Like any other industry, there are shocking secrets within the timeshare community that consumers are not supposed to know to protect the profits of the companies and the industry. There would be legal ramifications if consumers knew what really goes on.
Here are 13 shocking secrets of the timeshare industry that consumers should know about before they buy, sell, or dispose of their unwanted timeshares.
1. Many Timeshare Companies Do Not Actually Own Properties
That’s right. Many timeshare companies do not own the resorts where they sell their timeshares. They are owned by separate corporations and simply have an agreement with the timeshare companies to use some of their rooms.
When the members try to use their timeshares through the resort network or the exchange company, many find it very difficult because the timeshare has a limited inventory at that property. Consequently, there are a plethora of online complaints toward the company because there is no availability where and when owners want to vacation.
In the case of SECRETS, ZOETRY, DREAMS, BREATHLESS, NOW and SUNSCAPE Resorts in Mexico, the Dominican Republic and Jamaica, they are a collection by AmResorts. The company that sells the timeshare is Unlimited Vacation Club, a travel club, and they do not own any of the resorts. Consumers who purchase a UVC membership at these resorts are buying nothing more than an overpriced travel club membership that costs between $10,000 to $80,000.
According to the contracts, the legal entity for Unlimited Vacation Club is in Panama. Although it is a Florida based company, travel club members who want to mediate any legal action against the company must go to Panama.
Similarly, Prestige Travelers at Karisma Resorts and TravelSmart Travel Club in Mexico and in the Caribbean islands also do not own any of the resorts.
2. Timeshare Presentation Sales Tactics
When guests accept an invitation to a timeshare sales presentation—whether over the phone or while on vacation—they rarely plan to buy. In fact, many tell the salesperson upfront that they have no interest in purchasing. Ironically, that resistance often increases the likelihood of a sale for two key reasons.
First, guests typically arrive at the presentation with their defenses up. They expect a sales pitch and remain cautious throughout the early stages of the meeting. To overcome this resistance, salespeople work hard to build rapport. They act friendly, personable, and sincere to earn trust and lower the guests’ defenses. Once guests become comfortable, the salesperson begins uncovering the real reasons they hesitate to buy.
Second, after identifying the true objection, the salesperson tailors the entire presentation around it. Sales representatives receive extensive training to discover a guest’s “hot buttons” or dominant buying motives. They then use those motivations to craft a strategy designed to encourage a purchase on the spot. Often, this strategy includes offering a discounted price, a complimentary vacation week, bonus points, resort credits, or other attractive incentives that make the deal appear too good to pass up.
3. Timeshare Relief: High Costs vs. DIY Solutions
Timeshare attorneys and timeshare relief companies are generating millions of dollars in profits by helping timeshare owners get out of their unwanted timeshares. They use a variety of methods which begin with contacting the resort to initiate the process.
What most timeshare owners do not realize is that they can do the work themselves without paying anyone. In some cases, they can simply walk away without any repercussions because, in many cases, they do not own anything.
However, these savvy cancellation companies have popped up overnight and are generating millions of dollars in profits.
One timeshare attorney boasts that he has helped over 6,000 timeshare owners to dispose of their timeshare with a 99% success rate and charges an average of $3,900 per client. So, 6,000 X $3,900 = $23 million.
Although successful, the timeshare owners could have saved themselves the $3,900 and did it themselves by negotiating with the resort to transfer the property back with a warranty deed. This is the legal procedure that many timeshare attorneys use to transfer the timeshare back to the resort.
Timeshare attorneys and timeshare relief companies are so successful that the timeshare resorts have filed lawsuits against them because members are getting out of their timeshares through these companies.
One company, Mexico Timeshare Solutions, present themselves as a timeshare advocate and calls other cancellation companies scams. What their clients do not realize is that they are scamming clients into believing that they need their assistance to get rid of a Mexico timeshare when the clients can simply walk away without paying anything. Mexico timeshares are simply travel clubs, and companies cannot do anything to foreigners should they desire to simply walk away. This is how Mexico Timeshare Solutions guarantees their services.
4. Travel Club Overbooking: Members Can’t Use Benefits
Many travel club members purchased because they wanted to travel around the world and explore new places and cultures. They will attempt to make reservations within their own resort system or use one of two of the largest timeshare exchange companies in the world, Resorts Condominiums International (RCI) or Interval International (I.I.).
One of the reasons why so many members want to dispose of their timeshare is because they cannot exchange where they want to go. The primary reason why many can’t exchange is because the travel club’s inventory has been oversold. With the points system, the resorts can sell as many points as they like.
According to a law suit filed against ILX Resorts. they oversold their inventory at the Los Abrigados Resort and Spa in Sedona, Arizona and that is why the owners could never get in. This is a timeshare, not a travel club.
Diamond Resorts Lawsuit
A lawsuit filed against Diamond Resorts in Las Vegas alleges that the company engaged in securities fraud. According to the complaint, the company sold points that were not registered with the Securities and Exchange Commission (SEC). The lawsuit also claims that Diamond Resorts and several affiliated entities participated in practices that unfairly targeted elderly consumers. Reports indicate that the case involves allegations totaling more than one billion dollars.
Points-based vacation ownership programs create additional concerns because resorts can potentially sell more points than their available inventory can reasonably support. Unlike deeded ownership, where a specific interest is tied to a defined property, points systems often provide greater flexibility for the developer. As a result, owners may find it more difficult to secure the reservations, dates, or accommodations they expected when they purchased their memberships.
Moreover, there are many resorts that simply have no inventory for their members because they prefer to use the rooms to market more guests to the timeshare presentations. This was the case with The Manhattan Club which resulted in a class action law suit by its members.
The points system and the right to use system are created for the advantage of the developers, not the consumers. They can sell as much as they like with little, if any, accountability.
5. Questionable Operations and Discrimination in Jamaican Travel Clubs
Although Jamaica has many travel clubs in the RCI and I.I. resort directories, Jamaica traditionally has not had timeshare legislation to control the industry. In fact, most travel clubs in Jamaica may be operating illegally by not registering as a local business.
Resorts often transfer daily sales revenue directly to foreign bank accounts, bypassing the local banking system and reducing financial transparency. While local governments may believe these businesses operate as legitimate timeshare companies because the resorts hold business licenses, many travel clubs and vacation membership programs do not register separately with the appropriate authorities.
As a result, regulators may oversee the resort itself while remaining unaware of the activities, revenues, and sales practices of the travel club operating within the resort.
Recent Legislation
Jamaica has recently passed timeshare legislation to ‘increase the presence of timeshare’ according to a news article. However, the legislation does not include travel clubs that have already made their footprint in the country and might be operating illegally behind the skirts of high end resort brands, i.e., SECRETS, KARISMA and ROYALTON, which are separate entities.
They operate under the radar by working with small mom and pop businesses set up in the Free Zone of Montego Bay. However, the daily travel club sales are unreported to the local authorities. The Jamaican government may be losing millions annually in unreported tax revenue.
Many operators hire foreign workers to manage these programs and direct a substantial portion of the revenue to bank accounts in countries such as Mexico or the Dominican Republic. By moving funds offshore, they may reduce their exposure to local taxes and reporting requirements.
While some individuals report income through local businesses, those reported figures often fail to reflect the full amount of revenue generated. In some cases, foreign managers and executives earn tens of thousands of dollars each month, yet the income reported locally may represent only a fraction of their actual earnings.
Most often, the travel clubs are not paying the local Jamaican sales staff with the same commission structure as the illegal foreign workers. While many foreign workers are generating tens of thousands per month, many of the local sales staff are barely making a living. This is undetected as the foreign workers are paid handsomely “under the table.”
6. Zero Trade-In Value for Timeshare Upgrades
When an existing timeshare owner attends a timeshare presentation, they have the option of trading in their old timeshare for a new one.
The resort will offer a reduced price if the owner traded in their old paid-in-full timeshare. In some cases, they will offer tens of thousands for their old timeshare.
This is an old sales tactic used in the industry to make a sale. The closer will originally present a much higher price for the timeshare to make room for this “trade in.”
In the end, the timeshare owner simply traded in one timeshare for another and paid the same price as those who didn’t trade in a timeshare. TIMESHARE COMPANIES NEVER GIVE TIMESHARE OWNERS ANYTHING FOR THEIR OLD TIMESHARE.
7. Timeshare Sales: Lie or Be Fired
Many timeshare companies have a reputation for being dishonest, which is why there are so many lawsuits against them and so many disgruntled owners.
What consumers do not realize is that lying is expected in many resorts and required in other resorts. There are many lies within the industry that if the sales person does not present, he will not get the support of the management during the sales process.
The sales process is a team effort and requires the support of management to use a variety of sales strategies called such as “playhouse” to get the sale. In many sales organizations, management places intense pressure on sales representatives to meet aggressive production goals. When a salesperson consistently falls short of those targets, management may reduce their opportunities, assign them fewer prospects, place them on performance plans, or terminate their employment. As a result, some salespeople feel pressured to use high-pressure tactics or make promises they cannot guarantee in order to meet the company’s expectations and keep their jobs.
All resorts have daily, monthly, and annual goals that they must hit – at any costs.
8. Profiling in Marketing: Race, Religion, Gender, and Sexuality
Timeshare resorts spend a lot of money on marketing costs to lure unwilling consumers to attend a timeshare presentation. The gifts must be attractive enough to convince even the most skeptical consumers to take a 90-minute sales presentation.
The gifts range anywhere from free vacations, free excursions to theme parks, i.e., Disney, show tickets in Las Vegas to cash. If the resort has a sales staff of 100, which is not uncommon in some places like Disney that has over 250, the marketing expenses add up.
Although the resorts get a nice discount from vendors, they must spend a lot of money to lure consumers into the sales presentations. Therefore, their marketing strategies must become a science – and a science it is.
Resorts will use many strategies to target demographic segments to get the most for their marketing budget. Within the U.S., they will target certain zip codes which could represent income bracket, educational level, race, and religion.
More Prevalent in Mexico and Caribbean
In Mexico and the Caribbean Islands, the timeshare resorts give their marketing representatives specific instructions as to what they are looking for. These instructions will determine the value of gifts they can offer to the guests, and the amount of cash the marketing representative will earn for bringing in certain profiles or guests who would most likely buy.
For many resorts, the most valuable couples are whites. The resort’s marketing management will pay the most for a white couple over other races. Blacks, Latinos, Jews, Indians from India, men, and seniors will usually be offered fewer valued gifts and the marketing team will earn lesser pay when they bring in these couples.
Why? Because the primary purchasers in Mexico and the Caribbean Islands are the white from the U.S and Canada.
Surprisingly, in Mexico and the Caribbean Islands the locals are disqualified unless they appear to be wealthy.
9. Timeshare Owners Often Sign Unread Documents
What begins as a promised 90-minute sales presentation often stretches into a four- to six-hour marathon. During that time, sales teams repeatedly introduce new representatives, managers, and incentives designed to overcome every objection. By the end of the presentation, many consumers feel mentally and emotionally exhausted. Rather than continue the process, some decide to make a purchase simply to bring the experience to an end. Once they sign the initial paperwork, they often focus more on leaving the sales environment than on carefully reviewing the details of the agreement.
However, it might take an additional 30 minutes or more for the final paperwork to arrive, especially when there are a lot of sales in the room. When the paperwork finally arrives, most new owners sign the paperwork without thoroughly reading it.
A resort chain in the Dominican Republic states in their 36-page agreement that if the owner shares any negative remarks or comments online about their experiences with the resort, the resort will cancel their membership. This is something that the new owners unknowingly agree to when signing the paperwork.
Many will also overlook the right of rescission period; the time allowed for the purchaser to legally cancel the sale and get a full refund. Sales persons are trained to prevent rescissions during this period.
10. Incentives in Timeshare Costs: Not Truly Free
When the guests decide to purchase the timeshare, the resorts will list the closing costs in addition to the purchase price. It will not be listed as part of the purchase price, but added to the down payment.
For example, if the purchase price is $18,000, the down payment is 35% or $6,300. The closing costs will be an additional cost and could be as high as $2,000. Hence, your down payment could be $8,300.
The resort will use the closing costs to pay for the documents, the new owner’s kit or packet, the exchange company enrollment, and any gifts that are offered as part of the deal. The remainder is often split amongst the sales staff involved in the sale.
For example, if the resort offers the new owners a free stay at the resort or other valuable gifts, they were already included in the purchase price or the closing costs. They are never free as they are presented.
11. Timeshares: Cheaper Outside the Resort
Consumers who are serious about purchasing a timeshare should never purchase at a resort because they can buy the same timeshare for the same property at a fraction of the cost.
Resorts are charging exorbitant prices for a timeshare when consumers can quickly go online at the many timeshare resale sites and get it for much less.
While some resorts charge between $10,000-$20,000 for a timeshare, consumers can go online and purchase them for 10% of those prices.
Purchasing online also gives the consumer time to do the research and learn everything about the timeshare before making a purchase. There is nothing worse than making an expensive purchase at a high-pressure sales presentation and later regretting it. By purchasing online, one has the time to conduct their due diligence and pay considerably less.
When a consumer purchases a timeshare online, they will receive the same benefits unless otherwise documented in the paperwork. Read everything before you buy.
12. Travel Club Costs: Higher at All-Inclusive Resorts
Most Mexican and many Caribbean travel club properties are mandatory all-inclusive resorts that include meals, beverages, and some non-motorized activities.
This is an attractive feature for many consumers in some areas who would rather avoid searching for local establishments to eat and drink. With the all-inclusive option, they can eat and drink as much as they like without additional charges.
Many travel clubs operate within these resorts, although many don’t own the resort.
When prospects attend a sales presentation, they are told that they will get a discount when they stay at any of the company’s affiliate resorts. Some are even told that the timeshare will guarantee discounted airfares during their membership. This is a lie.
For example, if the guest bought a membership from the Unlimited Vacation Club that operates out of the Secrets Resorts, they can stay at any of the Secrets Resorts and get a discount on the mandatory all-inclusive options without paying a maintenance fee.
What the owners don’t realize is that they are paying the same if not more for the all-inclusive than the general public is paying. When you add up the purchase price for the timeshare, and the nightly costs for the mandatory all-inclusive, they are paying much more than they can get on any travel site.
Many owners have gone online and discovered deals at the same resorts for a much cheaper price than what their timeshare offers.
13. Timeshare Exit: Simple with the Right Knowledge
Timeshare attorneys and timeshare relief companies are successful in getting frustrated timeshare owners out of their unwanted timeshares. Most will guarantee that they can get you out regardless of whether it is paid off or not.
Sadly, these companies use effective marketing strategies that include scare tactics to convince consumers to hand over their credit cards to pay for something they can easily do themselves as is the case with Mexican Timeshare Solutions.
Know Before You Go on a Timeshare Presentation
Before attending a timeshare presentation anywhere, know before you go. Research the resort, the reviews, and the resale costs to learn all you can about the resort that has invited you.
If you want to complete your sales presentation in 90 minutes or less with your gifts, present them a copy of the resale and the negative reviews. They will usually get you out so that they can talk to a more willing prospect.
