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Dumping of timeshares is coming.....Prepare yourself for big maintenance fee increases and special a

PigsDad

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I think the hotel-branded operations will always want to funnel their frequent-staying members towards buying vacation ownership. To do that, they have to be sure that the timeshare maintenance fees always offer a value proposition over staying on-site via direct booking. That creates a cap on how high they can go with maintenance fees.

What the fees are at independent resorts won't matter much, because on the sales floor buyers aren't making that comparison.
I would agree with that logic, and it seems to match my experience in owning hotel-branded timeshares for the last 15 years. Very modest annual increases (2-4%), and no special assessments -- even though two of our timeshares took a direct hurricane hit that caused enough damage for them to be shut down for several weeks.

@bogey21: George -- given that hotel-branded timeshares have been around for several decades, why to you think all of a sudden their MFs will start increasing to the point they will be "in serious trouble 10-15 years down the road"? Years of past data certainly doesn't support that prediction. What do you see changing?

On the contrary, the resorts that have gotten themselves into a death spiral of defaults that lead to higher MFs that lead to more defaults to higher MFs, etc., have almost always been smaller, independent timeshares.

Kurt
 
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T_R_Oglodyte

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On the contrary, the resorts that have gotten themselves into a death spiral of defaults that lead to higher MFs that lead to more defaults to higher MFs, etc., have almost always been smaller, independent timeshares.
IMHO - many of the resorts that have gone into death spiral are properties that were marginal for timeshare to begin with, due to there being a large off-peak period where units have little value. In many cases those are HOA managed, independent properties, because the developer sold the units and then moved on, having made their money. That was common in the early days of timesharing.

The hotel-branded timeshares are much savvier about only creating inventory in areas where there is reasonable year-round demand. They are in the business of operating, not just building, so they know to pay attention to that.
 
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Tamaradarann

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IMHO - many of the resorts that have gone into death spiral are properties that were marginal for timeshare to begin with, due to there being a large off-peak period where unit have little value. In many cases those are HOA managed, independent properties, because the developer sold the units and then moved on, having made their money. That was common in the early days of timesharing.

The hotel-branded timeshares are much savvier about only creating inventory in areas where there is reasonable year-round demand. They are in the business of operating, not just building, so they know to pay attention to that.

I totally agree with your thinking here. That is one of the reasons that the Hilton Grand Vacation Club has such a great amount of inventory in Honolulu(5), Island of Hawaii(4), NYC(4), Las Vegas(4), and Orlando(4). Many criticize them for continuous building and renovating in those areas and not branching out to a lot of other locations but they are cautious and have only dabbled in a few other select locations.
 

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For certain, if the market rental value of a week is not as much as the maintenance fee, which is true in many places many weeks, that could be a sign . . . .

After all, with Internet it is pretty easy for folks to rent for less that owners are paying.
 

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I totally agree with your thinking here. That is one of the reasons that the Hilton Grand Vacation Club has such a great amount of inventory in Honolulu(5), Island of Hawaii(4), NYC(4), Las Vegas(4), and Orlando(4). Many criticize them for continuous building and renovating in those areas and not branching out to a lot of other locations but they are cautious and have only dabbled in a few other select locations.
HGVC also has marketed successfully to foreign markets.
 

Tamaradarann

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HGVC also has marketed successfully to foreign markets.

Well you certainly see that in Honolulu. They are so Japanese oriented that all of the Resort Managers are either of Japanese decent and/or speak Japanese fluently. We love it including playing bilingual bingo on Wednesdays at 4:00 PM in the owners lounge in the Grand Waikikian.
 

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We have numerous timeshare weeks with Hawaiian Sun Holidays. We bought them on the resale market and paid a reasonable price. Our maintenance fees are quite reasonable for Waikiki and are well below $600/week for a 1 bedroom. Not the fanciest property, but very very decent and a great value. If we didn't own our timeshare weeks, instead of going every year, we might only go every five years... As the cost to rent a similar room during the peak season is double or triple what our timeshare maintenance fee is.. We are very happy with the current arrangement.. AND if we do decide to use RCI, it is a very good trader.. gets us almost 2 weeks in most RCI North American trade locations!! Couldn't be more pleased!
 

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There was a strong Japanese presence on Kauai 20 years ago, golf being a big reason.
 

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Using ARDA's always-accurate-and-never-biased figures :ponder:, I wonder what would happen if all of the 15% of dissatisfied timeshare owners were suddenly let go?

Would timeshare resorts collapse, or would they thrive, having eliminated all that bad debt expense, be able to lower fees for the happy owners, and remove the angst from the industry?

Only the shadow knows.
 

buzglyd

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I totally agree with your thinking here. That is one of the reasons that the Hilton Grand Vacation Club has such a great amount of inventory in Honolulu(5), Island of Hawaii(4), NYC(4), Las Vegas(4), and Orlando(4). Many criticize them for continuous building and renovating in those areas and not branching out to a lot of other locations but they are cautious and have only dabbled in a few other select locations.

Well they've got 4 in South Carolina now and that market is heavily seasonal.
 

Tamaradarann

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Well they've got 4 in South Carolina now and that market is heavily seasonal.

I know. That is one which you will need to ask HGVC about. I have never been nor do I intend on go to South Carolina.
 

Panina

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Well they've got 4 in South Carolina now and that market is heavily seasonal.
Very heavily school season but busy other times too. Good Weather has a long season, Hilton Head a little warmer then Myrtle Beach. April and October are my favorite times in Myrtle Beach. It can also be warm in March and November depending on the weather flow. Many northeners actually spend the winter in this region as winters are very mild. Occasionally a very cold spell or snow/ice but gone in a few days.
 

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George -- given that hotel-branded timeshares have been around for several decades, why to you think all of a sudden their MFs will start increasing to the point they will be "in serious trouble 10-15 years down the road"? Years of past data certainly doesn't support that prediction. What do you see changing?

MFs continue to increase every year; we hit a recession; travel slows; rental rates get cut to where they are substantially less than MFs. Maybe this never happens but if it does the value of all TSs plummet including major brands, both points and Weeks...

George
 

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MFs continue to increase every year; we hit a recession; travel slows; rental rates get cut to where they are substantially less than MFs. Maybe this never happens but if it does the value of all TSs plummet including major brands, both points and Weeks...

George

I had to look to see if I said that.

:D
 

PigsDad

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MFs continue to increase every year; we hit a recession; travel slows; rental rates get cut to where they are substantially less than MFs. Maybe this never happens but if it does the value of all TSs plummet including major brands, both points and Weeks...
Hmmm. As I recall, that happened in '01-'02 and '07-'08, and we are still here and timeshare sales are increasing every year. What happened?

Kurt
 

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Hmmm. As I recall, that happened in '01-'02 and '07-'08, and we are still here and timeshare sales are increasing every year. What happened?

Kurt

People still love to "get away".
Also, they may not be making as much as they would like, but they still love to dine out.
Seems to be a recession-proof business.

Travel? ditto.
Whatever the circumstances, people take to the road.

And......do you know of a city ANYWHERE where the restaurant business ISN'T thriving? I don't.
Even in my home town in Georgia you have to make reservations early and expect waits at those (good) places
where they don't take reservations.

And take Hilton Head, for example, or Williamsburg, or Boston, or Orlando-----restaurants are killing it!!!!
 

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You all could be right. All I know is that I bought Weeks at 4 different Marriott Resorts starting in the Mid 80s. Almost immediatey they started changing the rules to my detriment. Within 5 years or so it became apparent to me that what I owned was going to decline in value so I sold, at a small profit no less. Today I would be lucky to get back 1/3 of my original purchase prices. I have no idea what the transition from Weeks to Points did to the value of those holding onto their Weeks. Maybe they benefited, maybe they got hurt. You all know better than me. But I continue to believe that the profit motive of the Marriotts, Hiltons, Wyndhams, etc. will result in continuing changes in their product to their benefit and to the detriment of their owners. Hope I am wrong, but this is what I believe...

George
 

Panina

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You all could be right. All I know is that I bought Weeks at 4 different Marriott Resorts starting in the Mid 80s. Almost immediatey they started changing the rules to my detriment. Within 5 years or so it became apparent to me that what I owned was going to decline in value so I sold, at a small profit no less. Today I would be lucky to get back 1/3 of my original purchase prices. I have no idea what the transition from Weeks to Points did to the value of those holding onto their Weeks. Maybe they benefited, maybe they got hurt. You all know better than me. But I continue to believe that the profit motive of the Marriotts, Hiltons, Wyndhams, etc. will result in continuing changes in their product to their benefit and to the detriment of their owners. Hope I am wrong, but this is what I believe...

George
You point is valid. Many of the systems made changes that were not beneficial to owners. These changes were ways to sell something else and were profit driven.
 

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Y But I continue to believe that the profit motive of the Marriotts, Hiltons, Wyndhams, etc. will result in continuing changes in their product to their benefit and to the detriment of their owners.

George

"Cash Cows" comes to mind.
 

dioxide45

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Using ARDA's always-accurate-and-never-biased figures :ponder:, I wonder what would happen if all of the 15% of dissatisfied timeshare owners were suddenly let go?

Would timeshare resorts collapse, or would they thrive, having eliminated all that bad debt expense, be able to lower fees for the happy owners, and remove the angst from the industry?

Only the shadow knows.
Given how at the height of the financial crisis the default rate on mortgages was only a little over 10%, if 15% of timeshare owners defaulted it wouldn't be pretty. If they just were let go, who would pay their MFs? That would become bad debt or everyone else's fees would go up, not be lowered.
 

Tamaradarann

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Very heavily school season but busy other times too. Good Weather has a long season, Hilton Head a little warmer then Myrtle Beach. April and October are my favorite times in Myrtle Beach. It can also be warm in March and November depending on the weather flow. Many northeners actually spend the winter in this region as winters are very mild. Occasionally a very cold spell or snow/ice but gone in a few days.

What is warm is a matter of opinion. We love the weather on Long Island from June - September, even though this June has been a little too cold. The rest of the year it is too cold for us to enjoy. We like daytimes in the 70's or above and nights no lower than 60. Honolulu is our place, not South Carolina.
 

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. . . if 15% of timeshare owners defaulted it wouldn't be pretty. If they just were let go, who would pay their MFs? That would become bad debt or everyone else's fees would go up, not be lowered.

But, we don't know that.

We don't know that if all the angst and litigation and bad debt expense ended, and all that was left was happy, happy, happy owners, fees would go up.

What we do know is that if the defaulters were no longer defaulting, there would be no bad dept expense, or very little.

But, since you mentioned the mortgage foreclosure debacle, did everything go to heck in a handbasket? Did those paying their mortgages have to start paying extra fees? Sure, there was a painful period, but did the defaulters get taken care of, and did things return pretty much to normal, over time?

And what caused the mortgage foreclosure debacle? Predatory lending practices putting people in houses above their means, and a decline in the value of the entire housing market when it hit critical mass.

Artificial house prices and owners who should not be.

Not entirely unlike the collapse of the timeshare retail market when the number wanting to escape the timeshare trap hit critical mass.

So, maybe there needs to be purging, a sanitizing of the industry, and get it over with.

Like housing, is there not a lower, real value in timeshare, where more people would find it attractive, just as the thousands of foreclosed houses have found new owners at lower values? At foreclosure ground zero, where there were once hundreds of foreclosures, with new ones every day, it's hard to find one now, and the values are much higher now.

Once the housing purge happened, and things settled back into real values, those values started increasing again, hopefully in a more sane manner. The house we bought for $45,000 in 2011, and sold for $129,000 in 2015, is for sale now for $220,000. Timeshare owners would be jumping for joy if something like that happened to timeshares, and there was virtually no defaults.

I am familiar with many older resorts where something close to that has happened, where they take back defaulting weeks and make them productive, and where there is real market value to timeshare weeks, much lower than developer values, but real, getting in and getting out.

Sometimes older and lesser is better.

Dollars and sense aside, it's just sad that an industry has to rely on massive litigation of their customers as SOP.

Wow! I did not intend to go here when I started this post, but maybe a timeshare foreclosure crisis is what is needed . . . or, less painful, just letting the bad debt owners go.
 
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Big Matt

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I could see some of the smaller independent timeshares just convert to condos, selling the units outright and establishing a subsequent condo association. You could even just flip them into apartments and work with municipalities to get affordable housing designations for some/all of the units. Most are going to be compliant already.
 

chapjim

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I have never been nor do I intend on go to South Carolina.

Is there a reason? I think a lot of people here would say you might be missing something. SC has some wonderful areas and is a lot closer and cheaper to get to than Hawaii.
 
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