Vacation Time Shares: The Current Landscape

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If you are a member of one of the nearly nine million households that own a timeshare product, you would do well to pay close attention to timeshare trends to come.

The American Resort Development Association, or ARDA, the industry trade group for timeshares, estimates that the industry is worth around $8 billion in terms of revenue. Those nine million households own either weeks, points or a fractional ownership of a vacation property. Think Disney, Four Seasons, Hilton, Marriott and Wyndham.

Experts found there are well over 500,000 shared ownership units worldwide and nearly 295,000 of them are in North America. However, over the past ten years, timeshares have experienced a bad reputation, even though they continue to offer great opportunities for families to build lasting memories in beautiful locations.

It seems the timeshare is up against more affordable and abundant travel solutions, and the current state of the market has resulted in a plethora of timeshare properties for sale that have little value, if any. Have timeshares reached the end of their life cycle?

First, any product or service relies on its consumer base. In the case of timeshares, the average owner is almost 50 years old, leaving the lucrative and coveted millennial consumer up for grabs.
Unfortunately, millennials have multiple options to consider for vacation rentals. Online computer sites such as VRBO, HomeAway and Airbnb have opened up the vacation world to the masses and are growing like wildfire. These sites generally offer privately owned accommodations for rent, instead of the traditional hotel or motel.

Some estimate the private accommodation market will be worth more than $35 billion this year. And this growth looks to be fueled by those ages 18 to 44, a vital segment that the timeshare industry needs desperately to grow.

The marketing and appeal of the private, short-term vacation rental business includes not only lower prices, but an ability to “flex and alter your travel plans,” along with a more authentic experience during your stay. Some rental hosts even meet with their renters and act as an unofficial tour guide during their stay, similar to a concierge, but going beyond the call of duty. “Is it your anniversary? Enjoy this complimentary bottle of champagne and box of chocolates!” Or, “Need to find the city bus? Follow me and I’ll walk you there!”

A younger audience is crucial to the timeshare industry not only because of the aging out of their current customer base, but also because much of the industry’s profits come from existing customers, who continue to buy the bulk of timeshare products being offered. According to ARDA, at least three major resort developers in 2015 made more than 60 percent of their sales to existing owners—owners who are over the age of 50.

The well-known “cons” of timeshare ownership have proven an obstacle to younger customers too. If something comes up and you can’t make your annual vacation happen, you are still on the hook for all the costs associated with ownership. And, if you bought a timeshare at a popular resort, you may not be able to exchange your week for another.

If you want to rent your week out to help defray some of your expenses, you may not find a suitable renter or one who will pay you enough. There could also be fine print in your contract that prevents you from subletting.

Then there is the declining and depreciating value that started as soon as you bought your timeshare, not to mention the ever-increasing fees associated with ownership. In 2016, the average purchase price for a timeshare was about $21,000. Sounds pretty inexpensive, but the annual maintenance fees, which that year were $970, and special assessments can amount to thousands of dollars every year.

Assessments are perhaps one of the biggest concerns for the timeshare industry, since recent weather phenomenons around the globe have caused damage beyond imagination. The hurricanes in the Caribbean and the fires near Dollywood and the Great Smoky Mountains are just two examples. Extreme weather patterns will most likely continue to increase maintenance costs for timeshare owners, and these fees are the main culprit driving buyers away.

As you can imagine, selling a timeshare could prove difficult as time goes by.

On the other hand, owning a timeshare is still an attractive investment if it’s priced right. And, timeshares offer trip security since you own it. If you know and love an area, and you wish to return each year to build long-term memories and share with co-workers and friends, then buying a timeshare could be the right purchase for you.■

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