Financial Crisis Affects Timeshare Industry (Part 2)

With consumers spending less on travel and with the freezing of credit markets, lodging and timeshare companies, including Westgate, Starwood, and Wyndham, are turning to the one place where they can recoup some of their losses – timeshare owners.

It is understood that at any time and for any given reason timeshare resort companies can require timeshare owners to pay special assessments. It is also understood that maintenance fees are not capped and are subject to increase at the timeshare resorts’ discretion. Over the past few months there have been reports of timeshare owners receiving special assessment fees of $1,000 to $3,000.

Chad Newbold, President of VI Network, Inc., one of the nation’s largest facilitators of vacation properties, reports that the current economic conditions, the increase of fees for the 2009 use year, along with unprecedented special assessment billings and a diluted resale market, has created the perfect storm for the timeshare industry. This storm has caused a record number of owners simply wanting out which he predicts will undoubtedly result in yet another sharp increase in maintenance fees for the 2010 use year.

Financial Crisis Affects Timeshare Industry (Part 1)

The current global financial crisis has created a troubling situation for timeshare owners. As most sectors of the economy are feeling the squeeze, the nation’s timeshare industry is being pounded from both sides as banks cut back on lending and consumers cut back on spending.

As a result, at the same time as individuals have to deal with stagnating or falling incomes, deteriorating retirement funds, and a higher cost of living, timeshare resort companies that are feeling the pinch are passing their financial burdens on to the consumer.

Consumer Spending

Currently individuals, families and companies are severely cutting back on leisure and travel spending faster than was anticipated, reports Bloomberg.com. The October 23rd article notes “forecasts [show] that the deterioration in leisure and business travel is accelerating as corporations and consumers contend with higher food prices, declining home values, job losses and scarce credit.”

Lisa Ann Schreier, author of Timeshares for Dummies, says that people simply do not have the disposable income right now. “People are scared, “says Scheirer. “And with the credit crunch, it will be harder and harder for people to finance timeshares. I think the time-share industry for too long has thought itself recession-proof, and I don’t think so.”