Will Covid-19 Pandemic Bankrupt Some Florida Timeshares

[bbakernbay]

With the travel restrictions and major loss of income and pending business closures and bankruptcies, it is certainly probable that Timeshare Maintenance Fees are not going to get paid. This situation will very likely cause many Timeshare Corporations to suffer a significant loss of income as many Owners decide to walk away, refuse to pay MFees and the Timeshare goes bankrupt shortly thereafter.

 

[CalGalTraveler]

Perhaps the HOAs can apply for SBA and payroll loans from the stimulus package.

 

[DannyTS]

it really depends on the timeshare. Marriott took a series of measures and they announced they expect to be cash flow neutral. The delinquency rate may go up but if it is not by a lot, it may just be covered by the the lower maintenance costs while the resorts are empty in 2020. Ironically, if the delinquency rate does go up the developers may acquire good inventory for free and that may increase future earnings. The big question of course is how long this is going to last but my prediction is that the big ones that are very profitable in normal times, will be fine.
I do not know how the smaller resorts that were just getting by will do. We may see some problems there.

 

[TravelTime]

I have thought about whether some timeshare companies may go out of business. It is possible. I have also thought that many hotels/resorts will go out of business too. I wonder what will happen with the cruise lines. Some of them have a lot of cash but I wonder how long they can survive with no bailout (and rightfully so).

 

[Talent312]

I suspect that many have already collected enuff MF's to remain open for the return of owners later this year. HGVC (Hilton Grand Vacations) has said that they've collected 90% of MF's for the year.

Next year may be an issue if a lot of owners are unable to pony up.
.

 

[Passepartout]

Many travel related businesses and full industries as well as healthcare systems and economies, large and small will be under extreme financial pressure caused by Covid-19. The effect will be much bigger than one state's timeshare resorts.

I'm not sticking my neck out too far to say that the financially strong will survive. Those without strong balance sheets will struggle.

Jim

 

[b2bailey]

I have thought about whether some timeshare companies may go out of business. It is possible. I have also thought that many hotels/resorts will go out of business too. I wonder what will happen with the cruise lines. Some of them have a lot of cash but I wonder how long they can survive with no bailout (and rightfully so).

I own one stand-alone timeshare at Gaslamp Plaza Suites in San Diego. As long as they can re-open for Comic -Con week, I think they will be okay.

 

[b2bailey]

Off-topic, I saw a headline that said cruise lines not able to receive US financial assistance. Anyone else see it?

 

[Luanne]

Off-topic, I saw a headline that said cruise lines not able to receive US financial assistance. Anyone else see it?

I've seen several articles that address this.

 

[TravelTime]

Off-topic, I saw a headline that said cruise lines not able to receive US financial assistance. Anyone else see it?

Yes, that is correct. They are not getting any bail out money.

 

[WVBaker]

let's hope they don't lay this at the feet of the owners by way of substantially increased maintenance fees. That, in and of itself, will cause many owners to simply drop their units and flee.

 

[Passepartout]

Off-topic, I saw a headline that said cruise lines not able to receive US financial assistance. Anyone else see it?

I saw that- they made their bed by flying foreign flags to avoid U.S. taxes and wage/hour laws. But I also read that a Saudi investment fund with links to Prince Bin Salman and he-that-cannot-be-named-on-TUG invested heavily in Carnival Corp. in recent days.

 

[Sandy VDH]

prices were very low, I have considered it.

 

[Panina]

I am not too worried about the timeshares I own, high demand places, high demand times and managed well. That is the key, those that were not managed well and had financial problems prior and relied on rental income for a large percentage of units that the hoa got because owners walked away, can be in trouble.

Even the ones I plan on giving away I feel will be easy even in harder times.

I realize my mfs this year and next might be lost if I cannot go but also think once there is either good treatment or a vaccine anyone who can afford to go away will asap after not being able to go for so long. Especially in driving distance.

 

[Roger830]

We own weeks 4,5,6 at Hollywood Beach Resort. The mf was paid in December for the full year, so we're ok for this year, but with the resort now closed, some of those owner's might get discouraged. Also, traders might want to give it up.

We'll be ok for next Jan and Feb, those owners will pay, I am concerned about future years.

 

[TravelTime]

I think in 2021 when MFs are due again, we will learn the fall out. I suspect we will hear many complaints in 2021 and 2022.

 

[Maple_Leaf]

I am not too worried about the timeshares I own, high demand places, high demand times and managed well. That is the key, those that were not managed well and had financial problems prior and relied on rental income for a large percentage of units that the hoa got because owners walked away, can be in trouble.

Weeks resorts with high owner utilization will likely be fine. The ones that depend on renters may have a problem. Points resorts kind of have the look and feel of hotels so those owners that rent are now in the hotel business with all the resulting coronavirus headaches.

 

[Sea Six]

Off-topic, I saw a headline that said cruise lines not able to receive US financial assistance. Anyone else see it?

Yes, and they are grounded for another 100 days! Maybe they will decide to pay their taxes to the USA? Tired of Ship's Registry - Panama. George Town, and so many other places in the Caribbean.

 

[klpca]

I own one stand-alone timeshare at Gaslamp Plaza Suites in San Diego. As long as they can re-open for Comic -Con week, I think they will be okay.

Comic con is not a for-sure thing this year. I'll see if I can find the article.

 

[CalGalTraveler]

...

 

[pedro47]

I feel some smaller independent timeshare resorts could be brought by Wyndham or DRI not this fiscal year but next year because owners will not pay their 2021 maintenance fees because of their experiences with the Coronavirus in 2020. IMHO.

 

[theo]

This situation will very likely cause many Timeshare Corporations to suffer a significant loss of income as many Owners decide to walk away, refuse to pay MFees and the Timeshare goes bankrupt shortly thereafter.

I'm not at all clear on what you mean by Timeshare Corporations, but the deep pockets "big chains" will certainly be just fine.

Personally, I wonder and worry more about small, independent timeshare operations, where there are no "deep corporate pockets" behind the scenes and where the owner population (at least in my own observation and experience) tends to be older. I know of (and own weeks at) several such places in Florida, each with just 20-40 total units. At one such property, the ownership (not with my vote) "opted out" of compliance with Florida's condo law which requires minimum financial reserves to be maintained. That a choice to "opt out" even exists at all is another conversation entirely, but that option does indeed exist and it is indeed sometimes exercised.

A vote to "opt out" of maintaining adequate financial reserves is (to me, anyhow) a relatively clear indication that a majority of folks there cannot or do not choose to look beyond the figure on their annual maintenance fee bill. With that much clear, what will those same folks do if / when their fees inevitably go up as a result of some unhappy owners having been "locked out" of their 2020 weeks (for which they already paid their fees) and bailing out? That would inevitably create higher maintenance fees for those still remaining; I can almost hear the sound of the dominoes falling there now. Even those remaining will have a pain threshold for fee increases. There is a point at which intelligent cost / benefit analysis leads to a reasonable conclusion of "No Mas" --- and folks just simply walking away. At some point, the future and viability of such a property as a timeshare facility will be in clear and obvious jeopardy,

 

[Big Matt]

I'm really confused by this thread. Other than brand new resorts that are partially built, the timeshares are owned by the owners. I also would expect that people who pay the fees are either still capable of paying them at year end or are already retired. I really don't see this impacting timeshare owners that much. Additionally, many are vacant right now and will be for a few months total, so operating expenses are going down. Management companies like Marriott may feel the pinch from losses in marginal income, but we are still paying them out of our fees.

 

[theo]

I'm really confused by this thread. Other than brand new resorts that are partially built, the timeshares are owned by the owners. I also would expect that people who pay the fees are either still capable of paying them at year end or are already retired. I really don't see this impacting timeshare owners that much. Additionally, many are vacant right now and will be for a few months total, so operating expenses are going down. Management companies like Marriott may feel the pinch from losses in marginal income, but we are still paying them out of our fees.

I hope that I haven't inadvertently contributed to your "confusion" with my input. I was trying to make a very clear distinction between small, independent resorts and the "big chains" since I was (and still am) unclear about the OP's original reference. The two are profoundly different and I suspect that the current situation will ultimately result in significantly different consequences.

At several small, independent places (of only 20-40 units) where we own some fixed weeks, I expect that a months-long closure will indeed have some very real financial consequences, but I would certainly be happy to be wrong.

 

[Big Matt]

Theo, I don't think it's as simple as some people not paying their fees, but here is how it might unfold. First, there would have to be so many that the timeshare HOA would realize very early in 2021 that they couldn't cover the operating budget, pay taxes, etc. At that point the remaining owners would vote on a one time special assessment to stay open. If it didn't pass, the only real option would be to cease operation and either try to sell the vacated weeks outright or sell them to a vacation broker or advertise on a travel agent site (Travelocity, Expedia, etc.) while determining other options with the owners. Assuming the property was reasonably nice to begin with, I'm sure there will be buyers if the HOA wanted to dissolve and sell the real estate.

I've always thought that at some point the smaller timeshares would be an ideal investment by a municipality for affordable senior housing.