We ask the tough questions about timeshare holidays as a financial decision – including whether they’re ever a sensible investment.
Timeshares: a quick overview
Timeshare is a broad term for private holiday membership schemes. The concept first appeared in Europe in the early 60's, then expanded rapidly in the USA from 1969 onwards. Today, the industry generates over £78.6 billion in annual economic output worldwide, according to the American Resort Development Association (ARDA). For context, that is almost four times the estimated value of the global music industry (£20.4 billion).
RCI reports 5,425 timeshare resorts worldwide, averaging around 130 units each. Around 20 million people holiday through some form of timeshare.
In simple terms, timeshare ownership gives the holder the right to stay in a holiday property for an agreed period – often the same week each year.
Buying into a timeshare typically involves an upfront joining fee (in 2023, the median cost was around £18,000) plus ongoing annual maintenance charges (often around £1,000 per year for a one-week membership). In many jurisdictions, legal term limits have been introduced; in Spain, for example, a contract cannot last longer than 50 years.
In other parts of the world (including the USA, the Caribbean, Mexico and Hawaii), timeshare ownership is often sold ‘in perpetuity’, meaning it lasts indefinitely.
The practical consequence is serious: not only you, but your estate and beneficiaries may be legally obliged to keep paying the fees – potentially forever.
This is a significant long-term commitment.
If you want to travel at a different time of year or to a different destination, you can theoretically do so by using an exchange scheme, usually with additional costs.
Most modern timeshares are points-based. Points can be used to book accommodation and may also be applied to flights, car hire or even shopping. However, the conversion rates are notoriously poor, meaning the points typically translate into very limited cash value.
Are timeshares a good investment?
There is a poker adage: “If you can't see who the sucker at the table is... then you are the sucker.”
In most cases, the people who benefit financially from a timeshare purchase are not the members – but the sales operation and resort owners.
You are effectively paying for expensive, partial access to a unit. As a financial asset, that membership usually has minimal (if any) real value.
Key timeshare investment risks include:
- There is practically no meaningful resale market.
- Once you buy, the membership can become virtually worthless straight away.
- Exchange systems rarely work as promised.
- Booking rules can be complex and rigid, often requiring more than a year’s notice to have a realistic chance of securing the week you want.
- Timeshares are commonly sold through high-pressure sales presentations while you’re on holiday. People rarely approach a resort independently to ask to buy.
- Maintenance fees are often similar to – or higher than the cost of an equivalent hotel stay. Fees generally rise each year, often faster than inflation.
- There is rarely a straightforward way to cancel a timeshare contract.
Timeshares do not generate returns
With many older memberships, what you are buying is the right to rotational occupancy for a set number of years. In theory, the value declines annually as the remaining holiday entitlement reduces. In practice, the ongoing obligation to pay maintenance fees (and increases) often means the drop in value is immediate and close to total.
With a modern or deeded timeshare, you may theoretically own a percentage of a property. However, you have no real say over décor, design or maintenance. Occupancy is tightly controlled and – unlike owning a freehold holiday apartment – you usually cannot rent out other weeks to generate income or offset costs.
If you add up all the individual memberships, a £100,000 apartment can be sold via timeshare for well over £1 million (£20,000 multiplied by 51 weeks, leaving one for maintenance equals £1,020,000). This reflects the high cost of marketing and selling timeshare (including incentives, commissions and sales overheads), which make up a large part of the sale price.
The result is that it could take a lifetime to sell at a profit – if selling is possible at all. In any event, a sale is only possible if 100% of owners agree and commit to it, which many members say makes a sale unrealistic.
"Timeshare clearly targets the financially inexperienced," says Greg Wilson, CEO of European Consumer Claims. "They are billed as vacation properties for people who can't afford a vacation property. The sales presentation is more about the 'bling lifestyle' than investment returns. There is no financial return on a timeshare ownership."
"If something doesn't generate income or return it is an expense rather than an investment.
"It might be fun, it might give you pleasure. But it is a drain on your resources that property ownership should not be over the long term."
Timeshares are not liquid assets
Many owners quickly discover that far more people are trying to sell timeshares than buy them. It is highly unlikely you will recover the initial purchase price, let alone make a profit. Once you factor in years of maintenance fees, timeshare ownership cannot realistically be treated as a liquid asset.
Websites offering to sell your timeshare promise a lot, but guarantee nothing. They may charge an upfront listing fee and, in some cases, an ongoing membership fee.
In the timeshare resale market, disingenuity often spills over into outright fraud – for example, a company claims it has a buyer ready, takes a fee, then disappears. In more obvious scams, the owner is asked for a large sum (potentially over £1,000) as a reservation fee to be refunded on completion. The sale never completes and the money is lost.
Where resales do happen, they tend to be for very small amounts. More commonly, an owner ends up paying specialists to relinquish the timeshare and exit the contract.
Common reasons for limited resale potential include:
- A saturated market, with more timeshare resorts being built – particularly in the USA, Caribbean, Mexico and Hawaii.
- Today’s travellers have access to a wider choice of accommodation with more flexibility, often at better value than private membership schemes.
- Timeshares generally require a sophisticated, marketing-heavy sales process to sell in the first place, which most individual owners cannot replicate when trying to resell.
I bought a timeshare – but now I want to get out
In most cases, the chances of making a timeshare pay off as an investment are minimal. However, it is generally possible to escape the commitment of rising mandatory annual fees, provided you get qualified help. In certain cases, there may also be potential to sue a resort if you were mis-sold.
To understand your options for an unwanted timeshare, get in touch with our team at Timeshare Advice Centre for a free, confidential consultation.
