Wyndham Destinations the world’s largest developer based in Orlando hit it off to an amazing start in 2018.
The standalone company which has been established since its split with Wyndham Worldwide announced a 7% increase in sales, going above and beyond Wall Street’s expectations during it’s first quarter. The CEO, Michael Brown of Wyndham Destinations’ said. “It was an outstanding quarter,”.
Albeit the figures speak for themselves there was also reference to the number of owner’s having not met their timeshare mortgage agreements, extending what has already become a concern.
The company confirmed the losses have slowed down to just below 5% however, this is still too high according to the CFO Michael Hug “these figures remain a central focus and will continue to do so until we are happy with ‘acceptable’ figures”
To date the company has nearly 900,000 owners, of which 200,000 of them have loans. However, the company anticipates investing 21% of its gross sales income to cover losses made in 2018, therefore, meaning it will only collect 79 dollars for every 100 loaned.
Wyndham claims the losses are due to other companies offering exit services, resale services or transfer of ownership allowing owners to get out of their contractual agreements.
Wyndham states “disreputable third-party exit companies” in the secondary market aggressively solicit unhappy or remorseful owners and persuade them to stop making mortgage payments and paying maintenance fees. Some use unethical and even illegal tactics, Wyndham says, leaving owners who default on their mortgages with nothing but a lower credit score as a result of their missed payments”.
Such exit companies are not only targeting Wyndham owners, several other large timeshare developers, including Orange Lake Holdings, Bluegreen Vacations, Diamond Resorts and Westgate Resorts, among others complain that timeshare exit companies are financially affecting their businesses. Bluegreen, for instance, say its average annual default rate has risen from 6.9% in 2015 to 8.4% in 2018 and that this is due to companies in the exit market.
The industry is, however, acting to try and stop these companies contacting their owners. One company alone (Bluegreen) claimed their administrative costs had risen during the first half of 2018, from a staggering 30 million dollars a year ago to over 40 million. This been mainly due the increase in legal costs which they are incurring because they are having to deal with timeshare exit companies.
Tom Nelson, president and CEO of Orange Lake, said, “We are not ceding the field anymore,” Nelson, has litigated at least two timeshare focused law firms that represent unhappy owners. Stating “We’re being proactive.”
The principal factor in the price of a timeshare is the cost. More than half the selling price is eaten up by marketing and sales costs. The industry continues to rely on extensive advertising and marketing and more importantly impulsive buyers. Just think all those “free” holiday packages which are used to get potential buyers there in the first place, the sales representatives commissions and the administrators fees who seal the deal. The costs are phenomenal.
Developers have worked hard to limit the secondary market. For example, Disney won’t allow Disney Vacation Club owners who purchased on their secondary market to use their points towards the Disney Cruise Line, Marriott Vacations also exclude owners who purchased their timeshares on the secondary market from been able to exchange for stays in other Marriott properties.
In 2013, the industry convinced state officials to make it difficult for secondary companies to dispose of unwanted timeshares into asset-less companies known as “Viking ships.” Prior to this the timeshare industry also petitioned the Florida Legislature to produce regulations which restricted the advertising and beefing up of penalties for false claims. Several years later, timeshare campaigners were successful in getting legislators to make it harder for counsels to get owners out of their contracts based on minor “errors and omissions” stated on the paperwork.
In order to fight back, developers are prosecuting exit companies and law firms, arguing, among other claims, that they are unlawfully interfering in private contracts and deceptively marketing their owners. A Tennessee law firm went into liquidation and another filed for bankruptcy whilst others have stood back.
Michael Finn, founder of Finn Law Group in Largo, said “They’re really going after everybody that is trying to help consumers,”. Orange Lake sued the firm in 2015 in a case that has yet to be resolved. “We dig really deep into the contracts. And we find things. We’re really good at findings things.”
Should the industry succeed in clamping down on the newest exit strategies, they must still look at the fundamental problem of why so many owners are so eager to be rid of their timeshares and that they are happy to pay a company to do so.
Timeshare.lawyer have seen that exit companies are certainly on the increase and are growing rapidly since the last recession. Many owners can no longer use their timeshares due to varied reasons, making the exit companies sound like a god send to the many wanting out.