Timeshare Exit Companies: How We Got Here

“The only thing necessary for the triumph of evil is that good man do nothing,” JFK said that quoting Edmund Burke… or maybe it was John Stuart Mill? While we don’t know for sure who said it first, it happens to be true — and it neatly encapsulates the proliferation of timeshare exit companies and the polarization of the secondary market. Bad actors will do bad things if there is no one to stop them, or even better, protect their potential victims before they’re harmed. While it’s clear that the timeshare companies didn’t ask for this battle, we do need to take an honest look at how we got here in the first place.

Timeshare exit companies emerged in the early 2010s as a way to help distressed owners deal — permanently — with timeshares they could no longer use or afford. What was once a fringe industry quickly became mainstream, thanks to aggressive marketing campaigns. These campaigns were very successful at two things:

1. Acquiring weary timeshare owners as customers
2. Destroying the timeshare industry’s reputation for everyone else

Exit companies are considered the blight of the timeshare industry by many — OK, by everyone. Ironically, they are also a primary reference point for mainstream audiences less familiar with timeshare. Tell someone you’re in the timeshare business, and odds are they’ll say they hear those commercials all the time about getting people out of their timeshare. Anyone hearing that would assume timeshare companies are the villains — and while there certainly were some scoundrels in the industry, much of that used-car salesman reputation has faded into 1970s folklore and modern-day sitcom fodder. Still, it seems exit companies are better at marketing timeshare’s flaws than timeshare companies are at marketing their benefits. And there certainly are benefits.

Today’s product is professionally managed and developed by trusted brands like Hilton and Disney; in our experience, most owners love their timeshares. Nonetheless, even the best timeshare can run its course, and recurring costs can cause the owner some discomfort. Historically, owners haven’t had a clear method of unbridling themselves from said discomfort. Enter timeshare exit companies.

Related: Yes, Timeshares Are Actually Cool

To be clear, not all timeshare exit companies are malicious or predatory. I’d even go so far as to say that some of these companies likely started with the best intentions — to help owners and, in turn, create a viable business. But what has transpired since is a quagmire of shady enterprises posing as real estate or legal professionals looking to bilk these same owners out of thousands of dollars.

For their part, some exit companies say they’ve helped get tens of thousands of timeshare owners released from their contracts. And perhaps they have, but it’s hard for the consumer to tell the difference between which ones may be legit and which are scams. And this is where things get murky.

Things you should know about exit companies:

1. Timeshare Exit Companies are costly

Timeshare exit companies are expensive. Canceling a timeshare with a timeshare exit company can cost $10,000 or more, and the fees are typically collected upfront.

2. Timeshare Exit Companies are Risky

Even if it’s a legit company, there’s no guarantee it will work. Timeshare exit is not a science and there is no easy way to sever someone from an otherwise life-long contract without the approval and support of the timeshare companies.

3. Timeshare Exit Companies are not really necessary:

If the owner is willing to do the work, they can probably navigate this on their own. In fact, some exit companies just advise owners on what steps to take. Plus, many timeshare companies now offer company-endorsed alternatives.

You’ll need patience dealing with a Timeshare Exit Company

Timeshare exits take a long time — up to three years in some cases. Many owners complain about a lack of transparency during the process.

The problem isn’t just that there are scammers, but that the current version of the product exists in a way that lets the scammers thrive. Let’s face it: It’s very difficult to divest from most timeshares. They lose value rapidly, there’s no robust secondary market, the resorts don’t make it easy to rent, and “deedback” programs are extremely restrictive. Yes, there are alternatives to selling, like an exchange, but that doesn’t appeal to people who are simply done with traveling altogether, are facing some imminent financial challenges, or whose kids aren’t interested in inheriting. But whatever your reason for wanting to sell, if you can’t seem to find a way out, and you’re increasingly frustrated, even desperate, you’re ripe for targeting by grifters.

So how can there be a more successful version of this product in the future?

One that is fun for the owner to use and easier to divest from once the fun is over. One that creates revenue and growth for the timeshare companies, while reducing sales friction and marketing and sales costs. Currently running as high as 45%, these costs are baked into the price, and higher prices create more sales friction and reduce organic demand.

The way I see it, simply because someone no longer wants a product does not mean that it’s a flawed product. It could mean their lifestyle has changed, or their financial position has changed and the lifestyle purchase no longer works. Ironically, the inability to divest from timeshare is what makes this otherwise fun product an ultimately flawed product. And that perception resonates louder today than the joys that timeshare ownership can bring.

So how do we right that wrong?

The industry has stepped up its efforts to help owners and heal the industry’s reputational damage, but more can and should be done. Here are a few things I’d like to see happen:

• Timeshare companies continue to beef up company-backed exit programs and educate owners via advocacy groups like ARDA
• Broader marketing campaigns to offset the negative impact of all the timeshare exit ads out there.
• Developers loosen restrictions on reselling timeshares and the right of first refusal clauses.
• The industry supports the establishment of a legitimate and safe resale market, so owners don’t need to resort to Craigslist, Facebook, and other unregulated marketplaces — and thereby open themselves up to scammers.
• The industry supports state attorneys general and government regulators who are holding fraudulent exit companies responsible for their misdeeds.
• We all educate buyers on alternates to exit, such as timeshare rentals

I’m confident that timeshare companies did not intend for exit companies to exist and thrive as they have. But, as JFK knew and we now know too, doing nothing is no longer an option.

Mike Kennedy is CEO and co-founder of KOALA, a new timeshare rental marketplace. Before co-founding KOALA, Mike spent over ten years as a top sales executive for Hilton Grand Vacations, where he first envisioned a secure, easy, and ethical way for timeshare owners to rent their unused time. His long-term mission is to transform the way people take vacations.