Enduring the Thunderstorm: Timeshare during the Recession
The US economic recession over the past two years has had an unquestionable negative
effect on the tourism industry, however, experts say that the timeshare sector of the industry was able to fare the market collapse better than expected.
Although significant drop in sales was experienced by the timeshare industry in 2008 and 2009, many developers point out that this was part of a strategy (purposely reduced sales) whose aim was to maintain cash flow in the face of the severing credit market condition. Not being able to paralyze timeshare development, the higher default rate among timeshare owners and the growing number of owners seeking relief from their obligations over the past years was rather expected given the prepaid nature of the program. In a weakening economy, renting vacation units in timeshare resorts became a widely-accepted alternative to costly hotel vacations and provided a significant amount of relief to timeshare owners who are in dismal economic straits.
Despite this temporary alleviation, the drop in consumer spending affected vacationers too, even as helped the timeshare industry weather the economic slump, since vacationers were inclined to use timeshare units (either owned or rented) as a substitute to pricy hotel rooms. Another factor to be considered is the rising fuel prices that forced many vacationers to prefer closer destinations, popularly known as "staycations" (from "stay home" and "vacations").
According to Howard Nusbaum, Chief Executive Officer of the American Resort Development Association, timeshare sales will most likely remain stagnant in 2010. However, new resorts continue to be built, especially by larger developers. In fact, several U.S timeshare properties are set to open this year, together with many others in popular tourist destinations like Mexico, China, and parts of Europe. One good example is Wyndham Worldwide Corporation's launching of Wyndham Vacation Resorts at National Harbor, the timeshare chain's first resort in Maryland, in February. The development's location conforms to the new trend among timeshare owners to stay in urban areas inside the country. To date, more than 75% of the eleven-story property's 250 units have already been sold.
Further, hospitality titan Marriott launched a new timeshare property in Florida, Marriott's Oceana Palms located in Palm Beach County, on January 15, 2010. To date, the development has one 19-story tower composed of 75 units, with more to be added. Once completed, the resort should have a total of 169 units.
Experts believe that the US economy is starting to slowly pick up, and is expected continue to do so this year. Although the timeshare industry was slow to feel the effects of the economic depression in the country, it should not take long for it benefit from the improving economic situation.
Enduring the Thunderstorm: Timeshare during the Recession
By: Mariecarz David
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