Can the timeshare company rent on the hotel market to non-owners?

I can't seem to find this particular question anywhere, but wanted to see if anyone has encountered this...

I have learned that the timeshare company we are involved with is making timeshare units available on hotel sites and representing the complex as a standard hotel-resort type property with nightly rental available. So, even though timeshare owners have purchased and own the weeks, it is possible for any person off the street to go online, rent a couple of nights, ruin availability for a whole week and thus prevent an owner from using their time.

The company, like most points based timeshares, allows exchanges and trades from other timeshare companies, so I find it hard to believe that between the owners from the originating timeshare company and tens of thousands of owners eligible for the trade / exchange program, there would ever be sufficient unused volume to make nightly room rental even possible (the property is in Hawaii, high demand)

This seems like an unethical double-dipping (sell a timeshare week and then ultimately prevent owners from using it easily by renting out nights here and there for cash to non timeshare owners) or maybe even an illegal act.

Has anyone encountered this situation with their timeshare company? Do you know if this is an OK action?

tm302 wrote:

I can't seem to find this particular question anywhere, but wanted to see if anyone has encountered this...

I have learned that the timeshare company we are involved with is making timeshare units available on hotel sites and representing the complex as a standard hotel-resort type property with nightly rental available. So, even though timeshare owners have purchased and own the weeks, it is possible for any person off the street to go online, rent a couple of nights, ruin availability for a whole week and thus prevent an owner from using their time.

The company, like most points based timeshares, allows exchanges and trades from other timeshare companies, so I find it hard to believe that between the owners from the originating timeshare company and tens of thousands of owners eligible for the trade / exchange program, there would ever be sufficient unused volume to make nightly room rental even possible (the property is in Hawaii, high demand)

This seems like an unethical double-dipping (sell a timeshare week and then ultimately prevent owners from using it easily by renting out nights here and there for cash to non timeshare owners) or maybe even an illegal act.

Has anyone encountered this situation with their timeshare company? Do you know if this is an OK action?

I claim no first hand knowledge about Hawaii timeshares, but keep in mind that if the account of an owner is currently "in arrears", a resort can lawfully) deny occupancy (and / or reservations) to an owner until those unpaid debts are satisfied. Further, until and unless that debt is satisfied, a resort would be on lawful grounds renting out individual days / nights within weeks that may be already owned, but which are owned by someone whose account is currently in arrears. I have no idea if that is what is actually happening at the (unidentified and unspecified) timeshare to which you refer.

Also, there may still be developer (or HOA) owned weeks at a timeshare property. If so, the developer (or HOA) can do whatever they please with such weeks (or with individual days within those weeks) -- until the weeks actually get sold.

I intentionally left name & location unspecified as I don't want to be making allegations when I am, at this time, merely curious and asking questions. Could be this is perfectly legit. The property is over 40 years old, so developer-owned seems unlikely, but a good theory.

The main question I have centers around how, prior to about three or four years ago or so, no hotel room operations were taking place - in other words, timeshare owners only.

Now, in any random week, I (or anyone off the street) can go in and literally rent a single night and, thus, make that week ineligible for use as a whole week timeshare. When I was last there, I queried the other guests - many of whom came and went on a daily or every other day basis - and, with the exception of ONE guest, none were timeshare owners. They were ALL hotel guests.

I'm thinking they have found a lucrative - possibly very lucrative - way to sell timeshares ($ + ongoing fees) AND then sell the same product again ($$$$ = nightly!!) believing no one would ever put the pieces of the puzzle together. Most timeshare owners would think it's just a busy resort and move on...never thinking the management is conducting their business in a way that may be detrimental to honoring the promises made in the timeshare contract. The time sold no longer belongs to the developer, does it? I also do not know how the property sharing / trading agreements work and what is required between companies. This property shows up as available for use by owners of other brands via exchange.

I have thought of contacting the Hawaii Attorney General's Office, or perhaps even the FTC due to the interstate nature of the transactions. In my gut, something fishy is going on. Thanks for the reply!

Mine has started doing this too.

Very shady.

Mine have started doing this too. All of them Very shady.

So you left a few open gaps in this. First is let’s say you bought a deeded week 10 in unit 1234a. You own that week. If you are current on your fees, you are supposed to be guaranteed that time and unit you purchased. Now if you want to go week 12 in unit 9876 you have no contractual rights to use that week or unit and are subject to availability. Any unsold units or time are available to exchange for the developer. Doesn’t matter if it’s a hotel chain or a timeshare company. It’s their time and units they own.

Now let’s say you’re in a trust and use points. The vacation club is no different than another exchange company. You gave up your guaranteed use period to the club in exchange for points to use in a different time or unit. Let say unit 1234 has sold weeks 1-36. Those 36 weeks are available with your points from the exchange. But the developer still owns weeks 37-52. Those weeks are not in the exchange so you can’t get them. Just as you exchanged your time to the club, the developer can exchange their owed time to a hotel or other exchange company, or multiple different companies.

When all is said and done. Someone owns all 52 weeks. Just because you bought one week it doesn’t give you entitlement to all 52 weeks. You’re only entitled to what you bought and can only use what was put into the vacation exchange. Not all weeks are exchanged into the club you belong to.