China Provides Warning To Residents About Buying Timeshares

It seems as if timeshare companies are creating a stir in China and for Chinese citizens traveling abroad throughout the world.  We found an article from the China Daily that reports about an official from the Chaoyang district administration of industry and commerce and the attempts from their office to warn residents about timeshare scams.

Quoting the article:

“As many as 260 notice boards were set up in busy shopping malls like SOHO Shangdu and The Place, as well as in local communities in Chaoyang district to echo the administration’s month-long campaign to warn consumers about timeshare scams that was launched last weekend.”

A non-profit consumer watch group has received over 200 complaints this year about timeshare contracts in China.  Most of these complaints come from the larger cities in China.  Interestingly, as reported, court cases are difficult to win against the timeshare companies because Chinese law is not well-defined for such cases.

As we all know, there are going to be good and bad within the industry.  So many timeshare contracts are set up for timeshare owners to pay on a long term contract.  It’s enough that fraudulent companies need not enter the space to create more dissension and mistrust in the industry.

Thinking About Buying a Timeshare? Get Relief Another Way

Over the past five to eight years, the timeshare industry has suffered an influx of customer complaints that stem from timeshare owners being unable to get relief from their timeshare contracts. Certain business practices within the timeshare industry has led to this virtually non-existent resale market. Now, with a mature world-wide-web, potential timeshare buyers are getting scared out of the market, while timeshare owners are looking for ways out.

Until the past few years, timeshares were still considered lower-cost alternatives to owning luxury vacation homes that few middle class families could afford. However, in a bad economy where families are looking to cut out any non-essential bills, timeshares have been the first on their lists to cut. They soon discover that selling a timeshare is much more difficult than buying. In many cases, timeshare contracts obligate these owners in perpetuity.

One of the industry’s biggest fears is losing timeshare owners. In order to prevent losses, many preventative measures were drawn up to lock owners financially to their units with nowhere to run. For timeshare resorts, the name of the game is volume. Resorts and developers are motivated to sign and to keep as many owners as possible to a single unit to boost revenue and profit through the residual nature of annual maintenance fees.

Schedule rules, such as booking a year in advance, stymie an owner’s ability to stay at the resort. Yet, they make timeshare units available for presentation to potential new buyers. Contracts effectively in perpetuity require the payment of maintenance fees forever. These businesses practices demonstrate just a couple of ways timeshare operators tip the scales in their favor.

The more consumers could sign to a single unit, the more money the resort makes in annual fees. A lot of times, owners have to deal with the frustration of late or over bookings not because they didn’t follow the guidelines, but rather, because the resort oversold their unit space.

Consolidated Resorts Bankruptcy Auction Held

Bargain hunters and large resellers were out in force for the Consolidated Resorts bankruptcy auction on October 3 in Las Vegas.  Computers & cubicles from the call center, credit card processors, and even 27 minibuses were part of the hundreds of items up for bid.  Office fixtures were auctioned this week.

Overall, the physical assets were valued at $3.7 million – a tiny percentage of the $337.5 million of debt that caused the collapse of Consolidated.  With the auction, hopes are to bring in more, however, creditors cannot expect much more than a penny or two on the dollar in return.

For timeshare owners at the resort, it’s interesting to note that the minibuses that shuttled vacationers to and from Tahiti Village were sold.  It will make transportation more difficult for the timeshare occupants unless buses are being rented by the management of the resort.  Again, the resort itself is not in bankruptcy, only the developer.

Major Hotel Chains with Timeshare Divisions Annouce Earnings

Wyndham Worldwide and Marriott International Inc. both announced their earnings yesterday.  Marriott did better than analysts predictions despite a $760 million writedown from their timeshare business.  Wyndham’s stock price rose 7.4% when Goldman Sachs raised its rating to ‘outperform’ based on the fact that the company is selling off its existing timeshare inventory.

Both large hotel chains have been significantly reducing the scale of their timeshare businesses given the current economic conditions of less disposable income and increased difficulty to available credit for financing.  By decreasing their supplies, they can keep prices stable and wait for a time when times are better.

Destination Clubs – How Could They Affect the Timeshare Industry?

There are some timeshare resorts that position themselves in the super-luxury end of the travel spectrum.  However, more and more companies are going the route of “Destination Clubs” — high-end vacation property vacation clubs designed for the wealthy who do not want to hassles of ownership.

Memberships can run from $50,000 through to half a million dollars upfront with significant annual fees.  For these large sums of money, members do not hold title or a deed to the portfolio of Club properties.  Instead, they are granted now-and-then access to a collection of luxury houses in exotic locales around the world.  Without the worry and upkeep of ownership, members need only spend there money and not much time to enjoy a mansion away from mansion (as opposed to a home away from home).

Destination clubs are not regulated as heavily as timeshares in terms of the sales & deeding process because they have been introduced only recently.  Unfortunately, the lack of regulation and of course, the downturn in the economy may have contributed to many clubs having to close their doors.  Hence, timeshare industry advocates are worried that fallout from bankruptcies of destination clubs could affect an already maligned timeshare industry.