Destinations Where they went Travel gear Student travelTime share is a luxury, not an investment
By Bruce Mohl, Globe Staff, 2/17/2002
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Destinations Where they went Travel gear Student travel |
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After slightly more than five years on the market, 22 of the 4,284 weeks remain unsold, and Marriott officials say those will be gone soon. Assuming an average sale price of $17,000 (prices currently range from $21,400 to $26,400 per week), that's gross revenue of $72 million. Even deducting the purchase price of $8.2 million, another $30 million or so on renovations, and more spent on marketing, there remains a tidy profit.
Marriott has had the Midas touch when it comes to time shares. The company, which offers a high-quality product and doesn't stoop to the lowbrow sales tactics of many of its lesser-known competitors, is the largest developer in the time-share business, which is growing faster than any other in the hospitality industry. Marriott's sales of time shares have grown 20 percent each of the last six years.
What's fascinating about the Custom House - Marriott's only urban time share - is not that nearly each week has been sold, but to whom the weeks have been sold. The owners of the Custom House almost all live within 150 miles of it.
Most time shares are in resort areas that can attract owners from all over the country and the world. Yet the Custom House is now owned by people who live just a short drive away, many of them in Boston's neighborhoods or suburbs. They probably see the Custom House on their daily commute, so to them it's hardly a place to get away from it all.
Not surprisingly, the handful of owners I talked to all said they bought their week at the Custom House because they wanted to trade for a week at one of Marriott's 51 other properties or at some other company's time share.
Margaret Meehan of Belmont said she and her husband have been trading their weeks to go to places like Palm Springs and Aruba. She says they also own a home on Cape Cod and some day may want to use their week to visit Boston, but that's for later.
McCourt Construction of Boston bought three weeks at the Custom House in 1998. Owner Richard McCourt said some of the weeks are broken up into individual nights and used as a substitute for hotels for guests. But he said most of the weeks are given as awards to high-performing employees, who then trade them for vacations in more exotic locales.
Timothy Cashman of Milford, Conn., has traded his week at the Custom House for weeks at Disney World in Florida and Myrtle Beach in South Carolina and is planning a trip to Mexico. He's enjoyed his time share, but says that analyzing it from an economic standpoint isn't easy.
"You don't buy it as an investment property," Cashman said. "You buy it as an investment in leisure."
Even with an investment in leisure, however, different strategies can be employed. I think time shares offer the best value if you can find one in a location you think you would like to return to year after year. That way you get exactly what you pay for and avoid the fees and hassles that come with trading.
If your goal is to trade your week and travel, I think the best strategy is to buy a week in the most desirable location you can find at the cheapest possible price.
The Custom House is a hard fit for my trade-and-travel strategy. The cost is currently a steep $21,400 for weeks from October to May and $26,400 for weeks from June through September. The annual maintenance fee per week is $690.
There are very tradeable weeks out there for much less. Marriott itself is marketing resale peak-season weeks at its Grande Vista property in Orlando, Fla., for $17,800 for a two- bedroom unit. A week in a two-bedroom at Cypress Harbor, also in Orlando, is going for as little as $11,900. Resales by individual owners or at resorts developed by other companies are available for even less.
Resales are almost always cheaper than buying new, since time shares typically start losing value as soon as they are purchased.
At the Custom House, Marriott says four weeks have been resold, all for less than their original purchase price. Two of the weeks, originally bought for $12,900 in 1997, were sold last year for $11,500 and $11,750. In dollar terms, that's not much of a loss. But there was a big gap between the resale price and the $21,400 price Marriott was asking for comparable new units.
Marriott spokesman Ed Kinney said the one-bedroom limitation at the Custom House makes it more difficult to trade, although Kinney said that disadvantage is offset by the fact that Marriott lets Custom House owners trade their weeks each year for points that can be used to stay at Marriott hotels. (Other Marriott time-share owners can trade for points only every other year.)
Kinney said the Custom House is a popular destination, but not as popular for trading purposes as Orlando, Hawaii, or ski areas in Colorado and Utah.
"If you want to trade," he said, "there's probably better ways to do it."
Give me feedback
I've given you my time-share strategy. What's yours? Share your thoughts on time-share travel and time-share marketing.
Bruce Mohl's e-mail address is mohl@globe.com"> mohl@globe.com.