Timesharing and the Economy – The Good and The Bad

It is no surprise that the depressed economy has started to effect the timeshare market.  Vacations are often among the first expenses to go in a climate of instability.  While it is still too early to tell what time share owners can expect from this most recent economic downturn, we can look at the positive and negative effects it could have on owners, and what you can do to prepare and/or take advantage of the present economic climate.

The Good – Who Prospers?

First, the good news.  If you are interested in purchasing timeshare, there are a lot of deals on eBay for those able to make an investment.  Timeshare prices on eBay have gone down almost 50% since this time last year, making it a great time to buy timeshare if you are in the market.  The same is true for other timeshare resale sites like Red Week and Craigslist, you can pick up some great values on week and points timeshares, paying pennies on the dollar compared to their original cost.  For those with knowledge of timeshare law and practices, timeshare foreclosures can be a great way to get the most for your money, although this is not necessarily recommended for the novice buyer.

For travelers, there is more availability for previously hard-to-get trades due to more people choosing to bank weeks and points instead of traveling.  There is a greater availability of exchanges, and if you are renting a week as a non-owner, you will be able to travel to more exotic destinations for a lower cost. Owners can trade through RCI and II for Hawaii and the Caribbean easily now with weak traders that would never have been able to trade for an island week in the past.

If you are an owner that can continue to pay your fees, you may be able to rent the timeshare out if you are unable to use it.  You will also be able to retain the property for rental, sale, or personal use when the economy recovers, instead of having to buy all over again along with everyone else.

The Bad – Who Suffers?

The poor economy coupled with high air fares have dealt a travel a double whammy.  As a result of this, it is a very bad time to be selling timeshares on both the retail and resale market.  For developers this will translate into halting future construction and a decrease in new resorts due to a lack of financing.  For resellers this means a lack of buyers, and increased difficulty getting rid of an unwanted or unaffordable timeshare.

Maintenance fees are increasing for owners, and some people have already received a 10% increase in the maintenance fees due rising energy costs.  Not only is this a concern because of the added cost, but also due to the correlation between the value of a timeshare week and the maintenance fees. As maintenance fees go up, timeshare values goes down (with few exceptions).  One of the values in owning a timeshare is the low cost investment in annual vacations. The annual maintenance fee typically beats market price by 50-100%; for example, if your maintenance fees are $700, these weeks will be offered for $1050-$1400. When those prices go down significantly, so does the perceived value of your ownership.

Renters are harder to come by too, and the increased competition to rent weeks is lowering rental prices. Prices at Hawaii locations and the Caribbean are at all time low rates. Many, many weeks are renting for less than the cost of maintenance fees, if they are even rented at all.   Many owners have seen the number renter inquiries decrease, and are being forced to rent out weeks at a loss.

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