The announcement last week that Westgate Resorts, one of America’s largest time-share companies, is getting ready to lay off hundreds of workers and halt much of its sales is just one more reminder that the current economic downturn is squeezing many sectors of the economy, including the timeshare industry.
The Miami Herald reported that “Westgate’s president told the Orlando Sentinel the cuts would affect all areas of business, from administration to marketing, sales and construction. He says Westgate will be able to pay its bills, but has no money for new business until things get better.”
Westgate Resorts Company President David Siegel attributes this cut-back to the fact that securities are no longer being bought. The timeshare business keeps “money flowing through lines of credit that are then paid off when [these companies] bundle and sell their mortgages as securities” says Siegel. “All of a sudden no one is buying those securities. About a week ago, everything looked fine.”
Lisa Ann Schreier, author of Timeshares for Dummies, said the credit market is so bad that even without a corporate-financing crunch of this type that this would be a bad time for consumers.
“People do not have this much disposable income,” she said. “People are scared. 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.”
Even more recently Wyndham Worldwide Corp. has seen a decline in trading and Marriott’s results, which included poor results from its timeshare business, fueled concerns about Wyndham’s larger timeshare segment.
It’s hard to know what this economic downturn will mean for timeshare owners in the short and long term. We have all been warned not to view timeshares as investments but many people do understand their timeshares to be investments in their future vacations.
But what will this future look like? As timeshare companies are making cut backs, the quality of service at resorts suffers. This fact, coupled with our current economic situation, drops resale values even further. There is no time like the present to weigh the pros and cons of timeshare ownership and consider your options about whether to keep paying for your timeshare or consider having it taken off of your hands.