How I almost fell for a $140,000 Hawaii vacation
Unmasking the Hidden Costs of Timeshares"
Financial independence is about having the clarity of mind to make the right decisions for your circumstances. I was faced with one such decision while on break at a vacation club in Hawaii. As part of the vacation package that I travelled on, I would attend a mandatory sales presentation of their timeshare offering. Their goal was to sell me a timeshare on the spot. Let’s see if it worked and how I thought about the deal.
Background
I go on vacation at least 4 times a year and mix discovery of new places with relaxing usually beach vacations.
This vacation club was selling timeshares. The concept is simple: you purchase a number of points for a given prices. Every year, you can redeem that number of points against a stay in one of the worldwide properties of the vacation club. The more exclusive the property, the more points required. So 4,500 points could be worth a 2-week stay in a mid-tier property in Costa Rica and only a 1-week stay in a high-end property in Hawaii. On the surface, this could be a great decision. So why did I not take the deal.
A Small Detour on the Sale Process
Upon checking in, the room I was given didn't have the best views. It was a ground-floor unit with garden view and we were in Hawaii. As a frequent hotel guest used to nice views and upgrades, I wondered why. On the day of the mandatory sales presentation, I was taken to one of the best rooms on the highest floor with pristine views of the ocean. Then I understood a potential why: it was important to engineer a perception surge at the time of purchase.
The rest of the sale process itself was interesting: the agent spent the majority of the time getting to know my travel preferences, reminisce on my best trips, and gather intelligence on how to speak my language and increase the chances of a sale.
My Objectives
I was interested in the idea of a timeshare. Pay ahead Use forever (PAUF). As a long time hotel loyalty program user, I didn't mind using the same hotel group if they have locations around the world. So I was ready to pay upfront for my (inevitable vacation travel) if it:
supported my goal of visiting all countries not at war in my lifetime
had properties in at most island/beach locations
was cheaper priced than I would pay over my lifetime in a hotel
It is important to go in a negotiation with a clear idea of your higher order objectives (not necessarily in detail but in terms of principles)
The Analysis
The vacation club I was exploring had properties in 110 countries, ~ 40 of which I have not been to. Since I was going to explore a 1-week a year vacation, I could go to 40 new countries. Check
Vacation clubs do not have properties in high-end luxury islands but they do in most beach locations. So this was a 50/50 outcome but one I could live with. I would still need to book 3/4 of my travel outside of the vacation club
It came down to financials. And they did not look good. See 2 paragraphs down
To get practical I estimated: 45 years of vacation, and I did not want to pay more than 75% of today's prices (assuming no inflation). The math was set.