Although timeshare holiday homes were all the rage in the 1980s, their star has dimmed in the last 15 years. Many timeshare buyers took a while to realise their so-called “investment” often represented extremely poor value for money, though this awareness often only surfaced after gabby salesman had prised substantial cheques from vulnerable holiday makers following exhausting presentations and assurances of years of unending pleasure in their new shared properties.
Intensive sales pressure and flaky promises appear to have done the timeshare industry a huge disservice, as the idea is perfectly sensible: spread the cost of a holiday home with friends or like-minded people, while jointly sharing maintenance costs.

Plus you may benefit from any uplift in the property’s value. “For someone,” says property lawyer John Howell of The International Law Partnership, “who wanted a no-risk holiday then it was a very good idea. You have a place in the sun of your own for four weeks of the year – or whatever it is – and you just buy a portion. You’re also buying into the local economy and community, and because other people also buy into it that saves you renting it out when you’re not there. The idea is a bit like an old-fashioned Methodist co-operative where everyone has a part of owning and controlling their stake. The problem was that the idea got hijacked by big business and greed.”

And in a big way. Unscrupulous operators cottoned on fast that by buying an apartment or small villa for £50,000 they could sell it out again at £5,000 per week hauling in combined revenue – if they were clever and able to let the property out for much of the year – for the best part of £250,000. That’s a huge return on a modest £60,000 investment. The opportunity to pile on additional charges such as management fees could also not be resisted. In other words, timeshare rapidly became a huge free-for-all for anyone willing to do the hard sell (and there was no shortage of those willing to hop on a plane from Luton to work in the sun for a few months often earning hefty commissions). So much so that the EU attempted to draft in legislation giving new timeshare owners a measure of much-needed protection with cooling-off periods for new buyers.
“However,” says John Howell, “people simply re-defined the product and introduced a points system. This fell outside the legislative scope.”

Industry origins
But first, let’s rewind briefly to the start of the timeshare story because it’s a commercial business idea that has managed to slither more or less intact through numerous recessions, each time subtly re-inventing itself. As we’ll see shortly, the latest recession is seeing timeshare shedding its skin yet again.

Timeshare was originally kicked off in the late 1960s by a Swiss company called Hapimag which remains the largest global timeshare operator to this day. But the concept didn’t really get going until the early 1970s when Americans, struggling to sell their Florida condominiums, picked up on the idea. The concept was further fuelled a few years later in the UK when timeshare professionals switched the venue from drizzly Scotland – where they had been struggling to sell shared ownership properties for some time – to sunny Spain. It proved a shrewd move at a time when people were increasingly buying up holiday homes in continental Europe; for those who couldn’t quite afford a place in the continental sun, a timeshare property was a good halfway house.  The option to buy into a timeshare property, says Sandy Grey, chairman of the Timeshare Consumers’ Association, a voluntary body that campaigns for better industry practice, has also worked out very well for some – it’s by no means a bad idea for all, he claims.

“Some people have bought shares in timeshare with the right property in a good resort with low management fees. There are still happy people out there. But at the same time, there’s also an awful lot of people who paid out high fees in places where resort standards were not maintained.” In fact, Grey now gets an average 40 telephone calls a day from worried people who’ve bought timeshare properties who feel they’ve been mis-sold. “We also get between 10-15 emails every day. Almost always the issue is ‘how do I get myself out of this situation.’” One of the misconceptions about timeshare says Grey is that buyers are generally not buying into bricks and mortar. They’re buying a holiday or a lifestyle. “What people should do is mentally write the cost off straight away. As an organisation we actually like the idea of timeshare, but our business is not to promote it but to help consumers get out of deals that are plainly unsatisfactory.”

Now, deep in a recession, many people have less money and are looking at ways to cut back. The weakening pound has decimated spending power for many Brits overseas. Yet the timeshare industry appears ready to undergo yet another metamorphosis.

Grey says its buy-in message this time is all about exclusivity and quality, like Club La Costa run by South African director Roy Peires, who has worked within the timeshare industry for the last 25 years. Peires says the timeshare concept is actually pretty well suited to the current recessionary environment. “Timeshare tends to ride recessions very well as the ‘value’ of ownership becomes even more evident and attractive. Certainly these are difficult times but we are still the market leaders within Europe with over 55,000 members.” Peires is quick to claim that the industry has also put many of its less attractive habits, such as highly aggressive selling techniques, firmly behind it. “There were aggressive sales techniques but now [there are] more sensible and ultimately better sales procedures, training, contract and industry regulations, greater transparency, no deposits and 14-day cooling off periods have changed the way the industry does business.”

Peires’ Club La Costa (CLC) certainly sounds attractive. State-of-the-art facilities; lots of on-site restaurants; health and fitness suites. CLC resort owners also have the chance to claw back cash from their investment by letting the property out under certain circumstances as well as share possible future rises in the value of the assets through an optional sale-and-leaseback arrangement. The glossy, upmarket revamp is also endorsed by former BBC Royal Correspondent Jenny Bond on the CLC website, gushing over its exclusivity. “Club La Costa’s exclusive club really is in a class of its own,” she says.

Which? investigates
However, the stylish revamp did not impress Jonathan Mitcham, principal researcher at Which? Magazine, who last year investigated a range of holiday clubs. He endured a lengthy CLC sales pitch of three to five hours where audience members were assigned special ‘friends’ apparently hired by CLC to help build rapport and confidence in CLC. “The CLC presentations,” Mitcham reported, “in both the UK and Spain were quite similar… Both had a principal sales rep that became our ‘friend’. This was more prominent in Fuengirola where ‘Andy’ [Mitcham’s assigned CLC ‘friend’] even showed us photos of his family apparently enjoying a holiday with CLC. He painted a ‘them-and-us’ scenario, suggesting he was giving us ‘inside’ information and hinting he wanted to get the best price for us.” Mitcham says the audience at CLC presentations were bombarded with a wide range of confusing information and company reps proved highly reluctant to admit that the company was essentially a timeshare operator.

“We were repeatedly asked if we understood everything, but when we posed searching questions we were either fobbed off with an answer that confused the matter even more, or told we’d find out in due course” he told the Which? Magazine researcher. By the end of the afternoon the audience were invited to pay £3,600 for a trial 34-month offer. Thirty-four months? Mitcham says this amount of time is important as some companies are not regulated by the 1994 EU Directive designed to tackle unfair trading practices by the timeshare industry for packages that last 36 months or longer. However this EU legislation is now being revised to include new protection for buyers of holiday resorts, though the directive won’t make it into law until 2010, hence a flurry of activity of holiday resort players to entice new buyers now.

Some commentators are sceptical of holiday clubs. “Rogue traders have changed their practices and introduced new schemes such as holiday clubs, to get round existing European law,” says Arlene McCarthy MEP who has campaigned for some time to give consumers more protection from timeshare schemes. “With this new law we are closing the loopholes for dodgy dealers and helping consumers to distinguish the genuine deals from the scams.

So if you are considering a timeshare or holiday resort deal, make sure you weigh up the advantages and disadvantages carefully, especially if cash is tight at the moment. Remember, you are buying a lifestyle, not a financial investment.