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What is
Timeshare?
( It is spelled as one word, not two words: TIMESHARE. )
How It Works (continued):
The exchange value of a timeshare
It is important that you understand exchange value if you want to be successful in trading your timeshare for a
different one. All exchange programs** and exchange companies generally operate on the basis of trading "
like for like" . This system was designed to prevent owners at an off-season hote unit in Timbuktu from trading
straight across for a penthouse suite on the beach in Hawaii during Christmas/New Years, and it has generally worked
very well through the years. Things that affect the exchange value include the Season,
Location, Demand, Unit Size, Resort Amenities, and how far in advance you deposit your request.
**Different criteria may apply when you are using a Points system.
In a points program, your exchange value is given as a certain number of points so you always know precisely what
exchange value your week has. The factors the exchange company uses to assign point values for a week are the same
as those normally used to establish exchange value.
Seasons:
The exchange
companies rate the
value of a season in colors. With RCI the most desirable
season at any resort location is Red the swing/shoulder season is White the least desirable season, when there is not much demand, is Blue. The
corresponding colors for II are Red, Yellow and
Green. Ownership during Red Season generally costs more
than White/Yellow, which in turn costs more than Blue/Green. For reasons of simplicity, we will use RCI's color
system to represent them all.
As an example, take a resort in the state of Maine in the USA.
The seasons for a resort there might look like this:
Red: June 10-October 07 December 16-April 01
White: May 13-June 10 October 07-November 04
Blue: April 01-May 13 November 04-December 16
In this case, Red
time includes the summer
months, when the weather is warm, children are out of
school and American families typically go on vacation it also includes early autumn, when the leaves are changing color and it hasn't started snowing yet.
Again, from mid December to April 1-- ski season and the Christmas/New Years holidays.
White time,
which is less in demand, stretches from mid May to June 10 in this example-- spring time, when the weather is changeable,
ski season is over, and the warm weather has not yet arrived also, most of October to early November-- it's starting
to get cold and there may be snow, but ski season has not yet arrived.
Blue time,
when there is little demand for vacation time in this example, runs from April 1 to May 13-- early spring, often
with rainy weather and cold snaps and November 4 to mid December-- late autumn, with cold weather but prior to
ski season and the holidays.
These dates are arbitrary, however, and a careful choice during
White and Blue time can work to your advantage under certain circumstances. For instance, if you want to spend
Thanksgiving (the 4th Thursday in November) in a quiet and picturesque place without crowds, then a Blue week can
be just what the doctor ordered. It is also true that there is little difference in weather within, say, a 4-week
period on the cusp of Red/White time or White/Blue time, but there can be a significant difference in price.
If you are buying primarily for exchange, you must be very careful
about your choice of season if you hope to make the best exchanges. If you do your research and are flexible with
your choices, though, White and Blue weeks can still offer value.
For instance, in Australia the seasons are reversed: their summer is our winter, their spring is
our autumn. Blue and White time in the state of New South Wales (where Sydney and Port Macquarie are) might look
like this:
White: January 29-February 19 June 24-July 22 Blue: May 20-June 24 July 22-August 26
In Sydney during July and August (the heart of winter) the daytime
temperature averages 17 C/ 63 F-- cool, certainly, but not icy. Further north, along the coast where Port Macquarie
is located, the daytime temperature averages around 21 C/ 70 F. So one could theoretically exchange that Blue week
in Maine, the least desirable time of year, for a very pleasant Blue week at the beach in Port Macquarie at a time
of year when the resorts are not as crowded.
However, you should be aware that you cannot necessarily
directly compare the color designations for different resorts when you look at exchange value. For instance, in
the RCI Points
system there are some resorts where White Weeks have higher point values than Red Weeks from other resorts. The
designation may depend on several factors other than color: location,
availability of inventory, quality of the resort-- basically
it's a supply and demand situation.
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How Red is Red?
Resorts in highly desirable locations will often offer Red time year round. Realistically, however, some periods
of that Red time are more desireable than others. For instance, Palm Springs, California and Scottsdale, Arizona
are Red all year long. However, both of these locations are in the desert and the demand for time during the scorching
summers is not as high as it is during the winter.
As another example, Orlando, Florida is Red all year long. However,
because there is essentially a glut of both timeshare and non-timeshare inventory in that area your February Red
3-bedroom villa in Orlando may not pull as much weight in exchanging as a February 1-bedroom villa in Scottsdale.
So Red time can really be divided into " shades" of
Red according to how high the demand is for specific periods of time and where exactly that Red Week is located.
That February week in Palm Springs and Scottsdale, when people are escaping the snow and ice of Maine, might be scarlet
a week in mid September, when the desert is scorching hot, the kids are back in school, and no one particularly
wants to play golf in the heat of the day, might be pale pink. Just as with Blue and White time, your ability to
exchange into a resort-- even if you own a Red Week-- will be determined by how Red your week really is (plus the
size and quality of the unit you own) versus how Red the week you want to exchange for is. That " pink"
week in Scottsdale may not get you the " scarlet" week you want in Hawaii, even though both weeks are
" red" .
Location
Choose your location carefully if you are purchasing mainly for exchange, because location is the key factor in
both supply and demand. Popular vacation destinations will have high visitor demand, but if the area is overbuilt
with timeshare projects there may also be an overabundance of supply, which can drive down the exchange value of
timeshares. Orlando, FL is often cited as such an overbuilt area.
Locations with high demand and limited supply will have high
value. Examples of this would probably include such
places as Paris, London, San Francisco, New York, the Napa Valley area in California, Coastal Oregon during the
summer months and many ski resorts during ski seasons. Also affecting supply and demand are areas where the majority
of timeshare owners choose to use their weeks every year rather than exchange them, thus limiting the supply available
to the exchange companies. An example of this might be the Sanibel Island area on the western Florida coast.
Even within a general location, such as most coastal areas, exchange value can be affected by the specific location
of the resort. Inventory at a resort on the beach will have higher value than inventory at a resort a few blocks
inland. In ski areas, inventory close to the ski lift may have higher value than inventory several blocks away
(ski in, ski out).
Unit size
Unit size, while important, is far less so than location. For instance, a beachfront two-bedroom unit will have
a higher exchange value than a one-bedroom unit at the same resort, but that one-bedroom unit will probably have
a higher exchange value than a two-bedroom unit located a few blocks inland. That one-bedroom may also have a higher
exchange value than a penthouse in a location that is less in demand.
Resort rating and amenities
It is often said that there are two kinds of timeshare owners: Those who are location driven and those who are
amenity driven. Those who desire all the toys at a resort may choose the inland property that has them to a beachfront
property that doesn't, but overall, location still has the upper hand when it comes to exchange value.
Having a " high amenity rating" (such as a "
Gold Crown" award in RCI and " 5-Star" in I.I.) is determined by the amenities provided by the resort,
not by how much demand there is for the resort. High
demand and low supply is primarily driven by location and season, not amenities.
For instance, most people tend to favor that beachfront resort over the resort a few blocks inland. Even if the
beachfront property has little in the way of amenities (no " lazy river" , no putting green, no spa,
no onsite restaurant, etc.) it will probably have a higher exchange value than the resort inland that does have
all the toys simply because exchangers tend to favor location over amenities in such a case. Thus, the resort's
rating and amenities package are important, but not as important as most people think.
Deposit Early: The exchange system rewards planning
ahead
The exchange companies are in the business for profit, like any other business, and they make money from exchange
fees. In order to be successful, they want to get the most for exchange transactions. All of these transactions
require time to complete, so an early deposit is more valuable to them than a late deposit. This is because a late
deposit may not have time to get an exchange and the week may go unused-- which means no exchange fee for the company.
When you deposit with an exchange company it triggers a series
of other timeshare exchanges: You claim someone's week, that person claims someone else's week, someone claims
the week you deposited, another someone claims the week deposited by the person who claimed your week, and so on.
You will learn that as the check-in date for an unused week
gets closer, its value decreases because the chance of the exchange company not being able to get an exchange fee
for it increases. By the time check-in is a month or two away, all exchange limitations are usually removed, which
allows for some good last-minute exchanges for the savvy trader but is not something you can count on if you're
looking for that perfect exchange. If you wait too long to deposit your week, its value-- and therefore your ability
to get the exchange you want-- is diminished.
Deposit early!!
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