Why are timeshares sold as an investment when they are not?
We may all think we know what an investment is although finding a genuine one that works may seem like winning the lottery. However, it is a term that gets thrown around a lot by individuals or companies selling products that would be difficult to sell and hard to justify spending the money on. Therefore, timeshare resorts have resorted to calling their products ‘investments’.
It’s important to consider what an actual investment is first before we get a salesperson explaining what they consider an investment to be. To invest our money is to do so with the expectation of seeing a positive return in the future. So, if we invest our money in something we do so with the expectation that that investment will yield a profit or increase in value in the future. The amount of profit you see depends on the level of risk applied to that investment. More risky investments generally yield higher profits and lower risk investments yield lower profits.
Timeshares have been marketed as investments in order to sell them, which contrary to what a salesperson will tell you, is a hard thing to do. This is mainly because if a customer knew all the facts about timeshare ownership before they purchased one, the likelihood is they would walk away and never turn back. Timeshares are much like a brand-new car, they depreciate in value the second you drive off in one. They are not an investment; they are a depreciating product that is almost impossible to sell and comes with annual costs attached to it. But imagine buying a brand-new car and not using it, timeshares often go unused, but you still must pay for them.
Despite being marketed as investments by unscrupulous timeshare salespeople for decades, in a recent Tweet, CEO of Diamond Resorts finally admitted timeshares are not investments in any way shape or form. He said: “They have never been an investment and they have never appreciated in value. They are prepaid vacations that hedge inflation. They give you larger and more spacious accommodations at today’s prices, compared to hotels. They provide families an affordable way to travel the world.”
Although some of what he said is true, a lot appears to be highly falsified statements that when you investigate it are just another tactic to sell timeshares. To say timeshares are not an investment is true, if you look on eBay you will see pages of listings for timeshares that go for a fraction of the price. It is not uncommon for people to give them away just to be free from paying the annual maintenance fees.
They do not hedge inflation, prepaying for something means that once you have paid for it there should be no additional cost or fees, but timeshare owners are tied to paying annual fees that go up every year. They do however give you more space and many people are attracted to timeshares because they have kitchen facilities. However, you can find similar at a fraction of the cost when conducting simple online searches and going through third party travel companies.
They do not as Mr Flaskey would say provide affordable way to travel. If timeshares were so affordable why would a timeshare company need to lure people in with free gifts an incentives and force them on the spot to sign up using underhanded tactics and not give consumers time to go away and think about their purchase and the ramifications of signing up to a timeshare.
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