Timeshare exchange problems exposed by COVID and the Ukraine war: fees and availability issues

Timeshare exchange networks were designed to let resort members swap their week or points for a stay in another destination. In theory, it offers variety without losing quality. In practice, recent events — including COVID disruption and the war in Ukraine — have exposed how easily the timeshare exchange system can fall short.

The idea in a nutshell

Many timeshare owners originally bought into resorts that were marketed as exclusive. They paid a premium for a higher standard than many mainstream holidays offered at the time, but they didn’t necessarily want to return to the same resort every year. That’s where the concept of “exchanging” came in.

Exchange systems allow owners to swap their unit (or points) for accommodation of an equivalent standard in another destination and/or at another time. The three major exchange networks are Resort Condominiums International (RCI), Interval International (II) and 7 Across (formerly Dial an Exchange). The largest, RCI, advertises destinations in 110 countries.

On the face of it, it sounds ideal: lots of choice and a promise of consistent quality. So why are timeshare exchanges hard in real life?

It’s expensive

Exchanging comes with extra charges. On top of annual maintenance fees (often comparable to the cost of a standard holiday), owners can pay an additional annual fee to belong to the exchange programme — even if they don’t use it. Currently this is around £76 per year.

It then costs another £191 to make an exchange. The fee for banking a week (saving it for another time) is £52. There is also a £68 fee for letting someone else use your timeshare if you are not using it.

The result is that doing anything beyond what your original membership provides can trigger escalating costs. A non-timeshare holidaymaker simply pays for the holiday they book. If a week costs £700 in destination A or destination B, they pay £700 either way — there’s no additional “exchange” charge outside a timeshare scheme.

It’s complicated

For non-timeshare owners, booking is straightforward: choose your accommodation and dates online, then pay.

For many timeshare owners, the process involves complex system rules and restrictions, including:

• Rigid deadlines for booking, exchanging and paying maintenance. If you miss a step, you can lose the holiday altogether (while still being billed).
• Fixed check-in days linked to the ownership. If it’s a Monday changeover, for example, you must arrive on that day whether it suits you or not.
• Week-long blocks are often required, rather than flexible lengths of stay that standard travel sites offer.
• No guarantee of success even when you follow the rules. Points owners with a 12-month booking window describe having to dial at 1 second past 9:00am on the day the window opens and still not securing their preferred week.

Availability is always limited

As with any holiday, popular dates and destinations go first. Within RCI there are around 4,300 resorts to choose from, but if the resorts in your chosen area are already full for your preferred week, you simply can’t exchange into them.

By comparison, a regular holidaymaker has far wider choice. They can book a timeshare resort if they want to, but they can also book outside the timeshare system without paying exchange fees.

A timeshare owner has already paid for their holiday via maintenance fees and membership costs. If their preferred exchange isn’t available, they may end up paying for an additional holiday outside the scheme while still paying their annual fees.

Timeshare resorts are also no longer “exclusive”. Many rent out weeks to non-members, often for around the same price members pay in maintenance. Aside from how unfair this feels to people who paid tens of thousands of pounds to join, it also reduces the pool of weeks available to members trying to exchange.

For some members, limited inventory means they can’t secure their first choice — or even their second or third choice — even in normal years.

War in the Baltic

The two countries directly involved are not timeshare destinations. However, due to the Russian invasion of Ukraine, many timeshare owners in the Balkans, or Central and Eastern Europe, are expected to request exchanges further away from the conflict zone.

No-one can predict whether the war could spread into neighbouring countries. If it did and any of those were a NATO country, the region could escalate quickly. Airspace over Russia and Ukraine is already off limits to commercial travel, and no-fly zones can expand as safety requirements dictate. The shooting down of Malaysian Airlines flight MH17 in 2014 by Russian-backed rebels in Ukraine happened in relative peacetime. Understandably, flying near active military conflict is unlikely to appeal to holidaymakers in 2022.

In practical terms, this can increase demand for “safer” destinations such as Spain and Portugal. With a fixed amount of resort availability, more owners are likely to be disappointed.

Weeks banked during COVID

Many industry experts believe 2022 could be the “perfect storm” that pushes exchange networks beyond breaking point. The CEO of European Consumer Claims, Andrew Cooper, explains: “In that first pandemic summer of 2020, members assumed that their maintenance wouldn’t be charged because they couldn’t take their holiday. With resorts standing empty all summer, running costs would be reduced to a trickle and people thought that the savings would be passed to them. Instead the resorts chose to charge in full and make record profits. The only consolation offered was the option of members banking their weeks to use the following year.”

“Those of us who understand the timeshare model knew that this could never work. In 2021, around double the amount of holidays would be owed to members. Where would the extra inventory come from to provide that accommodation?”

“Then 2021 arrived and travel still wasn’t back to normal, meaning weeks needed to be banked yet again. Now in 2022 an impossible amount of holidays are due. Resorts have promised something they simply can’t honour.”

“These are just weeks banked with resorts. What about the families who deposited their weeks for an exchange they couldn’t take for one of the above reasons? Maybe their deposited week was already used, but now RCI owes those families weeks which there isn’t enough inventory to honour.”

“Add to that the extra pressure from the war and this summer is going to deliver disappointment to people relying on their timeshare memberships for holidays. This is likely to affect the foreseeable future.”

Exodus

With ongoing timeshare exchange problems, many owners are looking for ways to escape costly memberships. Cooper adds: “The idea of timeshare is dated. The resorts are all available on regular booking sites to non members. And nobody wants to be committed to annual fees for something they often can’t use. People would rather go where they want, and when they want. They would rather pay exactly for what they use.”

Getting out of timeshare contracts is far from easy. “Because new member sales have flatlined, the resorts rely on annual fees from members. They don’t let people leave without a fight. Timeshare companies have even been known to enforce those fees with UK debt collectors like Daniels Silverman. If you just walk away from the debt you could end up with CCJs and enforcement actions taken against you.

“It is possible to escape with expert help from companies like ECC. And for those lucky enough to fit certain qualifications (the majority of Spanish timeshare companies operated illegally for decades) there is the possibility of not only freedom from the timeshare, but a significant compensation payment as well.”

For advice on how to escape a timeshare contract, or to find out if you qualify for compensation, get in touch with our team at Timeshare Advice Centre.