6 things to know before you buy a timeshare – MarketWatch

Timeshares have been huge profit centers for hotel companies like Starwood Hotels & Resorts Worldwide HOT, +3.12%  , which has sold more than $ 6 billion in vacation timeshare properties to more than 220,000 buyers over the past 30 years.

Starwood said last week that it plans to spin off its vacation ownership business, Starwood Vacation Ownership ("SVO"), into a separate publicly traded company.

"Separating this distinct part of our business will allow Starwood to continue participating in this growth industry through a fee-based business model, as we do with our managed and franchised hotel business," said Frits van Paasschen, then-president and chief executive of Starwood. (One week after announcing the spinoff, van Paasschen resigned by "mutual agreement" with the board.)

Timeshare vacation plans have been around in the U.S. since 1969 — the first opened in Kauai, Hawaii — and are now a $ 7.6 billion business, as big as Major League Baseball, with more than 8 million owners, according to the American Resort Development Association, or ARDA, which represents many timeshare developments.

For some people, timeshares are a good option, as they can guarantee you vacation time since they often come with fixed annual dates for right-of-use. On top of that, timeshare resorts typically offer more in-room amenities, such as kitchens and washing machines, than a hotel room. Timeshare owners can also "exchange" their shares for accommodations at other resorts.

But timeshares are also associated with high-pressure sales tactics and often are sold at a loss when it comes time to unload one. Plus, they come with annual maintenance fees that can easily top $ 500 and which often increase whether you use the timeshare or not.

Here are some things experts say to keep in mind before you buy a timeshare:

Don't pay full price

Like most real-estate transactions (even hotel stays), the price is usually negotiable. Timeshare initial prices typically average almost $ 16,000. The timeshare industry likes to point out that over a 20-year period, a family of four could save over $ 25,000 on accommodations by staying in a timeshare compared with what they would pay for hotel stays.

Nevertheless, considering how many options you have when it comes to vacations, you've got the leverage when it comes to price. As such, timeshare companies like to offer free gifts like dinners and show tickets, or free "try it out" rentals to prospective buyers.

Andy Doran, a now-42 year-old scientist at the Lawrence Berkeley National Laboratory recalls taking a timeshare company up on its offer for a free Las Vegas vacation if he and his fiancee attended a presentation across the Bay from their Berkeley home in Burlingame, a San Francisco suburb. "It was a traumatic couple of hours of hard, hard, hard sell," he said in an interview. "We managed to exit with the coupon and no timeshare but we never cashed it in," he said.

Often the "hard-sell" approach from some timeshare companies is because they have so much competition and sales and marketing costs are so high, sometimes as high as 55%, says Gary Prado, director of marketing and business development for RedWeek.com, a timeshare sales and rental site. "The reason why timeshares continually get mocked is the way they get sold," he said. "People don't go out and say 'I want to buy a timeshare today', it's sold as a heavy impulse buy," he said.