This past weekend I was given the opportunity to go to the Lake of the Ozarks with my family for a couple of days. As a child some of my most cherished memories were of the trips we would take each summer to my uncle’s cabin there. Being able to share many of those same experiences with my own kids was very special.
We had an absolutely amazing time at the resort we stayed at, and I can’t wait to go back. However, this state of bliss that most of us feel while on vacation can also be dangerous. While in Osage Beach I can’t tell you how many different people approached me about signing up for a timeshare. Even though I knew better, I was having such a wonderful time that I was tempted to talk to one of them about what it would cost to obtain a permanent vacation spot there.
That’s why I totally understand how people get themselves snared into the timeshare trap. In the moment it’s easy for vacationers to let their defenses down and be convinced by a high pressure salesperson with a smooth pitch to buy something they shouldn’t.
One of the primary ways in which these salespeople convince you that you should buy their product is by portraying it as a wise investment. Something that unlike a stay at a hotel, has long-term value, and unlike a vacation home, has a minimal upfront cost. In the moment this proposal can appear to make a lot of sense. However, once the contract is signed most people find out the deal wasn’t as good as they first thought.
According to the American Resort Development Association (ARDA) the average one-week timeshare in the US costs just over $22,000 with annual maintenance fees of just under $1,000. Therefore, over a 10 year span the sunk cost of a one week stay each year is about $3,200 a week, or $450 a night. In comparison, according to a study by Statista the average cost of a hotel room here in the United States is $128.94 per night. I would argue with a little bit of hunting you can find a nice 3 or even 4 star hotel for less than that. In other words, for about a quarter of the money you can stay in an equivalent accommodation with no long-term commitments and without limitations to the time and place of your stay.
Timeshare advocates will argue that although those facts are true, when you purchase a timeshare you have something of tangible value that later on you can sell and recoup some or even all of what you have spent. But is that true? A quick glance at eBay features dozens if not hundreds of timeshares being offered for as little as $1 with no takers. In fact, an entire industry exists offering to get people out of timeshare contracts for a fee. Many of these companies are even worse than the timeshare companies they claim to be fighting against. According to Missouri Better Business Bureau “Timeshare Exit” companies in Missouri alone have scammed customers out of over 2.2 million dollars with little results. This of course begs the question If timeshares are valuable, why would people be willing to spend millions to get rid of them?
I could provide far more evidence to convince you that timeshares are rarely a good idea. But, with the space I have remaining I will instead propose an alternative. Instead of spending $21,000 to buy a timeshare, invest that money in the stock market. If your investment saw annualized growth of 7%, which is a reasonable return, it would produce almost $1,500 a year. That would not only pay for each year’s 7 night stay in a hotel, but might leave you enough left over for a little fun while you’re there too.