The Path of Timeshare Industry & Three Prediction

If you are wrong everyone will have forgotten what you said by the time it happens anyway. Having gotten that major disclaimer out of the way, let's take a look at the industry and try to make some sense out of it.

The industry really got started almost thirty years ago in the United States. Many real estate developers lured by the vision of being able to sell a $100,000 condo for $500,000 jumped in. Not realizing they were in the marketing business in which they were inexperienced rather than the development business they didn't do all that well and many went under. The few who really understood what they were doing did very well. Some built sizable timeshare empires.

Then the industry started to mature. The major hotel chains such as Marriott, Hilton, etc. decided they were losing way too many of the vacation lodging customers to timesharing. They also had a perfect vehicle to insure the brand loyalty they had been spending so much to achieve. With their huge resources they effectively drove all but a few of the smaller developers out of the business. The largest independent developers are still doing very well in spite of this. Now where does the industry go from here?

Prediction #1: The chains and the largest developers will continue to grow and to offer more widely appealing products such as points systems and multiple locations. Their pricing levels will be in the $12,000 to $25,000 range per yearly timeshare week. The biennial sales (every other year) will still enable them to also gain the lower end of this market.

In the meantime, the developers overlooked a simple, logical by-product of their millions of sold timeshares. That is the resale market. Some of these original timeshares were sold twenty-five years ago to people who were in their seventies at the time. They simply cannot use the product any more. Further, since it was/is a real estate product which theoretically never dies, there are many good reasons to have to sell and move on.

General real estate brokers took a look at this timeshare resale market where the whole resale price is about a third of a selling broker's three- percent commission on a house and simply ignored it. Owners wishing to resell then had nowhere to turn. There was no marketing system. As a result, prices plummeted. People who had not really paid too much to the developer (after all they didn't really make a killing) could now sell for only a fraction of what they had paid.

Enter the scammer. These folks who seem to always be the first into any new arena promised the timeshare sellers anything they wanted to hear in return for an advance fee of from $300 to $5,000. If you went for one of these deals don't feel too bad. So did I and I should know better. I sent $350 to a company in Florida who put an ad in the Orlando shopping news for $9. That was the whole shake of the dice. It was also when I decided to provide viable solution to the resale problem...namely to provide a straight-ahead resale brokerage which would get paid when the timeshare was sold. Fortunately there were others around the country that thought the same way.

The resale business is now developing along these lines. As more honest brokers get into the resale business, they will become a group who will drive out the bad apples. They may even get something like a Resale Multiple Listing Service together. There are already some indications of this on the Internet.

Prediction #2: The good guys will drive out the bad guys.

Years ago, condominiums were in about the same place as timeshares are today. Eastern lenders wouldn't finance condos and many brokers wouldn't sell them. After all, how could you sell or finance part of a building? Now the same argument is heard in relation to time in part of a building. It too will pass and the time will come when it is completely normal. Further, the price of resale timeshares, which is now at ridiculously low levels, will increase as they become more accepted. The gap between the pricing of new timeshares and used timeshares will narrow.

There are already cases where timeshares, which were bought for investment, have worked out well for the owners. Just don’t buy that argument if you are currently looking at new timeshare product.

Prediction #3: The future looks bright for resort timesharing. As time goes on and inflation continues (which it always does) timeshares will become more valuable just as primary housing has proven to be in the long run. If you are not yet on board, you couldn’t pick a better time. If you already are, it might be a good time to consider adding to your vacation happiness. Anyone joining in now will have a hard time going wrong.