Timeshares Benefit the Economy; the Story that Never Makes Headlines

On Monday, The Timeshare Authority blog looked at some of the reasons the timeshare industry is not only weathering the poor economy, but is contributing to the economic recovery. (See: Timeshare Sales in Rebound as Developers Shop Rather than Build). But after we posted it, it seemed that perhaps this positive message about timeshare real estate bears reemphasis.

Timeshare developers need new timeshare buyers (or repeat buyers) in order to keep generating revenues. While timeshare exchange and timeshare management may be income streams within a timeshare company, the real return comes in developing (and selling) timeshare at new resorts.

But construction funding has not been easy to come by in the last few years. And construction funding borrowed against receivables has been especially tight. As a result, many timeshare companies have built less (if at all) thereby, significantly cutting into their cash flow.

In order to survive this slow to no-growth period, many timeshare companies have reevaluated their sales practices. They are doing less ‘shot-gunning’ where their efforts cover a broader potential market. They are targeting demographics in which timeshare sales have traditionally been the strongest. Why not focus more attention on people who currently own timeshares –84 percent of whom say they are satisfied with the product—than on trying to build inroads into new markets? Doing what has worked in the past may not sustain long-term growth within an industry but it will serve you well in the short term.

Part of the Win-Win for Timeshares

Even though the tight credit market has made it harder for timeshare developers to fund and build new timeshare resorts, many have still been able to ‘shop’. Residential, condotel, and vacation condos of all types have felt the economic crunch, meaning that projects underway have faltered as their markets have dropped out. Some timeshare developers have been able to take advantage of properties that become available, thereby ‘bailing out’ the condo developer while finding a way to grow their own inventory of timeshare real estate.

As construction lending and receivables funding become available again, timeshare developers will be able to return to their build and grow model. Many of the timeshare industry’s critics will never realize what an important role timeshare developers are playing in re-stabilizing the economy. Nor will they acknowledge how critical timeshare vacationers have been to mixed-use properties as hotel bookings have faltered in the face of stay-cations and reduced business travel. Yet despite the naysayers, the nearly $70 B that timeshares stimulate within the economy each year will be doing its part to put all of us one step closer to a restored and renewed economy.