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Timeshares, that wonderful relic from the 1970s, are about as popular as disco and excessive chest hair this year. Thanks to the recession, timeshare sales are forecasted to suffer their worst fall since this vacation option came on the scene more than 30 years ago. The plunge could reach 30 percent, according to Howard Nusbaum, president and CEO of the American Resort Development Association, a trade group, and the next year and a half could be tough, as well.
In the United States, timeshare sales fell 8.5% last year to $9.7 billion. They reached their peak the year before, when sales hit $10.6 billion, according to a study by Ernst & Young. The 2008 decline was the first sustained by the industry since it started keeping score in 1975.
The major hotel companies, which are also involved in the timeshare business, are feeling the squeeze.
Marriott International (NYSE: MAR) is taking a pretax charge of $760 million in the third quarter because of its timeshare business. In some cases, development will be caught, and prices will be cut. The company may also sell some undeveloped land. Wyndham Worldwide (NYSE: WYN), the largest seller of timeshare units in the country, is planning a 40% fall. Starwood Hotels & Resorts Worldwide (NYSE: HOT) is also expecting "significant timeshare impairments". The company saw fourth quarter sales for timeshares plummet 48% last year.
Through 2008, timeshares looked like a pretty good investment. From 2004 to 2008, the average sale price for timeshares in the United States increased from $15,790 to $20,152, with occupancy flat (at 82%) and maintenance fees increasing modestly from $471 to $646. So, it might not be a bad idea to sit through a presentation on one of those free trips this year ... a recession buy could show some appreciation down the road.
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