Weigh benefits of timeshare offers

By Olivia Sitompul

JAKARTA (JP): He was told he had won a seven-night complimentary stay in a five-star international hotel. To collect the prize, what he should do was to attend a half-an-hour timeshare presentation session with no obligation to buy anything.

He did what he was told. Along with his spouse he attended the session, which in fact lasted for three hours. At the end of the session the couple said they were not interested in buying anything. When they claimed the gift, the organizer, who suddenly became very unfriendly, said the gift was no longer available for them. A T-shirt was given as a replacement.

Another consumer claimed he was forced to sign a purchase agreement and make a down-payment. Later, upon the advice of his lawyer, he canceled the agreement. But the down-payment was not returnable as stated in the agreement.

Such complaints are not rare. Unfortunately, consumers often find difficulties in showing evidence that they have actually been deceived, or misled by the information during the presentation. Taking legal action on this matter will entail a long time and a painful process.

Some people regard timesharing as a fraudulent business, or something illegal, or merely one of the techniques used to sell them products. Such allegations, however, are not entirely true.

Timesharing is a concept which gives you an opportunity, by only paying a certain amount of money, to stay at a resort/hotel/apartment/condominium/bungalow/cruise for, say, one week every year for the next 25 years ahead or a certain number of years as agreed.

Timeshare selling uses a personal approach. The sellers never advertise the products in the mass media nor organize open seminars. They usually catch the prospective buyers in exclusive malls and restaurants or through the screening of telemarketing.

These prospective buyers are requested to fill up a data form for a kind of survey. The market segment target would be those in the middle-upper income brackets who have a credit card, too.

Potential buyers would be informed they are instant winners of one lucky draw. The prize can only be claimed when the winners have fully attended the presentation/demonstration along with their spouse with no obligation to buy anything at all.

The presentation is made to each individual separately by a consultant who then tries very hard to get a deal. Big discount up to 40 percent, additional bonus, free nights stay hotel voucher, etc. which are valid during that day only are offered.

Buying a timeshare unit means that you buy a specific accommodation unit within a timesharing system, including the privilege to use all facilities available in the resort. You will be called a timeshare owner and become a member of the resort club which the unit is purchased from.

As long as your rights to occupancy and the privilege stands or your membership is valid, you can lend the weeks you own to others, or exchange, sell, transfer, rent or bequeath them in accordance with the membership terms and conditions stipulated in the agreement. The type and kind can be various and very flexible.

The amount, paid in advance, can range from US$5,000 to US$25,000 for, let's say, the right to stay in a certain resort for a week per year, for a period of time between 15 years up to a lifetime (depending on the location and the class of the resort).

Besides, you have to pay the annual maintenance fee, insurance fee or fees to replace furniture, that can range from 3 percent to 5 percent of the purchase price. If you do not want to go back to the same resort year after year, you can exchange your slot with somebody else's in another part of the world through a vacation exchange company to which the resort club is affiliated.

But the exchange company will charge you an additional fee ranging from US$100 to US$200 per week depending on the destination.

Under the timeshare agreement, you are entitled to new membership at the resort club and to become a member of the vacation exchange company usually with free membership for the first two years.

This concept attracts lots of interest from investors, hotel developers and hotel owners because they receive the revenues in advance and collect subsequent revenues regularly later and also the room occupancy rate of the hotel can be predicted most accurately for the next 25 years. While consumers believe that they will save holiday costs and will have a different vacation experience together with the family from time to time through the available exchange facilities.

Because the purchase of a timeshare unit will involve a great deal of money and require quite a long term of commitment, if you want to buy it you should regard it just the way you buy a new house or property. It is necessary to think of the physical building and its conditions as well as the location, surroundings, facilities in that area, insurance, financial commitment, etc. If you need more than one day to choose the house you really like, do the same thing to buy a timeshare unit.

Many things can happen such as management disputes over the ownership of the resort, the resort might be in the process of confiscation by the government and the seller might disappear with all your money without a trace. You also need to consider the risks of late payment, a declining quality of resort, not enough legal forces to secure your rights as consumers etc.

It is a big mistake if consumers only consider the exchange facilities offered. Your success in exchanging to the desired resort destination will not be based on first request, first served, but will depend on your trading power, how early you place a request for exchange, and the availability of the place you ask for.

All these factors are beyond your control and all information related to these factors would not be related to you since they are all strictly confidential. So, if you do not get your desired resort destination through exchange, then you must accept whatever the answers are given by the vacation exchange company, you have no choice but take it because you will never know the truth.

In other words, your success in the exchange will put you at the mercy of the vacation exchange company and your luck at that time. You should also be aware that many resorts available through exchange schemes are located far away from the nearest airport or the tourist destination you want to go to (about 60 kms - 130 kms). Sometimes, tourist packages arranged by a travel agent can be a lot more convenient and cheaper.

Maybe if you have a good understanding of the exchange system and the timeshare system, you would not be interested in the scheme. This is probably one of the reasons why vacation exchange companies do not want to answer questions about the exchange system from non-members but leave it to a third party -- the timeshare seller -- to explain and answer all queries. Moreover, the resort club is not allowed to affiliate with more than one exchange company.

This definitely abuses the consumers' rights to get the best exchange services. If you are not satisfied with the exchange service given by one exchange company affiliated to the resort club, then you have to live without exchange facilities, unless you sell your unit and move to other resort clubs with better exchange services.

If you think that buying a timeshare unit is an investment, you are wrong because to get a buyer of this timeshare unit needs highly tuned sales skills and broad knowledge. And you need also to seriously consider the fact that resort clubs will never run out of unit inventory so they do not need to buy back your unit.

The writer is a former member of staff of Resort Condominium International (RCI), former head of the Education & Training unit and Legal & Public Relations unit, Indonesian Timeshare Association.