On this blog I have bandied about the terms Big Government, Big Education, Big Media, etc. quite a bit. This week it occurred to me while vacationing in Orlando that I had not yet broached Big Vacation.
Nor had I endured it much before as an adult. I did go to Disney as a child and as a teenager (1981 and 1990). Obviously, that was a long, long time ago.
At least of couple of acquaintances, upon learning that we were going to Orlando this week, scoffed. They figured me for the stereotypical parent whose kids forced him into the Disney snare. That couldn't be further from the truth. My kids (3.25 and 1.725 years of age) know hardly anything about Mickey Mouse, Donald Duck, Snow White, and Winnie the Pooh. Anyone who presumes that I, of all people, can't deprive my kids is ignorant of their target. I was abused, neglected, deprived, starved, and malpracticed upon throughout my childhood and I believe it is the very foundation of my embittered prominence. Like all ambitious parents, I aim to offer the same and so much more to my brood.
Here was our Monday-Saturday trip.
First, of all the televisions at Logan Airport, not a one was tuned to CNBC. The stock markets are melting down and apparently nobody in Boston cares. This was like my honeymoon in Hawaii where the 4-star hotels didn't even feature a financial channel on their cable lineups. But seriously, this is Boston - not a Pacific island. How can there possibly be ZERO local interest in the Dow Jones, S&P, and NASDAQ indices?
Our car rental was a Toyota 4Runner. Having never driven anything but POS American cars (Oldsmobiles, a Buick, a Ford, and some Chevys) I was blown away with the performance of a modern vehicle. It is sort of like discovering cavity-backed golf clubs after years of hitting unforgiving blades.
This trip was supposed to be a solo golf trip for me but it morphed into a plenary family vacation with the wife and two kids (I hadn't any luck trying to leave the little one home with the grandparents). And with the Disney snare, the total cost jumped from around $700 when it was just going to be me, to $3,000. Oh well. We had a blast, great weather every day, and a much needed respite from New England's six month winter.
On the first day we did one of those timeshare "seminars". My wife wanted to do it for the $170 coupon off Disney World whereas I just wanted to see what it was all about. I knew next to nothing about timeshares until I read a Forbes article about some clown who made serious ca$h in the business. For those of you that don't know, it's a pure marketing game, er slimy bamboozle replete with 13% financing on the spot. Was Shylock an animated Disney character?
We showed up at some partially built Marriott resort (one third completed) and after a complimentary (no omelet station) breakfast, a sales agent sat down with us and tried to peddle a floating vacation week there for $19,000 (plus $800 per year in "maintenance", forever!). They told us their sell-rate was 20%, a number that I didn't believe for a second (meaning that 20% of attendees end up buying a timeshare - if that were indeed the case, it wouldn't have taken five years to fill up a mere 300 units of this particular resort, now would it?).
The sales agent starts out slowly: names, kids, careers, favorite colors, etc. She inquires as to your dream destinations. Paris? Hawaii? Myrtle Beach? I provided her thoroughly unsatisfactory answers. At this point in my life, I simply don't even think about this stuff. My present dream vacation would be going to the bathroom unhurried for a week. Or, not having to eat my meals hovered over the counter. With two small children, I just want a break (like a solo golf trip) and it doesn't have to be in some exotic locale. The reason the sales agent pushes this tack is that later on she wants to sell you on "swapping" your newly purchased Orlando timeshare for a week at another Marriott "Vacation Club" that may be just about anywhere on the globe.
While she was out giving us the tour of the premises, she asked,
Agent - Look around. What do you think this will be like [without the cranes and backhoes] when all 900 units are completed?
CaptiousNut - I think it will be empty.
Here, my wife almost busted a gut trying to hold her laughter in. The personality-deficient agent was discombobulated by my response and needed a moment to cue up the scripted sales pitch again.
The room they showed us was really, really nice. It was a 1,250 square foot, 2 bedroom suite (with a pull out couch). It had two balconies, a beautiful kitchen, and came fully furnished. There was nothing not to like - except perhaps the price.
When we got back to the office, the agent sat us in front of a computer and tried to sell us on the math. She started punching in numbers to demonstrate how much money a budding family like ours would spend on a one week vacation over the next 20 years. Her assumptions were as follows:
- 20 years
- a 7 night stay
- $250 per night
- 12% annual hotel inflation
The number that popped onto the screen, as my total vacation outlay for the next 20 years, was about $85,000.
I laughed in her face and made her change the "annual hotel inflation" assumption to 2%. That slashed her 85k number down to $40,000. Then I scolded her:
CaptiousNut - On one hand you tell me that the $800 annual maintenance number won't rise that much, if at all, and on the other hand you want me to believe that hotel inflation will be 12% ANNUALLY, FOR TWENTY FULL YEARS?!?!?!?!
(12% inflation means that your $200 hotel room in 2008 will approach $1,900 PER NIGHT in the year 2028.)
Then I had to feign some genuine disgust - just to make this woman feel sufficient embarrassment for having her pathetic ruse exposed. There's a whale of a difference between 85k and 40k. It really upsets me that they throw this junk at less Captious tourists from middle America. Go read that Forbes article I already linked to. In it, timeshare king David Siegel has the cohones to brag that his customers are the "Johnny Lunch-Bucket crowd," who "shop at Wal-Mart."
I grabbed a pen and did some quick math. The fact is, given all the Marriott "points" and swap-ability to luxurious resorts worldwide (e.g. Hawaii, Lake Tahoe, Rome,...) even with the fuzzy math and resale uncertainty, this timeshare did make a little bit of financial sense.
The math ran like this. Assume that you shell out 40k over twenty years for vacation. Obviously that money is gone. But if you do this timeshare, you'll spend 20 years of maintenance - say between 20-25 grand for your vacations instead.
Ergo, even if the value of your time share goes to near zero, you'll still break even. If it holds its value at 19k, you will have saved at least $15,000. If it appreciates, you'll have done really well.
NOW HOLD ON.
For one thing, timeshares can be worth less than $0 - as evidenced by the one my parents paid $5,000 for ten years ago. Today, there are no bids at all for it. In fact, they would have to PAY $4,000 to get out of this liability now. That's right, the value went from +$5,000 to -$4,000!!! I sure as hell better not inherit it!!!
Also, the math I posted above does ignore the financing of a timeshare purchase. If you don't have the cash to buy it outright, interest charges over time erode much of the "savings" - particularly at 13% per annum.
But here is where the whole "sell" falls apart.
Note that anytime you compound something over a long period of time (say 20 years), extrapolations are extremely sensitive to initial conditions. Note how the total outlay halved when I made the agent reduce the hotel inflation rate to 2%.
The other condition - impossible to adjust on their model - was a reduction from a 7 day trip to only 5 days. Look at it this way, the increase from 5 to 7 represents an increase of 40%! Increasing a key variable by that much helps create the unrealistic financial comparison that's oh so integral to the slimy sell.
Our current trip was only 5 days and it well-served our purposes. Why should I budget in a longer one, every year, for the next twenty? Because it makes financial sense? How so?
Consider attending a professional baseball game where domestic macro-brews in wax cups are retailing for the ridiculous price of $7 apiece or three for $20. It may make financial sense to buy three instead of one - BUT not if you only needed/wanted one or two beers.
The timeshare scam essentially forces people (the wealthy "Wal-Mart" crowd) into a longer vacation than they might otherwise purchase. It also forces people into buying nicer accommodations than they probably need. A 1,250 square foot suite is nice but who really cares what the room looks like when you're out all day? The only destination where one might spend less time in their room than Orlando is Las Vegas.
I will say this, if you are going to spend at least 7 days on a family vacation, annually, and demand a room as nice as these Marriott suites...THEN yes, it's a decent deal for you. Because otherwise, rooms that nice will cost you at least $300-$450 per night just about anywhere. Think of it econo-intuitively: if you can guarantee Marriott a defined amount of vacation expenditure - annually, ad infinitum - then they can return to you some of that dedicated capital via below-market prices.
The sales agent tried her darned best but couldn't get me to buy anything. She eventually brought over the heavy artillery, i.e. her manager, who offered me "the first year maintenance free" and "110,000 extra" Marriott points if I signed right then and there. My wife stiff-armed the duo,
Mrs C-Nut - I don't buy a pair of shoes without thinking about it for a while, I am certainly not writing a check for nineteen grand based on a 90 minute sale pitch.
Remember, my equal-half just wanted the Disney discount and was getting quite annoyed at how "polite" I was acting throughout. Believe it!!!
The manager tried one last push. She asked where we were staying and at what cost. The answer - Holiday Inn's Nickelodeon Suites at $150 a night.
FrustratedManager - "Wow,...that's a good price[silence]"
We told her it was through a corporate discount with my wife's employer. Note the other variable you couldn't satisfactorily change on the 20-year vacation cost analysis was hotel room rate. I think it went from $150 to $250 per night. The intermediate point of $200 is, of course, 33.33% higher than $150 and conveniently impossible to insert into the model. Go figure.
As our corporate discount demonstrates, other deals abound. Even more competitive with these shady timeshares is the best deal of them all - staying with one of our many Floridian friends for free!!!
I ran the timeshare offer by one of said friends who happens to be a real estate agent in Naples. He laughed:
NaplesRealEstateGuy - Nineteen grand plus $800 per year for a week? You can rent a huge house in Naples right now with a pool for $1,400 FOR THE ENTIRE MONTH.
I say stay away from timeshares and keep your vacation options completely open.
Okay, let's move on.
After the timeshare thingamajig, we went to Animal Kingdom. It really was quite forgettable.
Wednesday, I played golf with my buddy at the Country Club of Orlando while my wife took the kids to the hotel pool. Remember, it was supposed to be MY golf trip. That night we headed to Downtown Disney and dined at the Rainforest Cafe (which I would never recommend to anyone with discerning taste buds).
Thursday was dedicated to Magic Kingdom. Now beware there's a whole lot of enviro-brainwashing going on at these parks (esp. Animal Kingdom). Here was a sign I had to stare at while waiting for the Jungle Safari boat ride.
Magic Kingdom was okay for my little ones. The classic rides haven't changed in at least 25 years but that's quite alright. I even remembered the detailed hairy leg of that pirate (of the Caribbean) that the boat passes under from my first visit in 1981. This timelessness reminded me of NYC's Museum of Natural History. From reading Catcher in the Rye back in 8th grade, it was clear many of the museum's exhibits hadn't changed a lick from when the book was written (1951) to when I saw the very same ones (1980).
For some reason, I didn't find the park food as expensive as both I remembered and as everyone kvetches about. Lunch with a drink was $9-$10 - approximately what we pay everywhere else for the meal outside of McDonalds. I remember my mother appalled at a $6 Magic Kingdom hamburger back in 1981 - if it was only $8 in 2008, then I am not so out of line assuming 2% annual hotel inflation, now am I? (Prepared food and tourism are, for the most part, highly competitive products whose wide substitution possibilities always retard price inflation.)
On Friday, we used the last of our discounted Disney tickets at Typhoon Lagoon - one of Disney's water parks. The sun broke through and my kids loved it more than the Kingdoms. They're still a little young to enjoy most of the rides.
That night we ventured to Universal's City Walk. We espied an "Emeril" restaurant and popped in. Usually, his places are booked solid on weekend nights but we lucked out and braved an expensive dinner with our two kids and their 45-minute panic threshold. The meal was phenomenal. It better have been as my rib eye cost $46. It was just as good as NOLA, one of Emeril's New Orleans joints that we hit years ago.
Off the kids menu, I ordered a $16.50 filet for my kids to split. For the record, I didn't have my first filet mignon until I was probably 22 years old. My spoiled kids will forever think "pot roast" a dog food.