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What Recession?

Timeshare Industry Shows No Signs of Stopping

Despite a slowing US economy, timeshares continue to sell in droves, equaling an $8+ billion industry.

The American Resort Development Association recently released a report estimating that over 4.5 Million US Households own timeshares. Interestingly, these households own timeshares in only 1,604 resorts; these numbers suggest that large companies such as Wyndham and Disney do the most business.

A recent article at Inman News by Tom Kelly describes a new niche discovered by savvy entrepreneurs – they seek timeshare owners who cannot use their weeks but are desperate to break even, and provide a service wherein the unused timeshares are rented out. Some of these businessmen also acquire timeshares on their own, buying upscale resort time at bargain-basement prices from the resale market.

One of these entrepreneurs, Steve Shermoen, owns about 100 timeshare weeks that he rotates and rents through exchange companies. "You cannot make the rental concept work if you buy directly from the developer," he says. "You have to be sure of what you are buying and purchase only on the resale market…Many people are [also] grateful that there is a buyer who is willing to take the week off their hands. They simply are tired of paying the annual fee and can't wait to get out from under it."

What Shermoen and others are discovering is that the typical timeshare package, which gives an owner about a week of time at a particular resort, simply doesn’t work for most consumers. For instance, many timeshare owners find themselves in situations where they cannot use their timeshare during the allotted week, leaving them essentially out of luck.

On the other hand, breaking up the week into multiple one or two night stays – as is allowed with “point system” timeshares – often works much better, as most consumers find it easier to get away for smaller periods of time. Entrepreneurs like Shermoen are also discovering that timeshares on the point system, which allow these fractures more easily, have more value.

But Shermoen points out, “Acquiring and renting out timeshares is complicated and not for the unwary. If you are going to jump in, you have to do your homework."

Experts still stress that part of this homework is realizing the truth about timeshares: they don’t work as investments, only vacations. The industry’s climbing boom in spite of economic troubles is perhaps symptomatic of consumerist ideology, which stresses a grasshopper (as opposed to ant) lifestyle. But perhaps entrepreneurs like those noted above will begin to alter these trends.