A Day in the Life: Not what I expected


Last weekend I attended one of these get-away offerings where for $40 and attendance at a 90 minute presentation you get an overnight stay at a resort and a gift. The gift we selected was free golf for me and my wife.

I was at best skeptical. I knew the deal was a sales pitch for some time-sharing deal.

I had two issues: was such an investment on my radar screen and second, I wasn’t interested in going through a hard-sell sales pitch.

My wife prevailed and we went.

Discussions among my friends resulted in the following observation: my male friends thought it a bad idea. My female friends said go for it! Results were consistently divided along these lines. An interesting topic for a future blog.

It turned out to be quite different than I expected. This was not a time-sharing offer, at least in the traditional sense, where you buy access to a condominium for some period of time each year.
Rather, essentially the deal was you buy “points” which can be spent on a wide range of things. Similar in concept to air miles. Not only can you spend these points on lodgings, they can be used to purchase cruises, car rentals, food, green fees etc. The company has a wide range of partnerships to provide access to resorts around the world.

Although there is an ownership aspect, and you get a deed, it is not for a specific property although it is for a specific resort. So it took quite a different turn. For the purchase, you get 10,500 points per year. As most of the resorts fall into the 2,500 to 4,500 point range per week (depending on high or low season) 10,500 points is enough for at minimum a two-week vacation each year. The remaining points would cover other vacation-related expenses such as food, car rental, etc.

In essence you are prepaying your expenses. So then the question becomes is that desirable? The argument presented was a financial one: when you pay your vacation, as you go, there is no residual value. The money is gone and you’re left with nothing but sweet memories. With this offer there is residual value that rests in the property value. The second argument was as an inflation guard, as the value of points remains stable over the years.

There is however an annual maintenance cost and club membership fee which amounts to about 1,500 per year. This cost is not inflation protected.

The fundamental assumption is that you can sell the property at a later date and thus recoup the investment. This is where it all fell apart. Could you actually sell the property? Searching the web showed that this might be tougher than you might think.

But let’s say you could sell the property, at cost; a back-of-the-envelop calculation suggested that if you invested the capital at 5% and added in the annual fees you weren’t really any further ahead.

So now it came down to a risk question. What is the risk profile and is it worth it? Certainly inflation is a risk and assuming that the value of points does not erode then over the long haul the only exposure is on the annual fees.

But what risk do you take on? Property value; ability to sell and recoup your investment; effective management of the condominium; continued partnerships and thus overall value of the points.

As the risk being taken on is largely out of an individual’s control these become difficult to manage. The financial analysis does not suggest a material benefit so on a risk-adjusted basis it’s hard to see it.

Sad, but true? Creating another currency is a hard thing to do.


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