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High QualityTimeshare Resale Prices Plummeting

london

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Many desirable high quality resort timeshare weeks are being purchased for pennies on the dollar.

Prices are 10% to 20% of what original purchasers paid 5 to 10 years ago. 10K weeks for 1K, 5K weeks for $500.00.

Orlando resorts are going for $100.00 and less on Ebay.

It is truly a buyers market for many high quality resorts.

Appears 2009 will see many owners almost giving away nice timeshare weeks.
 

icydog

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Welcome to timeshare 101 but multiplied by ten for 2009. Timeshares are rarely worth near the amount paid for to the developer. This year the situation is almost dire.
 

GregGH

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Hello

Can anyone show more proof ( apart from eBay ) ??

I stumbled across a thread listing this .... http://dioxide45.tripod.com/cgi-bin/rofr.cgi which shows ROFR for Marriott properties -- is anyone else tracking quality properties for others ?? What sales have we seen that have passed ROFR

Greg
 

timeos2

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ROFR has been exposed as what it is. No friend to owners

Hello

Can anyone show more proof ( apart from eBay ) ??

I stumbled across a thread listing this .... http://dioxide45.tripod.com/cgi-bin/rofr.cgi which shows ROFR for Marriott properties -- is anyone else tracking quality properties for others ?? What sales have we seen that have passed ROFR

Greg
Nearly anything goes - ROFR hasn't been used by Marriott lately as they too are feeling the pinch. Those who thought it was "price protection" are getting a big wake up call. If you want to buy - and I don't recommend buying any timeshare with ROFR - now may be the time.
 
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london

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Marriott ROFR

Posts in last 2 to 3 months seem indicate that resale pricing has dropped significantly, with Marriott not excercising its right of first refusal.

Marriott does not wish to increase its inventory of weeks in a declining market.

2009 projections are sales down 25% or more.
 

MaryH

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Hyatt resales have come down 2-5K depending on the season from 1-2 years ago.
 

Talent312

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Any thoughts on the notion that abandoned units and the failure of the T/S market will result in higher MF's for the rest of us owners?
 

london

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Higher MF's Due to Abandoned Units

Any thoughts on the notion that abandoned units and the failure of the T/S market will result in higher MF's for the rest of us owners?
We own at 4 resorts, that report delinquency rates of 6 to 8%. No doubt an increase in delinquency/foreclosures will increase owner MF's.

I would think the increase would not be a large percentage of the annual fee, perhaps 5%.
 

MaryH

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It has happened already. RHC walked away from a resort where they owned a sizable chunk of weeks and that resort went bankrupt.

My IPV week M/F jumped from $334 to $411, an increase of $77 or 24%... But that is partially due to no increase in M/F last year, change in model to allocate fees to different season and size and a slight increase in non-performing units.
 

timeos2

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It is a potential problem for every resort

Any thoughts on the notion that abandoned units and the failure of the T/S market will result in higher MF's for the rest of us owners?
You'll find out how good your HOA and management are in keeping an eye on delinquent accounts and following up effectively. If delinquencies rise and there is no plan to deal with it the remaining, paying owners could see serious increases in fees. That could lead to more delinquencies, ....
 

gmarine

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Nearly anything goes - ROFR hasn't been used by Marriott lately as they too are feeling the pinch. Those who thought it was "price protection" are getting a big wake up call. If you want to buy - and I don't recommend buying any timeshare with ROFR - now may be the time.
EXACTLY. You have always said that ROFR does not help keep resale prices high.
Now we see what happens when ROFR is not exercised. Prices have dropped.

ROFR is exercised = higher sale prices
ROFR not exercised = lower sale prices

So remind me how ROFR is bad for owners.
 

Jennie

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Here's another way in which the overall economic conditons are impacting the industry, and ultimately us. Someone I know who holds a key position (cannot be more specific for obvious reasons) told me that droves of people are "walking away" from blue studio units, especially in Orlando, and it's virtually impossible to go after them. The resorts have little hope of re-selling the units, given the low prices that much larger, nicer units are going for on Ebay and through resale companies.

So what are they doing to cover the shortfall? They are converting the abandoned junk units to RCI Points and then selling the Points packages at very low prices. As these points flood the market, there will be far more people competing for the desirable exchanges. Someone who pays very little to acquire the Points initially, and generally pays less annual maintenance fees for the two junk weeks based Points than people pay for a bright red one bedroom underlying week, will both be able to reserve the same high quality week. And one major problem with the RCI Points program is that there is no ability to enter an on-going search so it's a "crap shoot" who will find the gems first.And who will have to settle for junk or nothing.

As I understand it, RCI sets standards re: the quality of resorts that will be accepted into the Points program. But the standard is based upon the overall rating of the resort, not the desirability of the season, demand, or size of the different units at the resort. That's over and above the fact that many people have doubts about the objectivity, accuracy, and/or fairness of RCI's ratings in general. Suspicions abound about what role favoritism, unethical financial considerations, and even poor judment may play in the process.

By allowing tons of junk units to enter the Points system, it waters down the quality of the inventory, and makes it more difficult for owers of higher quality units to reserve weeks of similar quality. But hey, the resorts are collecting maintenance fees for the abandoned junk units that would otherwise have gone unsold and unfunded, and RCI is getting more Points members and their fees. They count on the fact that many of the new Points members will not take the time to learn how to use them, and thus they will have to deliver less. They hope the owners will blame themselves, rather than RCI, when they do not get any vacation out of it.

If the RCI inventory gets weighted down with too much junk, and the competition for the good stuff becomes too stiff, people who own Points based on good weeks may let their Points membership expire and revert back to owning the good underlying fixed or floating week which they can then use, rent, or exchange through their "Weeks" account, or perhaps through an alternate trading company.

In this scenerio, RCI may lose more and more business, and the newer owners of the junk weeks may abandon them. Then RCI will have to cook up a new scheme to make up for the lost revenue. And on and on it goes.
 

ira g

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It is really bad out there

We were at a charity auction last night and there were no offers or bids for either of 2 gold crown/ five star units. Not even $1.00. The donor was even willing to pay one half the closing costs. One of these units was in Weston FL, floating week during Feb. and the other in Jensen Beach FL. Both of these were 2 bedroom units. Anyone looking to get rid of their units will have a real hard time considering the weakened and weakening economy and the high MF. To me it looks like we are at the beginning of the timeshare implosion.
 

BocaBum99

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EXACTLY. You have always said that ROFR does not help keep resale prices high.
Now we see what happens when ROFR is not exercised. Prices have dropped.

ROFR is exercised = higher sale prices
ROFR not exercised = lower sale prices

So remind me how ROFR is bad for owners.
ROFR hurt customers of 3-6 months ago who bought resale believing that ROFR would keep prices high forever. Then, ROFR is dropped and they rug is pulled out from under them.
 

timeos2

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Nice try but the facts show a different outcome

EXACTLY. You have always said that ROFR does not help keep resale prices high.
Now we see what happens when ROFR is not exercised. Prices have dropped.

ROFR is exercised = higher sale prices
ROFR not exercised = lower sale prices

So remind me how ROFR is bad for owners.
A perfect answer except for one thing. The price the SELLER gets is always the low one. Doesn't matter if the ROFR is used or not. Marriott doesn't give the SELLER (owner) a higher price nor will the market based buyer. It is the illusion of higher price - because the BUYER (new owner) pays more (but only to Marriott, NOT the seller) that is the heart of the ROFR ruse.

Now the BUYERS are getting the deals, the sellers are getting what they always got (the LOW market selling price) and Marriott isn't getting the spread for their operations. Nothing except perception of a higher value has changed. ROFR is no friend to sellers or buyers, only the developer. Period. Prove that statement wrong as the facts unfortunately show your assertion to be an incorrect one.
 

timeos2

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Its week for week that can't be supported

If the RCI inventory gets weighted down with too much junk, and the competition for the good stuff becomes too stiff, people who own Points based on good weeks may let their Points membership expire and revert back to owning the good underlying fixed or floating week which they can then use, rent, or exchange through their "Weeks" account, or perhaps through an alternate trading company.

In this scenerio, RCI may lose more and more business, and the newer owners of the junk weeks may abandon them. Then RCI will have to cook up a new scheme to make up for the lost revenue. And on and on it goes.
Actually unlike week for week trades the "junk" weeks in points don't have a negative effect. Why? Because the value of a point is a point. When you deposit a so called junk week you get less points than a good or great week gets. it naturally balances the value. So it might take two or even three weeks of "junk" points to get a great week in trade. The weeks system must take a full week out for a full week in - one for one, no balance (except the super secret "trade value" that purports to balance but we know thats a sham).

So it's points systems like RCI's that will save the value of Junk or blue time for resorts used properly. Properly means the fees for lesser time (junk weeks) are less than those for good or great time. Thus the whole system is in balance and everyone gets fair value for their type of ownership. Much better than the unsustainable week for week despite wide variations in value each of those weeks most likely represent.

I wouldn't worry about the points systems but the week for week sham may indeed be headed for that implosion.
 

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Why not convert the smaller units into hotel rooms? The rental income should result in lower MFs. It would sure be better than continually raising MFs to offset Resort owned units. This should work well in overbuilt areas like Orlando, Branson and Las Vegas


George
 

timeos2

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Why not convert the smaller units into hotel rooms? The rental income should result in lower MFs. It would sure be better than continually raising MFs to offset Resort owned units. This should work well in overbuilt areas like Orlando, Branson and Las Vegas


George
There are no blue weeks in Orlando. And you cannot convert rooms for only part of a year. You need a flexible system to assign known values (points) and you need to adjust annual fees based on values (again, points can do that - weeks cannot). In most cases the blue time for Florida is in areas other than Orlando and usually at smaller, older resorts. The resorts have to be creative to solve a problem like this.
 

tombo

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EXACTLY. You have always said that ROFR does not help keep resale prices high.
Now we see what happens when ROFR is not exercised. Prices have dropped.

ROFR is exercised = higher sale prices
ROFR not exercised = lower sale prices

So remind me how ROFR is bad for owners.
What it actually shows is the truth that sale prices are determined by the free market and ROFR doesn't affect them at all. Sale prices are determined by supply and demand, simple economics 101.

When the market was better, demand was higher, so prices were higher. Since there was more demand for timeshares ( both retail and resale), Marriott stold every week they could make a profit on using ROFR. Marriott bought them for what they had already sold for because they needed the inventory, not to help owners in any way. They didn't raise the sale price one cent, they simply stold the week from the real buyer for the already agreed upon price. The seller would have received the same money whether Marriott ROFR'd or not.

Now fewer people want to buy timeshares resale or retail. Lower demand always translates into lower prices. ROFR doesn't enter into the equation. The current low sale prices are selling cheap whether they are ROFR'd or not. If it sold for $100 (whether it is ROFR'd or not), the seller only got $100, and it still sold for $100.

The average e-bay buyer doesn't read TUG or dioxides ROFR report. They buy a week they want by being high bidder on e-bay and don't raise their bid to beat ROFR and they never did. Now even though weeks are selling for a lot less due to the decreased demand, Marriott isn't using ROFR to steal the week. Marriott doesn't want to steal the weeks because they don't need more inventory they can't sell. The price a week sells for is always the price a seller and buyer (not Marriott) agree upon. In this market that price (if one can even find a buyer) is much lower.

Many belive ROFR is to help keep prices high at Marriott and other resorts. Why wouldn't they use the magic ROFR now when resale prices are the lowest they have ever been? Why aren't they"propping up the prices" using ROFR as so many owners beleive it was designed to do? The ugly truth is obvious now to anyone willing to be realistic. ROFR is used to benefit the developer. If it doesn't benefit the developer it doesn't get exercised no matter how low the prices have fallen.

There never was (and never will be) a floor price that Marriott won't let resales fall below (look at the low prices Marriott weeks have sold for recently if you have any doubts). That is a myth perpetuated by Mariott's sales force along with the lie that ROFR protects owners. ROFR was designed by developers, to benefit developers, and it does not help to keep owner's resale prices high. The current market is proof positive.

Don't buy from any developer that has ROFR in their contract.
 
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gmarine

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ROFR hurt customers of 3-6 months ago who bought resale believing that ROFR would keep prices high forever. Then, ROFR is dropped and they rug is pulled out from under them.
ROFR or not, expecting timeshare prices to always stay high was a mistake and anyone who bought with that idea was foolish.
 

bogey21

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There are no blue weeks in Orlando. And you cannot convert rooms for only part of a year.......The resorts have to be creative to solve a problem like this.
I'm not talking about Blue Weeks. I'm talking about smaller units or units that can be split into smaller units. To get all such units into the rental program owners of such Weeks could even be upgraded. You may not agree but I think this is creative.

George
 

california-bighorn

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Resort Renting their Weeks

There already are timeshare resorts that are very active in renting excess inventory. One I own in Hawaii encourages owners to rent additional weeks to make their stay longer and they also encourage owners to refer their friends for rental weeks. Another we own in Tahoe puts good use to "Bonus Time".
Going over balance sheets, the income from these rentals is a significant source of income helping to keep the MF's lower. This benefits everyone. When we have used the rental and bonus time, we paid about half of the going rate of a hotel room in these areas.
But, I just described two areas where the "season" isn't as much as a factor. Maybe the problem of tourist season and demand might still present a problem in many areas.
 

gmarine

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A perfect answer except for one thing. The price the SELLER gets is always the low one. Doesn't matter if the ROFR is used or not. Marriott doesn't give the SELLER (owner) a higher price nor will the market based buyer. It is the illusion of higher price - because the BUYER (new owner) pays more (but only to Marriott, NOT the seller) that is the heart of the ROFR ruse.

Now the BUYERS are getting the deals, the sellers are getting what they always got (the LOW market selling price) and Marriott isn't getting the spread for their operations. Nothing except perception of a higher value has changed. ROFR is no friend to sellers or buyers, only the developer. Period. Prove that statement wrong as the facts unfortunately show your assertion to be an incorrect one.
You said yourself that since Marriott has stopped exercising ROFR that resale prices have fallen. That means that when Marriott was exercising ROFR the SELLER was getting a higher price than they currently are with Marriott not exercising ROFR. Its very simple and you gave the example yourself. When exercised ROFR gives sellers higher prices. When it is stopped prices fall resulting in lower prices.

Think about it. A few months ago Marriott was exercising ROFR and a seller could get expect to get 10K for most annual two bedroom platinum units. Marriott stops exercising ROFR and some of these same units have gotten sellers thousands less. The economy is also to blame but obviously ROFR not being used is a big part of it as well.

With Marriott prices so low without ROFR being exercised you could just admit you were mistaken about ROFR and move on.
 
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Bill4728

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For a long time, the resale prices of the Hilton (HGVC) Orlando & LV resorts were pretty stable.

Platinum pts sold for about $2.00/pt or ~$14,000 for a 7000 pt 2 bd week
Gold points sold for about $1.50 - $1.60/pt or about $8000 for a 5000 pt 2 bd week

This is no longer true!!

The price for HGVC has gone down significantly in the past 4-6 months.

I'd guess that you can easily find Plat pts for $1.50 -$1.60 ( a Tugger got some 2 months ago for $1.40 )
And I'd guess that you can get gold pts for $1.25/pt or less.

So this is an example of the significant drop in the resale prices of a "top of the line" TS system.
 

tombo

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You said yourself that since Marriott has stopped exercising ROFR that resale prices have fallen. That means that when Marriott was exercising ROFR the SELLER was getting a higher price than they currently are with Marriott not exercising ROFR. Its very simple and you gave the example yourself. When exercised ROFR gives sellers higher prices. When it is stopped prices fall resulting in lower prices.

Think about it. A few months ago Marriott was exercising ROFR and a seller could get expect to get 10K for most annual two bedroom platinum units. Marriott stops exercising ROFR and some of these same units have gotten sellers thousands less. The economy is also to blame but obviously ROFR not being used is a big part of it as well.

With Marriott prices so low without ROFR being exercised you could just admit you were mistaken about ROFR and move on.

Please read my post above. The market determines prices. Mariott is not using ROFR now because sales ( both retail and resale) are dismal. The prices would have dropped whether Marriott was still ROFR'ing or not. In fact prices were plummeting while Marriott was still ROFR'ing.

The fact that Marriott only wants to steal inventory when sales are good using ROFR makes sense. Of course they will steal a week from the rightful buyer for $10,000 if they feel they can sell it retail for $20,000. Now they don't want to ROFR the same week for $5000 because like the seller, they can't find buyers. What is really sad is that even as low as current Marriott resale prices are, they still haven't gotten low enough to make Mariott think they are worth buying themselves. I guess when weeks start selling for under $1000 Marriott might think the prices are low enough to start buying again using ROFR.
 
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