Hotels vs Timeshares: Why Hotels Are the Cheaper Option

hotels are cheaper than timeshares
One of the main selling points that timeshare representatives emphasize is the fact that timeshares are less expensive than hotels. This is not exactly true. Timeshare representatives are salespeople, and that’s exactly what they’re trying to do – sell you something. When they make their presentations, they do it in such a way that they are not always providing the most accurate information on how much it really costs to own a timeshare. In order to have a true understanding of whether or not hotels are cheaper than timeshares, you must first understand what costs are associated with timeshares that you do not have with hotels.

Initial Costs

Here is the biggest difference between hotel and timeshare costs: the purchase cost. When you stay at a hotel, you don’t pay any upfront purchase costs. You do not have to pay $20,000 just for the ability to stay in hotels while you travel. That is exactly the case with timeshares. With timeshares, you pay a huge upfront amount, usually much more than $10,000, for the purchase. Most of the time, this would not be a major issue in and of itself. However, the problem is the fact that when you sell your timeshare you will most likely only be able to recover between 10% and 20% of what you paid. In fact, you would be amazingly lucky if you were even able to recover 50% of what you paid for your timeshare. When you purchase a timeshare, just for the ability to use it, you’re losing 80% to 90% of the purchase price when you eventually sell it.

In other words, if you keep your unit for 10 years and you initially pay $20,000 for it, over a 10 year period, you’re paying $1,600 to $1,800 a year for the unit. That might not seem like a bad deal, but it’s only the initial cost. There are many others which will add to that price.

Financing Costs

If you are like many people, you won’t have the money to pay for timeshare upfront. In this case, you’re going to have to explore your financing options. You’ll find loans for timeshares are very expensive due to the fact they aren’t considered real estate loans. In fact, the interest rates you’ll have to pay can be compared to the interest rates for your credit card. So, on top of the costly purchase price, there is a good possibility you also have to take out a loan and pay high interest rates on it. When compared to the price of booking a hotel room, financing a timeshare is definitely much more expensive.

Costs for Non-Use

Most people who purchase a timeshare plan on being able to use it year after year on a regular basis. Unfortunately, as most of us can attest, things don’t always go as planned. If you purchase a timeshare, there’s a high probability at some point during your ownership something will happen which prevents you from going on vacation that year. Unlike a hotel, even if you do not use your timeshare, you’re still responsible for paying all costs associated with it (i.e. maintenance and fees). When using a hotel, if you don’t go someplace one year, you don’t have to pay a dime to do so.

Costs for Upkeep

Many people who purchase a timeshare do so because they believe that it’s a cost-effective financial decision. While many people may believe that owning a timeshare is more cost-effective than staying in a hotel whenever they go on vacation, they may not realize there are many additional costs and fees associated with owning a timeshare. Whenever you buy timeshare, you will generally be charged with yearly or monthly maintenance fees. These fees can vary according to the resort and timeshare purchased, but generally run between $300 and $1,000+ per year. Unfortunately, you have to pay these fees regardless of whether or not you have actually used your timeshare each year. For some people, the upkeep costs are equivalent to what they would have spent on staying at a hotel for their vacation. Don’t forget you’ve already paid a huge upfront fee in order to secure your unit, so this fee is added to the cost of that.

Repairs & Assessment Fees

Another aspect to consider is what happens when the property where your timeshare is located needs to be repaired or improved. Due to the fact that you don’t own the actual property, only your unit, the company which owns it can charge you an assessment fee for repair costs anytime they want. You don’t get a vote in the decision. For most timeshare companies, this fee ranges from flat fees to a percentage of the total repair costs, and it must be paid immediately. For example, if a natural disaster occurred which caused a great deal of damage, then you could be charged thousands of dollars that are due immediately. On the other hand, you’ll never be charged any assessment fees or repair fees if a hotel that you stay at happens to be damaged or needs repairs.

Membership Costs

If you own a timeshare, and belong to a timeshare exchange company, then you are responsible for paying all membership fees. Timeshare exchange companies allow members to rent or exchange their timeshares amongst each other. Some timeshare exchange companies charge as little as $100 annually, but they can also charge a lot more than $100. The difference between owning a timeshare and using a hotel is that hotels will never charge you a membership fee. In fact, hotel memberships are usually free and allow the members to earn rewards when they use their hotel rooms.

Exchange Fees

If you own a timeshare, then you may get tired of going to the same place every year. While this is easy to do when you stay at hotels, trying to exchange or swap your timeshare with someone else can be difficult and expensive. Most exchange companies that handle these transactions charge a fee, which can range anywhere from $100 per exchange to a percentage of the total price. And, that’s if you are even able to exchange. Often you need to do this months in advance, making last minute changes nearly impossible.

Paperwork Costs

When someone who owns a timeshare wishes to sell it, you must have the paperwork from the resort. Much of the time, requesting these documents comes with a fee. Timeshare companies charge you for “document preparation” services which can cost anywhere between $250 and $500+. These document preparation services usually entail notifying the timeshare company of a change of ownership, drawing of a deed or contract, and obtaining a title. Luckily, a hotel never charges you any document or paperwork fees.

Sales Costs

If someone decides they no longer want their timeshare, the only way to get rid of it is by reselling it. There are different ways to resell a timeshare, such as hiring a company to sell it for you, a real estate agent, or trying to sell it yourself. Any method you use to resell your timeshare is going to have costs associated with it. Companies which will resell your timeshare for you generally charge a fee for their service. If you have a real estate agent, then they will charge a percentage of what the unit sells for. If you try to resell your unit yourself, then you will have to pay any advertising fees as well as a significant amount of your time. With hotels, all you have to do is pay for the cost of your stay and leave.

Even though timeshare salespeople will lead you to believe that owning a timeshare is much less expensive than staying in a hotel, in the long run the fees associated with owning a timeshare are much more significant than what it would cost to stay in a hotel during your vacations. The best way to ensure you’re making an informed decision on whether or not you should purchase a timeshare is by understanding all of the fees and costs that comes with it. Then it’s up to you to decide whether it is more cost-effective to purchase a timeshare or stay in a hotel.

About Emie Fortney

Emie Fortney is a self-proclaimed ‘info-maniac’, a lifetime academic learner and a lover of the English language. With a pension for the technical, scientific and methodical aspects of life and technology she prides herself on providing readers with the most enlightening and accurate information available. She hopes to make a difference in the world today by continually providing accurate information in areas of her expertise to those seeking knowledge.
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6 Responses to Hotels vs Timeshares: Why Hotels Are the Cheaper Option

  1. Jeremy says:

    I’ve always heard that timeshares were a bad deal. I’ve never understood why people buy into them.
    Then again, maybe I am just a cheap vacationer and if you go on vacation to a 5 star hotel for over a week each year, it is more affordable to do the timeshare.

  2. Richard says:

    If you buy the right one at the right price then there will be no way that you could rent a hotel room, or even the same timeshare apartment for remotely close to the same money. The secret is to buy the right one from the right place (usually the resale market, where you can pick one up for 0-30% of the retail price). If you do this, then you will save money and have more psace than a hotel room

  3. John says:

    The resale market is definitely the way to go. Why pay $20,000 when you can get them for $2,000 or less. The author makes a good case for not buying from resorts, but doesn’t explain the bargains through resale. Factor in things like separate bedrooms, full kitchens, in-room washer/dryers, etc and no way you can get a hotel room with all that for less money than a timeshare.

  4. Lisa says:

    Staying at home is cheaper than renting a hotel room. If you’re only concerned with “cheaper” then you might not want the space and amenities that timeshares offer.

    In most cases, renting is cheaper than ownership…however ownership has benefits as well as responsibilities that renting doesn’t offer.

  5. Debbie says:

    I travel a lot and hotels are great for business trips of a day to two. However, for a week’s vacation….timeshares is the only way to go. A two bedroom apartment style room with a full kitchen and dishes saves me and my family upwards of $2,000 on eating out and rental fees. BUY RESALE…and you save thousands on the cost of the timeshare too.

  6. David says:

    My family started off staying in tents on vacation. We thought we really moved up when we stayed in a $100 a night hotel for a week! Then we went to a timeshare presentation and fell in love. Luckily we didn’t buy, but later we bought resale. We spent $1800 for our timeshare with $2000 per year maintenance fees and we have enough points to stay in one or two bedroom apartments for 20-25 nights a year. Do the math, that’s $80-$100 per night. Sometimes it can cost more, for instance, when we visit San Francisco next summer we will use about $1k worth of points for 4 nights. However, we are in downtown San Fran in a 1br apartment with a full kitchen and a washer/dryer in our unit. I don’t think I could ever go back to hotel rooms! If you know your going to vacation (the fees don’t disappear if you skip a vacation) do a little research, buy resale and you might just might love it as much as I do.

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