Much of the timeshare sales for non-branded resorts (called ‘Legacy’) was done in the 1970’s and 1980’s. Thirty years later, these legacy resorts are faced with a growing need to ‘turnover’ those owners with new owners. Sometimes family is interested, but that doesn’t seem to be enough and an active and aggressive sales operation needs to be in place. Without that sales pace, legacy owners are faced with rising costs as 70% (or less) of the owners pay 100% of the bills.
One of the emerging trends in the industry is the decision to consider a ‘retire’ or ‘repurpose’ solution for the timeshare at many Associations. There are numerous reasons for this; most commonly one of or a combination of the following;
- The lack of a strong secondary market for Legacy properties.
- Fixed usage resorts that are more limiting than newer points based programs.
- Negative publicity regarding the industry in general.
- Mismanagement where HOA’s and Management companies failed to address increasing delinquencies and sales of HOA weeks until too late.
Sales are happening at legacy properties, but not at a fast enough pace to satisfy the available inventory at the roughly 1,200 Legacy properties and online platforms that do have robust resales (RedWeek) do most of the sales for ‘branded’ resorts.
As time marches on, resorts find that they have less and less owners paying and carrying the burden of 100% of the operations. Maintenance of the property (by neccessity because of lack of funds) starts to be deferred which leads to more unhappy owners which leads to less owners paying. The cycle is fatal once a certain point is reached; and void of an influx of immediate sales in bulk – time and the volume of inventory needed to be sold are suffocating the resorts financially. In the end – the choice is bankruptcy or an organized termination/repurpose, where owners can be moved to another location and the cash generated from the sale of whole units (or buildings) used to cover the wind-down expenses with distributions to owners.