Are timeshare vacations worth it?

Have you ever been roped into going to a timeshare presentation?  That was our reality yesterday.  We went, we avoided being conquered, and we went home.  And in this post, I will explain what happened, and finish with some financial analysis. I hope this post will help anyone who is approached/pressured into a timeshare presentation know the deal and how to make a choice that is right for them.

Hola!  Hubby and I are currently in Orlando, Florida. We are here partly for a holiday but mostly to attend #fincon22. Fincon is an annual conference for ‘money nerds’. I’ve wanted to attend it for years, and I’m thrilled that we will finally do it.

Getting roped into a sales presentation

After our 30-something hours of flight and transport, we arrived at our accommodation sometime after 8 pm local time.  We wanted nothing more than to go to our rooms, have a shower and crash. But first, the concierge tried to convince us to attend a ‘complimentary’ timeshare presentation. We declined.  But this wasn’t the end of the matter.

The next day, the resort rang our room.  We had only just arrived back from being out.  Did they have spies watching us? Or had they been trying all day? No idea, but it was a bit spooky.  I heard my Neil chatting on the phone and knew he had agreed to us attending a presentation. He’s the softer one of us; I probably would have said no and hung up. But Neil felt sorry for the staff who were ‘just doing their job’.  Oh, and they had our credit card details and would charge us USD50 if we didn’t attend.

Yep, that’s right – they were going to charge us money for not attending. Neil had booked using Qantas Frequent Flyer points, and there was no mention of this timeshare sales pitch when he booked.  But last year, the resort (and 80 others in the Diamond chain) was acquired by Hilton. And timeshare is now their thing. 

After venting with my new Fincon masterclass besties about the impropriety of all of this – was it even legal? – someone shared this helpful article on how to avoid saying yes. This really helped as some, but not all, of our experience went to script.

Arrival and initial presentation

We drove seven minutes to the luxurious, OTT Tuscany Village Orlando and refused their offer of valet parking (we wanted to be able to make a fast getaway).  Reception checked our invitation and passports (thankfully, they didn’t try to take them). We then helped ourselves to tea with creamer (yes, milk is rarely offered, but at least they had tea, not just coffee) and conversed politely with a Florida couple about why they own four guns and their fear that Australia would soon be invaded by China. 

An attractive woman called *Judy (name changed) escorted us to the presentation room. I was expecting a large room where I could hide up the back and read, but no such luck: it was small and intimate. She ran through a slick series of PowerPoint slides and videos. She had clearly done this before.  We were shown images and images of beautiful and AMAZING resorts from around the world.

Hilton has a core fleet of 60 Hilton Grand Vacation (HGV) properties. Adding to this, last year, it acquired a further 80 from the Diamond chain, and is in the process of upgrading those resorts to Hilton standards. (ew are staying in a Diamond resort.) HGV has affiliate relationships with 4,800 other properties. This means the HGV program has a large, global range of options for timeshare owners to stay at.

Judy was personable and lovely, which is, I guess, why she is in sales.  While much of this was a bit too slick to be genuine, I actually liked her.  Her Powerpoint also included photos of her and her fiancé on holidays in exotic Hilton locations across the globe.  She said she had just come back from Bali. It sent a clear message that this scheme was for the beautiful people who wanted to enjoy the best in life.

Some of the key messages in the presentation and subsequent one-on-one hard sell included:

1. You are not locked into a timeshare ‘deed’.  The ‘old’ model of a timeshare is a fixed period at a certain resort, e.g. one week in January each year at the same hotel.  This deed then creates a continuing obligation that continues even beyond death.  This is not the modern Hilton way. Hilton didn’t really get into timeshare until relatively recently; it wanted a better model.
2. Points make it easier.  Instead of a deed, Hilton uses a ‘trust’ model that involves buying a certain number of points that are issued annually. Points can be redeemed for stays in a resort of your choice at your preferred time.  Peak times require more points, and off-peak seasons (and mid-week) have better value. Your points accrue each year, and unused points carry forward. You can also use future entitlements in advance. [Note: casinos often use chips rather than money so that mentally, you are no longer thinking about the amount you spend. I suspect the same tactic is at play here.]
3. Family joy.  Time with family is important, and vacations are what bring joy.  You only live once, and life is too short.  Judy shared that her mother has stage IV breast cancer and is only now wishing she had travelled more with family.
4. You will spend money on a vacation, so why not do it well?  Based on surveys, HGV believe most people will invest in 14 nights of hotel/vacation stays a year at an average cost of USD150/night.  That works out at USD2,100 per annum or USD21,000 over ten years. As ‘you are going to spend this money anyways [sic]’, you may as well spend with a brand like Hilton that gives you quality and better value. Why chose to stay at an ordinary hotel – when you can stay at a luxury resort for less?
5. Maintenance fees are reasonable.  Hilton charges an annual maintenance fee. This is important to ensure regular upkeep of ‘your’ property.  And ‘you pay for this anyways’, usually in the form of resort fees (yep, that’s also an additional, undeclared expense at many US resorts). As detailed below, the maintenance fees for the product we were quoted actually cost more than the purchase costs.

Our tour guide

After the presentation, we were immediately met by *Mike (name changed), who took us on a personalised tour of the facilities.  We walked through the pool area, went through one of the two-bedroom apartment suites, checked out some of the activities like the pool and Playstation, and viewed the reception area, before being escorted to a booth in an open-air office.  Mike was friendly. He offered local tourist advice and asked lots of questions to find out more about what we did, how we liked to vacation and what made us tick. We responded but were careful not to volunteer too much.

Our hotel had promised the presentation would take two hours – total.  Hubby set an alarm on his watch; when it went off, Mike still hadn’t gotten to the bottom line of the sales pitch.  I let it go around ten minutes, then made a show of needing to leave for an alleged appointment.  Yes, I felt a bit like the nagging, bossy wife, but I worried Neil was starting to be swayed by the arguments.  I needed time to think, and I needed to get away.

Mike promised to make it brief and crunched some numbers (see below). He then offered to take us to collect our gift.  The carrot for attending the presentation was a USD150 gift card plus six nights’ accommodation and flights. For various reasons, we did not accept this offer.  Mike appeared somewhat flummoxed by this.  He then asked us to wait and called in someone else, who I assumed was his supervisor.

The supervisor

Enter salesperson number three – *Diana.  She was more hardsell than the others, and cut to the chase quickly. She presented a deal of spending USD1,695 for a one-week accommodation package at one of around ten US resorts. We were both a bit confused at this point, but I got the impression that if we took up this offer, we could somehow have the costs waived if we then signed up for their it’s-not-a-timeshare deal while there.  I could see my Neil was a bit interested in the Hawaii resort, which did look super swish.  I decided to play bad cop again, and said we had no plans to return to the US in the immediate future and wouldn’t use it.

We then walked out – but not before at least three people reminded us that we had not accepted our gift – including one lady racing out from the building after us after we left.

How the numbers stack up

Honestly, I had expected this to be a total scam. It’s not exactly, although you could get caught out if you do not pay in full.  It may suit some people, especially those that like to vacation every year in luxury resorts.  There is a good selection of properties, and the standard is high.  What we saw had the wow factor. 

Regarding cost, Mike only quoted us for the bottom tier, entry price product of 5,500 points annually. The recommended product is 17,000 points, and it goes up to 100,000 points.  You cannot find the costs or the price conversation on the website, and I may have forgotten or misconstrued some of the conversion details.  But this is my understanding:

1. Purchase price.  USD7,182, made up of purchase price of USD6,900, plus closing costs USD242 and special fees USD40.  This is a package for ten years. If you wish to upgrade to lifetime, it is USD12,357.  For the ten-year package, this works out at USD718.20 (AUD1051.67) per year.
2. Maintenance fees.  USD889 per annum (AUD1301.77). Note this is more than the purchase price as it totals USD8,890 over ten years.
3. Plans.  The lowest plan is for 5,500 incremental points.  Mike shared that we could use this for up to 21 nights in a studio apartment (off-peak aka silver or bronze) or around four nights for a 3-bedroom apartment (peak) per year (aka Platinum or Gold) with resort fees or local taxes included.  Assuming a studio apartment, this works out at from USD76.53 per night.  Researching the premises we toured, it is currently available from USD93 to US106 per night, plus resort fees and taxes, so it could work out cheaper if you booked using points. 
4. Protecting against inflation. By purchasing now, you lock in any future price rises. This is true, although, as detailed below, there is a lost investment opportunity cost.
5. HGV club.  The deal also includes special privileges as part of the HGV club, including 10% off certain cruises and VIP opportunities for entertainment. I suspect this may be more useful to US residents, although it is a global program. If, say, you like to cruise to a location and stay there before returning, this could be a good option.
6. Points. If you were already a member of the Hilton VIP program, you could transfer points from staying at Hilton Hotels (e.g. on business trips) into the HGV program. Mike made much of Neil already belonging to the Hilton membership program.

Financing

Up until this point, I had not quite worked out why Hilton was putting so much effort into selling this timeshare. And then, when I saw the figures and the option for finance, I suddenly got it.

When presenting the figures to us, Mike focused on the total monthly payment of USD116..52 Presumably, this is because many people purchase their timeshare on credit. And this is where the figures start to get interesting. After making an initial down payment (in our case USD1,499), financing is available for the remaining $5,643 at a whopping 20.39% per annum.  This is how it works out:

As outlined above, the remaining amount of USD5,643 becomes USD8,339 over the ten-year course of the loan. All up that could mean the total ten-year commitment would be USD19,010 (USD10,120 plus maintenance of USD8,890). For us, it would equate to AUD28,239.

This plan would commit many families, after paying an initial sum of USD1,539, to then have an ongoing commitment to pay $116.52 per month. I note further that this is the cheapest entry-level points plan. The recommended plan is at least 17,000 points per year, creating a larger obligation. We were not provided with costs for other programs, and I assume the sales representatives customise them.

Our views?

We liked the accommodation on offer. It was nicer than we thought.  We could see value in it for people who liked the luxury resort experience, and we could immediately name several friends who would enjoy it. We could also see that signing up for this could help some people budget, especially if they paid upfront.  Using points to book where and when you wanted to go made sense.  We also liked that the properties were for apartments and provided a family-friendly environment (e.g. you could cook and eat at home and just hang out at the resort as it was spacious and well appointed). We also like the international coverage of their offerings.

On balance, though, we did not feel that spending AUD23,549 over ten years for a week or so of holidays a year (or AUD28,239 if credit was used) represented good value for us. We also noted that AUD10,500 would be in immediate, upfront costs. 

When we reflected on our holiday preferences, we realised tended to stay with friends, go camping, go on cruises, stay at AirBnBs, use frequent flyer points or research mid-tier accommodation. Hubby regularly stays at a different chain with work and is part of their program. Staying in a luxury, gated communities – however nice – wasn’t really our jam.

Lost investment opportunity

There is also the lost opportunity cost of sinking so much money upfront into future holidays rather than investing it. For instance, if you invested the same amount in ETFs, you could potentially double your money in the same period.

When calculating this, I based my research on Vanguard Australian Shares Index (VAS). Assuming it retained the same 10-year return of 9.34% this is where you could be after ten years. (Note on calculations – AUD10,561 initial purchase price + Annual maintenance fees AUD1,303.49. Exchange rate changes, tax and 0.10% management fees are not taken into account, and I’ve assumed VAS will continue to return the same ten-year average it currently does – although that said, past earnings are no guarantee of future earnings. Basically, I had to make some assumptions and work within the limits of the calculator.]

The above is by no means accurate, but basically, if you put the same money as your timeshare vacation into ETFs, you would contribute AUD23,571 and earn AUD22,311 in interest. This means you could almost double your money or blow it on a timeshare scheme.

Cape Diem

Of course, life is too short not to enjoy it – something that timeshare salespeople will tell you. Life is for making memories, and yes, it’s okay to go on holiday.  My husband will tell you that this frugalista struggles a bit with spending money on holidays, and he is right to make me take a break.  All work isn’t good for anyone, and you don’t want to die with lots of figures in a bank account and lots of regrets.

But here’s the thing: when I think of my kids and the memories we are creating, it’s all about the little things.  We remember pizza Fridays, Saturday movie nights and Sunday night board games.  We remember the in-jokes, my almost teenager’s weird obsession with staring contests, and my ten-year son’s pride in cooking lasagne with Neil. Sadly, the night before last, I heard a child crying and a Dad yelling in a unit across the hall from us.  Even a trip to Disney World (which is close to where we are) can be unhappy if there is no love and mutual respect. And you don’t need a Disney holiday or expensive vacations to be a great parent.

Have you ever been to a timeshare presentation? If so, how did you navigate it? Did you feel pressured to buy?