Friday, May 04, 2018

Industry Tries to Debunk 6 Myths about Timeshare Owners

Timeshare owners are a mixed bag: younger, older, wealthy and educated

Younger.  Smarter.  Wealthier --- and tougher to fool.  That's the new look timeshare owner for 2018, according to surveys commissioned by the timeshare industry's trade and lobbying group.

In a recent column posted in Developments Magazine, Howard Nusbaum, president of the American Resort Development Association, debunks 6 "fluffy myths" about timeshares that have haunted the industry's public persona for years.

The results of ARDA's survey are interesting but not always conclusive.  But they should trigger many spirited conversations around your resort’s hot tub.

Here are the top six myths that Nusbaum wants to eliminate:

MYTH #1: Most timeshare owners are old, if not senior citizens.  According to Nusbaum, 67 percent of all timeshare owners are between the ages of 18 and 54. 

OUR TAKE: We’ve attended many timeshare sales presentations but have never seen a teenager in the room, much less buying a timeshare whose average price is $20,000 or more per weekly interval.  ARDA's survey also reveals that 33 percent of all timeshare owners are at least 55 years old.  This group, incidentally, is also most likely to purchase additional timeshares, since they already know the ups and downs of ownership.   FYI, a standard sales presentation contract says participants must be between the ages of 25 and 75 and have a household income of $50,000.  Which leads us to...

MYTH #2: Timeshare owners come from lower economic brackets.  According to ARDA, the mean household income for owners is $93,000 while the median income is $81,000. 

OUR Take: We’ve never seen a timeshare purchaser who appeared to be broke or penniless, so we’re not sure where this “lower economic” myth came from.  Anyone attending a brand-name timeshare presentation has already spent a considerable sum just to get in the room (e.g. $1,000 roundtrip per person airfares from the mainland to Hawaii).  The economics are different at 40-year-old legacy resorts, where (usually older) owners can be lured to an update sales presentation for coffee and a donut.

Myth #3: Retirees are the single-biggest group of owners.  According to ARDA's survey, only 19 percent of all owners are retired.  The overwhelming majority of owners, 67 percent, are either employed full-time or self-employed.

OUR Take: Assuming ARDA's numbers are accurate reflections of the people they surveyed, this means that another 14 percent of all owners aren't retired and don't work.  Don't know what to make of this group, unless they are spouses depending on the other categories?   This 14 percent needs more explanation.  But since they are not part of the workforce, we'll add them to the 19 percent of retirees, which means that 33 percent of all owners are either former workers or non-workers.

Myth #4: Timeshare owners are not highly educated.  According to ARDA, 42 percent of owners have a college degree while 21 percent hold graduate degrees.

OUR Take: If 63 percent of all timeshare owners are college-educated or better, then 37 percent stopped their formal education after 12th grade in high school.  We have no problem with that, except to wonder how they were able to get a good-enough paying job to afford buying a timeshare, which probably came after they had already gotten a job, bought a car or two, bought a house and had several kids.  This 37 percent group must include an amazing numbert of achievers who became successful without a college degree.  More power to them.

Myth #5: Most timeshare owners want to get out of their contract. ARDA's surveys show that 70 percent of all owners would recommend timeshare ownership to others, while nearly 75 percent would recommend their home resorts. 

OUR Take: Every time ARDA touts a figure like the 70-percent-satisfaction number, it begs the fact that 30 percent of all owners apparently would NOT recommend timeshare.  Another 25 percent would not even recommend their home resort to others.  Those are big numbers.  They also but suggest that these non-recommending owners would be happy to get out of their contracts.  We also know, from separate studies on "regret and remorse" issues commissioned by ARDA, that 15 percent of all buyers rescind their purchase within days of their sales presentation.  This group could be called "short-term buyers" who bailed after reconsidering their purchase for a few days.
It is also our informed opinion that 100 percent of all timeshare owners will, one day, want out of their contract, for all kinds of legitimate reasons --- health, age, divorce, death in the family, bankruptcy or other money problems that curb vacations, problems with kids, estate or inheritance issues, etc.  This is not a bad thing; it's natural and predictable.  Far as we can tell, no timeshare owners have ever outlived their "in perpetuity" contracts.

Myth #6: Timeshare owners believe the sales process is high pressure.  ARDA's surveys show, contrary to this widely repeated notion, that 71 percent of all owners "found their buying experience to be either excellent or good."

OUR Take: Historically, high-pressure sales tactics are synonymous with timeshare presentations and a key part of the industry's overall public reputation going back 30 years.  In our experience, reputations are earned, not accidents or bad luck. For example, there are several lawsuits pending in US courts, right now, alleging that well known timeshare companies used high-pressure sales techniques to persuade buyers into signing purchase contracts.  While not taking a stand on the veracity or legitimacy of these cases, their existence (as well as the private settlement of similar cases) suggests that the old high-pressure myth still has some currency among some timeshare owners and, most certainly, persists among the industry’s critics and those who promote more legal consumer protections for timeshare buyers.

What do you think about these myths?  Post your comments here.  All opinions welcome.

Sunday, February 11, 2018

2018 Starts Off with a Bang as Timeshare Universe Adapts to Major Changes in Travel Industry

Forget January.  February 2018 is a great start for the new year.  All maintenance fees should be paid by now, and if you want to go to your Hawaiian timeshare next winter, now is also the time to make that 12-months-in-advance-of checkin reservation at your home resort.

But it's also a good month for most timeshare football fans, and they tend to go together, based upon our experience watching NFL games from swim-up pools and hot tubs in all the places that snowbirds escape to during winter months. The Eagles surprise Super Bowl victory over the Patriots was a win for all underdogs, which pretty much takes us all back to our roots as regular people struggling to make our mark in the world.

Speaking of embracing challenge, traditional timeshare developers and vacation clubs are ramping up their efforts to adapt to an Internet-based world where travelers can book timeshares, instantly, for rental rates that match maintenance fees.  For travelers of all ages, this means you don't have to own a timeshare to use one. The companies are also rapidly trying to get younger so they can appeal to new and monied travelers who, historically, shy away from lifetime timeshare offerings.

Here's a snapshot of the US timeshare world provided to RedWeek by the American Resort Development Association (ARDA), which serves as the trade association and national lobbying organization for all brand-name timeshare developers and their cottage-industry service companies, including realtors, title companies, lenders, etc.

According to ARDA's industry surveys, developers racked up $9.2 billion in sales in 2016 (and probably more in 2017) in the US, and an estimated $19.7 billion worldwide.  These numbers don't include resale transactions, which are not clearly tracked by any major industry group.  The industry employs 500,000 people in North America with many based in sunny Florida, which is the WW headquarters for most timeshare companies and home to 50 percent of all US timeshare resorts.  More than 9.2 million US households own one or more timeshares.  FYI, all major timeshare companies are sloughing off that word --- timeshare --- and using "shared vacation ownership" instead.  Years of largely negative news stories about timeshares have taken their toll on the value of the word --- so watch it continue to disappear in 2018 as marketers promote shared ownership and "alternative accommodations."

On the advocacy front, the industry continues to fight transient tax increases in states (Hawaii, et al) that prey on timeshare owners who have no local political representation.  It also lobbies regulators and lawmakers to crack down on timeshare scams usually perpetrated by self-styled "transfer and relief" companies that solicit owners (for thousand-dollar upfront fees) with phony guarantees that they will help owners get out of their timeshare contracts.  On a related front, individual timeshare companies (Welk, Westgate and others) launched a concerted legal campaign last summer to sue some of these companies that offer exit strategies to owners.  While these cases wind through the federal court system, owner lawsuits against timeshare companies are also increasing with claims alleging elder abuse to misleading sales practices.

The industry's published goals for 2018 include more expansion, particularly into the Asia-Pacific and urban markets, more anti-fraud campaigns, developing successful messaging to reach new and younger potential buyers, and "telling our story" to combat negative myths about the industry.  It's a full and ambitious load of goals, which we will track for owners as the year unfolds.

CNBC Story Paints Vivid Picture of Industry Resale and Inheritance Issues

CNBC news, a national news organizations headquartered just outside Manhattan, published an in-depth news story Feb. 6 that provides a vivid and comprehensive picture of the major issues confronting timeshare owners.  Written by Strategic Content Editor Barbara Booth, the story focuses on the "inherited timeshare conundrum" that confronts owners who are unable to sell a timeshare and cannot give it away to their children or heirs (usually because the kids don't want to inherit the annual maintenance fee bills that come with timeshare ownership).  It is a very thorough and balanced piece of journalism that also discusses resale issues, timeshare scams, rental alternatives for owners and corporate exit programs.  Booth used RedWeek as a source for some of her material, so we're happy to recommend this article to anyone looking to off-load their timeshare.