Pulling a Rabbit Out of a Hat

Pulling a Rabbit Out of a Hat

While many of us still associate timeshares with high-pressure salespeople, pitching you a free night’s stay and a $50 meal voucher to look things over and sign your name to a contract, members of frequent guest programs are beginning to see these investments in a new light.

Jeff Patrias is part of this new breed of timeshare owners. A fellow frequent flyer who works as a senior partner at The Lacek Group in Minneapolis, Patrias used to get by, just by using his miles and points for vacations. But, as his family grew, Patrias found that his supply of miles and points couldn’t keep up with his family vacation demands.

“We progressed as a family from the suite with one room to a suite with two rooms. Our vacation costs doubled from a hotel standpoint, whether we were redeeming points or paying for the room,” said Patrias. “When you have five people show up in a small room it just doesn’t work any more. It’s not a vacation at that point.”

For many, the solution would have been to earn more points through more travel, or to try putting aside more money for vacation. Patrias, however, discovered that beneath the idea of timeshare ownership lies a valuable asset. “We were investigating a Hawaii trip that we were going to be taking when a friend brought it up to us that maybe we should do a timeshare because of the expensive hotel room,” says Patrias. That is how he stumbled on the idea of trading expensive hotel rooms for points and a timeshare.

Patrias went full throttle with his investigation. As he says, “The hotel side has been more an out-of-pocket expense. We went from staying with a baby in one room to needing two rooms — you just double your hotel expenses. So we came to the decision that we needed to do something to keep our lodging expenses in line. We checked out a number of different providers: Disney, Marriott and Vistana (Starwood). We had some friends that were very impressed with the Vistana property in Orlando, Florida. And, seeing that we have a 10 year old, a seven year old and a five year old, Orlando was a great location.”

With research in hand, Patrias purchased a timeshare property in Orlando, and, in the process, leveraged his hotel guest program (Starwood Preferred Guest). Because Patrias bought a Starwood property, he was able to earn Starwood points for the purchase. He redeemed those bonus points for two rooms at The Orchid in Hawaii and ended up with a perfect vacation for the family. In all, Patrias saved the $1,500 he would have normally paid for the hotel rooms, and he still has the investment of the timeshare. [More of his experience is featured in the “60 Seconds” interview].

We hope by introducing the example of Patrias at the outset of this article, you quickly understand that this is not intended to be an educational article on the benefits of timeshare investment, but rather an informational piece to help you learn how you can be proactive in earning points as an investment.

Marriott reports that a full 25 percent of its timeshare owners trade their weeks in for Rewards points on an annual basis, and almost 40 percent annually trade their properties for other locations. In the past, many people were hesitant to buy timeshares because they couldn’t stomach the idea of taking their vacation to the same place year after year. But the emergence of hotel companies as timeshare developers has changed the industry. They give the industry a certain legitimacy and a sense of stability. And, with your guest program membership, the hotel companies bring an existing relationship. More and more, members will be the target of direct mail pieces offering points and other bonuses for taking a tour and, once there, you’ll learn of the gold mine of points that could await your purchase.

One reason why timeshare/vacation ownership is so hot is that mortgage rates are currently about a point and a half below last year’s rates, making it easier to fund a purchase and yet still enjoy the pay out of points.

Here’s some advice from Chris Cain, a vacation-ownership expert:

  • Before you buy: Sure you’ve been conditioned to avoid these places, but you may find that those properties that are owned by various hotel companies actually give frequent guest points away for your stay just as if you were holed up in a hotel room somewhere. You’ll come to appreciate the additional room and facilities that timeshares offer and, of course, they are likely to be located in popular resort areas.
  • Buy with your head, not with your heart: Besides the points, remember this is an investment and unless you’ve done your research on resale value, trading time and availability, you may just end up a dissatisfied owner.
  • Seek advice and counsel: There are plenty of online communities that can help you get advice from other owners. From discussion groups by region to owner specific chats, we highly recommend spending some time listening to other owners. One such place is the Timeshare Owners Group and their Web site is located at www.tug2.net. You’ll find plenty of threads dealing with Hilton and Marriott ownership but sparse information on Starwood’s new foray into timeshare development.

While we have mentioned that you can earn bonus points for the purchase of a timeshare, beware that this is only true if you are dealing directly with the timeshare development company itself. You can buy from private parties on eBay to get a better deal, but you then forego the bonus points that you would earn by buying direct.

In this case, you are likely not eligible for a purchase bonus of frequent guest points but, by joining the ownership association of the timeshare, you’ll then be eligible for bonus points when you turn your weeks in or refer other people to the development.

Here’s a program guide to earning points with some of the more popular hotel guest programs that have emerged in the timeshare ownership business.

Hilton Grand Vacations
While bonus offers vary by location, week and property size, the standard for a purchase from Hilton seems to be 100,000 Hilton HHonors points.

In our research, it was common to find that members had negotiated with their sales agent to get more HHonors points. For example: one reader negotiated a one-bedroom timeshare in Las Vegas in April from Hilton Grand Vacations Club and got the standard 100,000 bonus HHonors points, another 100,000 bonus points as a same-day sign-up bonus and then convinced the sales person to reward an additional 80,000 HHonors points that they would have normally paid out as a referral bonus. This equaled 280,000 HHonors points for the simple purchase of a one-bedroom timeshare. Not everyone will be able to negotiate these types of deals, but it does give you an idea of what can be negotiated. This number of points equals almost three weeks of the VIP Hawaii award with Hilton and the value of that equals about $4,500 in resort hotel stays, which, you might argue, could be subtracted from the timeshare investment of $12,500 (in this case).

With any purchase or trade that is points related, keep in mind that not all properties participate and, more often than not, only the “flagged” properties will earn you bonus points. A good example of this is the Hilton Grand Vacation Club. While they have a total of 26 properties, most of them are ‘affiliates’ and thus you would not be eligible to earn bonus HHonors points. There are actually only five properties that offer the points you should be looking for, with more being developed in Las Vegas (1,500 units) and Orlando. Hilton is unlike others in that it allows you to convert your ‘ClubPoints’ each year for Hilton HHonors points, whereas most other programs only allow you this option every other year. (ClubPoints is the internal loyalty program of the Grand Vacations Club and allows members to trade from property to property or week to week).

Hyatt Vacation Club
Most people have yet to find out that Hyatt is in the timeshare/vacation ownership business. But with five properties, and more to come, it won’t be a secret for very much longer. A third property is planned for Key West. To date Hyatt has yet to integrate bonus offers for Gold Passport points with these properties, but it looks like such incentives are not far off.

Marriott Vacation Club
Marriott doesn’t tend to do things on a small scale and if you’ve ever visited Hilton Head, then you know that the hotel group appears to have won that entire island with its timeshare/vacation ownership properties. The good news is that it is easy to find members of the Rewards program who have figured out that an investment with Marriott Vacation Club is one fast way to redeeming points for hotel stays anywhere in the Marriott Hotel system. This program offers owners the flexibility of trading their week or weeks (in non-consecutive years) for Marriott Rewards points that can be redeemed for hotel stays, airline miles, cruises, golf and ski packages, merchandise, etc. Point values for trade-ins vary by location and season. Marriott Vacation Club “trade-ins” range from 25,000 to 200,000 points per week. Horizons’ “trade-ins” range from 35,000 to 75,000 points per week. Horizons are actually something new for them. While the standard Vacation Club properties are up to full-service Marriott standards, the new Horizons timeshare/vacation ownership properties are designed for more moderate family use, usually meaning less cost for ownership, but still all the benefits you’d expect for a family-oriented property, including interactive facilities for the kids and believe it or not — a car wash. One of the next Horizons property is set to open in Branson, Mo., which gives you an idea of the style of owner to which this brand will appeal. Marriott is soon to open its first timeshare associated with its Renaissance brand of hotels. Marriott is also involved in the vacation ownership (somehow ‘timeshare’ doesn’t seem appropriate here) for the Ritz-Carlton Club, but, as yet, Marriott doesn’t include them in the program to earn bonus Reward points for purchases.

Owners also have the ability to earn additional points for referrals who purchase and become owners. As members of Marriott Rewards, owners also have the benefit of earning points for all hotel stays at any Marriott brand. Marriott Rewards members who do not own weeks at Marriott vacation ownership properties can still benefit by earning points when vacationing at Horizons and participating MVCI properties. Likewise, Marriott Rewards members can redeem points for free stays at these participating properties.

When we asked why these vacation ownership opportunities are included in the Marriott Rewards program? Kim Manthei, manager of Communication Development for Marriott Rewards replied, “Owners at Marriott Vacation Ownership resorts represent some of Marriott’s most loyal customers — this group is choosing a Marriott vacation for every year of their lifetime (and their children’s lifetimes). What better way to thank them for their loyalty than to extend to them all the value, benefits and flexibility offered to travelers who frequently choose our Marriott lodging brands?”

A member says: “I own a timeshare at Marriott Palm Desert — next to the Desert Springs Resort. I got 200,000 Marriott points at the time of purchase, and can trade every other year for 125,000 Marriott points. Currently I am using the Marriott points to get the 714 award, redepositing the hotel certificates and claiming a 713 award. So, value for me from the “purchase” bonus and one year of points (along with normal travel) will net me 360,000 frequent flyer miles, 62,500 Marriott points, and a seven-night stay in any Marriott property (assuming I can convince them that they must honor the “old” point structure).”

Radisson Vacation Villas
With only two current properties, this program is ready to expand by two to three new properties a year. While there is no current direct relationship with the Radisson Gold Rewards program to earn bonus points, Stephanie Kirchmaier, manager of Marketing Communications for the program says, “We have plans to offer bonus-point incentives for members to purchase and trade properties within our growing network and members will be hearing of these opportunities during the second half of this year.” Promising news.

Starwood Vacation Ownership
Starwood is currently the second largest vacation ownership developer among the major hospitality companies, with nearly 100,000 owners and one dozen resorts. Starwood plans to add to its portfolio of Westin-branded vacation ownership properties by developing resorts at the Westin Mission Hills, and in Hawaii and Arizona. The first Westin-branded vacation ownership resort is the Westin St. John in the U.S. Virgin Islands. The company is also in the planning stages for vacation ownership at The Phoenician in Arizona.

And with Patrias’ experience earlier in this story, Starwood Vacation Ownership is in the business of awarding Starpoints for purchases. As a first-day incentive to purchase, owners receive 40,000 Starpoints for a one bedroom and 75,000 Starpoints for the purchase of a two-bedroom villa.

In the following examples, owners can use StarOptions to exchange to other Sheraton and Westin Vacation Ownership resorts and Starpoints can be redeemed for Starwood’s 725 hotels around the world. Each interval has an assigned value of StarOptions and Starpoints. For example, a two-bedroom villa at the Westin Mission Hills Resort Villas, Rancho Mirage, Calif., is worth 148,100 StarOptions or 78,000 Starpoints. (For clarity, StarOptions are this programs internal loyalty program, allowing members to trade between properties. StarOptions can be traded for Starpoints, which is the Starwood Preferred Guest currency).

The chart to the right gives you examples of a number of Sheraton and Westin Vacation Ownership resorts and their StarOption and Starpoint values based on unit type.

Let’s also look at how an owner can exchange within Sheraton and Westin Vacation Ownership resorts. Someone who owns two weeks in a two-bedroom villa at their new Sheraton Vistana Villages in Orlando, Fla. will have 159,000 StarOptions (each two-bedroom villa has an assigned value per week of 79,500 StarOptions, combined for 159,000 StarOptions).

159,000 StarOptions will get you:

  • 65,000 StarOptions: 1 week at Westin
    St. John Resort Villas in a 2 bedroom (May through Oct.)

    Balance: 94,000 StarOptions

  • 65,000 StarOptions: 1 week at Sheraton’s Vistana Villages in a 2-bedroom villa (see chart on page 26)

    Balance: 29,000 StarOption

  • 28,350 StarOptions: 8 days at Sheraton’s Mountain Vista in a 1 bedroom premium villa (off peak)

    Balance: 650 StarOptions

  • 65,000 StarOptions: 1 week at Sheraton’s Broadway Plantation in a 2 bedroom villa (high season)

    Balance: 94,000 StarOptions

  • 35,750 StarOptions: 3 nights at Sheraton’s Vistana Villages in a 2 bedroom villa (includes weekends)

    Balance: 58,250 StarOptions

  • 30,800 StarOptions: 4 nights at Westin Mission Hills in a 1 bedroom premium villa (mid season)

    Balance: 27,450 StarOptions

  • 25,925 StarOptions: 6 nights at Westin St. John Resort Villas in a studio villa
    (off peak)

    Balance: 1,525 StarOptions

For Starwood, StarOptions can be used daily or weekly between resorts and between seasons.

The Starpoints can be used in a number of ways within the Starwood Preferred Guest program depending on which category hotel an owner is exchanging to. Below is a chart outlining the Starpoints required for each category.

Each interval’s assigned Starpoint value, as outlined in the Value chart, can be used according to the Redemption Rates chart. For example, the 78,000 Starpoints for the two-bedroom lock off at the Westin Mission Hills Resort Villas can be redeemed for:

10 nights at any Category 3 Hotel such as:

  • W Hotel New Orleans
  • The Westin Innisbrook Resort
  • The Westin Resort & Spa, Whistler
  • The Westin La Quinta Golf Resort (Marbella, Spain)

7 nights at any Category Four Hotel such as:

  • Westin Maui
  • Westin Chosun (Seoul, Korea)
  • Walt Disney World Dolphin
  • W Seattle

5 nights at any Category 5 Hotel such as:

  • Hotel Imperial (Vienna, Austria)
  • The St. Regis Aspen
  • The Phoenician
  • Hotel Danieli (Venice, Italy)

These points can be used for additional vacations, merchandise or airline tickets. For example:

  • 40,000 Starpoints = 2 roundtrip domestic airline tickets
  • 60,000 Starpoints = 2 roundtrip tickets to Hawaii
  • 60,000 Starpoints = 1 roundtrip international ticket
  • 75,000 Starpoints = 2 roundtrip domestic airline tickets plus a weekend at any category 6 hotel like the St. Regis, New York City, plus a $50 car rental certificate
  • 75,000 Starpoints = 2 domestic roundtrip airline tickets plus 5 nights at any category 3 hotel like the Sheraton Seattle Hotel

Through Starwood Vacation Network, SVO owners can create unique vacations with priority exchange privileges at a growing collection of Westin and Sheraton-branded vacation ownership resorts. Based on the value of the interval, owners may choose any other resort in the network, the villa type, the travel date and length of stay. This allows owners to trade from a Westin Vacation Ownership Resort to a Sheraton Vacation Ownership Resort and vice versa, from one season to another and from one location to another. The Starwood Vacation Network allows owners to convert vacation intervals into SPG Starpoints which can be used for free nights at Starwood hotels, free flights with 27 airline partners’ frequent flyer programs, cruises, car rentals and merchandise at stores such as Lands End and Sharper Image.

As we researched information for this story we certainly underwent a change of opinion on what timeshare/vacation ownership mean to members of various hotel loyalty programs. While perceived as an investment in vacation time, most members would be well served to understand the hidden value that these programs contain in the rewards of points for buying, trading or referring others to these programs. You can think of the points as a “rebate” against your investment or consider them a way to lower the cost of vacation, like Patrias did, or more importantly, understand the full value of the relationships that the frequent guest programs have which are mentioned here.

So, the next time you are walking down a street in a popular resort and are besieged with hawkers to take a tour of some new timeshare properties, think about where the real value is. From our point of view, we’d only consider buying into a development from one of the hotel companies as mentioned above and factor in the value and rebate that all these points can give back to us. Yes, in this case there is a rabbit in the hat.

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