Tag Archives: vacation ownership

Jeff Weir

Disclosure bill benefitting timeshare buyers survives first hearing — but with some scars

By Jeff Weir, for TimeSharing Today

CARSON CITY, NV — A new bill that would require developers to provide additional disclosures for timeshare buyers passed its first legislative hurdle in the Nevada Senate March 2.

But not without some injuries.

As amended by the Judiciary Committee, Senate Bill 195, authored by Sen. Becky Harris (R-Las Vegas), would add the following consumer disclosures to the Public Offering Statement documents that are handed over to buyers at the time of sale.

“A timeshare is for personal use and is not an investment for a profit or tax advantage.  The purchase of a timeshare should be based upon its value as a vacation experience or for spending leisure time, and not for purposes of acquiring an appreciating investment or with an expectation that the timeshare may be resold.

“Resale of your timeshare may be subject to restrictions, including .. the developer’s first right of refusal and the developer’s continuing sale of timeshare inventory.  Any future purchaser may not receive  ancillary benefits which were not part of the timeshare plan that the developer may have offered at the time of purchase.

“You should check your contract and the governing documents for any such restrictions and also check whether your purchase contract, note or any other obligation will be fully due and payable upon sale of your timeshare.  Real estate agents may not be interested in listing your timeshare.”

In a separate section, the bill also requires that timeshare managers disclose all details of their compensation annually to members of the association.

While reasonable at face value, these consumer disclosures are timid compared to the proposals of the original bill, which was designed to inform buyers that their timeshares might have little, or no, value on the resale market.  In the original bill, Harris wanted buyers to sign a one-page document acknowledging, in effect, that their brand new $20,000 timeshare might prove worthless on the secondary market.  A second contentious proposal sought to advise customers that their timeshare purchase was a “perpetual contract” that would obligate buyers, and their heirs, to pay maintenance fees forever.  A third would have required developers to disclose the existence of any “give-back, deed-back, repurchase” or “other ownership divestiture programs.”

These three proposals, along with the one-page disclosure document, were exorcised from the bill over a 10-day span during which Harris communicated with interested parties, including owner advocates and representatives of the American Resort Development Association (ARDA), the lobbying arm of the US timeshare industry.

The end result of those discussions was a scaled-back bill — not what Harris really wanted, but what she could get.  That’s how legislation, frequently referred to as sausage by insiders, gets made across the country.  Harris is an attorney by trade.  She does not own any timeshares.  Nor has she ever attended a timeshare presentation.  Her knowledge of what happens at a sales presentation is limited to what she learned from her legal clients.

“I had clients who thought they had bought something that was an asset.  But it was not,” Harris said in an interview.  “I think more consumer protections are needed in the timeshare industry.  My premise is, I wanted a one-page sign-off sheet where buyers realize that they are not buying real estate property, and that they may not be able to sell.  It was a laundry list of items (buyers) had to sign.  Having all that information in one place protects consumers.”

SB 195 is similar to a bill that Harris authored last year.  It won passage in the Senate but died in the Assembly without a hearing, the victim of unknown assassins.

“I could not understand the pushback,” Harris said.  “Timeshare documents are 40 to 80 pages long.  There’s no way a regular consumer can take time to read them.  I just want it to be clear about what people are purchasing, and not, and what the resale value could be.”

This year, for tactical reasons, Harris tucked the timeshare disclosure provisions into an omnibus HOA bill that would reform and update the laws that govern condominium associations. She recognized that the HOA proposals would draw attention from many legislators — and, perhaps, provide air cover for her modest timeshare consumer protection proposals.

The language of the original bill included the following stark statements: “Be aware that the future value of a timeshare interest is very uncertain. Do not count on appreciation..The timeshare developer may have limited your resale rights.  Any future purchaser who buys your timeshare from you will have severely limited opportunities to reserve occupancy in the timeshare plan.”

None of those statements survived the amendment process.  They disappeared along with the “perpetual contract” statements (which, in fairness, would scare potential retail buyers and queer sales).

In light of the amendments that Harris acceded to last week, her original proposal appeared to have no chance of passage in a state that is dominated by the political and fundraising support of the casino-gambling-hospitality-tourist-and-recreation industries.  None of those powerful entities represent timeshare owners, who are spread across 50 states and Canada and, as a result, have little political clout to enact consumer friendly timeshare legislation.

One of the original advocates of the bill, Michael Kosor of Las Vegas, was rankled but not surprised by the legislative deliberations on SB 195.  Kosor, an owner at Wyndham Grand Desert in Las Vegas, is an outspoken individual who, by virtue of his lifetime experience, has developed black-and-white opinions about the timeshare universe. Kosor is frustrated with Nevada regulators, and absolutely dismayed by Harris’ willingness to compromise on her legislation.  He’s also running for a seat on his HOA board.

“I got involved in all of this because of the resale issue.  When I moved to Las Vegas and wanted to get rid of my timeshare, I found out it was an impossible feat,” Kosor said.

“This bill would not fix the overall secondary market issues, but it would make the absurdity of the resale situation available to everybody.”

The American Resort Development Association (ARDA), the industry’s lobbying arm in Washington, D.C., is actively following but NOT sponsoring the bill.  According to Harris’ statements at the March 2 Senate Judiciary Committee hearing, ARDA is now “supportive” of the amended bill.

“Our Nevada State Committee is tracking, monitoring and working the bill to ensure that the timeshare portion is accurate and does not have an unintended effect on the industry (including consumers),” said Peter Roth, ARDA’s vice president of communications and industry relations.  In an email, Roth added, “It is important that timeshare legislation and regulation be balanced and work for the consumer and the platform as both benefit from growth and protection of the industry.”

Harris’ bill arrives on the heels of a new consumer disclosure policy announced by Diamond Resorts in response to an investigation by the Arizona Attorney General into allegations of deceptive sales practices by Diamond sales personnel.  Diamond’s new program, which includes a host of new sales protocols, a voluntary relinquishment program and ethical promises to treat consumers fairly, was announced Jan. 23, 30 days after Diamond agreed to settle the Arizona case by paying $150,000 to the state for legal costs and $650,000 for restitution to buyers.

Both developments — the Nevada legislation and the Arizona litigation — suggest that the industry, overall, is gradually (maybe grudgingly) moving to a posture that endorses more consumer-friendly practices when sales agents try to persuade consumers to buy timeshares.

TimeSharing Today will keep you posted on all future machinations of SB 195.  The bill must gain passage from the state Senate and Assembly before being signed into law (or vetoed) by the governor.

Here is a link to all of the online information about SB 195.


To comment, reply to staff@tstoday.com Subject: Nevada Bill

Big transitions ahead in 2017 – By Jeff Weir, for Timesharing Today


Consolidation.  Growth.  Unsolicited calls from travel clubs.  Increasing maintenance fees.  Turbulence in the resale market as older owners drop out.  Plus, big changes in Washington, D.C. (and elsewhere) that could impact the entire timeshare travel universe.

With all apologies to the cliché about death and taxes, there are a half-dozen trends, at least, that are guaranteed to impact timeshare owners in 2017.  Based upon our interviews with industry leaders, board members and regular timeshare owners, here is a glimpse of 2017 — in advance.

Money talks

Maintenance fees, a subject every owner likes to complain about around the hot tub, will increase on average 2-5% in 2017, with most of the increases due by the end of January.  At many legacy resorts, the increases may go much higher as HOA boards try to offset the double-downside of increasing delinquencies with an urgent need to renovate older units and onsite amenities.  Legacy resorts that DON’T or WON’T increase maintenance fees may be headed for a rougher landing, in several years, when they try to mix the value of timeshare vacations with an ugly business reality — bankruptcies and shutdowns.  Conversely, HOAs that are not staying competitive in the timeshare market, may become takeover targets for well-funded companies, public and private, that are eager to pick up inventory — even at dilapidated resorts — to feed their trust inventory.  This enables the buying companies to continue selling timeshares at high retail prices — $25,000 or more for a week of usage, according to our most recent survey — even if the inventory they are stockpiling in their trusts, for pennies on the original dollar, may be resorts that have minimal value.  In the trust inventory world, where individual intervals are tied to points instead of specific real estate, every interval looks like a penthouse in Hawaii, and that’s how developers sell it.

Consolidation continues, along with modest growth

The timeshare developer industry appeared to enjoy modest growth in 2016 following a 9 percent increase in sales in 2015, according to annual studies conducted by the American Resort Development Association.  That makes seven straight years of growth since the financial crisis of 2008.  That progress is expected to continue in 2017, incrementally, unless an economic crisis or an international political event, such as a war, changes everything, depresses the travel industry and makes people stay home.

ARDA’s 2016 economic report also provided the following snapshot of an industry in transition.  The average sales price for a timeshare interval in 2015 was $22,240, with 54 percent of all sales going to existing owners (many for upgrades).  Timeshare occupancy rose 2 percent to a robust 80 percent, compared to 60 percent in the hotel industry.  The timeshare universe included 1,547 resorts where 70 percent of all units offered two bedrooms, or more.

These milestones suggest a healthy industry going forward even as some older resorts approach potential shutdowns or buyouts.  A major restructuring is also taking place as healthy companies — the big brand names — expand their inventories, purchase other clubs and consolidate their influence over the market.   Consolidation brought about big changes in 2016 — and more changes are ahead.  Equity giant Apollo Global Management LLC bought Diamond Resorts for $2.2 billion and, recently, announced the Dec. 31 departure of CEO David Palmer.  ILG (formerly Interval Leisure Group) added the Hyatt, Westin and Sheraton vacation clubs to its stable of holdings while Hilton Grand Vacations and Marriott Vacation Club spun-off from their parent companies to offer timeshares on their own.  The Marriott hotel chain, which bought the hotels formerly owned by Starwood, announced a grand total of 30 brands in its hospitality chain.

ARDA President and CEO Howard Nusbaum contends that consolidation is a predictable and heathy indicator for an industry that has proven its value (over 40 years) and still attracts new investors and consumers.  “This is a natural iteration of a healthy business,” Nusbaum said.  “We have well-capitalized players who are going to look for more synergies through acquisitions.  Frankly, I would be nervous if we weren’t consolidating.”

Marketing challenges for millennials

At the same time, the major timeshare brands are struggling to find a winning formula that will bring millennials into timeshare presentations.  So far, the youngest generation of monied travelers (the oldest millennial is 36) prefers spontaneous, short-term, AirBnB-like vacations, not weeklong stays at the same resort.  And they appear extremely leery of, if not hostile to, lifelong purchase contracts.

“Every focus group we’ve done shows that lifestyle trumps generation” Nusbaum said.  “We are seeing younger purchasers over the past 36 months, where the average age is 42.”  Bottom line, Nusbaum is confident that more and more younger buyers will embrace timeshares when they discover the myriad options that come along with ownership — including spontaneous timeshare escapes to New York, Washington and other urban areas.

For now, though, capturing the elusive millennial is a work in progress that will continue to unfold in 2017.

Secondary market will continue to struggle

The secondary timeshare market — with resale inventory outstripping demand — is expected to continue struggling in the new year despite efforts by some companies to devise “exit programs” that will enable longtime owners to get rid of their timeshares without being scammed by third-party companies that, for the moment, aggressively pursue elderly owners.  Wyndham’s Ovation program is the leader in this field, so far, because it offers owners a safe, secure and no-cost way to divest themselves of their timeshares.  The demand for more Ovation-like programs will build as more and more original timeshare owners age-out of their timeshare travel.

The emergence of travel and vacation clubs, which are not regulated and susceptible to abuse, will also impact owners seeking exit strategies.  Many travel clubs are stockpiling inventory to create their own business franchises, while simultaneously selling exclusive vacation packages.  They solicit owners directly but also work with legacy resorts. Legitimate travel clubs tend to have working arrangements to recycle inventory with developers and legacy resorts.  The “ill-intended players,” as Nusbaum described them, are hit-and-run specialists that prey on longtime owners.

“Everybody is rooting for the secondary market to be healthy,” Nusbaum said. “Developers realize that recycling inventory is important.  The quality resellers and realtors need to work together to create more opportunity. I believe it will continue to get better.”

President Trump also promises to change things

Donald Trump’s election as president is the final wild card for timeshare developers and owners in 2017.  During his campaign, the Republican Party adopted a platform that included a promise to dismantle a below-radar federal agency — the Consumer Financial Protection Bureau, which is currently investigating numerous industries and at least one timeshare company, Westgate Resorts.  Created by Congress in the aftermath of the subprime mortgage crisis of 2008, the CFPB investigates complaints about financial credit and loan programs that may defraud consumers.  It is singularly responsible for exposing the Wells Fargo Bank sales scandal that triggered the ouster of the bank’s president and led to a congressional investigation.

While not focused on the timeshare industry as a whole, the CFPB is looking at Westgate’s practice of financing owners’ timeshare purchases, a program which is common within the industry.  Using its subpoena powers, the agency has been investigating Westgate’s overall business practices, including sales representations, since the fall of 2015.  Business groups say the CFPB is too aggressive and should be reigned-in by an independent commission.  Consumer groups say it is doing a great job. Trump’s chief of staff, responding to Republican calls to regulate the regulators at CFPB, said recently that the next president would unveil his regulatory reforms as soon as he finishes picking a Cabinet.

At TimeSharing Today, your opinion really does count. What are your views about the state of the industry.  To comment, please email staff@tstoday.com.  Subject: Industry

Trolling for Votes and Control

Several developers have adopted deed back programs whereby owners at selected resorts are able to turn back their deeds, sometimes at a cost to the owner. Those developers are also aggressively acquiring defaulted timeshares that are being sold at auction or that can be found online at distress sale prices. The economic motives for this are clear. It is more cost-effective to convert existing timeshare properties to a developer’s points/vacation club than it is to build new projects.

Another developer strategy is to acquire enough voting rights to displace the bona fide owner-board members with developer-controlled board members. Board control empowers the developer to manage maintenance fees, special assessments and management costs.  They then end up with revenues gained through management fees and inventory to feed their vacation clubs.

The prime targets for these activities are legacy resorts and legacy owners. Other targets are the board members who have served to protect the interests of those legacy owners. We have seen developers in court battles with boards of directors and recently, TimeSharing Today has learned that two board presidents at different developer-controlled resorts have been ousted by the new “puppet” boards of the developers. Those board members do not have access to the owners lists to inform them about what is taking place.

Developers argue that the legacy resorts they target need higher maintenance fees to ensure adequate reserves for needed upgrade the resorts to bring them up to the standards of their vacation clubs; new owners get the quality amenities and services that are consistent throughout their properties. This argument, in certain situations, can be valid.

The questions for legacy owners are they:

  1. Informed about what is going?
  2. Getting hit with surprise special assessments and maintenance fees?
  3. Being coerced to convert to a Points/Vacation Club during sales presentations?

To comment, send an email to: staff@tstoday.com Subject: Developer Control

Aging timeshare owners and industry dynamics – A TimeSharing Today commentary

Are you among those timeshare owners who have enjoyed many wonderful years of vacations ownership, but have now reached the point where it’s time to move on? Many owners are no longer able to travel or are living off fixed retirement income and cannot afford the expense of ownership. Some TimeSharing Today members have reported that their kids have taken over their timeshares; others have said that their kids don’t want anything to do with owning a timeshare. Some owners have said that they were successful at turning over their deeds to their resort; others advised that their resort won’t take back units. Some have said that they have successfully sold their timeshares through various sources; others have said that they can’t give theirs away for free. There are owners who have decided to suffer the consequences and not pay their ongoing obligations; others have said that they continue to pay the maintenance fees but do not use their timeshares. Some say that their resort has an onsite resale program; others say their resort doesn’t do anything about resales.

TimeSharing Today has long reported that a lack of a viable exit strategy for aging timeshare owners has created a feeding ground for scams and fraudulent transfers. Howard Nusbaum, CEO and President of the American Resort  Development Association (ARDA), said in a interview on TimeSharing Today Radio (listen to it at www.tstodayjoin.com TST Broadcasting), that he is committed to helping find an “elegant” path for owners to get out of their long term obligations. Nusbaum said that a growing number of major brand  developers are implementing various forms of deedback programs. Those reclaimed timeshares can be converted to the resorts’ points programs, and those programs are having increased appeal to new and younger buyers. Nusbaum refers to a “cultural shift” away from resort specific ownership to flexible destination vacation choices that are available through vacation club memberships. He points out that younger buyers (millenials) are gravitating towards vacation club programs and when they reach a point at which they have families, timesharing still offers they greatest value compared to other choices such as hotels that have invested in expanding a variety of suite brands.

Email your comments to: staff@tstoday.com  Subject: Industry dynamics


Mainstream Media Show Split Personality

The March 2016 Consumer Reports includes an article entitled, “Timeshares Come of Age.” The sub-headline states, “These vacation ownership arrangements are attracting younger, more educated, more affluent buyers, thanks to consumer-friendly changes in the industry.”

The 4-page article points to the “rocky reputation” the industry was marked by in the mid-1970’s because of consumers being lured to attend multi-hour, high-pressure sales presentations, by the offer of enticing gifts.  It goes on to report that industry insiders say that “the industry has become much more consumer-friendly and transparent, and that is largely because of the entrance of major hospitality brands into the industry. Consumers can now avoid the in-person sales pitch by going online to research timeshare properties and even contact sales reps by phone and chat sessions.”

Consumer Reports covers a lot of ground on the trend away from fixed weeks and that consumers should not consider a timeshare purchase as a real estate investment. Randy Conrads, Co-Founder of RedWeek.com, is quoted as saying that. “It’s a lifestyle investment, not a financial one.”

The demographics of new buyers,  the economics of ownership and the challenges of selling a timeshare are discussed and the article points to timeshares that are being offered for sale at $1 on many popular resale website. It concludes with mention that owners who “really want out” can turn to companies who charge thousands of dollars to help negotiate the owners’ termination of their obligations.

Now, comes along a January 22, 2016 article written by reporter Gretchen Morgenson of The New York Times with a headline that reads, “The Timeshare Hard Sell Comes Roaring Back.”  Morgenson’s account is focused on Developer Diamond Resorts’ sales presentation and indicates the high-pressure sales tactics may still be alive and well. One owner said that an offer of a $100 gift card was made, but she ended up enduring a 5-hour of Diamond representative pressuring he to give up two of her timeshares deed  for a $30,000 purchase of Diamond’s ownership points. The owner who declined the offer, was handed documents and the end of the presentation, one of which was a copy of a voided charge on her credit card for $4840.00 for which the owner had not given approval.

Jeff Weir, a Diamond owner and Chief Correspondent for RedWeek and contributor to TimeSharing Today, is quoted as saying, “In my experience, Diamond is much more ambitious, aggressive and downright nasty in their sales presentations compared to Marriott and Westin.” He went on to say that Diamond just has an amazing reputation of being tough on people.”

The article does include comments from David F. Palmer, Diamond’s chief executive indicating that Diamond does try to bring fun to its customer interactions, both before an initial sale and once a member buys in.  “Our lifetime subscription model creates a series of systems where you can track that engagement and make sure you are constantly providing a series of experiences that exeed their expectations over many,many years,” he said.

Morgenson interviewed another owner, Walter Hunter. Hunter is a member of the homeowners’ association board at Daytona Beach Regency, a Diamond Resort in Florida. He said that he was pleased with Diamond as the management company. He acknowledged maintenance fees have significantly increased under Diamond, but said, “We are convinced that they are doing a good job.”

The extensive article contains a great deal of relevant information and can be found HERE.

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