It’s Not the Economy . . . Well, It’s Not All The Economy

I’m writing this the day after the market went up 900-some points, and so far it’s down again more than 277. At least writing this takes my mind off my retirement fund woes . . . for a bit.

As some of you know, I was quoted in a recent article in the Orlando Sentinel. The article was about the layoffs that a major independent timeshare, based in Orlando, was about to start. The president of that independent timeshare talked about the credit crunch and said that this had “come on like a heart attack,” but assured everyone that things would turn around quickly. Being the contrarian that I am, I disagreed on both counts.

This credit crunch as it applies to timeshares did not “come on like a heart attack.” It was caused by years and years of slick timeshare salespeople convincing consumers earning $35,000 that 15% or 16% or even 19% interest rates were “OK,” and that they could easily get a home equity loan or line of credit that would lower that 16% note. Then, when Mr. and Mrs. Average Consumer bought the timeshare and defaulted on it several weeks or months later, the banks that the timeshares were dealing with started clamping down.

Some thoughts:

• First of all, if you are earning $35,000 per year, you should NOT be buying a timeshare from the developer. You can’t afford it. The salesperson won’t tell you this, but I will. As some good friends of mine (I wish) sang some years ago, “You can’t always get what you want.”
• The timeshare industry should have changed its outdated and antiquated marketing techniques years ago. Had they done that, they would not have been in this mess. And this mess is much deeper than just banks clamping down. Luring consumers earning $30,000 or $40,000 to a “resort overview” by promising three nights at the resort for only $199 is just plain insane. There is absolutely no reason for that consumer to purchase the timeshare from the developer.
• Why is it that the timeshare industry, at least from the developers’ end of things, is allowed to keep consumers in the dark? The Internet is a wonderful thing. It enables people to get useful–and some not so useful–information about almost anything. If you want to research a car, a blender, a camera, or an insurance company, there is myriad information out there for you to use to make good judgments. Not so much with the timeshare industry. There are exceptions, but for the most part, timeshare developers have had carte blanche to be less than forthright about their products and services. In my opinion, one of the best things about this current economic mess is that the public will start demanding more information about timeshares.

These are not “fun” times, economically speaking, and I would not encourage anyone to purchase anything they truly cannot afford. So how does timeshare fit into this picture?

Consumers have always vacationed, and always will. In fact, I’d venture to say that nowadays, we need vacations more than ever. Buying smart, buying with the right information, buying resale, makes more sense than ever before. If you could go back 10 years and someone offered you an annual one-week vacation for only $3,000, plus $300 or $400 per year for “updates,” would you have jumped on that offer? Of course you would have. The $3,000 would have been paid off, and instead of wondering how you were going to vacation this year or next year, you’d already be planning.

The good news is that, thanks to timeshare resales, the price hasn’t really gone up. Three thousand dollars for 10 or 15 or 20 years of vacation? Sign me up! And sign me up for a vacation somewhere that I don’t have Internet access, so I can’t check on how the markets are doing every 15 minutes!

Happy Vacationing!

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