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 ANY Hawaii timeshares, but keep in mind that if the account of an owner is currently "in arrears", a resort can very likely (and entirely lawfully) deny occupancy (and / or reservations) to that owner until those unpaid debts are satisfied. Further, until and unless that debt is satisfied, I am inclined to believe that a resort would be on lawful grounds to rent out individual days / nights within weeks that may be already owned, but which are owned by someone whose fees are currently in arrears. I have no idea if that is what is going at the (unidentified and unspecified) timeshare to which you make reference, but it is a viable theory and a very real possibility, no?

Also, there may still be developer-owned (i.e., not yet sold) weeks at the property in question. If so, the developer can do whatever they please with those developer-owned weeks (or individual days within those weeks) -- at least 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!