I haven't seen an example yet where the extra value of buying from the developer exceeds the extra cost of doing so vs. the same thing on the resale market. Usually the comparison is ridiculously one-sided. I think a large family
might be able to make the case for DVC with the Sorcerer pass at some of the actively-sold resorts, but that assumes Disney doesn't water down that benefit before they reach payoff time horizon.
The reason for all of this is pretty simple: the developer "benefits" are paid for out of the marketing budget, and those benefits can't cost more than the return on selling full-frieght timeshares. Otherwise the developer goes out of business.
Is that really the case?
Many times the biggest defining problem expressed with traditional timeshares is that the annual dues exceed the market cash rate.
This is why many people are giving away their timeshares for free, paying all closing costs, and offering to pay several years of annual dues to the buyer in order to offload it.
In general, yes. Most timeshares have fees below the prevailing rental rates. If they did not, the timeshare enters what is colloquially known as a death spiral:
- Some owners recognize the negative usage value, and default.
- The lost revenue from those intervals is spread over the remaining owners who are paying.
- The gap between fees and rental value widens.
- More owners default.
- Rinse and repeat.
Such timeshares usually end up being liquidated sooner rather than later, and the owners left standing end up getting a share of the proceeds when the resort is finally auctioned off (usually in a bankruptcy proceeding). Oddly enough this is a positive outcome vs. just trying to dispose of it, because it generates a positive salvage value for something that,
structured as a timeshare has little to no inherent value. Hono Koa on Maui is one such timeshare, because the default rate has gotten to the point where it's really hard to justify owning there. That's true even though the property itself is absurdly valuable, because it is oceanfront on Maui's west coast. It will probably take a few more years, but it is on its way.
There are some other examples where there is postivie usage value, but based on exchange arbitrage rather than market rents. Marriott Grande Vista is my favorite example of this. Orlando is completely over-run with timeshares, and the off-season rental rates can be shockingly low. High-season weeks are still good values on a rental basis, but off-season weeks not so much. But, one can lock off the Grande Vista week and exchange it in Interval using Marriott's internal preference for weeks elsehwere in the system with much higher rental value. This is the analog of using SSR points to book at e.g. Poly, but on steroids. For example, it's pretty easy to take a Grande Vista week and turn it into two weeks in a 1BR (or sometimes a 2BR) Hawaii Marriott for about $215/night, all in.
The issue is that there is a disconnect between
market value (what a timeshare is worth if you try to sell it) and
usage value (the amount you save using it vs. renting someting similar). There are a lot of people who own timeshares. Most of them are perfectly happy, but some of them want to sell. There are fewer willing buyers than sellers---not because the underlying week has no value, but because (a) most people do not understand what that value might be, and (b) casual buyers have a very negative view of timeshares.
That negative view is earned, but by the
sales organization, not the resorts themselves. The resorts are usally somewhere between just fine and really great. If you are a resale-only buyer, you never have to deal with the sales organization, which makes life pretty pleasant.
And this is why you can make an absolute killing "buying used timeshares": An informed buyer has a strong information advantage relative to the overall market, and can acquire timeshares for much less than they are "objectively" worth when you just measure the benefit of usage.
Looking at Fidelity real estate timeshare broker site is full of these kind of timeshares.
Those are the leftovers that do not sell. And even most of those could be re-homed via adoption on TUG if the "seller" weren't insisting on trying to get back some of what they spent---because again part of the problem is the supply/demand imbalance, not the total lack of inherent value of the underlying week.
Most traditional timeshares are for 1 specific resort for a specific week right?
Timeshares have not been sold this way by any major developer for at least fifteen years now, and by most developers for much longer than that. Marriott might have been among the last of the major developers to switch to a points-based product in 2010. Wyndham (at the time, Fairfield), was selling points back in 1991, almost exactly when OKW originally opened.
The "one week at one resort" fiction is part of DVC's sales patter explaining why it is really not a timesahre. It is farily important for DVC to distance itself from the (very negative) timeshare label, because that's part of how it overcomes sales objections.
But it is a timeshare.
Now, it is true that if you are in the market for "used" timeshares, many of them will be one-week-at-one-resort. I own one of those--a summer week at a resort in the Wisconsin Dells. I've owned it for twenty years. I have never stayed there. Not once. Instead, I use it for exchange arbitrage. It has been stupidly valuable, and I think I paid $600 for it. This is something that takes some study to effectively buy and use, so while it is cheap in dollars it does require some time. But, I treat the arbitrage game as a hobby.
