Economy does a number on time shares

Itzamara Vazquez, a metal shop worker in Orlando, has been trying to sell her time-share unit at Wyndham Bonnet Creek Resort since November.

The "motivated seller," as she describes herself in her Craigslist ad, is selling the unit for $6,000, much lower than what she paid for it five years ago. "I've priced to sell," she says. "I'm trying to be reasonable given the economy."

A few have called, but she has yet to receive an offer. Vazquez and other sellers, including large resort operators, are discovering that the time-share market — like other lodging and real estate businesses — is being hit hard by sluggish demand and a tight credit market.

Once considered the most resilient segments in the lodging business, sales in time shares are expected to be flat this year compared with 2007, when the industry registered about $10.6 billion, according to the American Resort Development Association. The industry also will report a sales decline in 2009 for the first time in its history, says Howard Nusbaum, CEO of the association. "It's humbling because time share was always the little engine that could," he says.

In the past 20 years, the time-share industry has averaged a "double-digit growth" and has registered growth even as hotels suffered through down cycles, Nusbaum says. But time shares join other lodging segments, such as hotels, resorts, casinos and cruises, that have seen their sales drop dramatically in 2008 amid the severe economic downturn.

Consumers are cutting back on discretionary spending, and the usual financing sources they tapped to purchase units — home equity loans, credit cards, direct loans from time-share operators — are quickly disappearing. Nusbaum says that part of the reason time-share companies are less willing to do deals is because they cannot resell the loans, given the tight credit market.

Time-share units can range from $10,000 to as much as $150,000, depending on the location and the time of the year purchased.

Recent reports from major operators:

• Wyndham Vacation Ownership said earlier this month that it will reduce sales/marketing offices and cut about 4,000 jobs as it shrinks its time-share operation in 2009. The company projects its time-share sales in 2009 will be lowered to $1.2 billion, compared with $2 billion expected this year.

"Business was the best we've seen right up until it wasn't, when the credit market froze up," says Franz Hanning, CEO of Wyndham Vacation Ownership. "(In 2009), we're going to sell less of it and build less of it."

• Marriott International's time-share sales in its most recent quarter fell 13% to $306 million, and it warned that its time-share investment spending is expected to decline in 2009.

"Our time-share business has certainly been far more impacted by the current financial environment than our core lodging business," said chairman and CEO J.W. Marriott Jr. in a statement in the earnings report.

• Starwood Hotels' time-share sales were down 27% in the third quarter to $183 million. It has closed three sales centers and is reducing overhead.

Vazquez says she'll continue to try to sell on her own rather than rely on third-party resellers, who wanted her to pay a fee upfront.

"A lot of people buy a time share and grow out of it. Some can't buy and pay for the maintenance. For some, the course in life changes. That's what it was for me."