Resale News

Many people have heard of timeshares in such exotic and fun locales as Honolulu, Cancun, and South Beach. But what about owning a timeshare that flies? A growing business offers corporations and wealthy individuals the chance to skip the lines at the airport and fly wherever they want to around the world on “as little as four hours’ notice.” It’s called fractional jet ownership.

Instead of spending $50 million for a Gulfstream V or a Bombardier Global Express, a customer will pay around $7 million for a 3/16 share, which would earn him or his company 150 hours of flying per year. Just like a traditional resort timeshare, there’s a monthly management fee, with the proceeds going to maintenance of the plane and care of the crew.

Advantages include freedom to fly when and where you want to without harassment from TSA, and the ability to land at some of Europe’s smallest airports, which can be closer to the eventual destination. Also, this kind of flight caters to the premium business traveler. You get to work and rest in total privacy, at a cost that rivals that of the fabled 1980’s-90’s Concord: around $7,000/ hour.

The world’s innovator in the field, Netjets, counts Warren Buffet as an investor. If the richest man in the world believes in a product, shouldn’t you?

From the moment you get off your airplane in Cancun International Airport, through fake “CUSTOMS” desks and even out in your taxicab, timeshare sellers will try to pitch their “investments” to you.

Their pressure-filled sales tactics include free car-rentals, cruises and even the chance to stay in the timeshare for free for the duration of their vacation. These sales pitches have ramped up in number and in intensity since Mexico’s tourism industry has suffered over the last ten years. Drug cartel violence, in particular, has hurt Mexico’s image and number of tourists. Within the last two years alone, occupancy rates in Mexican hotels have dipped from 30 to 60%.

“They basically have rooms sitting empty and real estate sitting empty, so Mexico is pushing them extremely hard,” says Jeff Lugosi, senior vice president at Colliers PKF Consulting USA in Los Angeles.

Park Royal Hotels, which has resorts in Cancun, Cozumel, Mazatlan, Los Cabos, Ixtapa and Puerto Vallarta, now sells “points” to travelers that they can use on future trips to their resorts or other hotels around the world.

Ed Perkins, a contributing editor for SmarterTravel.com, warns against “investing” in something you may never use or may use and not like. Also, it’s not really investing when there is no financial return, so be wary of these “disasters”: “Anytime you’re talking about ‘investing’ $5,000, $10,000, $15,000, the chances are at best it’s a bad buy and at worst you’ll find it’s a disaster,” he says.

“You’re on vacation to relax, and it’s not worth the aggravation and pressure. Even if you like the idea of a timeshare, that’s not the way to buy it.”
Bottom line: Do not get roped into an emotional purchase made by a pushy salesman whose costs will last literally a lifetime. And if you did make the mistake of purchasing a timeshare, DO NOT trust resale/listing sites. Call Transfer Smart at 866-906-4494 and find out how they can set you up with a no cost information session on a way to transfer your timeshare title out of your name, the Smart way.

This tragic story comes from Wisconsin, but could happen anywhere the worthless investment known as timeshares are sold. William and Dorothy Ostig, a mature West Palm Beach Florida couple, are seeking the return of $15,000 they wasted on a timeshare points that didn’t work for products that didn’t exist.
While on vacation in Wisconsin, the Ostig’s allege that Bluegreen Vacation Club offered them free ski lift tickets if they attended a “financial investment meeting.” At this meeting, high-pressure sales tactics were used to get the couple to purchase Bluegreen Points, redeemable “worldwide” for lodging in various states and cruises.

While the Ostigs repeatedly declined to sign anything or purchase the points, more salesmen entered the room, becoming “hostile and angry” with the elderly couple. After enduring “hours” of “unrelenting pressure,” the Ostigs signed a timeshare contract “for a timeshare interest in the resort known as The Timbers at Christmas Mountain Villiage” in Wisconsin Dells, Wisconsin. A year later they attended an “owner’s meeting” at the resort and tried to get questions answered about the points that they had been sold. At this meeting, allegedly, the resort staff attempted to pressure the couple into buying more points, or an “upgrade” as it was called. They did not “upgrade” or get to use any “points.”

Three years after they signed their initial contract, the couple attempted to use their “points” at a resort on their list, the Falls Village Resort in Missouri. Here they were sent to another “mandatory owners meeting” and met similar pressure to spend more money on more points and sign a new timeshare contract, which they did with the understanding that the staff would help them sell or get rid of their previous timeshare purchase. After signing the second contract, the Missouri resort did not help them get rid of their points, but instead referred the couple to another Bluegreen affiliate.

The Ostigs are now taking Bluegreen Corporation to court and seeking more than $15,000 returned, plus damages with interest for fraud, negligent misrepresentation, violations of Wisconsin’s Consumer Protection Act and Missouri’s Merchandising Practices Act, statutory penalties, costs, and rescission of all contracts. They are represented by two Orlando lawyers with timeshare fraud experience, Alan Taylor and Susan Budowski.

The accountant from Cherry Hill, N.J., jumped on it, and became one of 6 million Americans who own a time share, shared vacation property that owners get to stay in for a week or so each year for life.

Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances.

Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership. Her bill for 2010 totals $1,650, up 20% from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”

Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.

Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.

Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.

“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”

There were 1,630 time-share resorts in the USA as of 2008, with 40% of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.

Sales drop, defaults rise

Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8% to $9.7 billion, according to ARDA. They plunged 40% more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.

Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9% of time-share mortgages went into default vs. 2.2% in 2008. About 8% of time-share mortgages were in default as of 2008. Maintenance fees have grown an average of 12% a year since 2005.

Large hospitality companies, already hurting from empty hotel rooms, are retreating. Marriott International’s time-share sales fell 38% in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.

Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif.

Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale. “Had I known what was coming in the future, I’d have held off,” she says.

Lehenky asked Marriott to take the contract back last year. The company refused.

ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street.

Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts. The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.

Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12″ properties that have already had groundbreaking, he says.

Remorseful buyers

The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50% of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10% to 15%, Waltrip says.

Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.

Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000. “We were suckered in, and we fell in love with it,” she says.

Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week, because it fell in October when her kids are in school.

Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.

“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”

Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run.

The number of ads by owners looking to sell on Rogers’ website is 25% higher than a year ago. About half of the people on his website want to sell their time share, he says. “More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”

 

That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt. “Going on a vacation like that would be living beyond our means,” she says.

‘Scams’ in resale market

Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000.

Udell says she’s been bombarded by such solicitations. “They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”

Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen.

TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee. “They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”

Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November, that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls.

The lawsuit alleges that the defendants — including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk — collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.”

The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.” The defendants also “made blatant misrepresentations … (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned.

“The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.

Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market.

She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “

Post from: Timeshare Blog

Timeshare Owners Fed Up

The accountant from Cherry Hill, N.J., jumped on it, and became one of 6 million Americans who own a time share, shared vacation property that owners get to stay in for a week or so each year for life.

Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances.

Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership. Her bill for 2010 totals $1,650, up 20% from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”

Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.

Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.

Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.

“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”

There were 1,630 time-share resorts in the USA as of 2008, with 40% of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.

Sales drop, defaults rise

Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8% to $9.7 billion, according to ARDA. They plunged 40% more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.

Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9% of time-share mortgages went into default vs. 2.2% in 2008. About 8% of time-share mortgages were in default as of 2008. Maintenance fees have grown an average of 12% a year since 2005.

Large hospitality companies, already hurting from empty hotel rooms, are retreating. Marriott International’s time-share sales fell 38% in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.

Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif.

Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale. “Had I known what was coming in the future, I’d have held off,” she says.

Lehenky asked Marriott to take the contract back last year. The company refused.

ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street.

Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts. The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.

Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12″ properties that have already had groundbreaking, he says.

Remorseful buyers

The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50% of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10% to 15%, Waltrip says.

Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.

Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000. “We were suckered in, and we fell in love with it,” she says.

Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week, because it fell in October when her kids are in school.

Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.

“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”

Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run.

The number of ads by owners looking to sell on Rogers’ website is 25% higher than a year ago. About half of the people on his website want to sell their time share, he says. “More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”

 

That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt. “Going on a vacation like that would be living beyond our means,” she says.

‘Scams’ in resale market

Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000.

Udell says she’s been bombarded by such solicitations. “They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”

Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen.

TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee. “They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”

Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November, that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls.

The lawsuit alleges that the defendants — including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk — collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.”

The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.” The defendants also “made blatant misrepresentations … (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned.

“The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.

Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market.

She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “

Post from: Timeshare Blog

Timeshare Owners Fed Up

The accountant from Cherry Hill, N.J., jumped on it, and became one of 6 million Americans who own a time share, shared vacation property that owners get to stay in for a week or so each year for life.

Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances.

Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership. Her bill for 2010 totals $1,650, up 20% from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”

Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.

Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.

Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.

“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”

There were 1,630 time-share resorts in the USA as of 2008, with 40% of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.

Sales drop, defaults rise

Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8% to $9.7 billion, according to ARDA. They plunged 40% more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.

Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9% of time-share mortgages went into default vs. 2.2% in 2008. About 8% of time-share mortgages were in default as of 2008. Maintenance fees have grown an average of 12% a year since 2005.

Large hospitality companies, already hurting from empty hotel rooms, are retreating. Marriott International’s time-share sales fell 38% in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.

Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif.

Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale. “Had I known what was coming in the future, I’d have held off,” she says.

Lehenky asked Marriott to take the contract back last year. The company refused.

ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street.

Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts. The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.

Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12″ properties that have already had groundbreaking, he says.

Remorseful buyers

The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50% of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10% to 15%, Waltrip says.

Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.

Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000. “We were suckered in, and we fell in love with it,” she says.

Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week, because it fell in October when her kids are in school.

Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.

“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”

Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run.

The number of ads by owners looking to sell on Rogers’ website is 25% higher than a year ago. About half of the people on his website want to sell their time share, he says. “More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”

 

That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt. “Going on a vacation like that would be living beyond our means,” she says.

‘Scams’ in resale market

Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000.

Udell says she’s been bombarded by such solicitations. “They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”

Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen.

TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee. “They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”

Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November, that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls.

The lawsuit alleges that the defendants — including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk — collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.”

The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.” The defendants also “made blatant misrepresentations … (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned.

“The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.

Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market.

She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “

Post from: Timeshare Blog

Timeshare Owners Fed Up

The accountant from Cherry Hill, N.J., jumped on it, and became one of 6 million Americans who own a time share, shared vacation property that owners get to stay in for a week or so each year for life.

Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances.

Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership. Her bill for 2010 totals $1,650, up 20% from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”

Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.

Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.

Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.

“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”

There were 1,630 time-share resorts in the USA as of 2008, with 40% of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.

Sales drop, defaults rise

Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8% to $9.7 billion, according to ARDA. They plunged 40% more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.

Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9% of time-share mortgages went into default vs. 2.2% in 2008. About 8% of time-share mortgages were in default as of 2008. Maintenance fees have grown an average of 12% a year since 2005.

Large hospitality companies, already hurting from empty hotel rooms, are retreating. Marriott International’s time-share sales fell 38% in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.

Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif.

Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale. “Had I known what was coming in the future, I’d have held off,” she says.

Lehenky asked Marriott to take the contract back last year. The company refused.

ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street.

Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts. The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.

Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12″ properties that have already had groundbreaking, he says.

Remorseful buyers

The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50% of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10% to 15%, Waltrip says.

Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.

Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000. “We were suckered in, and we fell in love with it,” she says.

Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week, because it fell in October when her kids are in school.

Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.

“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”

Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run.

The number of ads by owners looking to sell on Rogers’ website is 25% higher than a year ago. About half of the people on his website want to sell their time share, he says. “More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”

 

That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt. “Going on a vacation like that would be living beyond our means,” she says.

‘Scams’ in resale market

Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000.

Udell says she’s been bombarded by such solicitations. “They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”

Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen.

TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee. “They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”

Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November, that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls.

The lawsuit alleges that the defendants — including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk — collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.”

The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.” The defendants also “made blatant misrepresentations … (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned.

“The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.

Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market.

She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “

Post from: Timeshare Blog

Timeshare Owners Fed Up

The accountant from Cherry Hill, N.J., jumped on it, and became one of 6 million Americans who own a time share, shared vacation property that owners get to stay in for a week or so each year for life.

Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances.

Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership. Her bill for 2010 totals $1,650, up 20% from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”

Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.

Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.

Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.

“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”

There were 1,630 time-share resorts in the USA as of 2008, with 40% of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.

Sales drop, defaults rise

Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8% to $9.7 billion, according to ARDA. They plunged 40% more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.

Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9% of time-share mortgages went into default vs. 2.2% in 2008. About 8% of time-share mortgages were in default as of 2008. Maintenance fees have grown an average of 12% a year since 2005.

Large hospitality companies, already hurting from empty hotel rooms, are retreating. Marriott International’s time-share sales fell 38% in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.

Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif.

Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale. “Had I known what was coming in the future, I’d have held off,” she says.

Lehenky asked Marriott to take the contract back last year. The company refused.

ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street.

Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts. The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.

Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12″ properties that have already had groundbreaking, he says.

Remorseful buyers

The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50% of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10% to 15%, Waltrip says.

Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.

Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000. “We were suckered in, and we fell in love with it,” she says.

Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week, because it fell in October when her kids are in school.

Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.

“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”

Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run.

The number of ads by owners looking to sell on Rogers’ website is 25% higher than a year ago. About half of the people on his website want to sell their time share, he says. “More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”

 

That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt. “Going on a vacation like that would be living beyond our means,” she says.

‘Scams’ in resale market

Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000.

Udell says she’s been bombarded by such solicitations. “They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”

Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen.

TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee. “They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”

Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November, that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls.

The lawsuit alleges that the defendants — including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk — collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.”

The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.” The defendants also “made blatant misrepresentations … (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned.

“The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.

Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market.

She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “

Post from: Timeshare Blog

Timeshare Owners Fed Up

The accountant from Cherry Hill, N.J., jumped on it, and became one of 6 million Americans who own a time share, shared vacation property that owners get to stay in for a week or so each year for life.

Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances.

Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership. Her bill for 2010 totals $1,650, up 20% from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”

Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.

Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.

Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.

“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”

There were 1,630 time-share resorts in the USA as of 2008, with 40% of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.

Sales drop, defaults rise

Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8% to $9.7 billion, according to ARDA. They plunged 40% more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.

Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9% of time-share mortgages went into default vs. 2.2% in 2008. About 8% of time-share mortgages were in default as of 2008. Maintenance fees have grown an average of 12% a year since 2005.

Large hospitality companies, already hurting from empty hotel rooms, are retreating. Marriott International’s time-share sales fell 38% in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.

Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif.

Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale. “Had I known what was coming in the future, I’d have held off,” she says.

Lehenky asked Marriott to take the contract back last year. The company refused.

ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street.

Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts. The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.

Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12″ properties that have already had groundbreaking, he says.

Remorseful buyers

The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50% of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10% to 15%, Waltrip says.

Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.

Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000. “We were suckered in, and we fell in love with it,” she says.

Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week, because it fell in October when her kids are in school.

Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.

“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”

Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run.

The number of ads by owners looking to sell on Rogers’ website is 25% higher than a year ago. About half of the people on his website want to sell their time share, he says. “More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”

 

That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt. “Going on a vacation like that would be living beyond our means,” she says.

‘Scams’ in resale market

Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000.

Udell says she’s been bombarded by such solicitations. “They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”

Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen.

TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee. “They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”

Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November, that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls.

The lawsuit alleges that the defendants — including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk — collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.”

The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.” The defendants also “made blatant misrepresentations … (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned.

“The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.

Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market.

She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “

Post from: Timeshare Blog

Timeshare Owners Fed Up

The accountant from Cherry Hill, N.J., jumped on it, and became one of 6 million Americans who own a time share, shared vacation property that owners get to stay in for a week or so each year for life.

Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances.

Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership. Her bill for 2010 totals $1,650, up 20% from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”

Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.

Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.

Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.

“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”

There were 1,630 time-share resorts in the USA as of 2008, with 40% of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.

Sales drop, defaults rise

Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8% to $9.7 billion, according to ARDA. They plunged 40% more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.

Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9% of time-share mortgages went into default vs. 2.2% in 2008. About 8% of time-share mortgages were in default as of 2008. Maintenance fees have grown an average of 12% a year since 2005.

Large hospitality companies, already hurting from empty hotel rooms, are retreating. Marriott International’s time-share sales fell 38% in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.

Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif.

Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale. “Had I known what was coming in the future, I’d have held off,” she says.

Lehenky asked Marriott to take the contract back last year. The company refused.

ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street.

Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts. The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.

Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12″ properties that have already had groundbreaking, he says.

Remorseful buyers

The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50% of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10% to 15%, Waltrip says.

Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.

Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000. “We were suckered in, and we fell in love with it,” she says.

Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week, because it fell in October when her kids are in school.

Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.

“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”

Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run.

The number of ads by owners looking to sell on Rogers’ website is 25% higher than a year ago. About half of the people on his website want to sell their time share, he says. “More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”

 

That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt. “Going on a vacation like that would be living beyond our means,” she says.

‘Scams’ in resale market

Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000.

Udell says she’s been bombarded by such solicitations. “They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”

Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen.

TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee. “They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”

Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November, that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls.

The lawsuit alleges that the defendants — including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk — collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.”

The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.” The defendants also “made blatant misrepresentations … (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned.

“The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.

Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market.

She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “

Post from: Timeshare Blog

Timeshare Owners Fed Up