What happened to timeshare?
Why the mass exodus?
From the birth of timeshare, it swept over Europe like this amazing new way of holidaying. It was introduced as something you have to have as a holidaymaker, especially if you sought quality combined with flexibility and a warm feeling of hospitality. Meeting the same people every year, "knowing what you were going to get" was the sales argument.
For years this worked well, very well in fact. Timeshare owners were telling friends and family to join as well. Referral was the major new member generator. Today the well known generators of timeshare owners derive from so called ticket salesmen. We know them to be called OPCs
They basically offer people on the street a bottle of whiskey or maybe even a week’s vacation for free if they attend a sales presentation for about 60 minutes...
The introduction of the European Timeshare act happened in 1994, this was the first of its kind, and this effectively stopped the sales process from being something taken from the Wild West, this introduced some rules and regulations with boundaries of what could be sold and how it was sold. This was effectively the end of large "cash outs" (paying the full amount of the purchase on the day of purchase using a Credit card).
The sales agents became more and more ruthless as a result of a direct flaw in the sales setup. Sales agents worked purely on commissions, so they needed to sell to make any money. No basic wage for timeshare salesmen was arguably one of the major causes of its downfall in Europe.
Ruthless sales tactics combined with empty promises. Some of the ones we have encountered over the years are so bizarre it is actually hard to believe the buyers fell for them, but they did. The salesman was so persistent in his arguments;
- Limousine service to and from airport for all your vacations
- Helicopter picking you up and dropping you off from the airport to the resort.
- Personal butler during your stay.
- Complimentary all inclusive for you and all your guests.
- Always availability, short notice or long notice
- the salesman would also promise that he would personally look after them, forever...
The average timeshare maintenance fee rises about 100% every 10 years. This does not seem too horrible the first 10 years as you remember the salesman told you it follows inflation...
But when you realise it actually tops inflation with 5% yearly it quickly becomes an issue as you have 30-40 years left on your contract, or in worse case, you have a perpetuity contract and it is never-ending.
So all the promises that were left as empty, combined with it getting harder and harder to use your product and the maintenance increasing at a more and more alarming rate, people began complaining to the officials and new timeshare acts came in to protect consumers.
The last nail in the coffin seems to be the very well known case of a perpetuity contract against one of the larger timeshare companies in Spain back in 2015. After this Supreme Court ruling, that perpetuity contracts are illegal, most of the small timeshare companies and many of the more well known ones, have one by one shut down operations and the mass exodus of owners is a reality.
Three reasons for this mass exodus;
- The timeshare companies had to act fast in light of this Spanish Supreme Court ruling, some of them decided to give exit options for certain people. This is not something they wanted to do; this is something they had to do to get rid of liability. They did not grow a conscience from one day to the other; this was something this ruling forced them to do.
By "taking back" some timeshares from owners that no longer wanted it, they effectively kill any claims that the client may have against them. So it was a survival instinct to lose some members. - Using the ruling from 2015 that makes hundreds of thousands of timeshare contracts illegal contracts, companies like SIM Legal can now work on your behalf (the timeshare owner) to exit/relinquish your ownership as well as advice or help with potential consumer claims, using the Consumer Credit Act from 1974.
- Timeshare is an expensive and outdated system. With the introduction of companies and services such as booking.com, trivago.com, hotels.com and Airbnb, who needs timeshare?
It's cheaper to travel on your own, and in most cases you can stay at these timeshare companies' resorts anyway using the normal form of payment cash/card.
