The pre-conditions for Timeshare Reform may have arrived

[Jya-Ning Silver Contributor Find all posts View Profile Close Jya-Ning]

maybe not that bad. Wyndham is now worth a little over 1B. The FSP owner is about 300k, the WM owner is about 250k, and another 250k fix week owner. If 10% owners want to over take the company, each only need $12.5k to get all the stock. And only need $2k to start a take over. They probably will get financial easily.

Jya-Ning

[Nitram Junior Member Find all posts View Profile Close Nitram]

Sales Model needs to Change

Yeah, wouldn't it be great if we could use the retail value of our timeshares as collateral for a margin loan to purchase stock in the timeshare developers. That would be ironic.

I agree that the sales model needs to change, but I'm not sure how. It also troubles me that most developers hope a resale market never materializes.

I don't think it's a good time to buy developer stock. Things are going to become worse for developers.

At some point, the masses will learn that $20K - $40K is too much to pay for a timeshare.

We need an organized market place where timeshares can be bought and sold -- not the multitude of internet sites we currently have. We need something like the NYSE. Something that everyone knows about and trusts. Something where the new and resale prices are similar--like the real estate market.

We also need a way to value timeshares. Something like a real estate appraisal. Not sure if we should use "average resale value", "trading credit", "appraised value of the property", or what. Each of these have shortcomings. Ideally, supply and demand should dictate the value.

One option would be to require developers to buy back timeshares at 50% of the sale price. In theory, they could resale them for 100% more. That should be enough to make a reasonable profit and would stop some of the overbuilding that's occurring. It might also lessen the retail prices of timeshares.

The sales model needs to change, but I'm not sure how.

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

I agree with you on m/f's. The owner controlled HOA's have no incentive to pad them and in fact have every incentive not to. They are what they are.

As to points, at many resorts the majority of owners buy to use not to trade, so the concept of points is alien to them. These owners come down to enjoy the resort the same week every year, get to know their fellow owners of that week as friends, and that is part of the positive experience of timesharing. They want fixed weeks and fixed units. The very first timeshare developer, Hapimag of Switzerland was a points based mini-system right from the beginning. When a rival French developer came up with the weeks concept, that had a lot more market appeal, and that is the timeshare concept that took off.

Part A I think you're right on. The rental/maintenance fee part B makes no sense. There is no relationship between what a week can rent for and what it costs to operate and perhaps even more importantly renovate and improve a resort. Timeshare resorts are not setup to appeal to renters and aren't stripped down to basics as a hotel/motel would be. In fact many are designed to equal or exceed what a home or upscale apartment would offer. They are not inexpensive to operate and very costly to renovate/upgrade even compared to a private home. The value is in the owners experience and continued desire to return to the resort - not in what a one time visitor would be willing to pay as rent. The real problem with maintenance fees is the unfair distribution to low value time equal to the fees paid by higher value times. Except for the very few areas with near year round demand that model more than any other causes defaults on annual fees once the ownrs figure out they aren't getting equal value and are subsidizing the high value time owners.

Pure points with fees based on the number of points assigned helps fix that issue as do some of the more creative Associations who have embraced the "leased" or RTU points idea but most continue, for various reasons including State laws, charging all weeks the same and having understandable issues keeping owners current in the low value times.

This downturn may help correct both the fee and retail/resale problems but past hard times haven't been able to do it. Maybe the ease of information flow now will finally turn the tide (and none too soon).

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

There are many resorts, particularly the small and medium sized resorts where a majority of owners own to use, not to trade. Losing the exchange owners would be a major financial hurdle for them, but not necessarily fatal. Timehare resorts existed and sold weeks before exchange companies were even created.

As far as winding up resorts is concerned, that is difficult as it takes a supermajority if the resort is organized under the Uniform Condominiums Act. If it is organized under one of the state statutes based on the older HUD model act, then it normally takes unanimous consent. Some ot fht older state statutes are based on the Puerto Rico condominium laws, but I have never read that to see which way it goes on this issue, but I strongly susupect that it is either unanimous consent or supermajority like the others.

JMHO,

If assume all exchange companies went bankrupcy, and there is no reason to maintain TS in whatever way, eventually, the resort needs to be sold, and the proceed distribute to owners.

In these cases, the management company will behavor like class action lawyer, they will get a fat cut. Not sure if owner will end up like class action owner or not.

Jya-Ning

[Hostelling Senior Member Find all posts View Profile Close Hostelling]

At some point, the masses will learn that $20K - $40K is too much to pay for a timeshare.

One option would be to require developers to buy back timeshares at 50% of the sale price. In theory, they could resale them for 100% more. That should be enough to make a reasonable profit and would stop some of the overbuilding that's occurring. It might also lessen the retail prices of timeshares.

The market will drive the change. As owners become aware of the resale market they will opt to purchase less expensive (price and maintenance) property. Then enters the inefficient method of relinquishing the old (paid off) property. Attached is a copy of my recent communication with Marriott Sea View Council of owners.

To: Barker, Matthew
Subject: Fairway Villas at Seaview Condominium Association, Inc.

I no longer wish to own my week at fairways villas. I no longer wish to participate in annual maintenance fees.

Please explain the procedure for the COA can take ownership of the week?


Greetings

There is not a procedure in place where our COA would voluntarily take possession of your week or the weeks of any Owner. I am aware of Owners in the past who have taken advantage of Marriott Vacation Club's Resale program but I am unsure if your week would be accepted into the program. You may contact Marriott's Owner Services at 800-845-4226 to inquire regarding the program. I am also aware of Owners who have successfully utilized 3rd party services to sell their week. This could also be an option should you choose.

If I can be of further assistance, please feel free to contact me.

Warm Regards,
Matt Barker
General Manager
Marriott's Fairway Villas Resort
500 East Fairway Lane
Galloway, NJ 08205
phone (609) 404-4051 fax (609) 748-4314
matthew.barker@vacationclub.com


To: "Matthew Barker"

I contacted Marriott services, they have no interest in weeks at Sea View for the resale program now or in the near future. (Even when I offered it back free).

I tried to give the week away for free at ebay.com. (I even offered to pay closing costs). There were no takers.

Do you know anyone who would like to own a week (green) at Sea View, at better than resale prices?

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

Getting back to reality, change will be nothing but cosmetic and maybe a few changes in the script. The economy is on the way back and the uninformed will always be potential victims.