TIMESHARE POINTS CHURNING THE BARRELL
CHURNING THE BARRELL
At one time a timeshare interest was typically a deeded right of title and access for a specified interval at a single location once annually. It was very much akin to ownership in a condominium, but only on a fractional basis. Over time, however, even the word ‘timeshare’ has taken on a decidedly pejorative connotation. Thus, in a marketing epiphany, developers have implemented a ‘points-of-access’ based arrangement. This effectively did two things:
1. The timeshare could now be touted as a ‘vacation ownership interest’, or VOI. One wasn’t buying a ‘timeshare’ at all, no, it was going to be a vacation club – ownership in an exclusive network of resorts – each one more opulent than the one before – in exotic locations worldwide. Learn more about how to cancel your timeshare!
2. The unscrupulous timeshare developer was no longer constrained by factors inherently restricting the overbooking of resort accommodations – like the pesky little problem of having to record deeds corresponding to weekly intervals in the public property records. To this day, there are very few if any effective legal constraints on their ability to oversell these points-of-access, with impunity. Find out about a timeshare lawyer
So it should come as no surprise that the points you bought five years ago won’t get you nearly the access this year that you had then. One publicly traded developer event trumpets this initiative to its equity investors in its SEC filings, (not to be confused with its patrons or ‘members’), calling it an ‘inventory light’ approach. There’s no need to actually build or develop new accommodations to sell these points – not at all. No, indeed, it only takes a points reclamation process whereby the developer continually ‘churns’ the sale and reclamation of points upon default on payments, only to resell them to the next unwitting consumer(s).
The foregoing process, in conjunction with a unilateral (and probably unlawful) prohibition against commercial resale or rental of these points, prevents them from every taking on any intrinsic value. Otherwise, this would be very bad for the developer’s retail operations, which would then have to compete against a secondary resale market.
This is all done intentionally, and even disclosed by the developer to its stock investors – but not to the ‘members’. It goes without saying that has a demoralizing effect on the membership once it’s learned that the number of points that got you to Hawaii a few years ago won’t even get you to Hackensack this season.
But hey, it doesn’t matter that the members are a little down-in-the-mouth about all this: After all, if they were happy with their investment, Lord forbid, the developer might actually have to go out and do some real development.
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