Timeshare

The notorious “Timeshare Spammer” was sentenced today to one year in federal prison. Inboxes everywhere rejoice.

Search for “timeshare” on any online news service, and news stories about the nefarious “Timeshare Spammer” dominate the results. Convicted “Timeshare Spammer” Peter Moshou was sentenced today to serve 1 year in federal prison and was ordered to pay restitution in the amount of $120,000. The case has received worldwide attention because Mr. Moshou is among the first spammers to be sentenced for violations of the relatively new CAN-SPAM act.

I am particularly vocal when it comes to lousy business practices in the timeshare industry. It is for this reason that I feel obliged to comment on such widely-publicized news.

First, that this spammer was busily and indiscriminately flooding people’s inboxes with garbage causes him to rightfully earn the ire of everyone with an email account. Never purchase anything from spammers, nor should you offer money for their supposed “services”. Why reward bad behavior?

Second, this is a particularly dramatic example of shady marketing practices which persist in the timeshare sales community. The Timeshare Spammer’s sentence serves as an explicit warning, not only to all spammers everywhere, but also to certain unscrupulous types who infest the timeshare industry. Sorry guys, but bottom-feeder sales tactics are no longer acceptable in this business.

If only the “timeshare spammers” of the world would go find real jobs like everyone else…

The two hottest trends in timeshares today, condo-hotels and private residence clubs will occupy a prominent place in the timeshare landscape for years to come.

It seems like everyone’s been talking about condo-hotels and private residence clubs, but these concepts are new enough that few timeshare owners know what they are. What differentiates these concepts from traditional timeshares?

An article on hospitalitynet.org points to a .pdf file by Timo B. Jones, CEO of a company called TimeShareWare. TimeShareWare provides software products for resort companies, and their website can be found at http://www.timeshareware.com. In this article, Mr. Jones sheds light on the distinguishing characteristics of both condo-hotels and private residence clubs, and suggested that existing customer relationship management technologies might not be flexible enough to accommodate all the nuances of these new types of timeshares.

Anyone who has ever tried to check into his/her hotel and heard “…we rented out your room and we have nothing else available” would find this article of interest. If a resort’s CRM software is outdated, customer service snafus could easily ensue.

Though mention of timeshare was conspicuously absent from this year’s Throne Speech, Bermuda’s higher-ups say that reform of timeshare legislation is in the post.

Reform of the laws governing timeshare in Bermuda is viewed by many as glaringly overdue. The last piece of legislation to address timeshare ownership was passed in 1981, which means that those owners who haven’t renewed their leases are approaching the end of their tenure. Under current laws, timeshares are good for 25 years, though the option to renew is available.

Though timeshare wasn’t one of the items under discussion in this year’s Throne Speech, legislation is now being prepared to allow owners to own Bermuda timeshares for longer periods. This article from the Royal Gazette describes some proposed Bermuda timeshare reforms.

Bermuda is looking for ways to augment tourism revenues. Hopefully they consider passing this legislation, which would bring Bermuda timeshare into the 21st century. Here’s another article about the many opportunities and challenges that Bermuda timeshare and resort developers are facing.

A new Chairman is scheduled to assume command of the Federal Reserve. How will this affect the timeshare market?

Do you remember who was Chairman of the Federal Reserve before Alan Greenspan spent eighteen years in the job?

Neither does anyone else.

Former Federal Reserve Chairman, Paul A. Volcker, has not slipped from our memories because he failed to leave his mark on the American economy. Volcker in fact, is credited with taking runaway US inflation from an ugly 9% in 1980 to a highly tolerable 3.2% by 1983.

It’s just that Alan Greenspan has been the chief watchdog of the American economy for such a long time—two and a half Bushes, one Reagan, and a Clinton, to be exact. We apparently assumed that despite the absence of a clutch bag and a tiara, Greenspan, was like one of the British royals, and would hold the job forever.

Not true. On January 31, 2006, Alan Greenspan will pass the torch to Chairman-nominee, Ben Bernanke. Like Greenspan, Volcker, and all who have gone before him, Bernanke will face the challenges of balancing healthy growth with an appropriately healthy measure of inflation.

The strategy is pretty simple: when prices go too high, the Fed pushes up interest rates. We stop buying things on borrowed money, and prices come back down. Of course, it’s not really simple at all. Especially since the US Federal Reserve doesn’t actually control any part of our economy except interest rates. The ups and downs in our financial system are a mixture of backlash response to changing interest rates and pure chance.

Paul Volcker accomplished no monetary miracle other than the predictable result that occurred when the Reserve temporarily kicked interest rates into double-digit numbers in order to bring inflationary growth under control once again. Alan Greenspan has been using this same technique in moderation throughout his time at the helm, and using it aggressively since June 2004, when the Federal Reserve started tightening the screws on borrowing and lending.

In the summer of 2004, the federal funds rate (the interest rate at which banks loan money to each other) was at an amazing low 1%. The prime lending rate (the interest rate at which banks loan money to consumers) was sitting at only 4%. So Greenspan and his merry men began nudging up the interest rates, in tiny, palatable quarter points. And Bernanke will have no choice, but to follow the plan—at least for a little while. After all, he can’t start out appearing to be soft on inflation.

If you are buying real estate—whether it is a new house, office building, vacation home, or timeshare property—and you are planning to borrow money for your purchase, it is probably better to take out that loan now than to wait until the first or second quarters of 2006. On the flip side, if you are the seller, this may be a good time to get your property on the market, while buyers can take advantage of current interest rates.

No real magic ever happens at the Federal Reserve. No one gets sawn in half or even pulls a scraggly rabbit out of a top hat. But when it comes to juggling acts, Bernanke has his work cut out for him filling the shoes of Greenspan and Volcker.