Consumer advocacy group Choice says signing up for a timeshare holiday can cost 115% more than simply booking accommodation directly – and it is demanding action to protect consumers.
Choice is urging the regulator to force timeshare operators to disclose the real cost of signing up for their schemes, after new analysis revealed members can end up overpaying by around 115% for holiday accommodation compared to booking directly through an external site.
“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,” Choice head of policy, Erin Turner, said.
“A week in a Wyndham timeshare studio apartment in Margaret River ends up costing around AUD 5419 during peak season, 115% above the AUD 2520 quote for a one-off booking in a two bedroom unit at the same resort during school holidays.
“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.
“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.”
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,” Turner said.
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,” Turner said.
“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.”
Choice is calling on the regulator to force operators to provide much clearer information upfront including:
- The total minimum amount a member would pay for the minimum length of their membership.
- An example of the annual costs a member would be paying on average for one week of accommodation.
- All other fees and costs members will face, including how interest or price rises will affect costs over time.
- The current dollar value for one credit or point.
- The average credits or points required for a one week holiday for two people and the total amount a member will need to spend on points to obtain this benefit.
- The total minimum cost for the first year of membership.