Jim and Bonnie are the best kind of timeshare owners. They love to travel and have found that
the timeshare concept fits their lifestyle exceptionally well, thus they are multiple week owners at several resorts
across the country. They live in Eugene and own at one of the best resorts on the Oregon coast and another
of their other ownerships is just about as far away from Oregon as it can be and still remain in the states, that
would be Key West. They are what we like to call ‘Timeshare Smart’ thus have understood how to play the
exchange game and historically were able to get where they wanted to go when they wanted to go there. Jim and Bonnie
have been very selective in their purchases and have always sought out the best resorts in the height of their
seasons. They just don’t own anything that on the surface would cause them to have difficulty obtaining a satisfactory
exchange. They are indeed the type of owner the timeshare industry needs as they almost always take friends with
them on their trips to various resorts and have introduced many to our concept over the years.
One of the resorts in Arizona at which they are longtime owners holds both the Gold Crown and
5 Star designations and is all red time. That resort has historically been in very high demand and still
maintains a 98.7% utilization rate. That means that every time (or almost) one of the owners provides a unit at
the resort to any one of the exchange companies it gets used by one of their members. The resort is in such
high demand that several of the better known Clubs can be counted among its owners as each have purchased several
hundred weeks to fill the demands of their club members.
Beginning about 36 months ago Jim has been experiencing problems with exchange equality. While he had
been very selective in his acquisition (the best weeks – best resorts - highest demand locations - height of season
– correct size), always deposited his weeks early and provided wide options in dates and locations, the offerings
from the exchange company began to vary greatly.
In his most recent foray into the world of exchange, Jim was attempting to obtain the use right in a
two bedroom in Southern California for the Arizona week he had banked over a year ago. Typically
his request was for anytime between week 20 and week 26 yet he was advised that only 2 resorts were available and
neither one of them was the equivalent to his Arizona facility.
This situation is not unique to Jim and Bonnie. Many timeshare owners are experiencing the same
problems and most of them are also ‘Timeshare Smart’ meaning that they too are experienced in the game. Rule 1
of that game was that if you wanted to have consistency in exchanging you needed to belong to an exchange firm
or firms.
They understood that the exchange companies build their inventory by accepting deposits of weeks from owners
seeking to make exchanges through the exchange company. In addition, developers also sometimes deposit unsold
weeks with an exchange company so that there will be more people visiting the resort during its sales stage.
‘Timeshare Smart’ owners knew that when you deposit a week with an exchange company, you receive the right to obtain
another week from the exchange company’s inventory of available weeks, subject to the rules and restrictions of
the exchange company. These rules differ somewhat exchange firm to exchange firm. Some exchanges companies
will allow you to search their inventory before you deposit your week; other exchange companies will not allow
you to search for an exchange unless you first deposit your week.
‘Timeshare Smart’ owners also knew that value was an important concept to understand. This was basic for most
internal exchange programs and exchange companies generally operate on the basis of exchanging timeshares of like
value. The concept of value was easily understood because it was based on common sense factors. The first of those
common sense ‘value’ factors was Location.
Almost everyone is familiar with the story of that cornfield in Iowa and the mythical concept of “If
you build it they will come.” That movie story line reversed the concept of ‘location, location, location’
that is so well known in the hospitality business and the foundation for development. In truth, to be successful
you must build where they want to go rather than relying on the ‘they will come’ myth. ‘Timeshare Smart’
owners knew this because it applied to them. They wanted to vacation at the beach, in the mountains, or near major
attractions both natural and man-made. These popular destinations created demand for accommodations that timeshare
developers were quick to provide. If these developers rushed in too quickly the possibility that the demand / supply
factor could get out of balance existed. Demand increases value while supply decreases it, subsequently locations
with high demand and limited supply will always have higher value.
The second of those common sense ‘value’ factors was Season.
For most of us the term season brings thoughts of spring, summer, fall and winter and these are all about changes
in the weather and weather always affects value. It is obvious that summer sunshine and the beach are good, as
is snow in the mountains and skiing. In winter rain in the mountains is actually snowfall and a good thing, however
rain in the spring only adds to the snowmelt and enhances the mud. In the winter a little rain on a Florida
or Caribbean beach is less of a deterrent to a beach enthusiast than an Easterner blowing in along the
Cape Cod Seashore.
When most of the ‘Timeshare Smart’ individuals purchased, seasons were designated by the colors red, white and
blue. ‘Red’ being high demand, “white” being mid-demand and ‘blue’ being low demand seasons. Back then it was relativity
easy to establish what season to buy if you wanted to insure value. However, everyone knew that even within the
same color season, certain weeks had higher value. As an example, most Arizona resorts are designated all ‘red’
yet everyone knows that in the Sonora Desert July is hot, dry and not necessarily the best time to enjoy
the outdoor beauty of that area. The same holds true for Southern California beaches. Most are all ‘red’
however; summer weeks have higher value than winter weeks because of the family and school’s-out impact.
The third of those common sense ‘value’ factors was Deposit timing.
‘Timeshare Smart’ individuals understood that while the exchange firms had earnings from their membership fees,
the real money was in the exchange fees and they wanted to maximize the number of exchanges made in any given year.
While a family like Jim and Bonnie maintained one membership they own several weeks and the exchange
firm wants them and all other multi-week owners to exchange as many of them each year as possible. The reality
was that no exchange could be made until exchange inventory was available and that required (for the most part)
that individual owners deposit their weeks. For the exchange firms an early deposit is more valuable than a late
deposit because the majority of vacation plans were made one to two years in advance. Ideally the best time
of deposit is a year or more prior to the check-in date because the exchange firms reward early deposits with ‘value’.
Subsequently, a ‘blue’ week deposited early could have more ‘value’ than a ‘red’ week deposited late.
The fourth of those common sense ‘value’ factors was Unit size.
In reality ‘Timeshare Smart’ owners knew it wasn’t unit size that was important as much as it was unit accommodations.
The question was always ‘how many would it sleep, what was the privacy factor, how many bathrooms, full or partial
kitchen?’ and not ‘how many square feet?’ Obviously a 1200 sq foot – two bedroom – two bath – full kitchen that
sleeps 6 with privacy for 4 would have more value than a 1200 sq foot - one bath studio – partial kitchen - that
sleeps 4 but had privacy for only 2. Just as obviously a 1,000 sq foot - one-bedroom – two bath full kitchen that
sleeps 4 with privacy for 4, directly on the beach will have more ‘value’ than the 1200 sq foot – two bedroom –
two bath – full kitchen that sleeps 6 with privacy for 4, that is 4 miles from the beach.
The fifth of those common sense ‘value’ factors was Resort rating.
Those who were really ‘Timeshare Smart’ understood that these ratings were based on facility and service criteria
established by the exchange firms and only indicate that the resort maintains the minimum established standards.
Achieving such standards of course increased the desirability of a specific resort, however it had little affect
on the key factors of supply and demand. An owner who wants to be directly on the beach will place higher value
on location than on facility or service ratings.
So if the ‘Timeshare Smart’ owners such as Jim and Bonnie knew and understood the game, exchange
firm rules and the ‘value’ factors why is it that they are now experiencing feelings of diminishing returns?
Final Thought
Timeshare owners such as Jim and Bonnie, who have been industry consumers for several years, are
feeling most of the current frustration. Their beginning ownership predates three specific industry events. [A]
The advent of points, [B] the entry of major hospitality brands into the industry and [C] an increasing emphasis
on member self-service via Internet interface. These three events brought about at least four primary areas of
impact on the typical “weeks” owner and the resorts where they owned. Those impacts were….
- The old rules don’t apply anymore.
