Why are timeshares so expensive? A breakdown of fees, commissions and maintenance costs

We break down the true cost of a timeshare membership, so you can see where your money really goes.

What you’re actually paying for

Timeshare memberships are often marketed in flattering terms. Two selling points that many buyers say persuaded them are:

• Guaranteed high quality. Members expect consistently high-standard accommodation for the length of their contract.
• Exclusivity. A purchase is presented as access to resorts that aren’t available to the wider public.

We’ll come back to both points later.

In practice, most modern timeshare contracts boil down to a long-term agreement to book your holiday through a particular resort or group of resorts each year. You pay an upfront purchase price, then pay an annual fee to use the accommodation—often at around what a non-member would pay for a similar standard stay (sometimes in the same resort).

Crucially, you also commit to paying those annual costs whether you use the holiday or not. And if you want to change anything about your usual pattern—dates, unit size, destination—there are typically extra charges.

What does a timeshare cost? (A simple costs breakdown)

The average cost of one week of timeshare is currently $24,140 (£19,059). The average annual maintenance cost is over $1,200 (£960).

Many owners also pay an annual membership fee to an exchange company, which is often the only practical way to avoid returning to the same room, in the same week, year after year. At present, that annual fee is $109 (£90).

On top of this, there are additional fees for changes such as switching the time of year, changing the apartment size, or swapping destinations. In many cases, it can cost extra even to trade into a smaller apartment, a less desirable location, or a less popular week.

If you want to let someone else use your week, you may have to pay a further $109 to do so.

RCI, the largest exchange company, is broadly representative of the other two (Interval International and 7Across). Their fees are listed here.

What should it cost?

Greg Wilson, CEO of European Consumer Claims, explains: "There are several ways of looking at this question. The most intuitive is to look at the cost of the apartment involved and divide the cost by 52. In my estimation, and that of the experts who work for my organisation, an average timeshare apartment is worth around $300,000 (£240,000). It is being sold for more than five times that when you multiply the average membership week cost by 52.

"By that measure, the apartment could be timeshared for under $5,800 (£4,500) per week. And the members would have actual ownership of a property with a resale value likely to be more than they paid for it, depending on how much later they sold it.

"Maintenance costs should logically be a great deal less too. Regular timeshare owners are paying around $62,400 (£49,000) annually to maintain an apartment worth around $300,000. We conservatively estimate the real maintenance cost to be a maximum of 10% of that.

"Another way of looking at it is from the resort’s perspective. They guarantee themselves business years in advance by entering into a contract that commits a customer to using their services.

"It gives them the right to put 'rental' (annual fee) prices up at will. It also obliges the customer to pay even when they don’t use the services, such as during COVID.

"That is a highly desirable deal for accommodation providers. If you were looking at this model for the first time from a business perspective, you’d have to say these major concessions from the buyer should justify a considerable discount rather than extra cost. Speaking personally, I wouldn’t even consider making that kind of commitment to a hotel brand unless I was getting discounts of 60% or more on regular prices."

So why is timeshare so expensive?

"Because they can" is the short version of why timeshare companies can charge far more than the product warrants.

Timeshare is also a testament to the power of well-executed, highly refined sales techniques. People don’t typically go out shopping for a timeshare in the way they might for a car or a home. Most expensive purchases have some obvious financial logic, whereas when someone buys a timeshare, they are paying a large sum for an agreement that can run against their best interests.

If you opened a timeshare showroom and relied on (for example) TV adverts to bring in people who genuinely wanted to buy memberships, you’d be waiting a long time.

Put another way: people don’t buy timeshares; they have to be actively sold.

To make the model work, expensive marketing funnels are used to bring prospects into intense sales presentations. A former sales manager from Club La Costa World, now working at ECC, puts the cost per presentation at around $1,015 (£800). With a typical 20% closing rate, that implies customer acquisition costs of approximately $5,075 (£4,000). A further 22% of the total price is paid in commissions to the salesperson and their managers.

So, out of the average $24,140 price, $10,385 is the amount the buyer unknowingly pays to be sold something they otherwise would never buy. If we then subtract the $5,800 figure calculated by Greg Wilson above, we are left with a healthy profit of $7,955 (£6,279) for the resort. In effect, expensive marketing and high-pressure sales appear to support an extra 33% as profit for the resort owners.

The reasons for the staggering £18,340 gap between what timeshare should cost and what it does cost are, in summary:

• Huge marketing costs (needed to entice prospects to attend presentations)
• Inflated sales commissions (because it is so difficult to sell)
• Enormous profits for the resort developers

Feel cheated?

Very few timeshare resorts remain exclusive in 2024. You can stay in practically any resort via sites such as Booking.com without being a timeshare member. And claims of higher quality fall away once you realise that equally high-standard hotels and apartments are available across the major booking sites—including, in many cases, the very same timeshare resorts.

If you believe you’ve been mis-sold and want to explore your options, get in touch with our team at Timeshare Advice Centre.