There can be no denying that the timeshare industry is a behemoth.
The American Resort Development Association (ARDA), an industry trade group, estimates that the industry is worth roughly $8.6 billion – putting it in the conversation with the music industry ($7 billion) and even Major League Baseball ($9 billion) in terms of revenue. By ARDA’s estimates, nearly 9 million households own one or more timeshare products, in the form of weeks, points, or fractional ownership. That’s nothing to sneeze at.
The bottom line is that this industry is like a big, ironclad ship. And as any salty old sea captain could tell you (and we’ve got plenty of them here in our home base of Florida), big ships can be supremely difficult to turn around.
But, with that said, every industry is susceptible to its own ups and downs. Sometimes, it can be hard to tell which way the winds are blowing – until they’ve already bowled you over. But in other cases, keeping an eye on the forecast can help set you down the right path.
With that in mind, we may be able to make a few educated guesses about what the future may hold for the timeshare industry – or, at the very least, point you toward the developing narratives and industry conversations worth keeping tabs on.
Here are some timeshare industry trends and stories well worth following in the months to come:
Changing Demographics
As we’ve noted before, one long-term issue that may determine he future of the timeshare industry is the age and makeup of its consumer base.
While ARDA and other timeshare industry watchdogs have stressed the need to diversify their consumer pool and seek out millennial customers, the reality is that the average age of a timeshare owner is nearly 50 years old.
What’s more, ARDA itself acknowledges that much of the timeshare industry’s profits come on the backs of those existing customers; in 2015, fewer than half of timeshare sales were to new owners. One report suggests that at least three major resort developers in 2015 made more than 60% of their sales to existing owners.
In 2018 and beyond, it’s well worth watching how the industry reacts to the gray wave that is the boomer generation. Can it continue to make money on the backs of its aging customers? Or will resort developers and trade associations steer their industry toward more consumer-friendly practices, which could lure in millennial audiences brought up with a plethora of vacation options at their disposal?
Speaking of which…
Newer Vacation Options
In many ways, the last few years have been the age of the short-term vacation rental.
Homesharing options like Airbnb, HomeAway, VRBO, and others have opened up this once-niche travel option to the mainstream, and the industry is absolutely booming. One study suggests that the private accommodation market’s growth far outpaced the total US travel market in 2016, and could be worth more than $36 billion by 2018.
It’s also worth noting that, according to some industry watchers, the largest growth in this sector is coming from younger audiences, aged 18 to 44 – the very demographic that the timeshare industry must start capturing to survive.
While short term, private vacation rentals have been criticized and scrutinized in their own right, they seem poised to only keep growing in prevalence for travelers, who are increasingly looking for lower prices, greater flexibility, and more authentic travel experiences.
This could well affect the travel and hospitality sectors in an enormous way, posing a threat to hotels, and, yes, timeshare resorts. Keep an eye on this horse-race in the year to come.
Response to Natural Disasters
While most of us don’t want to think about it this way, the reality is that a lot of our health and good fortune is entirely up to a game of chance.
There’s no telling when an act of God – such as the massive fires that ripped through Tennessee in late 2016, or the hurricanes that pummeled the southern US and the Caribbean in 2017 – could wreak damage on a timeshare resort.
Indeed, with global weather patterns only becoming more extreme over time, it seems likely that this will only become a more common occurrence in the years ahead. And that timeshare owners could end up paying more, as a result.
It may become important to keep an eye on how the timeshare industry, as well as individual resorts, react to a greater threat of damage or increased clean-up costs year over year – particularly when you consider that high costs, especially maintenance fees, are already the number one factor driving consumers away from their timeshare interests.
Increased Oversight?
In 2017, New York’s Attorney General attained $6.5 million settlement with the owners and operators of the Manhattan Club, a timeshare building in Midtown Manhattan.
As the AG’s office explained in a statement:
“…contrary to the club’s explicit promises in its offering plan, room availability to owners was greatly limited because rooms were being rented out to the general public. That means that all reservations are subject to availability and owners, in some cases, were unable to use any of the time they purchased. Further, the owners’ annual common charges jumped approximately 200% in the last ten years – to about $2,000 per ownership interest per year for the smaller units – on top of the upfront purchase costs that ranged from just under $10,000 to over $40,000 per ownership interest. Some frustrated owners have sold their ownership interests back for a mere $1, just to escape the burdens of paying these charges.”
None of this is uncommon within the timeshare industry; we’ve long kept our eye on consumer complaints about resort reservation systems, steadily rising annual fees, and the systemic suppression of the secondary market for resales.
While consumer protection is being stifled on the national level, we’ve also noted that state attorneys general are stepping up to the plate – and Michael Finn has chided our own state’s consumer protection agencies for not enacting more common sense policies.
Could this year bring fresh legal challenges to the timeshare industry and its actors? Will consumers and their advocates turn a fresh eye to the oversight of resort developers around the country in 2018? Stay tuned.
Led by Attorney Michael D. Finn with 50 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don’t hesitate to drop us a line with any questions or concerns.