The Yin and Yang of Today’s Timeshare and Travel Market
Monday, December 15, 2008
We know that the economy is bad and that hoteliers and timeshare developers are taking a real hit right now from the credit crunch. But just how bleak the picture really is, seems to depend on where you get your information.
A Negative Perspective on the Timeshare Market
This past week Reuters news ran an article titled, “The Timeshare Industry Squeezed by Credit Crisis,” in which they explained that credit for consumers to finance timeshare purchases is harder to come by, and, “… the securitization market for hotel companies selling bonds backed by timeshare deals has mostly closed its doors.”
The article quotes Jeremy Glaser, lodging industry analyst at investment research firm Morningstar, “In the last few months, sales have really dropped off a cliff – consumer credit is really disappearing in a lot of ways.” To this, they added the following less-than-cheerful comment from Bjorn Hanson, lodging industry veteran from New York University, “The syndication (securitization) market has all but gone.”
The Reuters article closes by pointing out that as consumers examine their budgets, discretionary spending will be the first item they cut, with Hanson reiterating, “Among discretionary spending, vacation ownership (timeshare) is high on that list.”
A More Upbeat Slant on Timeshare and Travel
On the same day, the British-based travel website, Travelmole USA Newswire reported on improving optimism among American travelers. According to research gathered in a special edition of Destination Analysts’ The State of the American Traveler survey, a survey of 800 American leisure travelers conducted in mid-November showed that optimism about future travel plans was on the rise. In July of this year, nearly 29 percent of those surveyed stated that they were planning to travel less for leisure. By November, that number had dropped to 21 percent. Additionally, one third of those recently surveyed said that leisure travel was a high or very high priority for them in upcoming months.
What’s the Real Story on Timeshare Sales?
What to take away from these two differing perspectives? Besides the reaffirmation of the adage that events are rarely as bad or as good as they seem, the other important point to consider is that timeshares purchased new from the developer and timeshare sold on the resale market are two very different types of purchases. At The Timeshare Authority, we tend to think both sides of the story are partially correct.
The days of under qualified buyers overpaying to buy and finance timeshare they really can’t afford may be over … at least for the time being. On the other hand, with travelers saying they are sufficiently optimistic to be planning new travel, there will be plenty of demand for the types of great value and good deals available in timeshare resales and timeshare rentals.