Over the past two years, the economic depression has had an undeniable negative effect on the tourism industry. But nonetheless, experts maintain that despite tougher times, the timeshare segment of the industry was able to endure the market collapse better than expected.
While the industry suffered a significant drop in sales in 2008 and 2009, many developers maintained that it was part of a strategy to purposely reduce sales, in an effort to maintain cash flow amid the worsening credit market condition. While it did not paralyze timeshare development, the higher default rate among timeshare owners, and the subsequent trend to sell off timeshare investments, was rather expected given the prepaid nature of the program. In a depressed economy, renting vacation units in timeshare resorts became a popular alternative to costly hotel accommodations, and provided valuable income for timeshare owners 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.
Another giant developer, Marriott also opened a new timeshare property back in January. Marriott’s Oceana Palms Resort in Palm Beach, Florida has one 19-story tower and 75 units, with additions on the plan. The resort is supposed to have a total of 169 units upon completion.
With experts believing that the US economy is starting to slowly recover, so too will timeshare get back on its feet. 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.