The current global financial crisis has a crucial effect on almost everyone. Currently individuals, families and companies are cutting back on leisure and travel spending faster than was anticipated. In the timeshare industry, many owners are getting out of their timeshares and a number of companies have already closed down or stopped some of their operations.
As Blommberg.com reported, forecasts show that the deterioration in leisure and business travel is accelerating as corporations and consumers contend with higher food prices, declining home values, job losses and scarce credit. According to Lisa Ann Schreier, author and expert on the timeshare industry, people simply do not have the disposable income right now. She added that people are scared and with the credit crunch, it will be harder for people to finance timeshares.
On the other hand, the timeshare industry is strained not only because consumers are spending less but also due to the fact that this industry has largely relied on mortgage-backed securities. As David Siegel, Company President of Westgate Resorts said, the largest privately held timeshare company in the world, attributes his company’s financial squeeze to the fact securities are no longer being bought. Siegel once explains that the timeshare companies keep money flowing through lines of credit that are then paid off when these companies bundle and sell their mortgages as securities. Then, all of a sudden no one is buying those securities.
Timeshares can be a costly procurement especially at these troubled economic times. That’s why we always see many owners trying to get rid of their timeshares nowadays. Some of them even hire a timeshare transfer company such as the Transfer Smart just to get rid of it. With consumers spending less on travel and with the freezing of credit markets, lodging and timeshare companies turn to timeshare owners to recoup some of their losses.