# An interesting article on "Will timeshares survive?"



## Iggyearl (Apr 8, 2020)

https://seekingalpha.com/article/4336402-wyndham-destinations-and-timeshare-business-face-road-lead-nowhere
		


This article points out the fragility of the timeshare sales model.  Most developers get 40% of their sales from "new" customers.  Those are people on vacation, who accept a gift in return for 90 minutes of their attention.  Then, Boom - you know the rest of the story.  But those prospects aren't showing up, and they may not show up for a long time.  Those that do may not be in a position to commit to a financial contract.  Additionally, many current owners are day to day on their finances.  Will they continue to pay their maintenance fees?  It will take a while for the dust to settle, but I am not going to be scouting timeshare stocks.  Are you?


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## TravelTime (Apr 8, 2020)

I think that Covid-19 might prove the timeshare model is too risky. It is much easier and less costly to rent hotels and cancel them.


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## CO skier (Apr 8, 2020)

Iggyearl said:


> https://seekingalpha.com/article/4336402-wyndham-destinations-and-timeshare-business-face-road-lead-nowhere
> 
> 
> It will take a while for the dust to settle, but I am not going to be scouting timeshare stocks.


The same thinking and investor sentiment was evident in 2008-2009.  It drove WYN stock under $4 per share, iirc.  Less than 10 years later it was trading over $120/share.  I think that works out to about a 3,000% return on investment.  Risk -- Reward, maybe.









						WYN Q4 Earnings
					

In the threads on the account suspensions 1.5 years ago and the belly flopped introduction of the Voyager reservation system last May, there was some speculation about the possible effects on the future stock price for Wyndham Worldwide Corp.  Despite these events, the hurricanes last year, and...




					tugbbs.com
				




In 2008, WYN stock represented both the timeshare and hotel side of the business.  Those are different stocks now.  Wyndham Destinations (ticker WYND) is the timeshare business; currently trading at under $25/share.  If it goes to under $5/share in the next year or two, I might buy some just to see what happens and maybe the capital gains sometime within the next decade will pay for a few years of maintenance fees.


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## Brett (Apr 9, 2020)

Iggyearl said:


> https://seekingalpha.com/article/4336402-wyndham-destinations-and-timeshare-business-face-road-lead-nowhere
> 
> 
> 
> This article points out the fragility of the timeshare sales model.  Most developers get 40% of their sales from "new" customers.  Those are people on vacation, who accept a gift in return for 90 minutes of their attention.  Then, Boom - you know the rest of the story.  But those prospects aren't showing up, and they may not show up for a long time.  Those that do may not be in a position to commit to a financial contract.  Additionally, many current owners are day to day on their finances.  Will they continue to pay their maintenance fees?  It will take a while for the dust to settle, but I am not going to be scouting timeshare stocks.  Are you?



I won't be buying any timeshare stocks 
but I like to rent timeshares and prefer them over hotels .... hope some people (here) still buy timeshares and timeshare stocks


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## Fredflintstone (Apr 9, 2020)

TravelTime said:


> I think that Covid-19 might prove the timeshare model is too risky. It is much easier and less costly to rent hotels and cancel them.



I agree. The plus is there will still be many folks locked into their contracts producing enriched MF. That is the one thing that might keep the TS industry alive. I do see TS as being as much harder sell after this pandemic. People will want the freedom to get out and that means renting only. This means attempting to sell will be even harder than it is already.

I do feel sorry for owners. I can envision the MF rise with the argument that the added costs resulted from covid 19 which now needs to be paid for by owners.


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## bogey21 (Apr 9, 2020)

I expect "Weeks" which I prefer to slowly disappear and "Points" which I'm somewhat indifferent to to survive...

George


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## Roger830 (Apr 9, 2020)

Generally the developer sells a dream which might now be an easier sell.

The ability to cancel with a refund of points, up to one day prior with Wyndham insurance, is a huge advantage over vrbo and air b&b.

I am concerned about my fixed weeks resort on Hollywood Beach surviving.


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## theo (Apr 9, 2020)

Although not privy to the corporate mentality, I often wonder why the "big chains" don't think outside the (old and moldy) box and offer / peddle *date finite* contracts. One hopes (or wants to believe, anyhow) that in the Internet information age, better informed consumers will increasingly (and understandably) regard the "in perpetuity" aspect of timeshare products to be pure poison.

I have never purchased directly from any developer, but it seems to me that it would be a whole lot easier for the "big chains" to sell contracts of various predetermined durations for reasonable money, rather than continue to hard sell "perpetual" products for obscenely high figures.


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## CalGalTraveler (Apr 9, 2020)

theo said:


> Although not privy to the corporate mentality, I often wonder why the "big chains" don't think outside the (old and moldy) box and instead offer and peddle *date finite* contracts. One hopes (or wants to believe, anyhow) that in the Internet information age, better informed consumers will increasingly (and understandably) regard the "in perpetuity" aspect of timeshare products to be poison.


+1 This would also negate the need for deedback programs.  The risk of not being able to dispose of a TS prevents us from buying more. If I know I had a date finite contract I would feel more comfortable. Life changes happen.

Drastically increasing MF will not help the companies LT because too many people will head for the exits which will cost them more in defaults and unpaid MF with negative consequences.

Instead, I could see developers pivoting toward selling additional points for cash with no obligation. HGVC has indicated that they are adding this model. Although they haven't specified details, it may be similar to Marriott in which if you own a base set of points, you can rent additional points instead of having to purchase a new contract.  I also think they will ramp up their rentals to generate revenue. They can play the hospitality game just as well as the hotels.


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## Ironwood (Apr 9, 2020)

Our first TS was a 2 bedroom deeded interval ownership at Smugglers Notch VT some 30 years ago.  MF's were about $500 or maybe even less.  It was good vacation value for a family at the time, but not so today.  With all the BnB, Air BnB and other options which we take advantage of today with only one deeded week left, we have found better and more flexible value elsewhere.  And as empty nesters, we tend to vacation in urban settings as much as recreational locations and there are few big city TS options.   Like the cruise industry, I think TSing will never be the same.


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## T_R_Oglodyte (Apr 9, 2020)

theo said:


> Although not privy to the corporate mentality, I often wonder why the "big chains" don't think outside the (old and moldy) box and offer / peddle *date finite* contracts. One hopes (or wants to believe, anyhow) that in the Internet information age, better informed consumers will increasingly (and understandably) regard the "in perpetuity" aspect of timeshare products to be pure poison.
> 
> I have never purchased directly from any developer, but it seems to me that it would be a whole lot easier for the "big chains" to sell contracts of various duration for reasonable money, rather than continue to sell "perpetual" products for obscenely high numbers.


How does that differ from a traditional right-to-use contract?  We like our RTU contracts.  We expect them to expire shortly before we do.


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## elaine (Apr 9, 2020)

_It was good vacation value for a family at the time, but not so today. _
concur.  easy rentals via internet didn't exist 20 years ago--you had to book via a TA or know about beach rentals, lake cabins, etc.  There are also far more "suite" style options, like Residence Inns than there were 20 years ago. I think the branded ones, M, HGVC, etc. will survive, but non-branded will dwindle unless at a highly desirable, low supply area.


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## theo (Apr 9, 2020)

T_R_Oglodyte said:


> How does that differ from a traditional right-to-use contract?  We like our RTU contracts.  We expect them to expire shortly before we do.



To the best of my knowledge and belief, date finite RTU contracts are actually something of a rarity *outside of Mexico*.

We had two unrelated RTU's in the U.S. over the years; neither one had date finite terms.  One was Perennial Vacation Club and the other's name escapes me. Both were obtained resale for short money, both were sold (for even shorter money) after several years of use and enjoyment in each instance, but we would have been "stuck" had we not found others to whom to transfer the contracts.


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## bnoble (Apr 9, 2020)

I suspect most TS developers will get by. Many of them do not have huge debt obligations, as they've transitioned to more asset-light development models. Wyndham's WAAM is one good example; they buy (parts of) condo developments from financially distressed developers just as they are needed to support sales, so there isn't a lot of construction debt ongoing. Many of the hotel brands have also recently spun out their timeshare assets as separate companies. Those will be isolated from the hotel-side crash, because some owners will default on their MFs, many won't. So, a pause in sales generation will hurt, and the market valuations of the companies will drop, but I don't expect either to be a death sentence.

The rate of failure of older and/or highly seasonal resorts will probably accelerate, as more owners at those decide to default on MFs and the distribution of bad debt to reamaining owners leads to a death spiral. Those without a channel to resell foreclosed inventory are in more trouble. Again, this tends to favor the larger developers, all of whom now have points-based products that let them fairly easily resell inventory without having a sales office at that particular location. Even better, it generates inventory for sales that doesn't have to be built.


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## dayooper (Apr 9, 2020)

Mark Wang, HGVC’s CEO said, on the most recent investor call, that they were looking at a more mid level TS program. It was supposed to be a trust and the buy in cost was supposed to be less. I know he was trying to expand to a different population sector, but I wonder how this plays out after this crisis.


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## CalGalTraveler (Apr 9, 2020)

bnoble said:


> I suspect most TS developers will get by. Many of them do not have huge debt obligations, as they've transitioned to more asset-light development models. Wyndham's WAAM is one good example; they buy (parts of) condo developments from financially distressed developers just as they are needed to support sales, so there isn't a lot of construction debt ongoing. Many of the hotel brands have also recently spun out their timeshare assets as separate companies. Those will be isolated from the hotel-side crash, because some owners will default on their MFs, many won't. So, a pause in sales generation will hurt, and the market valuations of the companies will drop, but I don't expect either to be a death sentence.
> 
> The rate of failure of older and/or highly seasonal resorts will probably accelerate, as more owners at those decide to default on MFs and the distribution of bad debt to reamaining owners leads to a death spiral. Those without a channel to resell foreclosed inventory are in more trouble. Again, this tends to favor the larger developers, all of whom now have points-based products that let them fairly easily resell inventory without having a sales office at that particular location. Even better, it generates inventory for sales that doesn't have to be built.



+1 They say that cockroaches would survive armageddon...#justsayin  LOL


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## JohnPaul (Apr 9, 2020)

theo said:


> Although not privy to the corporate mentality, I often wonder why the "big chains" don't think outside the (old and moldy) box and offer / peddle *date finite* contracts. One hopes (or wants to believe, anyhow) that in the Internet information age, better informed consumers will increasingly (and understandably) regard the "in perpetuity" aspect of timeshare products to be pure poison.
> 
> I have never purchased directly from any developer, but it seems to me that it would be a whole lot easier for the "big chains" to sell contracts of various predetermined durations for reasonable money, rather than continue to hard sell "perpetual" products for obscenely high figures.



One of the systems we own is Vacation Internationale (now VI Resorts).  

They used to sell 25 year and 40 year contracts but abandoned that for perpetual ownership.


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## am1 (Apr 9, 2020)

I sold my wyn stock in 2011 after I realized how poorly run their timeshare management department was run.  Only info someone would have by grinding out booking cancelling, upgrades and a whole other bag of tricks.  Their sales team more then compensated and I missed out.  Also did not like the risk of my income and investments tied together.


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## Jan M. (Apr 9, 2020)

dayooper said:


> Mark Wang, HGVC’s CEO said, on the most recent investor call, that they were looking at a more mid level TS program. It was supposed to be a trust and the buy in cost was supposed to be less. I know he was trying to expand to a different population sector, but I wonder how this plays out after this crisis.



That isn't a new concept for timeshares. Wyndham developed their Club Wyndham Access points to deal with all the foreclosures due to the economic recession that began in 2008. Wyndham retains ownership of the deeds the points are based on and sells you a contract for the use of x number of points annually. With Wyndham the cost to buy isn't any lower. They had other selling points to promote it. It will be interesting to see what HGVC does with the concept.


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## dayooper (Apr 9, 2020)

Jan M. said:


> That isn't a new concept for timeshares. Wyndham developed their Club Wyndham Access points to deal with all the foreclosures due to the economic recession that began in 2008. Wyndham retains ownership of the deeds the points are based on and sells you a contract for the use of x number of points annually. With Wyndham the cost to buy isn't any lower. They had other selling points to promote it. It will be interesting to see what HGVC does with the concept.



Yeah, I know. He did specifically say it would be targeted to a more mid level buyer than their present product. I’m curious if this will become a reality after this is over or be scrapped.


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## Ralph Sir Edward (Apr 9, 2020)

I have no clue how this will work through. What happens if the TS company goes bankrupt, to the owners of, say, weeks? Who knows?


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## bnoble (Apr 9, 2020)

Ralph Sir Edward said:


> What happens if the TS company goes bankrupt, to the owners of, say, weeks?


If the developer isn't also the manager, nothing. If the developer is the manager, then the HOA finds a new management company.


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## Ralph Sir Edward (Apr 9, 2020)

bnoble said:


> If the developer isn't also the manager, nothing. If the developer is the manager, then the HOA finds a new management company.



But what if the HOA is run by the developer? Say Marriott (VAC) go broke. They run the points system. What happens to the points owners?


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## bnoble (Apr 10, 2020)

I don’t know enough about Marriott to say. In Wyndham, the converted fixed week folks would revert to the underlying ownership. The UDI folks would need to collectively establish some entity to manage reservations for just the resort at which they own. The Access people might no longer have anything but even there I am not sure.


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## Maple_Leaf (Apr 10, 2020)

Fredflintstone said:


> I do feel sorry for owners. I can envision the MF rise with the argument that the added costs resulted from covid 19 which now needs to be paid for by owners


I feel sorry for the hotels. Their business model is in the crapper with everyone currently locked down and the spectre of a 14 day quarantine for future customers whenever a coronavirus spreader is discovered in their hotel. How do they manage that risk going forward? I would hate to go on a week vacation and be contacted by my local public health unit when I got back to isolate at home for 14 days due to contact tracing of a coronavirus spreader who stayed at the same hotel.

At least with a weeks-based timeshare a one week vacation might have less possible interactions with a coronavirus spreader than in a hotel with other guests coming and going on a daily basis.


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## bobmnu (Apr 11, 2020)

Iggyearl said:


> https://seekingalpha.com/article/4336402-wyndham-destinations-and-timeshare-business-face-road-lead-nowhere
> 
> 
> 
> This article points out the fragility of the timeshare sales model.  Most developers get 40% of their sales from "new" customers.  Those are people on vacation, who accept a gift in return for 90 minutes of their attention.  Then, Boom - you know the rest of the story.  But those prospects aren't showing up, and they may not show up for a long time.  Those that do may not be in a position to commit to a financial contract.  Additionally, many current owners are day to day on their finances.  Will they continue to pay their maintenance fees?  It will take a while for the dust to settle, but I am not going to be scouting timeshare stocks.  Are you?


Some of us older member remember when gas was rationed(in the 1970's) the media was predicting the end of the RV industry.  RV cost more than a time share and the maintenance costs are similar.  Winnebago Corp (WGO) was given up for dead its stock dropped from $10.50 a share to about $2.50.  It is now trading at $35 a share down from the high of $60 a share.  Time shares survived that crisis and will survive this crisis.  In my area lake and hunting property are selling.  People will continue to vacation and Vacation Property and opportunity will continue to prosper.  There may be some tight time ahead but vacationing will continue.


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## Deb & Bill (Apr 11, 2020)

theo said:


> To the best of my knowledge and belief, date finite RTU contracts are actually something of a rarity *outside of Mexico*.
> 
> We had two unrelated RTU's in the U.S. over the years; neither one had date finite terms.  One was Perennial Vacation Club and the other's name escapes me. Both were obtained resale for short money, both were sold (for even shorter money) after several years of use and enjoyment in each instance, but we would have been "stuck" had we not found others to whom to transfer the contracts.


DVC is RTU.  The original resorts all expire on Jan 31, 2042.  Some Old Key West contracts expire 15 years later when DVC tried to get more money from OKW members to add years to their contract.  Since that time, starting with Saratoga Springs, the newer resorts all expire 50 years from the start of the resort.  


CalGalTraveler said:


> +1 This would also negate the need for deedback programs.  The risk of not being able to dispose of a TS prevents us from buying more. If I know I had a date finite contract I would feel more comfortable. Life changes happen.
> 
> Drastically increasing MF will not help the companies LT because too many people will head for the exits which will cost them more in defaults and unpaid MF with negative consequences.
> 
> Instead, I could see developers pivoting toward selling additional points for cash with no obligation. HGVC has indicated that they are adding this model. Although they haven't specified details, it may be similar to Marriott in which if you own a base set of points, you can rent additional points instead of having to purchase a new contract.  I also think they will ramp up their rentals to generate revenue. They can play the hospitality game just as well as the hotels.


DVC allows member to purchase One Time Use points (up to 24 per UY per membership) to add to your points.  They started out about $15 a point, now are about $19 a point.  24 points can get you two nights in a studio at many times of the year.  The only problem is you can't purchase them during the home resort time frame, only at seven months out, and you can't purchase them ahead of time, only right when you need them.  So you can't do your booking online with those OTU points.


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## jbercu (Apr 11, 2020)

In reading the article and the responses it appears that there are many unknowns that are the result of very poor communication from the companies that are mentioned in the article.  The posting on this site reflects the best assumptions of the most knowledgeable timeshare consumers, Current Owners.  The current Owners of the product are the key to the continued viability of timeshare business, and the developers count on this segment of the consumers to make up at least 50% of future sales.   

AIR B&B took a very aggressive stance with its customers by forcing the hosts into a Money Back - No Questions Asked approach in order to maintain customer satisfaction at the expense of the hosts.  Will the timeshare industry, with a nation-wide policy dictated by ARDA provide the same thoughtful policy for the timeshare consumer affected by the COVID-19 crisis?

Let's hear from ARDA and ARDA-ROC when it counts!


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## Larry M (Apr 11, 2020)

Well, I had been expecting that I would get money for my little independent timeshare on the first Sunday in January, 2026. The HOA was pretty confident that the members would vote to continue operation instead. The pandemic should work in my favor.


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## CPNY (Apr 11, 2020)

I’m glad I like the system I own in and have no problem going to the resorts in my network.


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## ruhskis9713 (Apr 11, 2020)

theo said:


> Although not privy to the corporate mentality, I often wonder why the "big chains" don't think outside the (old and moldy) box and offer / peddle *date finite* contracts. One hopes (or wants to believe, anyhow) that in the Internet information age, better informed consumers will increasingly (and understandably) regard the "in perpetuity" aspect of timeshare products to be pure poison.
> 
> I have never purchased directly from any developer, but it seems to me that it would be a whole lot easier for the "big chains" to sell contracts of various predetermined durations for reasonable money, rather than continue to hard sell "perpetual" products for obscenely high figures.


I've said this for years also.  I'd much prefer to purchase a fixed term of use that expires rather than saddle my heirs with ownership in perpetuity.  It would also benefie the timeshare chains because it would give them a continuous stream of units to resell.


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## overthehill (Apr 11, 2020)

Interesting article with some good points. We have owned timeshares since 1985 and have enjoyed our ownership and the resorts we've been to but in the last year we find confirming resorts, be they at WorldMark or exchanges through RCI or II, getting the resorts we want has become impossible. Wyndham keeps on changing the programs or adding programs to entice potential buyers while at the same time treating long time owners like ourselves as peons. While we pay the same maintenance fees, we are at the back of the line when it comes to bookings. Add to that the business model which appears to have Wyndham building new resorts in lower cost areas not high on most owners places they want to visit, buying run down hotels with terrible floor plans and raising maintenance fees every year. Trendwest did not raise fees every year. 

I found this article hit on a movement we have joined that being using VRBO and Home Away to secure our vacations in places we want without being obligated to pay maintenance fees to Wyndham. We have been able to rent weeks at some of the very timeshares we have been unable to book through RCI or II. We don't stay at hotels as they usually don't offer kitchens, etc., so t/s or condo rentals give us what we need at lower costs than hotels AND often for lower cost than our weekly maintenance fee Wyndham charges. As a result we are disposing of our timeshare holdings.

I agree with the author's opinion that timeshare developers will be in trouble financially, especially when defaults by owners whom have purchased on contract fail to make payments due. If a current owner wants to increase their ownership, there will be numerous opportunities to buy for pennies on the dollar. One will have to expect the management company, i.e. Wyndham, etc. will take forever to process the transfer paperwork but it may be worth it in the long run. 

The one area not discussed is that of resort management. Wyndham manages WorldMark but that can be changed once the current contract expires, especially if Wyndham is near insolvency. I don't know what the management situation might be with other resorts. Your resort Board of Directors should be watching the situation closely.


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## bogey21 (Apr 11, 2020)

theo said:


> Although not privy to the corporate mentality, I often wonder why the "big chains" don't think outside the (old and moldy) box and offer / peddle *date finite* contracts.



You are really talking RTU contracts.  I agree they make sense.  My guess is that people would ride out the MFs when nearing the end of the contract ...

George


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## HitchHiker71 (Apr 11, 2020)

theo said:


> Although not privy to the corporate mentality, I often wonder why the "big chains" don't think outside the (old and moldy) box and offer / peddle *date finite* contracts. One hopes (or wants to believe, anyhow) that in the Internet information age, better informed consumers will increasingly (and understandably) regard the "in perpetuity" aspect of timeshare products to be pure poison.
> 
> I have never purchased directly from any developer, but it seems to me that it would be a whole lot easier for the "big chains" to sell contracts of various predetermined durations for reasonable money, rather than continue to hard sell "perpetual" products for obscenely high figures.



Wyndham’s COO and their EVP of sales openly discussed this exact option at last years owners meeting. They didn’t refer to them as RTU contracts but rather as “lease vs own” type contracts - where the contract would have an explicit end date - with the option to extend or to convert to perpetual - much like “lease with the option to buy” type real estate rental contracts. I haven’t heard anything more about this item since the owners meeting though - but I’m happy to follow up with an executive contact I have at Wyndham if there is interest in getting an update. 


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## theo (Apr 11, 2020)

ruhskis9713 said:


> I'd much prefer to purchase a fixed term of use that expires rather than saddle my heirs with ownership in perpetuity.



Realistically and legally speaking, there is no scenario in which your heirs could or would ever be "saddled" with your ownership(s), let alone in perpetuity, *unless* their names have (very unwisely) *already* been placed on the current  deed(s) as co-owner(s).  Otherwise, the heirs are completely free to simply *disclaim* any such unwanted "inheritance" when that time comes.


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## Lansdowne (Apr 12, 2020)

Interesting discussion but it leaves out for the most part a crisis that is inevitable in the cruise industry. People will be reluctant to take cruises after this crisis, heck they were starting to question cruising after some problems on ships before this virus. These folks will be vacationing - their options will be hotels and AirBNB, making them more expensive due to the competition. Those of us who own timeshares in the US will always have a place to vacation, with the convenience we are accustomed to. In my opinion, personally we own too many timeshares but we own them in places we like to go to and with stable corporate ownership that makes me feel more Upbeat about TS going forward. Let’s hope that the TS management companies have done their homework and have minimize the damage to their bottom line while maintaining our TS.


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## Fredflintstone (Apr 12, 2020)

Lansdowne said:


> Interesting discussion but it leaves out for the most part a crisis that is inevitable in the cruise industry. People will be reluctant to take cruises after this crisis, heck they were starting to question cruising after some problems on ships before this virus. These folks will be vacationing - their options will be hotels and AirBNB, making them more expensive due to the competition. Those of us who own timeshares in the US will always have a place to vacation, with the convenience we are accustomed to. In my opinion, personally we own too many timeshares but we own them in places we like to go to and with stable corporate ownership that makes me feel more Upbeat about TS going forward. Let’s hope that the TS management companies have done their homework and have minimize the damage to their bottom line while maintaining our TS.



Interesting points.

I don’t see Airbnb’s going up because of increased competition. What I see is people travelling less, more reluctant to be packed into an aircraft. Fewer people travelling often means higher vacancy and more competition to get rooms filled.

Actually, the price of airfare may go up as airlines remove seats to allow some social distancing. There is already plans in the works from some airlines to do just that. You are right over the cruise industry. Perhaps there will be fewer people allowed per boat increasing costs.

It’s going to be an interesting new world in travel. 


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