Timeshare exchange system failures highlighted by events since COVID and Ukraine war

Timeshare exchange networks were created to allow the exclusive resort member the possibility of travel to other high-quality destinations. But recent years have highlighted systemic faults...

The idea in a nutshell

Timeshare owners bought into what used to be exclusive resorts. They paid a lot of money for higher quality than was available to regular vacationers, but did not want necessarily to go to the same place every year. So, the idea of 'exchanging' was born.

Exchange systems allow timeshare owners to swap their unit for equivalent standards in an alternative destination and/or timeslot. There are three major exchange networks: Resort Condominiums International (RCI), Interval International (II) and 7 Across (formerly Dial an Exchange). The largest, RCI, boasts destinations in 110 countries.

On the face of it this sounds ideal. A huge amount of choice, and always guaranteed great quality wherever you travel. So, what's the problem?

It's expensive

There are extra charges for exchange. On top of the regular annual fees (already usually the equivalent of the cost of a regular vacation) there is an additional annual fee for being a member of the exchange system, even if you don't use it. Currently this is around $109 per year

It costs another $243 to actually make an exchange. The fee for banking a week (saving them for another time) is $66. And there is a fee of $86 for allowing another person to use your own timeshare if you are not using it.

This means that doing anything other than what your original membership guarantees, comes with spiraling costs. The non timeshare owner pays only for the vacation they have. If a vacation costs $900 for a week in destination A or destination B, they will pay the same in either, there are no fees to exchange if you don't vacation through timeshare.

It's complicated…

For non timeshare owners, booking vacations is pretty straightforward. You go on the booking site, choose a hotel and dates, then pay for it.

For timeshare owners there are complex, systematic rules:

There are rigid deadlines for booking, exchange, and for paying management fees. If you get anything wrong you can lose your vacation altogether (but still pay for it).

Ownerships usually come with mandated check in days. If it is a Monday changeover, for example, that is the day you need to arrive; regardless of whether that suits you.

Similarly, owners must usually book in blocks of a week. Regular vacationers choose their own lengths of stay from dropdown menus on the booking website

Even carefully following the rules often does not get you what you need. Points owners with a 12-month booking window describe having to dial at 1 second past 9:00am on the day that the window opens for their preferred week and often still not securing their choice

Availability is always limited

Like with all vacations, the popular destinations book up first. In the RCI system there are around 4300 resorts to choose from. If the choices in a particular destination at the preferred time are full, then the owner can't exchange there.

For a regular vacationer there is a wider selection of choices. The non owner can choose to stay in a timeshare resort, but also can choose anywhere outside the timeshare system without incurring extra fees.

The timeshare owner has already paid for his vacation. If his preferred exchange destination has no availability, then he must pay for an entire extra vacation outside of his membership, as well as paying his own annual fees.

Timeshare resorts are also no longer exclusive. They rent out weeks to non-members, for around the same price as the members pay in management fees. Putting aside the fact that this is grossly unfair on people who paid tens of thousands to join a club they could now stay in without being a member, this means that those weeks are now not available for members who have paid for them.

Many members can never get their choice of vacation, or their second or third choice even in regular years.

War in the Baltic

The two countries directly involved are not timeshare destinations. But due to the Russian invasion of Ukraine, many timeshare owners in the Balkans, or Central and Eastern Europe are expected to request exchanges further from the conflict zone.

Nobody can predict whether the war could spill into neighboring countries, if it did and any of those were a NATO country, then the whole region could flare up. Already the skies over Russia and Ukraine are off limits to commercial travel, and this no-fly zone could expand as safety requirements dictate. The shooting down of Malaysian Airlines flight MH17 in 2014 by Russian backed rebels in Ukraine was done in comparative peacetime. Flying anywhere near missile toting military forces is not going to be a popular choice in 2023 and 2024.

This all means that there will be extra demand on 'safe countries,' including the US, Caribbean and Mexico. With a fixed amount of resorts, a high number of people will be disappointed.

Weeks banked during COVID

Many industry experts believe 2023 could be the 'perfect storm' that breaks the exchange networks beyond repair. American Consumer Claims (ACC) spokesperson Suzanne Stojanovic explains: "In that first pandemic summer of 2020, members assumed that their management fees wouldn't be charged because they couldn't take their vacation. With resorts standing empty all summer, running costs would be reduced to a trickle and people thought that the savings would be passed to them. Instead, the resorts chose to charge in full and make record profits. The only consolation offered was the option of members banking their weeks to use the following year.

"Those of us who understand the timeshare model knew that this could never work. In 2021, around double the amount of vacations were owed to members. Where would the extra inventory come from to provide that accommodation?

"Then 2021 and 2022 arrived and travel still wasn't back to normal, meaning weeks needed to be banked yet again. Now in 2023 an impossible number of vacations are due. Resorts have promised something they simply can't honor.

"These are just weeks banked with resorts. What about the families who deposited their weeks for an exchange they couldn't take for one of the above reasons? Maybe their deposited week was already used, but now RCI owes those families weeks which again there isn't enough inventory to honor.

"Add to that the extra pressure from the war and this summer is going to deliver disappointment to people relying on their timeshare memberships for vacations. This is likely to affect the foreseeable future."

Exodus

Timeshare owners are looking for ways to escape costly memberships. "The idea of timeshare is dated," explains Stojanovic. "The resorts are all available on regular booking sites to non members. And nobody wants to be committed to annual fees for something they often can't use. People would rather go where they want, and when they want. They would rather pay exactly for what they use."

Getting out of timeshare contracts is far from easy.  The resorts’ revenue model relies on annual fees from members. They don't let people leave without a fight. Timeshare companies have even been known to enforce those fees with debt collectors and court action.

It is possible to escape with expert help from companies like TAC. We will not only exit you from your timeshare contract but will investigate the possibility of compensation claims for people who were mis-sold.

For advice on how to escape a timeshare contract get in touch with our team at ACC.