Enticing timeshare test-drives

Time was that timeshare marketers were considered the used-car salesmen of the real estate business: smooth talkers who dangled discounts on vacation getaways only to shanghai naive prospects into endless presentations on shoddy digs (and then maybe charging a fatter-than-advertised fee for the privilege). Worse, some investors who bought into prefinished buildings saw their investments go up in smoke when the projects ultimately failed.

 

By many accounts, those shenanigans have ebbed in the last 30 years--but the teaser discounts remain. And with fuel prices sky-high, and recession all but a certainty, breaks on travel expenses can come in handy for cash-strapped vacationers willing to stomach a two-hour sales pitch for a week's worth of fun in the sun or on the slopes.

 

Not that the marketers are in the free-entertainment business. According to the American Resort Development Association, a trade group of nearly 1,000 resort operators, two out of every 10 promotional visits yield a purchase--and generally the promotions are offered only when the rooms would go empty anyway.

 

The timeshare model--in which investors buy access to various properties for an allotted amount of time (after which the rights revert to the original owner)--is still not terribly pervasive. Only 6% of U.S. households with an annual income of $45,000 or above own a timeshare unit.

 

But thanks to the flagging housing market and the industry's refurbished reputation, once-suspicious money is pouring in. According to Ernst & Young, sales of timeshares reached $10.6 billion in 2007, up from just $6 billion in 2003. Throw in fractional-ownership properties--governed by contracts that allow buyers to rent them out and leave them to their heirs--and the total market hits $12 billion.

 

"The most common problem in the old days [the 1960s an 1970s] was that the deals were technically correct, just highly misleading," says Howard Nusbaum, president of the ARDA. "They would offer you a discounted trip, but upon arriving you'd have to pay full price and [then] mail in a rebate that required complicated forms. There were so many hoops to jump through that whatever they were offering wasn't worth the effort."

 

Those days are history, assures Nusbaum. A series of laws passed in the early 1980s required that real estate developers present public offering statements vetted by the states where the properties were located and marketed. Undaunted, more established hospitality brands--including Marriott, Disney, Wyndham, Hilton and Starwood -- have since waded into the timeshare market.

 

These properties aren't aimed at high-fliers--the typical timeshare buyer has an average annual household income of $82,000--but for those craving a quick vacation on the cheap, some of the teaser promotions offer decent bang for the buck.