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Don’t Overpay for Your Holiday

January 23, 2017 Business News No Comments Email Email

Consumer group CHOICE is calling on the regulator to force timeshare operators to disclose the real cost of signing up for their schemes after new analysis reveals members can end up overpaying by around 115% for holiday accommodation compared to booking directly through an external site.[1]
“These lifestyle companies tout timeshare as a good option for your annual holiday. But after we crunched the numbers we found they were little more than modern day money pits,” says CHOICE Head of Policy, Erin Turner.

“A week in a Wyndham timeshare studio apartment in Margaret River ends up costing around $5,419 during peak season, 115% above the $2,520 quote for a one-off booking in a two bedroom unit at the same resort during school holidays.[2]

“Not only are members paying more than double for their accommodation but they can end up with a much smaller unit.

“Operators are masking the real costs of these schemes with complex point systems, hefty annual levies and undisclosed ad hoc fees, which makes it extremely difficult for consumers to work out what they’re actually paying.[3]

“Standard members of Wyndham’s scheme need to buy more than $38,000 worth of ‘vacation credits’ in order to join, before they’re slugged with expensive annual levies which increase by at least 5% each year[4].”

Members use their credits or points to book hotel rooms and holidays instead of cash. Worryingly, timeshare operators determine the value of the points and can change that value anytime.

“Once you factor in additional ad hoc fees like housekeeping and service costs, members are left paying more than $145,000 over 40 years for timeshare,”[5] Ms Turner says.

CHOICE is calling on the regulator to force operators to disclose the dollar value of points or credits, the annual fees members face and the minimum spend on membership for the first year.

“We also want to see an end to consumers being pressured into signing up through high pressure sales tactics,” says Ms Turner.

“Timeshare schemes are technically a complex financial product and those selling them are often giving financial advice. However, advisers flogging timeshares are exempt from many parts of the law designed to protect consumers, like some of the rules around conflicted remuneration.

“Sellers often hawk in shopping centres or theme parks and try to lure people into sales seminars with the promise of a reward, like a free holiday. Once there, timeshare operators use ‘now or never’ tactics, and minimal cooling-off periods, generally seven days, to pressure people into signing contracts which can last for decades.

“This is one area of the law where financial advisers have preserved the cowboy tactics of the past – high pressure sales techniques, high commissions and shocking consumer outcomes.”

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