As reported on CNNMoney.com and Dow Jones Newswires, Marriott followed much of the hospitality industry with a fourth-quarter loss. The surprise in its weakness was its timeshare business.
“”Timeshare guidance was significantly worse than what people expected,” said Patrick Scholes, a lodging analyst at FBR Capital Markets. He noted that Marriott cut its projection for timeshare income for 2009 to $45 million from between $215 million to $265 million forecasted in October.
That is a drop of around 80%. The company had been earning significant profits by financing timeshare sales. With credit markets evaporating and defaults on the rise, the decrease in revenue was expected, yet surprisingly steep.
In our opinion, timeshare companies everywhere will be forced to rely on maintenance fees of owners who will not be travelling this year due to the economy. Timeshare owners may also see special assessments issued by the resorts, in a similar fashion as many local governments are increasing taxes in order to stem falling into debt.
Pricing will decrease, as supply and inventory in the resale market will escalate. Yet, the number of buyers most likely will decrease with improved knowledge of the financial burden associated with owning a timeshare. The total overall percentage of successful resales will most likely fall.
Filed under: Maintenance Fees, Timeshare Costs, Timeshare Industry, Timeshare News, Timeshare Relief | Tagged: cnn money, dow jones, financial burden, Marriott, timeshare financing, timeshare owner, Timeshare Relief, timeshare resale market, timeshare revenue |