How Does the Timeshare Industry Survive?

01/18/2022

how to get out of a timeshare purchase

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If you’ve ever looked into how to get out of a timeshare purchase, it might have left you wondering how the industry manages to survive. With so many people wanting to exit timeshare contracts due to yearly fees or other issues, it can make one wonder how they continue to sell timeshares.

Even with the pandemic, timeshare sales rebounded in the second quarter of 2021 over the same quarter in 2020 by 827%, according to the American Resort Development Association (ARDA). Prior to the pandemic, sales of timeshares had increased every year for a decade. The total value of sales during 2019 was $10.5 billion.

Big Profits on Sales

Timeshares equal big returns. A condo that might have cost $150,000 – $200,000 to build might be sold as separate weeks of yearly use for $20,000 each. That $200,000 unit essentially sold for $1 million.

The timeshare company might even sell those same weeks multiple times due to foreclosures, also called “reclaimed properties”. In an industry study, Earnst and Young reported that foreclosures accounted for 56% of reclaimed timeshares. Selling something more than just once is a dream situation for any corporation.

Yearly Fees

Annual fees are assessed in order to cover the cost of maintaining the resort and keeping it running. These fees go up yearly and can even have large one-time costs for things like a pool renovation. Fees of $1,000 to 2,000 a year essentially free the timeshare company of any further costs once the resort is sold out. Fees are the number one reason people look at how to get out of a timeshare purchase.

High-Pressure Sales

If you’ve ever sat through a timeshare presentation, you know it can get very pushy and be hard to leave. The company needs you to buy now before there is time to think. People on vacation are great targets. They are enjoying themselves, their guard is down, and they want to get back to the beach. Later on, they might end up looking at how to get out of a timeshare purchase they wish hadn’t been made.

The equation for timeshare companies is high-pressure sales plus huge profits plus yearly fees which equals a very lucrative market. Timeshare sales are even resilient in the face of a pandemic. Companies selling timeshares seem to survive very well.

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