June 17, 2011 — To the targeted and always disbelieving audience the music was strident and almost deafening when the voluptuous soprano, in full regalia, took center stage and began bellowing her aria to the far corners of world, detailing the saga that the timeshare industry is in utter chaos and its glory days are gone forever!
Some developers assert that the financial crisis of 2008/09 was the impetus that created the current pandemonium within the glimmering ‘theater’ but the reality is that the collapse of this once viable industry was long coming. Yet even the blasting of air raid sirens couldn’t disturb most developers in the deep, luxurious comfort of their impenetrable theater boxes.
The warnings were indeed as plain as graffiti on the walls in any major city, but in true timeshare mode most developers refused to acknowledge or accept all the advisories, let alone do anything about the issues that had confronted them for decades and would ultimately threaten to bring down their empires.
First of all, unlike generations past, today there is no shortage of vacation rental or extended-stay lodging options that provides all amenities most travelers seek, including fully furnished and nicely appointed studio, one, two and three bedroom suites, villas or private homes, etc.. And that inventory includes discounted rentals directly from most timeshare developers and exchange companies.
And unlike purchasing a timeshare interest that will cost the timeshare owner (vacationer) up to $100,000 or more over the years just for their ‘accommodations’, renters of these very same types of temporary vacation residences enjoy all the ‘perks’ while renting on an ‘at-will’ basis without the life long (and beyond) never-ending financial and contractual commitment and obligations required to be a timeshare owner.
Then there are those mostly uncapped ‘profit-designed’ annual maintenance fees, also without end, that timeshare owners must pay each year plus those grossly exorbitant ‘exchange’ fees for what amounts to no more than a computerized ‘reservation’ that is costing the timeshare owner about $30.00 per night ($210.00 per week) for a mere ‘booking’ (reservation) process!
Next is the plethora of existing timeshare owner inventory for sale. Some industry analysts are suggesting that as many as 1 Million ‘weeks’ of inventory have been dumped on the market, selling for pennies on the dollars (if owners can sell at all). A recent report from Europe claims that 70% of all timeshare owners surveyed would get out of their timeshare if there were a legitimate way for them to exercise such an option.
And let us not forget the untold numbers (tens of thousands) of timeshare owners who are just walking away from their ownership rights and uses, including their financial obligations, even at the risk of ruining their prized and hard earned credit ratings for many years to come.
In fact there is so much resale inventory on the secondary market and so many owners wanting ‘out’, that there is no shortage of private companies offering owners every option possible including rental services, resale programs, even ownership transfer entities whereby timeshare owners are more than willing to pay thousands of dollars upfront and per week owned just to get out from under the stress that they are living with and/or paying for something they no longer need or use.
And instead of working out solutions with those owners, many timeshare developers began creating massive legal and/or financial obstacles preventing or obstructing owners from selling their timeshares. Such obstacles include charging thousands of dollars in transfer fees, forcing an owner’s ‘sale’ to be subject to the developer’s (and/or HOA) pre-approval, and so on.
As for those owners who simply default (walk away)– some of whom have reportedly owned since the late 1970’s and faithfully paid their annual fees, dues and associated costs like clock work each year– their timeshare developers (and/or HOA’s) began contracting with very aggressive collection entities (worldwide), hell bent on persecuting the very owners who had contributed to the developer’s success and wealth in the first place.
Interestingly, while some of these same timeshare developers treated their own owners (aka: clients) in such an appalling and unproductive manner (of course also exercising and benefiting from tax write-offs, etc. associated with these defaults), in the USA they themselves approached the U.S. Federal Government via their association (ARDA: American Resort Developments Association) pleading for a slice of that bailout money from the tax payers…
And moving right along, what timeshare owner hasn’t been hit with one or more of those ‘special-assessments’ (aka: more charges/fees) over the decades that are levied, in most cases, by the developer or a developer-controlled HOA for (e.g.) property ‘improvement’, etc., which charges are often, at their core, a ‘profit-center’, too?
Another key to the ruin of this industry has always been the failure of timeshare developers to create a ‘vacation product’ whereby becoming a timeshare owner was actually financially beneficial for the timeshare owners.
No, that idea, too, was ignored. Instead developers continue to introduce ownership plans that cost ‘buyers’ (owners), in real dollars, two and three times more to access (use and enjoy) per night/week than renters pay, renters who can often access and reserve ‘their’ slice of Paradise more easily than owners can via a simple phone call or online booking.
And with all this taking place in front of God and everybody, at this very moment unsuspecting souls are being approached by a timeshare marketer who’ll tempt them to visit a timeshare sales center ‘today’ with gifts valued at hundreds of dollars if the ‘consumer’ will just accept a friendly invitation to listen to and preview a ’90 minute informative presentation.’
Yet, all the while the ‘seller’ (aka: developer) is fully aware that what they are peddling, in most cases, has become economically and functionally obsolete and no longer has any real benefit or value to the consumer (‘buyer’). This practice will continue to erode an industry image already heavily-damaged and tarnished by the antiquated and deceptive timeshare marketing (solicitation) practices that go back to the late 1960’s.
Now the ‘big buzz’ in the halls of Timeshare Land, among the great thinkers in the ‘biz’, is to introduce a shorter term ‘use’ ownership plan, aka RTU (Right to use) for (e.g.) ten or twenty years. That plan has been sold by Mexican developers for decades, but many accountants and attorneys are advising their developers that doing so is not feasible, not sellable or that such ownership plans simply won’t generate a ‘profit’.
They, and others like them who are heavily vested in keeping the status quo, are clueless on that particular topic. For the record they have always been and will continue to be some of the very people who contributed to and are responsible, at least in part, to the ruination of this wonderful industry. But the bottom line is that it is the developers themselves who are accountable, as they are the Masters of this industry and their own destiny.
There will be, of course, specialized timeshare projects, etc. that will survive and in fact succeed if they become innovative and develop a vacation product that works for them and the owners in this modern era. But when Humpty Dumpty (aka: other timeshare developers) falls, and many will, “all the king’s horses and all the king’s men” won’t even attempt to put good old Humpty back together again.
No, instead all those who contributed to the ruin will move on to other ‘riper’ pickings in other industries, etc., walking away without so much as blinking an eye, whistling past the graveyard with their pockets stuffed full of 30 pieces of silver!
And as Walter Cronkite might say: “And that’s the way it is folks, June 17th, 2011”!
Or if you prefer Paul Harvey: “And now you know the rest of the story”!
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©2011 Inside The Gate