I have owned two deeded weeks in California for several years and am considering buying more. But my developer is only selling points these days, not weeks. Why did they change? Are points better or worse than floating weeks? Finally, how do I sell points when I'm ready to retire?
Great questions. According to real estate brokers who specialize in timeshares, the industry's conversion to points, which reached a critical mass about ten years ago, represents a forward-looking business model that also reveals the limitations of the industry's original focus on selling fixed and floating weeks that were deeded to one home resort.
Put simply, the major timeshare developers, with some exceptions, converted their programs to points so they could sell more timeshares and, at the same time, provide more vacation options to owners. The point programs also solved a growing problem: floating deeded-week owners (who own an actual deed to a week at a resort, but not defined dates) were having more and more difficulty getting reservations at their home resorts.
In point programs, owners essentially belong to a vacation club that owns a network of resorts, not just one home resort. Using points as currency, owners can typically book stays at any of the resorts in the network eight to twelve months prior to arrival. At some clubs, owners can also reserve stays by the night, not just weeks. So instead of staying seven nights at one resort — the traditional reservation model — owners can stay two nights here, four nights there, and several more somewhere else, as long as they have enough points to cover the per-night charges.
Developers Tout Flexibility of Point Programs
In recent years, major developers have also expanded their point programs to cover a wide swath of coveted vacation activities, such as Caribbean cruises and guided tours, rock concerts, and celebrity golf events. These alternative programs provided a partial solution to the inventory crunch that owners frequently encountered when trying to make week-long reservations at high-value resorts in Hawaii and other top destinations.
Back in the beginning of timeshare — 50 years ago — companies sold timeshares as an "investment" in real estate backed up by a property deed. Today, most of the brand-name developers sell points for "vacation experiences" that are backed up by a trust that owns all properties in the club's network.
Most of the majors — Disney, Wyndham, Marriott, Vistana, Hilton, Hyatt, Diamond — offer point-based vacations. The points needed for any specific resort depend on the accommodations (bedrooms, baths), location, view category, and season. While programs vary company to company, they all promote vacation flexibility for owners. They also create a new selling tool for developers to upgrade deeded-week owners to the "new and improved" points program. When that happens, the companies convert the deeded ownership to points and deposit the original deed in the trust.
But not all companies have jumped on the points bandwagon. Breckenridge Grand Vacations, with 23,000 owners and world-class skiing, is a deeded-week loyalist. According to CEO Mike Dudick, BGV continues to thrive by offering fractional ownership with fixed weeks that are extremely attractive to ski families who want the same Christmas or President's Day vacations every year. He also noted one recent eye-popping sale — a four-bedroom suite, fixed Week 12, that sold for $575,000.
Westgate Resorts, among several other independents, is also loyal to the fixed-week model. At a recent sales tour, in fact, Westgate reps openly criticized point programs as the equivalent of vapor ware. They also said points are difficult to sell on the secondary market because they are not connected to a real-property deed.
Resale Market Flooded with Deeded Weeks, not Points
Clearly, the deeded-week timeshare product is not dead, but it is being supplanted by the plethora of point programs now available on the market. Almost all older legacy resorts, meanwhile, are still deeded-week operations.
The long-term benefit — or detriment — of point programs will be determined by their resale value. As evidenced by RedWeek's resale offerings, the secondary market is flooded with weeks. Due to their newness on the market, points packages are few and far between in RedWeek's postings of timeshare resales. (The Westin Flex and Sheration Flex programs, for example, were rolled out during the past two years, which means it's way too early to assess their future resale values.)
Resale brokers also report a wide discrepancy in the market value of points packages. In fact, brokers are extremely choosy about what points packages they will even list for sale. Disney and Marriott points have some residual value, they said. Diamond points, on the other hand, are very difficult to sell on the resale market.
The overall resale market has been consistent — and flat — for several years. Brand-name timeshares from trusted companies do sell on RedWeek and other sites, though not for anything close to their original retail purchase price. Lessor known, shoulder-season timeshares also sell, frequently for pennies to buyers who are collecting intervals at specific resorts with hopes of monetizing them in the future.
The resale market is subject to pure economics — too many timeshares, not enough buyers — as well as restrictive developer policies and transfer fees that deter resales. These factors also explain why several major developers are tinkering with a brand-new business model — limited right-to-use contracts that expire after 10 or 15 years. These point-based products, when adopted, would eliminate deed-related issues altogether, since the developer would retain ownership throughout the lease. No lifetime contracts or foreclosures, either.
So, should owners or new buyers choose a point-based timeshare or deeded-week program? Real estate brokers say it is easier for them to sell deeded weeks. But they acknowledge that many points programs offer many more resorts and activities than a single annual interval at a home resort. The probable bottom line of this trend is that most if not all future buyers will purchase points in a widespread travel club that offers far more options to owners than the industry's fixed-week founders ever envisioned 50 years ago.
What do you think? Do you prefer points or weeks? Leave a comment below.
