Timeshare Resale Call to Action
Monday, September 23, 2013
The following article appears in the July/September issue of the NA Edition of Perspective Magazine. Written by Jason Tremblay, “Timeshare Resale Call to Action,” includes quotes and insights from Heather Guffin, president and CEO of the Association of Timeshare Recyclers and Mary Robeants, owner and partner of 52 Shares, Inc., a real estate brokerage specializing in timeshare resales. It is reprinted here in full with the permission of Perspective Magazine.
Timeshare Resale Call to Action
By Jason Tremblay
The resale challenge of timeshare has reached critical mass, and it involves everyone in vacation ownership. Industry wide, it is time to come together to solve the problem of timeshare resales. This call to action is not meant as a wake-up call. Instead, it is a last call to an industry with a problem that begs to be solved.
When major branded hospitality providers released first quarter earnings reports earlier this year, many showed increases in profits, year over year. On closer review, one realizes that the gains were primarily increases in profitability margins, and that actual sales to new buyers of timeshare were weak. Most of the timeshare sales recorded were owner upgrades or the sale of additional intervals or points to existing owners. At the recent ARDA regional meeting (Portsmouth, NH) Darla S. Zanini, executive vice president, ARDA International Foundation, reported that last year more than 60 percent of all timeshare sales were to existing owners.
The majority of today’s timeshare buyers are not a fresh market of consumers coming to the vacation ownership product. The fact that current owners are adding to their ownership says wonderful things about the consumer experience of being a timeshare owner. At the same time, it delivers an ominous message about the failure of the industry’s marketing outreach to connect with the vast untapped market of vacationers who won’t tolerate the current sales-by-resort-tour approach, or who believe timeshare is riddled with fraud, long- term costs, and offers no exit strategy when they no longer want to own it.
That ARDA has emphasized the need to market timeshare in new ways to Gen X and Gen Y buyers is important, yet it is not enough. Timeshare owners are a segment of the vacationing population that gets smaller by percentage each year, and this has nothing to do with a challenged economy or a tight lending market. Instead, it speaks to a crisis that is potentially a house of cards. How can it be a sustainable business model that the primary consumer of new timeshare is the individual who already owns timeshare? Doesn’t the shared ownership industry—like any industry with a healthy business model— need a steady flow of new consumers?
The value proposition of timeshare cannot include it being a life sentence that once purchased, the owner is destined to own forever. Resorts having the first right of refusal to buy back a timeshare for which an owner has a buyer and a solid offer is a sound business practice that helps keep timeshare resale values elevated. However, some management companies have taken this approach a step further.
At least one major player in vacation ownership is refusing to transfer ownership of a timeshare to any resale buyer who is on record as having toured that resort within the previous 12 months. In this scenario, an owner either finds a buyer himself or with the assistance of a timeshare reseller. The owner or transfer company initiates the title transfer and the resort then blocks the sale, but not because the resort wants to exercise its right of first refusal and buy back the timeshare, which would be a win-win for everyone. Instead, the resort blocks the sale because the prospective buyer has accepted a resort tour during the previous year and is being deemed as the resort’s prospect, rather than the owner’s buyer.
To look at this another way, imagine test- driving a car at a dealership and later deciding to buy a used car of the same model, only to be told you can’t because months ago you visited a dealership. This initiative gives rise to ethical and legal questions. More importantly, it crystallizes the marketing question, “Does the industry really benefit by presenting timeshare as a product with no way out and no resale value?”
As Heather Guffin, president and CEO of the Association of Timeshare Recyclers says, “Every product in the world has a secondary market: jewelry, art, vehicles, technology, traditional real estate, even shares of a publicly-traded company. In fact, the investment value of an industry as a whole is largely determined by the resale value that their products maintain. The industries that have worked together to increase the value of their products on the secondary market are those that are generally considered to be good investments.”
Guffin adds, “Developers who offer their prospective members solutions to the objections of no way to resell, no resale value, and rising maintenance fees will simply sell more. Consumers want these solutions; they have been asking for these solutions, and voicing their frustration with the lack of viable timeshare exit strategies for years. It is time to stop ignoring their needs and offer them exit solutions that work.”
The challenges of the timeshare secondary market are never just going to “go away,” even if many industry thought-leaders and decision- makers would like them to fade quietly into oblivion. Inevitably, the day arrives when the chickens come home to roost. That reality makes it incumbent upon us all to find a point of resolution. The time has come to convene an emergency summit, at which the timeshare industry as a whole agrees to check egos at the door, refrain from the finger pointing of resellers blaming developers and developers blaming resellers and pledge to work together to effect change and achieve resolution. ARDA board members gathering to discuss resale but excluding secondary market companies has yet to solve anything.
Mary Robeants, owner and partner of 52 Shares, Inc., a real estate brokerage specializing in timeshare resales, says, “We would be thrilled to participate in an industry summit to discuss win-win solutions that meet the needs of developers, owners and those of us in the resale industry. We’re confident that open and frank discussion can yield the answers that are needed to the challenges that currently exist with respect to the resale market and the ability of owners to find a robust and healthy market for their timeshare weeks.”
Robeants voices a sentiment that is universal among legitimate resale companies. Resale is not an enemy of timeshare—it is an inevitability. If developers and management companies do not like how resale companies operate, they can change things; in fact, both resellers and developers will probably have to make changes in the way they currently operate segments of their business. The industry has to work together toward solutions that appeal to owners, developers, management companies, HOAs and resellers. Educating owners about disreputable resellers is a job half done. Led by its professional associations, timeshare must also educate owners and prospective owners regarding reputable resale companies.
During this year’s ARDA World Convention, in a discussion that included Howard Nusbaum, president and CEO of ARDA; Jason Gamel, ARDA’s vice president of state government affairs; Scott Roberts, CEO of Vacation Innovations; and Jason Tremblay, founder of SellMyTimeshareNOW.com, an important idea surfaced —that of an ARDA-verified reseller program. Everyone agreed that launching a program in which timeshare resale companies voluntarily provide ARDA with verification of resale and rental offers and finalized transactions is imperative.
Third party audits of timeshare resale and rental results, archived and made available to the industry and the public through ARDA, would enable buyers and sellers to identify trustworthy resellers. Just as importantly, third party audits of resale and rental results would put to rest those nagging untruths that timeshares have no resale value, and that timeshare is a life sentence, with no way out.
Consider this a plea to the stakeholders in ARDA to convene at an emergency resale summit, at which they invite the resale industry to participate and help collaborate and architect a meaningful solution.
Thank you Perspective Magazine for permission to reprint this article.