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Comment by gregpilling | Hacker News Reader

The real scam is the ongoing, monthly, maintenance fees on your 'timeshare'. Worldmark wanted $100 per month, per week of ownership, in a presentation I saw in Vegas. Which means that 52 weeks x $100 x 12 months = $62,400 per year in 'maintenance' on each unit. So even if you paid cash, they still get $62K per year in addition. This was Worldmark Vegas, buying a 'week' in a townhouse complex of $150,000 units.

The movie "Queen of Versailles" was fascinating. Timeshare mogul builds USA largest house https://www.imdb.com/title/tt2125666/videoplayer/vi191341081...

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I get the sense that the days of "take out a huge loan to be locked into vacationing at a crummy house in Boca" are over, probably because the reputation got too bad. Now it's reasonable prices, flexible travel dates, luxury properties around the world - all yours, for the low price of bank-breaking fees for life.

52 weeks x $100 x 12 months = $62,400 is wrong. The 52 weeks means the 12 months should not be there. 52 weeks x $100 = $52,00

The maintenance fee is $100 a month for each week of timeshare you own. So if you want to use the time share 4 weeks a year you pay $400 a month. After selling all 52 weeks the company is collecting $62,400 a year.

He means in aggregate of the people.

52 people each buy a week share.

Each person gets charged $100 / month.

So 52 people each pay $1200 / year, which is the $62,400. Which I'm guessing is a bit more than the cost of maintenance

You would be making monthly payments of $5200

If the unit has been chopped up such that all 52 weeks of the share have been sold, then a combination of people will be paying $100 per week of ownership, every month. Your share of the monthly maintenance is allocated by the number of weeks you "own".

You aren't just paying maintenance for the week that belongs to you. Original calculation of $62400 is correct. Part of the scam is obfuscating from you the true costs of the deal.

If the 52 week-owners knew each other, and could all afford the costs of the share in the first place, they could conceivably form their own LLC, cut out the timeshare company middleman, pay $10k each up front for week-length shares in a $520000 property, and cut their maintenance fee in half, to $50 per share per month (assuming 5% upkeep/utilities/taxes per year). They could even rent out any unused weeks on AirBnB to cut the maintenance charges, or even pay out distributions.

The timeshare people are making bank on the fact that getting up to 52 people to spontaneously come together in a common cause is extremely unlikely. You need a prime mover organizing the whole thing, who is ideally positioned to profit from information asymmetry.

As much as I hate all the block chain hype, I could see smart contacts facilitating this kind of coordination.

I guess there would still be a discoverability problem, not to mention the very significant risk of putting your money into a scam.

I'm not up to speed on the mathematics, but a matchmaking algorithm that keeps preference data secret until all participants in a trade web commit to a deal that satisfies at least one of those preferences could drive a lot of middlemen and scam-like businesses out of the market.

For instance, you might find an algorithmic pickle agent in the network, and tell it that you could eat one big jar of crisp dill cucumber pickles every two weeks if it costs less than 8 money units, delivered to your door, or one per week if it costs less than 3 money units, committing some number of money units greater than 8 to back a promise to buy at those prices. A small-time pickle-making farmer might tell the agent that they can ship at most 500 jars a week, as long as they get at least 2 money units per jar, or as many as 800 if they can get 4 per jar (cost of hiring a dedicated packer, perhaps). The pickle agent consults with a commodity shipping agent, calculates a billion different ways to move pickles from suppliers to consumers, and then starts moving money and pickles around. Everyone who promised to buy at a certain price is guaranteed to get the goods at that or a lower price, and everyone who promised to sell at a certain price is guaranteed to ship the goods at that or a higher price. The shippers get their fee for moving a package from point A to point B. The agents take their cut to pay for their computation, and for insurance against failed shipments or bad pickles. The system would also need to include distributor/importer/resellers, because some trades just aren't possible unless you pack a whole pallet of pickles, or a whole truckload/shipping container, and break that out for individual orders closer to the consumers.

That's all technically possible with smart contracts, as far as I know, but it would require a huge amount of programming effort to even get the basics correct. And Wal-Mart already has their supply chain, inventory, and distribution software in place.

52 weeks x 12 months?

It's $1200 per year for every week of timeshare you own split evenly into $100 monthly payments.

I'm not sure if this is a complete "scam." I think it mostly works out as similar to the costs of typical hotels.

- I would assume the timeshare companies often have more supply of rooms than they have paying "owners." For example certain destinations are only desirable during part of the year when the weather is favorable. So they may not be making this full amount in the math above.

- They have regular expenses beyond the room maintenance itself: overall building maintenance, resort amenities, staffing, utilities, cable/tv, etc.

- For comparison: a simple $150 hotel room for example would be $150 x 365 = $54,750. Similar to the timeshare, this one may not be 100% booked, though I don't know what booking/ownership rates are for timeshares vs. hotel rooms. In any case many timeshare units may have one or multiple bedrooms, a kitchen, a living area, etc. whereas the $150 hotel room is probably just a sleeping area. So you are likely getting "more space" with the timeshare.

Admittedly, many timeshares are scams, I won't deny that. But the evidence you provided for this one is not completely indicative of that. It still may not be a "good deal" based on how you prefer to travel, and if it's not certainly don't partake in it.

To me spending $100 x 12 = $1200 per year for your housing on vacation is not completely unreasonable compared to $150 x 7 = $1050, considering the extra amenities and opportunity to save money by cooking in the unit. It doesn't make the timeshare a "steal of a deal" (like some of the presentations make it out to be) but rather more of a "prepaid vacation" which may make sense in some situations. It seems like a "legitimate business" in this case to me, assuming the up-front costs to buy in are not too crazy. Country Clubs have been using a similar structure of "buying in" + recurring fees since before the timeshare industry even existed, and presumably these country clubs are legitimate businesses as well. There are good and bad players in the timeshare industry, like is the case in so many other industries as well.

My parents are Worldmark owners, so I've done some analysis on that one in particular. There is a decent amount of flexibility (destination) and the units have seemed pretty well-equipped. In the math I've done it seems to work out to not necessarily make your vacation "cheaper" but it doesn't make it "more expensive" either. They like it because they get more space and a kitchen to cook some of their own meals, and they use it as encouragement to take vacations to destinations they otherwise would not have thought about (and have very much enjoyed).

The timeshare company in the article though is clearly a major scam though! I trust that most people on HN can take a look at the math to weigh what may be a good deal for their personal situation.

I'm assuming that the figures parent laid out as an example don't include the cost of the timeshare itself. So you're mortgaging the cost of the time share at a high interest rate, then it's $1200/yr./week on top of that for "maintenance".

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