A Brief History of the Major Timeshare Selling Problems
About the fixed weeks system
After the development of timeshare products, the resorts which provided the holiday inventory were amongst the necessary convoluted matrix of companies, their responsibilities and the formulas and constructions. The European selling began in or about early 1970. Many salespeople were informed as to the benefits of the product and the best pitches to make to ensure the sales were delivered. For those unable to pay the sums asked for, loans were arranged, and credit cards taken.
As the developers had expended considerable sums developing the resorts and needed to recover the return on investment, the phrase “sell, sell, sell” was coined. As each resort consisted of many apartments and the concept was to sell occupational rights in each apartment, many thousands of contracts had to be sold and very quickly. To get the potential consumer to visit the sales room the resorts' employees and hordes of “touts” [ropers], giving away unlosable scratch cards, free drinks, water park entertainment or show tickets all in an effort to get bums on seats. When those consumers arrived expecting the goodies they were required to attend the sale rooms where salespeople worked the floor to sell timeshare.
The whole selling practices were likened to the “wild west”, no rules, no protection. A soup of misrepresentations, warranties and promises and all to get you to part with thousands of £ [there and then] and for the newly designed “timeshare product”. If the sales person could not sell the product they were dismissed. When sold, that sales person was paid substantial sums and for each sale. In respect to the salesmen these days were referred to as the cocaine days of fast cars.
Year after year in the early 70’s the timeshare product was being sold and when a consumer wanted to re sell (what was described a valuable asset) they were dissuaded, until all the resort products had been sold. That stated, the resorts were left with the timeshare weeks which no one wanted, “the runt weeks”. As the original timeshare model was the purchase of fixed weeks in a year, in a particular apartment and a chosen resort, some were more valuable than others and some were simply unsellable. To shift these weeks would require considerable thought and re-engineering of the model.
These runt weeks could not be sold in the 70’s as they were winter and off-peak holiday periods, were not serviced by many airlines and many fun activities were closed for the winter.
The birth of the 'floating timeshare'
Faced with the issue of inflexibility and the “runt” week problem, some timeshare developers created a 'floating timeshare' system and sold this new mode of timeshare as a new epoch to the world of timeshare sharing. A product more valuable, sought after, flexible and re-sellable. Thus, the developers wanted more money and should existing members buy into the new concept they could, but were required to hand back their existing timeshare. The floating model consisted of everyone buying a week’s timeshare and when acquired they would deposit the timeshare into the seller’s pool of other timeshare (covertly the runt weeks) thus an inventory of 52 holiday weeks was perceived to be available and as more and more units were added and other pools in other resorts joined, the illusion was that more choice existed.
When pooled, the timeshare owners were sold the concept that they could select any holiday from the entire pooled inventory and with the addition of other resorts, they could holiday all over the world as well, without the need of joining timeshare exchange companies.
The known problem was always that the runt weeks the resorts had sold off made considerable money and the consumer was left competing for prime holidays. When those prime weeks were allocated and having regard for the fact that no flights serviced many resorts, due to the runts weeks being out of season, many did not get a holiday.
Another opportunity some saw was the number of timeshare properties and capitulating resorts that were never disclosed to those who bought into the system. Accordingly, over selling became rife and in the worst case (I’ve have heard of) over 280 weeks of timeshare was sold to a collection of consumers in one apartment (an apartment is only capable of ever delivering 52 weeks). In this criminal enterprise no one got a holiday and the accommodation was simply used as bait to sell more and more timeshare weeks in the oversubscribed resort.
Another scam was to sell off the weeks and tell everyone that they were already booked and then rented those weeks to others. The added benefit to the timeshare seller was a further monetary entitlement. Consumers who bought timeshare were denied occupation but were required to pay for the upkeep of the resort by way of maintenance fees and the resort re-let the inventory and pocket the rental income. Some desperate to at least get something arranged to occupy the runt weeks and when doing so were invited back to the sales rooms and sold the illusion of enhanced membership with guarantees that the great and good weeks would become available to them. After another exodus and further scourging of the timeshare product some amended the model to a less transparent type of holiday club.
The 'points' system
To further move away from the term timeshare, some resorts developed a points system which essentially is a currency. This shift meant that the consumer was not buying into a fixed nor floating timeshare week but into a pre-reserved allocation of prized currency called “points”, which when acquired you could exchange the points for holiday inventory.
Therefore, a club was created and entirely controlled by the founder members of the club. Membership into the club was sold to consumers by a connected entity of the founder members and all sale money was taken by the seller (none being delivered to the club) accordingly no matter how many memberships were sold, the club received none of it - thus was worthless from the day it was created and remains worthless to this day. Members of some clubs paid membership fees that were not paid into the club but paid to the appointed manager of the club (again connected to the founder member).
When membership fees are paid you are fully entitled to buy the allocation of points and again you pay the manager not the club. When the points are acquired you can select the holiday accommodation that manager controls and should that accommodation be available, you can acquire it using the points you have.
Should it not be available you have to select other accommodation and so on. If nothing is available, you obtain no holiday but have the points for sometimes 2 years, at which point they are taken off consumers as they have not been redeemed.
As with other products this points system was sold as an investment, was claimed to be highly prized, but was simply buying into a worthless club, which never had any inventory, sold a closed loop, an unregulated currency which was only capable of being redeemed by the person who sold it to you and if holiday accommodation was available. If you failed to redeem the points you lost them as this “private currency” was incapable of ever being saved.