Pros and Cons of Holiday Points simplified

Source: www.timeshare.org.uk

We are becoming more familiar with points as a means of exchange for goods and services.

Credit card companies give you points, airlines give you air miles, supermarkets give you points and you can even collect points on your driving licence. The timeshare industry has been using points-based systems for many years. The Swiss- based company Hapimag has built up a large portfolio based on points. South African timeshare has been based heavily on points systems.

When Disney got involved in timeshare they went for a points based system, and many others have followed suit. There are advantages and disadvantages to most systems, but points club have overcome some of the disadvantages of fixed or floating week timeshare. To own a fixed week at a resort has traditionally been the best way to own a timeshare.

Buy a week that suits you in a resort you like, and you can use it or exchange it. A floating week is designed to help the salespeople sell high season weeks over and over again which is not necessarily of benefit to the owner. The points clubs have added some flexibility to the timeshare `week', by way of allowing you to split your week into short breaks.

The legal differences between timeshare (with exchanges) and points clubs. The difference between the two systems lies in the relationship between the consumer and the provider of the accommodation. A conventional timeshare owner has the right to use a week (7 days) which is either specified ("week 30") or a floating week within a seasonal band ("Red").

The owner becomes a member of an Owners' Club which is responsible for managing the resort. A Points Club member is allotted a number of points each year which can be used to book a period or periods of time at one of the resorts controlled (in part or in whole) by the Points Club. Members join a Points Club by paying a capital sum and are required to pay a Management Fee each year in a similar manner to conventional timeshare, although with RCI Points (see later) any ceded timeshare is still owned by the individual who continues to pay the management fees at the resort(s) at which they own plus a smaller RCI membership fee.

Points clubs should not be confused with "multi-resort clubs" where members of the club have access to a range of resorts controlled by the club - but without "points" being used as the "currency" for exchange. Benefits of Points Club Membership: * The ability to utilise more or less than a 7 day fixed week period. * The ability to utilise either longer periods of low season (perhaps two or three weeks) or alternatively a shorter period (a single week) of high season at the member's discretion, using the same number of points.

Or longer periods in smaller accommodation or shorter periods in larger accommodation - for example, the main family holiday. * The ability, in some clubs, to use points for other services such as flights, hotels etc. * The option to start membership with a small capital sum and "top up" the number of points with further capital payments in later years.

Conventional timeshare and Points Clubs both generally enable the owner or member to use a week or points in one year in exchange for weeks or points in a past or future year - "saving" and" borrowing"

Disadvantages of Points Club Membership:

There is no guarantee that a member will be able to use a specific week and/or resort each year or any year as booking is on a first -come-first-served basis - except where a week is ceded and booked well ahead.

The cost of joining a Points Club, together with the annual fees, may not make the Points Club good value in comparison with the purchase of timeshare (especially if the timeshare is bought in the secondary market - or in comparison to timeshare rental etc. 

Some Points Clubs increase the value of points required for a week and/or resort - requiring the member to pay further capital sums to enable them to continue to use a specific week and/or resort

Because of the great complexity of many points clubs there is a risk of being confused by the system and possibly being misled by the marketing organisation.

Selling on of points when no longer required may be a problem. As with traditional timeshare, the value of the points bought (unless bought on the resale market) will be far less than you bought them for. The current Points Clubs - the big five Sunterra (Previously called Grand Vacation Club "GVC" and "LSI") With nearly 40 (2004) good quality resorts in Europe, controlled by Sunterra in the US, and their affiliation with Interval International, the 40,000 members (2004) have a good choice.

Sunterra points can only be bought from Sunterra, through one of their approved agents, and cannot directly be resold, although they can be sold or transferred to a member of the family or to another Sunterra member.

There is a thriving secondary market in Sunterra points on the members website - www.sunterra-members.co.uk and on the yahoo group site http://groups.yahoo.com/group/sunterramembers but to take advantage of these lower price points you must already have bought some points (minimum now 40 points) from Sunterra or one of its approved agents.

Purchasers have been able to "bargain" the points' price from a high of £230 down to around £120 per point. If you would like to talk to existing Sunterra Members go to the web site (see above) where Members share information on resorts, flights, car hire, restaurant recommendations and their experiences on holiday. Members join a democratic club and have a say, through an elected Committee, in the affairs of the club. RCI Points (Previously called CRI Points).

There are two methods of buying RCI Points - either as pure points, the most expensive option, or by "ceding" an existing timeshare week(s) in exchange for points, the cheapest option. There are no barriers to reselling RCI pure points, although there is no guaranteed resale market offered by the approved vendors, and RCI pure points can be gifted or willed in the same way as timeshare.

Timeshare weeks ceded into the system can be unceded and revert back to the week for week exchange system. RCI points can be bought at any of the 1200+ affiliated resorts or through a number of "sub agents" - any prospective member looking for a bargain should shop around - perhaps buying a week in the secondary market to cede to RCI Points.

If you want to talk to existing RCI Points Members or want more information on the cost of joining the RCI Points system, go to the owners' group web site www.morps.org . Most RCI Points members belong to an undemocratic "Proprietary Club", however a few do belong to a democratic RCI Points Ltd club. Club la Costa "Options" and "Vacation Club" Club la Costa Options are no longer available although current membership continues.

Options has been effectively replaced by Vacation Club which allows members to utilise all Club la Costa resorts as well as high quality hotel accommodation. Hapimag The Hapimag points club was the first (1963) and is still the foremost in the German and French speaking regions but is perhaps of less interest to UK citizens, although their literature is printed in English. Over the years the club has carefully selected the resorts and has always gone for high quality. The club has 136,000 members (2004) who own points in 64 locations based in 15 countries.

Holiday Property Bond - HPB HPB is run on similar lines to Hapimag but with a stronger English bias. Members effectively buy shares which, in time, are tradable. Limited choice of resorts in the UK but with the prospect of a reasonable financial return after a number of years. The other, smaller Points Clubs. There is an increasing number of smaller Points Clubs - typical of these being Universal Vacation Club (UVC), Choices Holiday Club and FlexiClub UK -which offer varying degrees of choice and cost. Some are linked with RCI which gives them a greatly added range of resorts to select for holidays.

Smaller points clubs are riskier than the larger clubs because of their vulnerability (takeover by the big boys or financial failure) and some lack the sophisticated management systems essential to provide easy and fair booking arrangements. With some of the smaller points clubs being simply a device by the operator to "absorb" unsold weeks (often low season), the benefits to buyers may be illusory. And there are a number of "scam" clubs around with lots of verbal promises, unsupported by facts - or documentation! Costs -

are Points Clubs good value for money? Compared to timeshare? Here are some comparative purchase prices to help you decide whether Points Clubs are for you and which one to choose- based on a 2 bedroom apartment in mid July in a middle quality Canary Island resort: (a) Timeshare purchase from the developer;£7,000 (b) Timeshare purchase from reseller: £2,250 (c) Points purchase- Sunterra [55 points] £6,600 to £11,000 (see Sunterra above) (d) Points purchase - RCI [48,900 points] £3,000 to £8,000 (see RCI Points above)

TCA advice:

If you like to holiday in the same resort at the same time every year, then stick with conventional timeshare - buying the exact week in your preferred resort. This is especially true if you need to take your holiday during the school holidays.

If you like to holiday in weekly periods but at different resorts and different times of the year - then conventional timeshare (with exchange) may provide better value than a Points Club, but both should be considered.

Value for money may the deciding factor. * If you like to vary the length of time of your holiday; or the size of accommodation, and like occasional short breaks or want multiple holidays as well as a main holiday - then a Points Club is probably the answer.

The larger points clubs appear to offer more security for the future and a greater degree of choice - but some of the smaller ones may be cheaper (especially in the early stages of their development).

Before you sign to join a Points Club:

Get confirmation that all its inventory is safely held in Trust

Check the exact details of the inventory - some Points Clubs infer that they control a number of resorts when, in reality, they only have a handful of weeks at each resort, severely limiting members' choice.

Check that it is run democratically by the Members, not the operator/manager, and that all the costs of running the Points Club are disclosed and approved by the members.

Check that you are allowed to sell the points when you want and that a market actually exists to buy/sell points. And what the value of your points are currently if you want to sell.

Check that the number of points you are considering purchasing is sufficient to take the holidays you want.

Ensure that you get not less than 10 days cooling-off period (14 days in the UK) and do not have to pay any money during that cooling-off period. If you do not get this protection, assume it is a scam

Shop around - there are bargains to be had for the selective shopper. And establish the regular annual costs and who controls any changes - preferably the members. If you already own a week of timeshare and are "encouraged" to convert to the points system - consider the implications with care.

A points system is nothing more than a exchange system with a few, relatively minor, advantages. You should consider whether the cost of joining the points system is justified by these advantages. And, if you have a fixed week of timeshare, you will be transferring into a "subject to availability" system where you cannot be guaranteed any specific week in the future.