It's Crunch Time for Timeshares

It's Crunch Time for Timeshares
FOR years, people eager to find a cheaper alternative to buying a vacation home have chosen timeshares as a guaranteed way to have a place in a desirable resort. Although they faced additional costs like yearly fees for upkeep and a percentage of the resort’s property taxes, they could vacation in the same unit or even exchange their timeshare for use at partner resorts.
But now many timeshare owners are scrambling to get rid of their units, even at a considerable loss, to escape fees and, in some cases, mortgages.
The upside to this trend is that a handful of buyers are picking up some great deals, and resorts that were often hard to get into or were too expensive have now become available and more affordable.
Ava Dunlow of St. Simons Island, Ga., was searching on eBay for timeshares when she saw a listing she couldn’t believe. A summer week at the Sea Scape Beach & Golf Villas in Kitty Hawk, N.C., where her family already owned two weeks, was up for sale. A two-bedroom lockout, a unit that can be separated into two apartments, was selling for considerably less than the $3,000 she paid for a smaller unit several years ago.
“When I saw it for $500 on eBay, I had to buy it,” said Ms. Dunlow, 60. “I’ve started to get a little bit of the fever. I’ve got to quit buying, so I don’t have too many maintenance fees.”
Timeshare sales dropped 8 percent last year, the first time sales have fallen since the American Resort Development Association began tracking sales 34 years ago. In 2007, timeshare sales rose 6 percent from 2006, to $10.6 billion.
“Timeshares used to be the little engine that could, whether the economy was up or down,” said Howard Nusbaum, the association’s president and chief executive. “We were the one piece that always outperformed the market.”
Today as Americans pull back on traveling and rein in their spending, developers, like Marriott International, Starwood Hotels & Resorts and Wyndham Worldwide, are closing sales centers, suspending new projects and reporting drops in timeshare sales.
For individual owners who want to unload their timeshares, selling in a recession has grown more difficult. Prices have slumped as timeshare listings have grown on eBay and Craigslist, so sellers must now offer more to stand out. High on the list are offers to pay closing costs and maintenance fees; sometimes bonus weeks are even thrown in to sweeten the deal.
“This is the best time to buy and the absolutely worst time to sell,” said Brian Rogers, the owner of the Timeshare Users Group (www.tug2.net), an online service in Orange Park, Fla. “A few years ago you got 50 cents on the dollar. Now you’re lucky if you get 10 cents on the dollar.”
If a seller is still paying a mortgage on a timeshare, it can be nearly impossible to sell a unit because most buyers won’t take over loan payments.
Five years ago, India and Roscoe Johns bought a weeklong timeshare in Kissimmee, Fla., for just over $11,000 because they thought it would be a good way to vacation with family. They never had time to return, however, and decided to sell it last year when Ms. Johns lost her job and her husband’s overtime was reduced. With $9,000 still owed on the unit, they have not found a buyer and have fallen behind on their payments. Her calls to the resort for financial assistance have gone nowhere, Ms. Johns said.
“We still are paying what we can or whenever we can, and they’ve been accepting it,” said Ms. Johns, 37, of Hanover, Md. “I’ve thought about foreclosure.”
Some sellers and resort operators are resorting to more drastic measures. Cindy Montrose, an owner and board member at a Colorado timeshare, has been giving away weeks on behalf of the resort for the last year to anyone who will take one. The units are two and three bedrooms and are near well-known ski resorts.
The catch? Anyone who wanted a week had to pay an $11 county filing fee and assume an annual maintenance fee of $380 to $420.
It’s the only way she can fill up the resort, Twin Rivers, and collect more maintenance fees to renovate the 1960s-era complex. Some owners have just stopped paying the annual charges.
“There are people we can’t foreclose on because we can’t find them,” Ms. Montrose, 54, said.
For George Marine of Commack on Long Island, Ms. Montrose’s deal was too good to pass up. He had bought three other timeshares in the last year at deep discounts, but had never snapped up one under terms like these. Shortly after he saw the ad on a timeshare Web site, he contacted the resort and said he wanted one of the three-bedroom units.
“What downside is there?” said Mr. Marine, 40, who owns nine timeshares over all. “I didn’t plan on buying four, but the prices were ridiculous.”
Mr. Marine said one of the first things he looked for was a reasonable maintenance fee. His most profitable timeshare is his two-bedroom unit at the St. James Club Resort & Villas in Antigua, for which he pays $525 in annual fees for each week. He has considered using the unit himself but can’t turn down the money. Each May, the same person rents the apartment for $2,350 a week.
“I’m definitely coming out ahead,” he said.
A CHANGING BUSINESS PICTURE
The turnaround in the timeshare business has meant big changes for the top players in the industry.
Wyndham Worldwide is reducing timeshare sales and trimming 4,000 jobs in its timeshare division because of a lack of financing. The hotel giant, whose brands include Super 8 and Ramada, expects sales this year of $1.2 billion, down from $2 billion in 2008.
“At the time we made the decision, towards the end of 2008, it was unclear if the capital markets would ever open again,” said Stephen Holmes, Wyndham’s chief executive.
The outlook has dimmed for prospective buyers, too. Before the bust, hotel companies routinely offered financing up to 90 percent of the purchase price on timeshares.
“If you could sign your name and you wanted to buy it, they would sell it to you,” said John Melicharek, head of the hospitality industry practice at the law firm of Baker Hostetler in Orlando, Fla.
Timeshare companies now demand that buyers have higher down payments and good credit scores to qualify for a loan. At Marriott International, 80 percent of buyers used to receive financing, but now only half do, said Ed Kinney, vice president for corporate affairs at Marriott Vacation Club International in Orlando. Wyndham, which once required a 10 to 15 percent down payment, has since increased it to 15 to 20 percent, Mr. Holmes said.
Starwood has cut back incentives, like free nights, for owners. “Obviously, we’re watching every dollar,” said David Matheson, spokesman for Starwood Vacation Ownership in Orlando.

FOR years, people eager to find a cheaper alternative to buying a vacation home have chosen timeshares as a guaranteed way to have a place in a desirable resort. Although they faced additional costs like yearly fees for upkeep and a percentage of the resort’s property taxes, they could vacation in the same unit or even exchange their timeshare for use at partner resorts.
But now many timeshare owners are scrambling to get rid of their units, even at a considerable loss, to escape fees and, in some cases, mortgages.
The upside to this trend is that a handful of buyers are picking up some great deals, and resorts that were often hard to get into or were too expensive have now become available and more affordable.
Ava Dunlow of St. Simons Island, Ga., was searching on eBay for timeshares when she saw a listing she couldn’t believe. A summer week at the Sea Scape Beach & Golf Villas in Kitty Hawk, N.C., where her family already owned two weeks, was up for sale. A two-bedroom lockout, a unit that can be separated into two apartments, was selling for considerably less than the $3,000 she paid for a smaller unit several years ago.
“When I saw it for $500 on eBay, I had to buy it,” said Ms. Dunlow, 60. “I’ve started to get a little bit of the fever. I’ve got to quit buying, so I don’t have too many maintenance fees.”
Timeshare sales dropped 8 percent last year, the first time sales have fallen since the American Resort Development Association began tracking sales 34 years ago. In 2007, timeshare sales rose 6 percent from 2006, to $10.6 billion.
“Timeshares used to be the little engine that could, whether the economy was up or down,” said Howard Nusbaum, the association’s president and chief executive. “We were the one piece that always outperformed the market.”
Today as Americans pull back on traveling and rein in their spending, developers, like Marriott International, Starwood Hotels & Resorts and Wyndham Worldwide, are closing sales centers, suspending new projects and reporting drops in timeshare sales.
For individual owners who want to unload their timeshares, selling in a recession has grown more difficult. Prices have slumped as timeshare listings have grown on eBay and Craigslist, so sellers must now offer more to stand out. High on the list are offers to pay closing costs and maintenance fees; sometimes bonus weeks are even thrown in to sweeten the deal.
“This is the best time to buy and the absolutely worst time to sell,” said Brian Rogers, the owner of the Timeshare Users Group (www.tug2.net), an online service in Orange Park, Fla. “A few years ago you got 50 cents on the dollar. Now you’re lucky if you get 10 cents on the dollar.”
If a seller is still paying a mortgage on a timeshare, it can be nearly impossible to sell a unit because most buyers won’t take over loan payments.
Five years ago, India and Roscoe Johns bought a weeklong timeshare in Kissimmee, Fla., for just over $11,000 because they thought it would be a good way to vacation with family. They never had time to return, however, and decided to sell it last year when Ms. Johns lost her job and her husband’s overtime was reduced. With $9,000 still owed on the unit, they have not found a buyer and have fallen behind on their payments. Her calls to the resort for financial assistance have gone nowhere, Ms. Johns said.
“We still are paying what we can or whenever we can, and they’ve been accepting it,” said Ms. Johns, 37, of Hanover, Md. “I’ve thought about foreclosure.”
Some sellers and resort operators are resorting to more drastic measures. Cindy Montrose, an owner and board member at a Colorado timeshare, has been giving away weeks on behalf of the resort for the last year to anyone who will take one. The units are two and three bedrooms and are near well-known ski resorts.
The catch? Anyone who wanted a week had to pay an $11 county filing fee and assume an annual maintenance fee of $380 to $420.
It’s the only way she can fill up the resort, Twin Rivers, and collect more maintenance fees to renovate the 1960s-era complex. Some owners have just stopped paying the annual charges.
“There are people we can’t foreclose on because we can’t find them,” Ms. Montrose, 54, said.
For George Marine of Commack on Long Island, Ms. Montrose’s deal was too good to pass up. He had bought three other timeshares in the last year at deep discounts, but had never snapped up one under terms like these. Shortly after he saw the ad on a timeshare Web site, he contacted the resort and said he wanted one of the three-bedroom units.
“What downside is there?” said Mr. Marine, 40, who owns nine timeshares over all. “I didn’t plan on buying four, but the prices were ridiculous.”
Mr. Marine said one of the first things he looked for was a reasonable maintenance fee. His most profitable timeshare is his two-bedroom unit at the St. James Club Resort & Villas in Antigua, for which he pays $525 in annual fees for each week. He has considered using the unit himself but can’t turn down the money. Each May, the same person rents the apartment for $2,350 a week.
“I’m definitely coming out ahead,” he said.
A CHANGING BUSINESS PICTURE
The turnaround in the timeshare business has meant big changes for the top players in the industry.
Wyndham Worldwide is reducing timeshare sales and trimming 4,000 jobs in its timeshare division because of a lack of financing. The hotel giant, whose brands include Super 8 and Ramada, expects sales this year of $1.2 billion, down from $2 billion in 2008.
“At the time we made the decision, towards the end of 2008, it was unclear if the capital markets would ever open again,” said Stephen Holmes, Wyndham’s chief executive.
The outlook has dimmed for prospective buyers, too. Before the bust, hotel companies routinely offered financing up to 90 percent of the purchase price on timeshares.
“If you could sign your name and you wanted to buy it, they would sell it to you,” said John Melicharek, head of the hospitality industry practice at the law firm of Baker Hostetler in Orlando, Fla.
Timeshare companies now demand that buyers have higher down payments and good credit scores to qualify for a loan. At Marriott International, 80 percent of buyers used to receive financing, but now only half do, said Ed Kinney, vice president for corporate affairs at Marriott Vacation Club International in Orlando. Wyndham, which once required a 10 to 15 percent down payment, has since increased it to 15 to 20 percent, Mr. Holmes said.
Starwood has cut back incentives, like free nights, for owners. “Obviously, we’re watching every dollar,” said David Matheson, spokesman for Starwood Vacation Ownership in Orlando.