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An interesting article on "Will timeshares survive?"

Iggyearl

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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?
 

TravelTime

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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.
 

CO skier

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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.


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.
 

Brett

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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
 

Fredflintstone

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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.


Sent from my iPad using Tapatalk
 

bogey21

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

George
 

Roger830

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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.
 

theo

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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. :shrug:
 
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CalGalTraveler

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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. :shrug:
+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

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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.
 

T_R_Oglodyte

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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. :shrug:
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.
 

elaine

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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.
 

theo

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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

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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.
 

dayooper

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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.
 

CalGalTraveler

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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 :ponder:
 

JohnPaul

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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. :shrug:

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.
 

am1

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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.
 

Jan M.

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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.
 

dayooper

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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.
 

Ralph Sir Edward

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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?
 

Ralph Sir Edward

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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?
 

bnoble

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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.
 

Maple_Leaf

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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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