Nearly 440,000 transactions and $10.5 billion in total
industry sales in 2022, a 30% rise in prices in just
five years. That's the timeshare industry.
It was really a post pandemic winning sector.
It was not incentives or lower prices by any means.
It was consumers staying at home and consumers having
more money and willing to spend it.
Nearly 10 million US households own a timeshare,
but despite a massive industry and rapid growth in
recent years, it all comes with a lot of controversy.
They're not held accountable for what they tell you prior
to closing, so they can boldface, lie to you, and do
whatever they have to do to make the sale.
And who cares if they hurt you?
Websites like Timeshare Users Group and Adweek.com
list timeshares for resale, many of them for free.
But few consumers know about them, and companies
rely on that lack of awareness.
The actual reality is, is that timeshare depreciates
between 90 and 100% the moment you sign that piece
of paper. And if that were true and common knowledge,
or the salesman presented that in the sales
presentation, not a single person would buy another
timeshare.
This is Sheila Wagner.
She took her first vacation in Pigeon Forge, Tennessee,
in May of 2020.
During her trip, she was invited to a timeshare
presentation with Capital Vacations, one of the
largest privately owned timeshare companies in the
US.
We love the place we were staying and it was 2020, so
we were told that they were offering a deal where they
would give you double the amount of points for signing
up.
For $31,000 in $1,700 in annual maintenance fees,
Sheila got 300,000 annual timeshare points.
Traditionally, timeshares have been sold as fixed or
floating weeks. Today, it's mostly a point system.
The industry has made it very, very clear that
today's consumer wants flexibility, wants the
ability to go different locations each and every
year. And the point model that almost all major
developers have adopted reflects that.
Shortly after going back home, Sheila tried to book a
trip and soon realized the destinations that she had
hoped for weren't an option.
After many calls with Capital Vacations, she was
told she had to upgrade for another $42,000 to be able
to use her points in the way that she wanted.
She says Capital vacations even promised to buy back
her points to cover the cost of the upgrade if she
put it on her credit card.
She later found out that wasn't true and had to
resort to other measures to pay off her new loan.
Interest rate being 15%.
As you can imagine, that's huge.
So the only thing I could do was borrow money from my
401 K my retirement to pay off the $42,000 loan.
Her maintenance fees have now surpassed $5,000, well
above the national average of nearly 1200.
I even told capital, if I won the lottery, the first
thing I would do is buy their company and fire all
of them. I could retire if I had my money back from
this, but I can't retire right now because of this
situation that I'm in.
Capital Vacations manages 170 of the roughly 1500
timeshare resorts nationwide. Nearly half of
the just over 200,000 units in the United States are in
Florida, Hawaii and California.
Some of the biggest hotel brands, like Marriott and
Hilton, have been in the timeshare business since the
80s and 90s.
The timeshare piece of the business, it was smaller.
Uh, it was arguably less profitable, more capital
intensive, and had a lower growth rate than the hotel
business that we know today.
So in 2011, Marriott International spun off its
timeshare business, and in 2017, Hilton and Wyndham
followed suit.
Basically, the hotel brand company said, we are the
franchisor. We own the brands.
Let's let someone else, in this case, the timeshare
companies, grow our brand on our behalf, and they pay
us a license fee or a royalty fee to do so.
In 2021, Wyndham Destinations acquired Travel
and Leisure, which is now its parent company.
This is just one of the many consolidations that's
occurred over the past decade.
Wyndham is going to make about $90 million from TNL,
and that's about 13% of Wyndham's adjusted earnings
profile as a combined company.
Hilton. The license fee that HGV pays is going to be
about $140 million.
Uh, all variable, and that's about 4.5% of
Hilton's earnings.
The largest privately owned timeshare company, Westgate
Resorts, has an annual revenue of $1.5 billion.
The 2012 documentary Queen of Versailles spotlighted
Jackie Siegel, the wife of David Siegel, founder of
Westgate Resorts.
And a 43 year old mother of eight.
Who lives in a 90,000 square foot home in Florida modeled
after the Palace of Versailles.
I got the private jet experience here in my living
room so I can enjoy my caviar first class.
According to a study out of the University of Central
Florida, 85% of timeshare owners regret their
purchase, but getting out of one is not easy.
Even when paying off a loan, the owner is
perpetually accountable for an ever increasing
maintenance fee. The Better Business Bureau has received
over 3000 complaints for Hilton Grand Vacations,
Wyndham Destinations and Marriott Vacations
Worldwide.
Typically, a mortgage company will say, sure, if
you pay off the loan, then you can get out of the
timeshare. But the timeshare company sometimes
are also the lending entities, so they own the
mortgage, and that gives them more flexibility to
find a way for you to curtail your exit and pay
off the mortgage, or not all at the same time.
When the housing crisis hit in 2008, Americans owning
timeshares felt the pressure. In a 2009 quarter
one earnings call, Marriott said it had $28 million
worth of contract cancellations.
Industry-wide, owners defaulting on payments more
than doubled from 2007 to 2009.
This pressure gave rise to the timeshare exit industry
. LLCs formed, allowing owners to transfer their
unwanted timeshare deeds over for a few thousand
dollars. But many of these exit companies that formed
at the height of the financial crisis turned out
to be empty shell companies.
The resorts didn't catch wind of this until
maintenance. They realized they were sending 2000
maintenance fee bills to the same address in
Delaware, and no one's answering the phone.
So that really just rocked the industry, that they've
closed that loophole because it just got just got
absurd. And it just absolutely crippled some of
these companies. With thousands and thousands of
defaulted ownerships.
Timeshare exit companies are still found all over the
internet. But nowadays, Rogers says that the
strategy of these exit companies is often just
telling owners to default on payments.
And the owner is overjoyed.
Oh my goodness, I finally got out of my timeshare.
This company did exactly what they told me they were
going to do and getting me out of my timeshare, not
realizing that all they did was stop paying and roll the
dice.
The US Department of Justice has made efforts to curb
exit company scams like this in November of 2022, or
this in Washington state.
Between 2015 and 2021, Personal finance author and
radio host David Ramsey allegedly received more than
$30 million to promote Timeshare Exit Team, a
company later known as Reed Hein and Associates.
I've been recommending these guys for the past three
years, and I am so confident that they can get
you out of your timeshare.
Reed Hein and Associates shut down in 2021.
In April of 2023, Ramsey was sued by his listeners
and the case is still ongoing.
The major timeshare industry itself did not address this
problem early enough to create responsible exit
programs for their customers.
This is Tom and Kelly Schriver.
They bought two timeshares in Tennessee.
One in May of 2022 and one in October of 2023 that they
soon wanted to get out of.
When contacting a timeshare broker, they were told that
their points were worth a fraction of what they paid.
The rescission period where you can cancel a timeshare
is dependent on state laws or outlined in the contract
itself. The Shriver's contract with Wyndham was
ten days. They took out about $34,000 worth of loans
between the two contracts.
The only solution that Wyndham's exit program
offered was I had to pay my timeshare off.
I had to pay $15,500 to them and then whatever else,
other fees they charge for us to exit out of it.
There are generally three ways to exit a timeshare.
The first, either give it away or sell it on resale
websites like Timeshare Users Group and Redweek.com.
Timeshares are often listed for free, as owners are
looking to unburden themselves from the
maintenance fees.
No situation where buying a new timeshare from the
resort is the best choice for you.
It became common knowledge that the resale market
existed, and not only that, but the resale depreciation
is almost 100% in so many cases.
Uh, the industry would just, I won't say would
collapse, but it would certainly fundamentally
change overnight.
The FTC warns of timeshare resale scams, where owners
are contacted by a company offering to sell their
timeshare. They collect an upfront fee and then
disappear. The second option for exiting is a deed
back program, where certain timeshare companies will
work with you to take it back.
I'll use Disney as the gold standard because that's what
I think it is. They're so brand conscious.
Hilton is the same, Marriott is the same.
They they want to get rid of the the clutter on the
internet reduces their brand value.
And the older legacy resorts have a different set of
economic problems where if they let if they let you out
of a timeshare, I'm going to have to pay more to to
offset your loss of income.
If you have paid off the loan and only owe
maintenance fees, a final option could be defaulting
on payments. But this comes with risks like foreclosure.
And I know sometimes timeshare companies will
talk about, well, if you do that, we'll we'll we'll send
a letter ruining your credit. And that sounds like
a good scare tactic.
It works with a lot of older couples because they
grew up in a depression era where they were they didn't
have credit. So when they got it, they want to keep
it.
Very, very rare and almost unheard of for a timeshare,
whether deeded or not, to come after an owner for
unpaid maintenance fees.
You know, it's a coin flip, whether they'll report it to
the credit agencies, if you're defaulting on a loan,
that's a much different matter. And the person
coming after you for the loan is the lender.
The Shrivers said that they were ready to default on
their Wyndham loan entirely.
I've even thrown around the idea of bankruptcy.
But the thing is, is this is the it's the principle of
the whole thing. Uh, I'm not giving them money
because of the way they went about what they did.
That's when they decided to contact the attorney
General's office in October of 2023, as a last ditch
effort. About two months later.
Wyndham. I sent them an email to confirm the
cancellation of their contract, releasing them of
all financial obligations.
Hilton Grand Vacations, Marriott Vacations
Worldwide, Wyndham Destinations and Capital
Vacations declined or did not respond to CNBC's
request for a comment or an interview.
If you do decide on attending a timeshare
presentation, the FTC recommends researching the
company before going into it and asking the
salesperson why today is the only day they can offer
you that deal. Understand your ability to cancel the
contract and read through the paperwork on your own
before committing.
It's hard enough to make your living now with the
cost of everything and and just, you know, pay paycheck
to paycheck and living in this world right now, let
alone having, you know, people like that take
advantage of you.