Two for One Exchanges

      Many years ago we were selling a resort in Waikoloa Village known as Paniolo Greens.  Part of the sales pitch was a certificate the owner would receive guaranteeing a two for one exchange by RCI the affiliated exchange company. The caveats were that the exchange must be made for weeks located outside of Hawaii and it was guaranteed good each year for seven years.

     At the time this was unheard of in the industry and needless to say Paniolo Greens was an easy sale, partly because of the low price but mostly because of the "two for one exchange" offer. People quickly realized they could own a Hawaii week and vacation with it just about anywhere outside of Hawaii for two weeks. Most weeks on the mainland back then were pricing in at around ten grand with a five to six hundred dollar maintenance fee. Anyone having looked at timeshare on the mainland recognized the value right off.

     Since then "two for one" exchanges have been offered for "high demand" weeks by numerous exchange companies and you don't need a certificate to get it. One reason is the imbalance of basic supply and demand of weeks in one area as opposed to another.

     Hawaii has always been an area of very "high demand" and relatively low supply, making it, the perfect place to own a timeshare week. Unlike many mainland destinations such as Florida and Mexico where construction costs and land acquisition is still cheap, Hawaii is one of the most difficult places to build a resort. Land is at a premium, labor costs are double and sometimes triple and materials have to be shipped over 5000 miles. This all adds up to a shortage of weeks of timeshare available for exchange in Hawaii.

Thousands of owners try each year to book into Hawaii using low demand weeks. They are rarely if ever successful. We hear it all the time. "We've been trying to exchange into Hawaii for years but there's never any availability" or "We finally got an exchange into Hawaii but ended up in a tiny studio with no view". These disgruntled owners have a lot to learn about how the exchange works and why it works the way it does.

     One of the first things to consider is how an exchange company makes its money. You can deposit a week in any exchange company' space bank free of charge. The company makes no money when you deposit a week. When you make a request for a reservation, however, is when you are charged an exchange fee and that's how they earn their money. Understanding this is the key to understanding "Trading Power".

     Trading Power is an arbitrary term that simply means how many requests an exchange company receives for reservations for a particular week of timeshare. The reason behind it all is money, exchange fee money. The exchange companies know that the more weeks they can get into their space bank that have high request volume the more money they can make. They also know that when they receive weeks that have a poor history of reservation requests, that these weeks tend to lay around unused in their space bank and generate little to no income. So "Trading Power" is directly related to "High Demand".

The exchange companies make lots of money on high demand weeks, so are willing to give certain concessions to the owners of these weeks. One such

concession is the "two for one exchange". Most timeshare weeks in Hawaii are always in high demand and therefore are high trading power weeks.

     The majority of owners of Hawaii weeks use them rather than deposit them with an exchange company. This further enhances the value of the few weeks that are deposited making them really peak on the trading power scale.

     So if you own a high trading power week and are thinking of exchanging it for a week elsewhere you qualify for a "two for one exchange". But don't expect the exchange company to offer it to you. You have to ask for it and sometimes you have to play the exchange company's' game. By this we mean use a little savvy when dealing with the exchange company.

     Instead of just depositing your high power week and hoping for the best, hold it back for a couple months before you're ready to travel. go ahead and reserve your week at the resort a couple of months out from your preferred travel time. Then tell the exchange company where you wish to go, for how long and what kind of accommodation you prefer. Tell them that you have a reserved but un deposited week in Hawaii (they may already know this) and you would consider depositing the week with them if they can give you what you want. You'll be surprised at how fast they will try and fulfill your request.

     This is called "search first". Many high demand weeks have this feature built into them and are identified as such in the exchange company's' records. This is so the agent knows to do a search without first having a to book against in their system. Some agents won't know to do this without the "search first" tag so you may have to nudge them a little. If they act like they don't know what you're talking about they probably don't because they're new. If this happens just ask to speak with a supervisor.

     Most exchange companies will recommend depositing early and this is good advise for low power weeks owners. However, we have found it works to the disadvantage of the owner of a high power week. Once the week is in the exchange company's' hands you give up all of your bargaining chips and you're really at the mercy of the exchange company. If the week has no trading power it makes no difference but if it's a highly sought after week you're giving up the cat birds seat by depositing early.

     Another trading power factor that has recently come in to play is the rental of timeshare weeks to the general public. Some exchange companies are now renting deposited weeks. This is another good reason not to deposit your week before getting the exchange you desire. If you deposit the week the exchange company may rent it keep the money and leave you lose any advantage.

     Two for one exchanges are a great value so long as the destination is one that you prefer or are visiting anyway. Remember to ask for them when depositing your Hawaii week to an exchange company. Also keep in mind that you are not required to use two for one's on a consecutive basis and they don't have to be used at the same destination. You can split the use into two different periods and different properties. The big plus is there is no maintenance fee paid on the second week, however, you are required to pay the standard exchange fee for making the reservation. A great value any way you slice it.           By: Donald Rullo