Marriott is setting the standard for Spanish timeshare compensation claims after 1999 rulings

Marriott Vacations Worldwide’s 2021 annual report suggests at least one major timeshare group is finally confronting the issue of unlawful Spanish timeshare contracts, as owners increasingly win substantial compensation through the courts.

A European industry with a poor reputation

The European timeshare industry has long struggled with a poor public image. Many people still remember the days when touts approached families heading to Spanish beaches and pushed timeshare deals on the spot.

Timeshare also became associated with high-pressure sales operations linked to UK celebrity gangsters who laundered money through schemes in Portugal, Spain and the Canary Islands. Hundreds of thousands of people signed expensive agreements, and stories of owners’ experiences regularly made the news.

Eventually, the issue could no longer be overlooked. Spain introduced consumer protection measures aimed at stopping tourists from making major financial commitments while on holiday—likely to limit the damage to the country’s tourism reputation and revenue.

Spanish timeshare laws introduced

This led to laws stating that, from 5 January 1999 onwards, timeshare agreements could not run for longer than 50 years. ‘Floating weeks’ and points-based memberships were also made unlawful. In addition, timeshare companies were prohibited from taking payment during the cooling-off period.

In principle, these rules should have made it easier for buyers to avoid harmful long-term commitments and reduced the risks associated with the products being sold.

However, many timeshare operators continued regardless, perhaps because complying would have reduced profits.

It is also true that Spain’s often slow-moving bureaucracy may have given some companies a sense of protection. Enforcement did not happen quickly, and decision-makers at timeshare firms may have assumed they would not still be around by the time consequences caught up with them.

Successful court cases changed everything

Justice did begin to catch up. In 2016, a Norwegian member of Gran Canaria-based timeshare entity Anfi sued over an unlawful contract and was awarded €40,000.

That result helped open the door to further successful claims. M1 Legal, an established law firm of expert timeshare lawyers, has continued to win cases. Timeshare victims have now been awarded hundreds of millions of euros, and the balance of power has shifted.

In fact, a number of large timeshare operations have halted sales activity and later filed for bankruptcy—companies such as Diamond Resorts Europe, Silverpoint, Anfi, Club La Costa and Azure.

M1 Legal estimates the average compensation payout is over £20,000. Success rates are also high, with the firm currently reporting a 98.6% success rate in cases against timeshare operations.

Legal tactics used to delay claims

Despite the progress, lawyers acting for timeshare companies have continued to resist, seeking to prevent resorts from meeting their obligations. Liability has still been denied, with defences used largely to delay compensation for owners.

"These were tactics that everyone knew would fail, including the timeshare companies themselves," according to Andrew Cooper, CEO of European Consumer Claims (ECC). "M1 legal, ECC's associated firm of lawyers, have been diligently working to overcome these delays one at a time. Each tactic defeated smooths the way for future claims, as that excuse is no longer valid. We are reaching the point now where even the most inventive timeshare company lawyers are struggling to find ways to hinder justice."

Marriott Vacations Worldwide acknowledges exposure in Spain

Against that backdrop, it is notable that Marriott Vacations Worldwide (MVW) has admitted liability in relation to "certain contracts entered into over after January 1999".

In its MVW 2021 annual report, the group stated: "A series of Spanish court rulings that since 2015 have voided certain contracts has increased our exposure to litigation."

"This is a big step forward," Cooper says. "The MVW report admits that contracts in Spain did not meet Spanish timeshare laws. Publicly admitting this commits them to a position of needing to do something about it. As far as we are aware, no other timeshare company has made such a bold and honest public statement."

The report goes on to say there is an "increased ability for owners of Spanish timeshares to void their contracts." It also acknowledges that similar claims against MVW may "cause us to incur material litigation and other costs, including judgement or settlement payments."

The section concludes by warning the situation "may lead to a significant decrease in the number of resorts located in Spain in the Interval International (exchange) network, and the loss of members at who own... at those resorts."

Marriott Vacation Club payments made quickly after some wins

Marriott Vacation Club International may also have taken corporate decisions to avoid drawn-out appeals designed to delay outcomes. That is reflected in reports of some owners receiving money quickly after winning their cases.

This includes a German couple with a timeshare in Marbella who were awarded €81,208, and another owner from Palma de Mallorca who received €43,319. Both reportedly received payment within weeks.

"This is a huge break from traditional timeshare company behaviour," continues Andrew Cooper. "In the past, timeshare companies have fought for years, knowing they were wrong, but hoping that they could outlast their opposition. That was a realistic goal for them when they were dealing with individuals, but firms like M1 Legal will never give up. It seems like MCVI have finally accepted that."

Even so, Cooper says resistance can still be expected from parts of the industry. "Don't get me wrong," he says. "Even Marriott are still challenging us in many cases. But as market leaders, their recent examples of facing the truth and obeying court rulings are giving us grounds to believe that the whole industry may be about to turn a corner."

"For people who have been on the fence about claiming compensation for illegal timeshare contracts. There has never been a better time."

Would you like to discuss issues around relinquishment or making claims for timeshare compensation?

Then contact Timeshare Advice Centre today to find out more.