The major thinking of most British timeshare owners is how to sell their timeshare after the rising costs of maintenance fees. According to newspaper articles some of the big European players such as Diamond Vacation Club appear to be in constant battle with their members over rising maintenance fees.
Also, with the weakening of the pound against the Euro some timeshare owners have literally seen their maintenance fees double! Timeshare is obviously not protected against outside influences such as inflation, but is this really the major problem?

The maintenance fee is used to keep the property up to a certain standard. Taking this logic one step further, if the price of building materials, labor wages, and consumer goods rise; the maintenance fee will have to increase to cover those inflated costs. This aspect can be considered as reasonable. How much of these costs are truly related to inflation though? Most timeshare owners are astounded at the rise in their maintenance fees or the number of “special assessments” that are levied on them to maintain their property.

Another aspect that causes financial issues concerns timeshares that are part of a hotel resort. People who are not in the hotel business are generally unfamiliar with the costs of maintaining a hotel. These expenses differ drastically from the expenses of maintaining a home because hotels must be fully refurbished every 3-5 years to stay modern and to keep their star rating. Obviously there is a lot more to cover than in a single home and therefore it is a pricey incidental.
Considering the lack of control over these high and variable expenses, one could ask where the benefits of such an ownership are.

At this point let’s compare the yearly holiday costs vs. maintenance fees.
Most of the families that own timeshares would have been better off saving for holidays every year. Even some of the people who use their timeshare every year could have saved more money by paying for their holidays yearly because of the significant rise in the costs. Hotels do not have the ability to pass all of their costs on to the consumer which is the point at issue that timeshare owners are dealing with. Hotel prices are based on the number of travelers to their destination, because they would rather be full (or close to it) than charge higher prices and have large holiday rates. Particularly during times when most consumers cannot afford holidays, hotels tend to be cheaper. Timeshares do not have that same link; in fact it’s quite the opposite, as members are paying to keep the resort running in a financially viable manner.

Unless people take holidays for two months out of the year – every year – for many people the yearly maintenance fee is greater than what they pay for their holidays. Putting that same money in savings will give people more flexibility and more money in the short and long run.

This table shows the tricky structure of rising fees

A significant increase in fees came with the takeover of former Sunterra by DRI (Diamond Resorts) and for 2 years there was plenty of mud slinging. DRI needed to rebrand the resort and the previous company allegedly did not account correctly and was not recovering enough fees from its members. The question is why? In fact in 2008 the base fee increased 14% and yet in 2009 DRI wanted another 20% from its members on top of their 2008 fees. All in all the members are paying now an extra 30% to DRI for running the club although the restructuring is now complete.

Are DRI and other resorts recovering enough fees from its members to cover the overheads of running the resorts? If not, why is that possible?
High pressure sales tactics obviously didn’t sell the product as a maintenance burden. Many disillusioned timeshare owners decided not to keep up with their maintenance payments and try to get rid of their ownership.
Perhaps the developers didn’t calculate such losses within their budgets? Is it that those owners who do keep paying their annual fees have to pay more to recompense these losses? Are there any means to break out of it? Somehow everybody has been let down in this circle, however, many problems result from the fact that some products haven’t been sold as what they really are, the results have potentially created financial burdens all round.

It may be worth asking yourself the question, are you the one owning the ‘goodies’ or do the ‘goodies’ own you?

People may go into their timeshare deal fully intending to use it each and every year.
However, if they are unable to, all of that year’s fees go swirling down the drain! Many unpredictable things can occur in a year which may make it impossible or impractical for owners to visit their timeshare. Canceling a hotel won’t cost a lot of money but a timeshare simply remains a forever-lasting financial responsibility.

The main issue at this point is how difficult getting rid of the financial burden of timeshare can be. Many timeshare owners try to cancel their contracts and hand it back to the developer, but generally the developer has no interest in buying it back. This is the case with some members of Diamond Resorts.

The company has increased annual maintenance fees by an incredible 57% over the last three years. They claim the increases are necessary to keep their resorts financially independent. From the company’s point of view it is a very important responsibility of the management company and the resort committees to ensure financial independence and continued resort sustainability.

So, in other words members are paying to keep the resort running in a financially viable manner, but are the facilities actually being maintained to a satisfying standard? Also, is it acceptable to hold members financially responsible for the lack of available funds needed to maintain resort facilities?

Obviously, increasing maintenance fees reduce desirability and that in turn quickly drains financial resources. Meanwhile the value of the timeshare and the resort decreases.

Members also complain about a lack of exchange opportunities. In recent years, timeshare developers have introduced point-based programs designed to offer the timeshare buyer another level of flexibility, but in reality it is wasted money and doesn’t change anything. Diamond Resorts’ members who spent additional money now have a big problem trying to get rid of their points as they are restricted to selling them to other Diamond Resorts members or family and friends. Obviously, leaving their loved ones with rising bills and no way out is not really an option.

It’s unclear whether the management fees are likely to see further increases or will be retained at current levels. It is extremely unlikely that management fees will ever be reduced back to the level of commitment that was agreed with members upon joining, so clients are left feeling constrained and extremely uncertain.

The Diamond Resorts’ members voiced that they would much rather be told what was going on and hear some kind of response to their concerns. At the moment they have no opportunity to challenge what was said by the company chairman.