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Pool Area at Local Orlando Timeshare Property
Like a bad movie, the plotline for timeshare keeps getting more and more unlikely. In the current economy, sales have dwindled to almost nothing, loans to buyers are at a higher default rate than expected, and Consolidated Resorts, Inc., a Las Vegas timeshare developer, announced filing for bankruptcy yesterday.
For Orlando's native industry that once employed thousands of Central Florida citizens, this means that there is little hope for a turnaround in the near future.
Timeshare, once the profitable arm of many large hotel flags, has now been returned to the status of an expensive hobby for the likes of Barry Sternlich and Mr. Marriott. How long they can keep their race cars and timeshare divisions is up to their own feelings about the future, but it is likely that some big decisions are going to be made in the coming months as timeshare loses its value.
Orlando has become the home of nearly all timeshare development companies, which were the last bastion of world-class, high-budget, luxury land development. More than just condominium resorts, these expensive, highly amenitized properties competed with each other for more flash and onsite activities to lure customers who perceived that they had lots of discretionary income to throw around. While on vacation, it is easy to escape one's own economic realities, and during this period of vulnerability, these companies preyed on families who were enjoying Orlando a little too much. Driving home with some mouse ears and a new mortgage became a sort of a joke in some quarters - but the joke isn't too funny these days as people struggle to pay off their credit card debt.
Looking at the annual maintenance fee bill, and the monthly mortgage payment for a vacation property, it is easy to put those aside and hope to pay them someday, when one has a job again. Especially as the unemployment rate shoots up higher and higher, timeshare companies are finding less and less income from their current owners, and almost no new owners. Any CEO with a timeshare division is likely considering closing this division, or at least making it dormant for the time being, and looking elsewhere to return revenues into their companies.
For Orlando, this means that several thousand people could be out of jobs in the near future, several thousand timeshare units could be sitting empty, and an entire sector of the area's economy is defunct. For a city with a single economic driver - tourism - this could mean that diversifying the economy may be a forced issue rather than a luxury.
For the timeshare properties themselves, one recent high-level executive recently stated that it will take eight years to finally sell off all the timeshare units that have already been built, at the current pace. This means that for eight years, empty excess housing will be sitting in Orlando and elsewhere gathering cobwebs and weeds. It is imperative that these challenges be confronted in Orlando and elsewhere so that today's luxury playgrounds do not turn into tomorrow's slums.
Earlier, this column called for a points-based housing system to accomodate the rise of nomadic lifestyles. This would take care of a portion of the excess housing that has already been built, provide employment for the operations teams in place at these properties, and recognize a third way for folks caught in the scylla and charibdis of rent vs. own.
Timeshare companies would do well to look more closely at this scenario, and others as well. Recapturing offshore medical tourism by building clinics and facilties on domestic properties would save some areas where timeshare has a geographic link to hospitals and research facilities.
Another idea is to provide government housing for space science workers related to NASA projects. While the State of Florida was caught with its pants down over the 6,000 layoffs at NASA, the space industry continues to spend money in this state, and private investment to replace these jobs could mean offering some housing to workers coming to Florida for the space program.
And finally, since the state is known as a top exporter of fertilizer, timeshare properties could be ground up for fertilizer and sold to Brazil and China.
With Port Canaveral only 45 minutes away, this could mean a boom for both Orlando and Cocoa.
In any event, repurposing timeshare is destined to become a new industry, and as the spiritual home of all timeshare, Orlando could be proactive in leading this effort.
Comments
It is clear from the perspective of someone actually in the timeshar industry that a)For some reason you hold a grudge against timeshare and b)Your research and presentation of fact is sorely lacking.
Certainly there are many timeshare companies facing challenges but what industry isn't? Orlando may have a larger proportion of challenged companies but it is the defacto timeshare capital of the world. Many resorts that have funding are still selling quite well. Those that are suffering are doing so primarily because of the credit freeze combined with expensive sales and marketing programs... facing the possibility of selling themselves out of business because they cannot hypothocate paper which is a direct result of the housing crisis, not a timeshare crisis. It is for lack of credit, that has caused companies to minimize sales and marketing operations, not lack of potential buyers... companies that have financing performing well considering the market.
Timeshare is going no-where. This industry will be strong again and along with everything else it will re-tool and be better for it. Hotel chains know the value of the timeshare piece, not in just selling but also the extra business it brings to the restaurants,golf courses, and other ementities the hotels have to offer.
Dear Ted,
Mr. Thomas was also in the timeshare industry for many years. So a)he doesn't hold a grudge against the time share industry in fact he is a respected former member of this industry. b0 he has discussed his proposal of alternative uses for timeshare which have received high level priase for thinking outside of the box on how to deal with timeshare when yes every industry is suffering. FYI the state of Florida's unemployment rate is above 10% so where are these potential buyers who are waitng with baited breath to buy timeshare living? In Detroit or bankrupt California some other depressed part of the country? In hard times it takes vision to see how to improve something that is not working. I appreciate Mr. Thomas' vision of no longer doing business as usual.
I love blogs... its like fly-paper for idiots. Nice qualifications for this "author": former middle manager for a timeshare company. And suddenly he's the Alvin Toffler for the tourism industry? C'mon people - this guy has schmuck written all over him.
First of all he is not a smuck. Secondly your remark is degrading to all individuals in the Timeshare industry. This of course shows your ignorance that you would make such a blanket remark. Also since you responded you must be one of those idiots stuck to fly paper otherwise you would not have taken the time to blog. I think you are a shmuck (I am keeping it tame so I don't get sensored) for calling someone else you don't even know a shmuck and calling bloggers idiots.
Look honey, I'm in the industry, alright? And no, never heard of Rex - which is probably why he's "formerly" a middle manager. Or maybe it was that he needed time to think up some whiz-bang theory, sure to save us all: Offshore medical tourism? Points-based housing for nomadic lifestyles? Housing for NASA employees? Hit the hash pipe again, will ya? Look, Ted had it right. We're going through a contraction - the large, well capitalized companies are doing just fine, albeit with a smaller sales target. This industry is far from done - even if Rex has already baked himself into oblivion.
Rex got it right - timeshare needs to reinvent itself to survive. Most outside the industry agree with this assessment, based on the Wall St. Journal article he linked.
For those inside the industry, it is difficult and stressful times. Having worked in the resort development industry for 15 years, I have seen many changes, and when timeshare is willing to change, it will carve its own destiny for the future.
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