Hotels, Resort Timeshares Carry Hidden Costs

Timeshares give a person a chance to reserve a hotel room or vacation home indefinitely in the location where they like taking vacations. They are usually available in tourist-friendly areas around the U.S., like Florida or Colorado, but may be found in other parts of the world as well. Vacation clubs are a little different than a deeded or "fee simple" timeshare, because the purchaser only buys the right to use the property, but does not literally own a share in the hotel or vacation home.

Two other distinctive categories that timeshares come in are fractionals and timeshares. Fractionals are an exclusive, luxurious version of timeshares. The homes known as fractionals are usually large, with multiple bedrooms. Timeshares, on the other hand, are often little more than a hotel room or suite.

Timeshares involve sharing ownership of property used during vacations. With a timeshare, you own the hotel room or small vacation home for a week or two every year. The nicer fractionals work like timeshares, but you get to use the house for four to five weeks, and sometimes up to 13 weeks.

Timeshares have been created in most areas where people take vacations. Fractionals are a lot more exclusive and are more easily found around exclusive ski resorts, beaches, or near a full service hotel. While timeshares can be found almost anywhere in the U.S., fractionals are more often in higher class tourist neighborhoods.

Timeshares cost from $5000 and up. If you are in the market for a more luxurious place to spend your vacations, you can get fractionals for $100,000 to a million dollars each. Obviously you will need to have good credit if you wish to finance a fractional. However, fractionals appreciate in value, which makes lending institutions more likely to provide the investment than they are with the more hotel like timeshares. Financing for one of these can be hard to find.

A caution about buying a timeshare on a property where you spend your vacations is that these hotel rooms and other spots tend to depreciate in value. Be aware, too, that if you own a week in the prime tourist season, it will cost more than the off season week. A timeshare owner should have a job that offers predictable vacations every year and not one that varies from year to year, or they might not get to use their hotel room.

Timeshares can be bought for a week every other year, too. They can be bought new or used, with used timeshares being less expensive. The purchaser is expected to pay annual maintenance fees. As an example, a two bedroom, two bath hotel suite timeshare might cost $10,000 to purchase. The annual maintenance fee on the property might add another $400 or so.

Annual fees can increase with the cost of living, and you might have to pay a bit of property tax every year, too. There are other hidden costs, such as real-estate fees and an eventual assessment fee. If the hotel or resort is located a great distance from your home, you will also have travel costs every year which could render vacations impossible in some lean years. Choosing a hotel timeshare closer to home makes sense. ...