In keeping with our previous blog(s), the ownership of a timeshare is not to be mistaken with a legitimate real estate ‘investment.’ But is timeshare ownership even cost effective compared to say, paying standard fare by pre-booking at a resort? Many people don’t realize the true cost of timeshare ownership. A recent survey based on Priceline® quoted rates for one week in Orlando in May of 2014 yielded an average cost of $226 per night, projecting to $1,582 weekly rate for all listed four and five star hotels.
Now consider what it really costs you to own a time share. For the purpose of this analysis, we’ll use the most conservative possible numbers, those quoted by Howard Nusbaum, CEO of the American Resort Developer’s Association (ARDA) – A consortium formed to perpetuate the interests of resort developers, including timeshares). Mr. Nusbaum quotes an average sales price of $19,000, with average monthly maintenance fees equating to $660.
Now let’s assume, again conservatively, that the average financing rate on $19,000 is ten percent, amortized over twenty (20) years. Monthly acquisition payments on this amount are $183.35. Projected annually, this equates to $2,199.02. Add in the $660 per year that you’re paying in maintenance in the meantime, an amount that is likely to increase dramatically with time, (and never cease), and you have a twenty year acquisition cost of 20 x $(2196.02 + 660)=$57,117.40.
If the average age upon acquisition of the timeshare is about 45 years old, and the average life expectancy of the buyer is 80 years, we must now add 15 additional annual payments of $660, projecting to a total additional cost of $9,900, even without considering any inflation factor for the maintenance fees. All told, using the foregoing parameters, the price of lodging alone during your annual weekly vacation projected actuarially for the rest of your life is $67,107.40.
On the other hand, you could have booked annually at a four or five star resort in the Orlando area at $226 per night, again with no adjustment for inflation, forty two times over – beyond your projected lifespan – with no obligation. On top of this, you would have complete flexibility to book anytime and anywhere you wish – Orlando was just used as an example in both cases to make the comparison more objective.
Bottom line, as you may have suspected by now, you got a raw deal and likely didn’t realize the true cost of timeshare ownership. It happens to all of us from time to time. On the other hand, if you’ve decided it’s time to cut your losses, please give us a call.
We also have a new location in London for those who are in need of a timeshare attorney in the United Kingdom