Sharing time in time shares

Many people dream of owning a vacation home or condominium on a sunny beach or snowy slope, but its allure can diminish dramatically when the annual costs and hassles of ownership are weighed against the reality of being able to use it for only a few weeks each year.

Solving that dilemma is the motivating force behind one of the fastest growing segments of the travel industry: time sharing or "vacation ownership." Instead of buying and maintaining a place by yourself, you purchase a share of a fully furnished property and use it for a set period of time every year for a pre-determined number of years.

The concept of time sharing has been around for more than 30 years. It began in the French Alps in the late '60s and spread quickly to the United States, as thousands of individuals signed long-term commitments for shares of vacation properties.

That initial wave of enthusiasm was dampened by a host of shady dealers, shoddy real estate and inflexible rules, but that began to change in 1984, when Marriott Corp. entered the business. Since then, numerous major hotel and resort companies have gotten into the act, including Disney, Hilton, Hyatt, Radisson, Ramada and Ritz-Carlton.

Today, time-share situations are available in more than 4,000 resorts in 81 countries, with an estimated 3 million participating households, the majority of which are American families. The largest percentage of time-share resorts and hotels are located in beach areas and seaside enclaves, followed by mountain and lake areas and golf retreats. Within the past few years, time-share hotels have been developed in major cities, along with casino and adventure travel destinations. And a new concept has been floated, time shares on cruise ships. (In January, Carnival Cruises announced its intention to acquire Fairfield Communities, a time-share operator with 28 resorts in the United States and six more under development.)

On paper, the notion of time sharing can be very appealing. It removes much of the guesswork and uncertainty from planning a vacation. The comfort and convenience of having a fully furnished and familiar facility at your disposal compares favorably with the always iffy prospects of selecting and staying in an anonymous hotel room or unknown resort. Many time-share units also come with equipped kitchens, dining areas, laundry facilities and a host of other amenities not normally found in hotels. Time shares may also include access to other facilities associated with resorts, including swimming pools, tennis courts, restaurants and on-site service staff.

Because the price is fixed at the time of sale, the cost of future vacations is presumably inflation-proof, at least as far as accommodations are concerned. The transportation portion of the trip is another matter.

Although there are a wide range of time-share plans around, nearly all involve putting down a lump sum purchase price, which buys the right to use the property for a set number of weeks each year, usually during the same season. The purchase price, which can generally qualify for a mortgage or consumer loan, varies, depending on the size and quality of the accommodations, number of shares and desirability of the season in which the shares will be used. In addition to the purchase price, there's an annual fee, which can fluctuate, depending on the joint costs of maintaining the particular property.

Some of these programs provide for open-ended ownership, just like buying any real estate. Under these plans, buyers may benefit from tax advantages and also get a voice in the management of the property. Like other real estate transactions, share owners have the option of selling their stake, although there are no guarantees of being able to find a buyer, especially at the price you paid. Owners may also rent or exchange their shares to others or bequeath them to their heirs.

Under other types of programs, typically called right-to-use or club-membership plans, the ownership of the property remains with the developer. At the end of the purchase term, which can range from 10 to 50 years, the shares simply expire.

The advantages of having a particular place at one's disposal notwithstanding, the introduction of transferability has been a major factor behind the growth of time sharing.

Instead of being tied to a single location, participants in many of the major programs are given the option of trading their weeks or shares for use at other properties that belong to the program. For travelers who prefer a little variety in their vacations, this can obviously be a real benefit, but it's important to remember that not all of the properties in a program are the same. Nor is availability at another location guaranteed for the time you may want to use it.

Unfortunately, the time-share industry still suffers from a reputation for shady business practices and fast-talking salespeople. Prospective buyers are often lured to a location with promises of free vacations that turn into one long, hard-sell sales pitch. Glitzy presentations, alluring promises and gilt-edged guarantees are easily made but less often followed through. A confusion of unfamiliar terms may be bandied about. Fine-print stipulations and hidden fees turn up after contacts have been signed. Misrepresentations are common, and occasionally, outright frauds are perpetrated.

The entry of major brand name participants in the business has certainly alleviated but not entirely eliminated some of the worst business practices.

There's no question participation in a time-share program can provide some savings over staying in a hotel or renting a place for one-time use, but whether they'll be as significant as the sales agent claim is another matter, especially if unspecified costs are added on later. And selling out of the plan often proves much more difficult than initially represented.

When considering involvement in a time-share program, the watchword is "buyer beware." Never, ever buy into a program without first visiting the property with which you'll be involved. Does the facility seem well-maintained? Does it represent a vacation option and style that is likely to suit your requirements as much in a decade as next year? Make a point to talk to other share owners and ask them about their experiences. Check out the management company. Is it a member of the American Resort Development Association (202-371-6700 or www.arda.org), which has established standards of ethical sales practices and management?

If you're buying into the program for its exchange options, find out all the costs and stipulations that may involve. It goes without saying that you should understand the specifics of the program you're being offered and carefully read all the documents before signing a thing.

It's probably also wise to get an independent evaluation of the offer from your lawyer or a trusted real estate adviser.

Finally, evaluate the offering as an investment in future vacations rather than one that will produce financial profits. Due diligence upfront is the best way to avoid surprises and ensure your time-share satisfaction for years to come.