A few days ago, timeshare executives discussed the impact of the economy on their industry during a panel discussion at the 31st Annual New York University International Hospitality Industry Investment Conference at the Waldorf-Astoria hotel. Beth Kormanik, the managing editor of Buyer Interactive and editor of Hotel Interactive writes about the discussion here.
Here is a summary of some of the more interesting points:
- With retirements being wiped out, more people are opting to keep discretionary income rather than spend it, especially on a timeshare. So, timeshares are looking for a new pool of buyers.
- They want to emphasize rigorous maintenance of their properties, “even if it means raising fees.”
- They wish to cut down on the colossal marketing costs of timeshares
- Mortgages will require higher downpayments
- Timeshare owners for the most part kept paying their fees in spite of the economic downturn
“Will the consumer not pay the $800 and give up the $24,000 they have already spent?” he [Stephen Cloobeck, chairman and CEO of Diamond Resorts International] asked. “That’s the issue in a nutshell.”
TR360 comment: Interesting statement…think about what that implies. Timeshare owners feel compelled to pay the maintenance fees regardless whether they use the timeshare or not.
- Lower cost options are on the way with fewer ammentities and upgrades.
- We may see conversions into condo-hotels.
Last statement from Johann Murray, senior vice president of financial services for Hilton Grand Vacations: “We’ll be out of this downturn in five to six months. We’re already seeing signs of bottoming,” he said. “There’s just too much money to be made in this industry.”
Read that last sentence a few times. He’s talking about timeshares making the money, not owners.
Keep in mind that all the major hotel chains (Wyndham, Hilton, Marriot) have timeshare divisions. When times were booming, these divisions represented very profitable, if not the most profitable divisions of the companies. So, it’s no surprise that Holiday Inn have a timeshare division as well. The 
Is the Timeshare Industry a Cash Cow Worth Protecting?
David MacMillan is the President/Owner of Timeshare Relief, Inc.
The exemption essentially allows the time share industry to dodge proposed regulations on same-day purchases and lengthy escape clauses that would allow consumers to leave some contracts if they find themselves in over their heads.
The reasoning for this from Congressman Grayson stems from the fact that Central Florida (his district) is so heavily economically dependent upon the timeshare industry. The Congressman makes the analogy that timeshares are to Florida like oil is to Texas and corn is to Iowa.
But who ultimately finances the timeshare industry? Why do development companies, hotel chain and state & local governments love timeshares? It’s a cash cow for all of them. Per unit built, timeshare units are among the most profitable vacation accomodations for hotel chains. Hence, developers can charge more and governments can increase their tax base, especially if timeshare owners come from out of state. It’s a great way to increase tax revenues without taxing the majority of your constituency.
For timeshare owners, the vacations are lovely and the time spent with family is precious. But know that your dollars spent in the purchase, maintenance and other fees are funding some major developments and lobbyists. Just keep your eyes open.