Puerto Vallarta and the timeshare industry

As I noted previously, Lori and I had a great time in Puerto Vallarta last week. We consider PV to be our favorite vacation destination (this was my fourth trip there) for many reasons, not the least of which is the fact that PV was an actual city before it became a tourist destination; it is not a place manufactured expressly for tourism like Cancun and so it has a lot of historical charm. For all of its historical authenticity, however, it is clear that Vallarta's economic engine is powered by tourism. Hotels, resorts and condominums line the length of Banderas Bay and new developments are being built all the time. A substantial number of these developments, old and new, are timeshares.

Let me start by making it clear that I am NOT an opponent of timeshares. While the industry doesn't have a great reputation and there are plenty of people who are opposed to the timeshare concept because they think they are scams or bad investments or whatever, we (meaning my parents - who collect timeshares like some people collect stamps - Lori and myself) have used and enjoyed them for years. In fact, the place we stayed while were were in Vallarta was one of my favorite timeshares of all, a small complex in the old town directly facing the beach.

There are a few caveats about timeshares, of course. Most importantly, they should not be considered "investments" like other types of real estate. A timeshare, like a car, is a facility that you use, not a commodity that you save; they lose value, the same way an automobile does, and the chances of anybody recouping their initial purchase price through resale are somewhere between slim and none. For this reason, the best timeshare deals can be found in the secondary (resale) market, and people wishing to purchase a timeshare might consider looking there before sitting through a new timeshare presentation. People looking to sell their property on the secondary market, likewise, need to beware of sleazy resellers: if somebody claims that they can get you more money for your timeshare than what you paid for it, and wants a several-hundred-dollar fee up front to "list" your timeshare, run away. The ability to exchange your timeshare week for another timeshare week somewhere else (through exchange companies like RCI or Interval International, for example) is certainly useful, but getting a location you want during the week you want is never a guarantee and exchange companies do charge fees for their services. Finally, it should always be remembered that, in addition to the initial purchase price, timeshares also require the payment of periodic maintenance fees. These fees are perpetual, and can be substantial.

With all that said, timeshares can be an economical way to vacation - if they are used and understood properly. Unfortunately, the way timeshares are marketed and sold leaves something to be desired. As our experience with Puerto Vallarta's timeshare industry suggests, there's a reason why the timeshare industry has cultivated a less-than-stellar reputation: the developer's need to lure people to their resorts and make a sale comes well ahead of the consumer's need to make an educated purchase.

The first problem is the presence of the ubiquitous "wranglers" who try to get you to go to the timeshare presentations. These guys, of course, are not actual timeshare salespeople; they don't care if you buy or not. They're merely the folks who try to get you to attend the sales pitch by offering you free trips, dinners, goods or even cash - anything to collect the commission that the timeshares pay them for sending tourists their way. They've been a PV fixture for as long as I've been traveling there, of course, and they're by no means confined to Vallarta. But they are now more numerous, more aggressive and more annoying than ever. It is currently impossible to walk down a Puerto Vallarta sidewalk for any appreciable length without being pestered by somebody standing at a storefront or sitting behind an open-air desk trying to get you to go to a timeshare presentation. They try to be friendly, asking you where you're from, welcoming you to Mexico, extending their hand to shake yours, telling you a joke, or asking if you'd like to go on a wonderful boat excursion for free - anything to get you to stop, listen and sign up. It was really rather bothersome and it detracted from our enjoyment of the town; at one point I was looking through the t-shirts at a market stall sincerely wishing that somebody printed one that said "NO QUIERO TIMESHARE!" on it.

They're getting craftier in their lures, as well. In Puerto Vallarta today, there are numerous "tequila shops" where unsuspecting tourists can walk in and sample fine - and pricey - 100% blue agave tequilas. But they're not there to sell you any of these high-end tequilas. They're there to give you a couple of bottles - free! - if you attend a timeshare presentation!

To be sure, the loot one can receive simply by agreeing to attend a timeshare presentation is not inconsequential. Many savvy tourists like to "play the game" by signing up for a presentation with no intention of buying a timeshare simply to get the goodies being offered for attending. The first day we were in Puerto Vallarta, Lori decided to "play the game" in order to snag a couple of free excursions: a zip-line "canopy tour" through the jungle south of town and a boat trip to the Las Caletas beach on the south side of the bay. These tours, together, would have cost us around $300 had we paid for them ourselves. But if the both us sat through a ninety-minute timeshare presentation, they were free. It sounded like a plan.

So, Lori and I were driven up to a sprawling development in the Nuevo Vallarta zone of Nayarit (Puerto Vallarta itself is in Jalisco state, but much of the new development is taking place north of the town in Nayarit state) where a sales representative sat down with us to fill out a questionaire. He then took us to lunch and then on a tour around the complex. It was indeed an impressive development, with well-furnished units, a wonderful view of the bay and numerous amenities that all of us - Kirby especially - could enjoy. A nice part of the arrangement was that, as owners, we would be able to use not only that particular resort, but the multiple other resorts that the development company owned throughout Mexico and Latin America (including one in Buenos Aires, Argentina, which Lori and I want to visit in the near future).

With the tour over, the sales rep asked if we liked what we saw. Even though we still had no intention on making a purchase, we were curious to see what their pricing was like so we humored them by telling him that we did. That led to the actual sales pitch, which closely followed this procedure. We sat at a table, the sales representative who gave us the tour was joined by a sales manager, we were presented with a bunch of slick brochures about the development company and its resorts, and we were finally given some offers, starting with the most expensive package and working down to smaller packages based on the type and size of unit, the number of weeks available for use, and other factors.

Even if I had been interested in buying a timeshare, there were many facts about the sale that I found to be turn-offs. The first was the terms of the sale: a 35% down payment, with the rest of the purchase price financed at a ridiculous 14%. (Not enough money in your bank account for the down payment? No problem! Just apply for this credit card and use it to finance the down payment as well!) There was also a whole list of benefits and incentives - a "First Visitor Incentive" program- that we would get along with the property if we purchased that day. If we declined to purchase that day, however, those benefits would be lost to us forever. Remember those other properties, such as the one in Buenos Aires, that the salesperson said we would have access to if we purchased? Turns out that arrangement was part of the First Visitor Incentive as well. That revelation raised the red "bait and switch" flag in my mind.

In arguing for the long-term value of a timeshare, the sales rep and the sales manager kept referring to the $2,500 that they thought Lori and I annually spent on vacations - a wildly-speculative number based on some estimates we made about our vacationing habits when we were filling out the earlier questionnaire. I felt that this tactic was a bit presumptious. The sales manager's penchant for speaking quickly, writing down confusing bunches of numbers on his legal pad, and mentioning various discounts, promotions and rebates we could use to lower our purchase price raised yet another red flag in my mind. I was not entirely clear where he was getting some of his numbers from, and a few of his suggested ways to lower the purchase price of a given package were a bit too "creative" for my tastes. It seemed more like an Enron accounting scheme and less like a sales pitch for a vacation property.

After Lori and I finally made it clear to them that we were not going to purchase - we explained that our financial situation would not allow it - we were subjected to the inevitable guilt trip. They made sure to mention the fact that they had spent hundreds of dollars on incentives aimed at getting us to attend their presentation, as if that weren't part of their cost of doing business (this, incidentally, is one of the reasons timeshares lose their value so quickly: the considerable costs of marketing the timeshare inflate the initial purchase price) or that we somehow owed them something. They also seemed to imply that, in sitting through their presentation but opting not to buy, we had wasted their precious time.

But even after the sales rep and the sales manager finally let us go, we still were not finished with our ordeal. The next step was to send us to another room to meet a developer's representative, who tried to sell us another vacation package associated with the resort! By now Lori and I were becoming annoyed. We declined, and they eventually relented and sent us to the travel desk to pick up our vouchers for the canopy tour, the beach excursion, and a cash reimbursement for the taxi ride back to town. (In examining the travel vouchers, we also realized that the tour operators provide significant discounts to the timeshare developers, i.e. maybe they're not really spending as much money on you as they claim they are.)

By the time we finally left the resort, we had been there for a solid four hours: considerably longer than the "90 minutes" we were promised when we agreed to attend the presentation. And, while we definitely saved money on our excursions (both the canopy tour and the Las Caletas excursion were very enjoyable), I still can't help but wonder: was it really worth spending four hours of our vacation week sitting through a tedious, high-pressure timeshare presentation?

All in all, it was an interesting experience, and it gave Lori and me an idea of what to watch out for if we do decide to actually buy a timeshare of our own in the future (and, to be honest, we really don't need our own as long we can keep using my parents' weeks for free). But after sitting through the presentation, I can fully understand why a lot of people have a negative impression of the timeshare industry. It's not just because of the hordes of wranglers throughout Puerto Vallarta (and, for that matter, every other Mexican resort) that degrade the quality of one's vacation by incessantly pestering people to attend a presentation. And it's not just because of the factors and tactics, as I've described above, used during the sales pitches themselves. A lot of it has to do with the overall sales philosophy of the timeshare developers: make that sale now.

Much like auto dealerships that subject you to a high-pressure sales pitch for fear that you'll never return if you're allowed to walk off the lot, timeshare developers feel that the only way to make a sale is to pressure you into making a purchase on the spot. They don't want you to think about it for a few days. They don't want you to go home and do your research about the proper use of a timeshare or search the web to see what kind of deal you could get on the secondary market. They don't even want you to know that Mexican law mandates a five-day rescission period wherein you can cancel your purchase. They want to lure tourists off the street (unprepared though they might be), bring them into the development, impress them with an array of sales tactics, and have them walk away with a unit-week that same day. Thus, the free stuff they use to entice you into the presentation, the slick brochures, the tag-team pressure from the sales rep and the sales manager, the "First Visit Incentives" they dangle in front of you, the guilt trip you get if you don't decide to purchase. These developers expect that vacationers will purchase a piece of real property, commit to its long-term use, and shell out an amount of money equal to the price of a decent automobile completely on the basis of impulse. Obviously, a lot of people do it. And just as obviously, a lot of people later come to regret the decision they made.

I understand that it's all about making money. And I still think that timeshares are a good value if they are used properly. But is what Lori and I experienced really the best marketing model that the timeshare industry can come up with?

Once we got back from the presentation, the wrangler that sent us to that resort approached us, asked us if we liked the resort and thanked us for helping him earn a commission. Then he asked if we wanted to go to another timeshare presentation at a different resort later that week.

We said no.