Barbara De Lollis, a business travel correspondent for USA TODAY interviewed Wyndham CEO Steve Holmes about the recent downturn in the timeshare business and how it has affected Wyndham. You can check out the interview here.
One particular question and answer is particularly interesting:
Q. Why did you lay off 4,000 employees?
A. “Every business felt the pressure of the current macroeconomic environment. None of our businesses were immune to that. It was the constriction of the capital markets that created an environment where we needed to take sales down. When we sell (timeshares), we lend people money 50% of the time to buy them. We then go to insurance companies and banks to lend us money. The fact was that the lenders shut down. And that constricted the amount of capital we had to make available to consumers who we shell timeshares to.”
So half of the timeshare owners with Wyndham bought timeshares with loans. That seems like a very high number and points to the fact that many timeshare owners probably do not know what they are buying. Paying interest on a timeshare is like paying someone to take more of your money. With maintenance fees and special assessments on top of a mortgage, timeshare owners are not only paying a lot but also contractually obligated to paying a long time. Many would have been better off not buying a time-share and pay for vacations individually.