Are Timeshares Good For Business?

Timeshares are big business in greater Williamsburg, well over 3,000 units and at least another 400 coming.

But it's a business with a seamy underside and one that some say cannibalizes our motel rooms.

The unsavory element is the operation of “off-site personal contact,” or OPCs. They are sales reps who hang around shops hoping to entice tourists into a sales office with free tickets to local attractions.

“Those are called premiums,” said Ernest Liberator of Vacation Time Inc., who specializes in timeshare marketing. “It's almost a prehistoric approach, and it's intrusive.”

Fully 11 of 31 timeshare developments in Virginia are in the Williamsburg area, giving the industry its highest exposure statewide.

Liberator said the reps have to pay the businesses where they stand outside.

“It's what I call a replacement fee,” he said. “It's paying the business to replace the business they've driven off or the people who may not want to enter a business with someone loitering around outside.”

Chuck Davis, who operates Timeshare Resale Williamsburg, said the timeshares can afford it. “They can make a lot of money,” he said.

Davis said the OPCs get paid a fee for everyone who shows up for a sales interview as well as a small commission on sales.

“They're gypsies,” he said. “The same people you see lurking around outside 7-Eleven now will be lurking around a ski lodge up north this winter approaching people loading skies into their cars.”

Davis feels they give Williamsburg a bad name. “There are thousands of people who have bitter feelings about Williamsburg because of their experiences with timeshares,” he said.

Motel operators and others resent that timeshares do nothing to help promote Williamsburg tourism, since they're exempt from the room tax. Timeshares reply that they pay plenty of real estate taxes and advertise hundreds of resorts heavily.

Others in the business community have a more positive view of timeshares and their impact on the economy.

“Timeshares are a very important part of our tourism business here,” said Dick Schreiber, president of the Greater Williamsburg Chamber & Tourism Alliance. “Close to 20 percent of our visitors stay in timeshares. Only 50 percent stay in hotels, and the average stay in a timeshare is six days as opposed to an average hotel stay of two days. Timeshares are very important to us and should not be dismissed out of hand for any reason.”

Timeshares have toned down their tactics over the years. They no longer accost people in parking lots near supermarkets.

Liberator said he always advises his clients to use less “invasive” marketing strategies. “You want the customer to ask you for the information,” he said.

That information will lead the customer to timeshare salesroom. Those who have experienced a timeshare sales pitch know the high pressure.

“They're not popular,” Liberator said of timeshare salesmen. “They're not as unpopular as lawyers or reporters, but there's some distrust.”

Then why does it work?

Davis hasbeen in the business over 30 years. “That's one of the mysteries of my life. People are gullible. And they expect the people they meet to be honest. They are ill prepared to deal with someone who's dishonest and manipulative.”

Schreiber said all of the timeshare operators shouldn't be tarred with the same brush.

“I'm sure there are some whose methods are not as refined as we might like them to be,” he said. “But there are many others who are very responsible members of our business community.”

Outright misinformation is against state regulations, said Mary Broz, who oversees consumer protection for the Department of Professional and Occupational Regulation, the state agency that oversees timeshare sales.

The regulations are not exactly Draconian.

“The policy decision that the General Assembly has made in this area is in the direction of disclosure. After that, it's ‘buyer beware,'” she said.

She pointed to a seven-day “cooling off” period in which timeshare buyers are allowed to cancel the transaction at no penalty.

She said consumers who believe they have been deceived should contact her agency. They will investigate the complaint and forward it to the Board of Real Estate for action.

Broz said complaints about timeshares have ranged from 59 to 117 per year over the last six years. Most are complaints about the actions of timeshare boards and are similar to complaints the agency fields about condominiums, she said.

Broz said the consumer's only resource in many of these cases is through the courts, by bringing a civil action against the developer or the board.

Davis said Virginia is behind many other state's in regulating timeshare sales. For instance, he said Virginia does not require those working in a timeshare salesroom, the ones actually making the sales pitch, to have a real estate license.

“That's not to say I haven't heard lies told in salesrooms in Arizona, where you do have to have a license or in Hawaii, where the laws are very strict, but there's a limit to the lying,” he said.

He said requiring a real estate license to sell timeshares builds in disciplinary framework, because those engaged in dishonest or unethical practices can be stripped of their licenses.

“It is long past time that Virginia tightened the regulation of this industry,” Davis said.

Davis makes his living as a broker for those who want to resell their timeshares. He said depreciation is significant.

“It's like buying a Cadillac and it drops $10,000 in value the minute you drive off the lot,” he said.

He said that nearly half of the salesroom price of a timeshare is marketing and sales costs. Thus, customers who want to resell have to do so at a steep discount.