Would you like a cheap holiday?

Achieving your lifestyle dreams is about getting the most lifestyle from your current money as well as about creating wealth.

If you’re like me and most other people I meet then you like the idea of luxurious holidays. And the prospect of not paying full price is a bonus attraction. Add to that an offer of two nights accommodation for just $29 – do I have your attention?

A few weeks ago I received an offer in the mail just like that, and yes it got my attention. (After all it did say that I was “special”.) A part of you may be thinking “that sounds too good to be true; I bet Matt is going to write about not being duped.” Well read on, because this type of offer may suit some people as a way to reduce their expenses while maintaining their lifestyle.

Vacation Clubs

The offer I received was from a company promoting a vacation club. A vacation club is a modern day evolution of the time-share accommodation from a couple of decades ago.

Even though they are called “clubs” it is just a marketing name. In fact these vacation clubs are property investments, often through an unlisted trust structure.

In summary some of the key features include:

  • You pay an amount of money to be a “member” of the “club” (up-front plus annual)
  • The “club” owns many properties in desirable locations
  • You receive annual rights to stay at the club’s properties
  • You also have beneficial ownership in the properties
  • You may receive additional benefits and reciprocal rights to stay at properties owned by other vacation clubs around the world.

Even though you become a part-owner in property the investment basis is very unclear. In fact, no investment characteristics were mentioned in the presentation.

Are they worth considering?

Yes, vacation clubs may suit some people. Particularly if you:

  • Travel a lot, and plan to every year for the rest of your life
  • Generally pay for 4 and 5 star accommodation when you travel
  • Are comfortable with restriction on your destination

How to find out more

To become a member of the club (investor in the property trust) you will probably need to attend a Preview Session to have the investment explained to you. To get invited to such a Preview I suggest that when you are doing anything travel related to always tick boxes that say “yes, please send me marketing material because I love it.”

You will eventually be specially selected to receive an irresistible offer designed entirely to get you to give up a couple of hours of your time to attend a Preview Session. For example, we received an offer to stay for 2 nights at one of their fancy properties all for the low price of a $29 processing fee. (Since we had planned a holiday near one of their properties we decided it was worth two hours of our time.)

(If you are desperate for immediate pay-off then type “Vacation Club” into an internet search engine and that will point you to some clubs. But if you contact clubs directly you may miss out on the irresistible offer.)

Forewarned is Forearmed

Be Aware – you may be told that it is an information session but in fact it is going to be a selling session too. You will probably be offered an amazing set of bonuses to sign up at that very session – and they will be mouth watering.

If you think the concept is of interest to you and therefore you may be inclined to want to join on the night then attend the meeting prepared with actual information on your travel. Think carefully about:

  • How often you’ve travelled in recent years (number of days)
  • The average amount you spend on accommodation per night
  • How many days per year you plan to travel in future years (for the rest of your life)
  • The dates and locations (including hotel or areas) for any travel over the next year.

If you’re serious then there are a couple of other important points to know.

  • This is an investment so you must receive a Product Disclosure Statement (PDS) and Financial Services Guide (FSG)
  • You must be given a cooling off period. Before signing, read the PDS to find out how long the cooling off period lasts. The one we saw had only 5 days which is way too short in my opinion given the selling environment.
  • There is often no easy or set way to sell your investment
  • Many of the bonuses are dependent upon the reciprocal agreements with other vacation clubs. These are not guaranteed so do not base your decision on anything other than the core properties owned by the trust.

Also note that it will probably take longer than the time frame quoted to you, especially if you ask questions or want to read the information before deciding. Plus allow an extra hour for signing up, should you be disposed to do that.

The cheap holiday

Whether membership of the club provides you with cheap holidays will depend upon how you use your investment.

Either way you may get at least one cheap holiday by accepting the tempting offer to attend a preview session.

You may even get a second cheap holiday. On our way out a second sales person had a last ditch attempt at convincing us to consider the club. We were offered another heavily discounted accommodation deal at selected properties. The exchange for this deal was to attend another preview session while on holiday. But you have to decide on the spot. So I suggest that you attend your session knowing where you plan to stay in the next year, the offer may just suit your existing plans.

Receiving marketing material may be a good financial planning decision after all! Enjoy your cheap holiday.

Author: Matt Hern

Certified Financial Planner professional, Matt Hern has three times been awarded as one of Australia's Top 50 Financial Planners by The Australian Financial Review Smart Investor. He is passionate about guiding you on the right financial choices to achieve what you really want. Matt Hern is an Authorised Representative of Charter Financial Planning Limited AFSL 234665. All information is general advice only.