Timeshare Industry Wrestles With Resales

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A new wave of timeshares is flooding the resale market, wreaking havoc on an industry trying to woo new customers.

Timeshares in the secondary market are often priced 40 to 60 percent -- or more--below original prices. At a time when the timeshare industry is reporting increasing sales, the resells are undercutting the market and hampering any recovery.

"Resales are having a huge impact," said Simon Jaworski, senior vice president of The Research Intelligence Group. "The resale market has almost doubled in the last three or four years."

Mr. Jaworski was talking during ARDA World, the annual convention for the resort and timeshare industry, where the resale market was a hot topic. Speakers emphasized the need to create a "healthy secondary market," and sessions focused on different ways for the industry to deal with the market.

Resales are nothing new in the industry. But the growing volume has exacerbated the issues in recent years, as more and more owners who bought week deals before the market crash are now attempting to sell, industry executives say. In addition, timeshare owners are growing older--they bought timeshares in their 50s and are now in their 70s and no longer as interested in spending a week in Florida.

Dozens of companies have surfaced to help people sell their timeshares, including scammers who see an easy target. The traditional timeshare industry has traditionally viewed the resale market with something between tolerance and contempt.

But pressure is mounting for the industry to embrace the resales.

"So many people want an exit strategy" from their timeshare, Mr. Jaworski said. "If they find a solution, everybody wins."

More than one executive suggested the industry should embrace the term "certified resales," invoking the model in the car business, where manufacturers have belatedly embraced the second-hand market. Several new timeshare operators have already launched resale programs.

"I don't know if it is an issue for every company," said Howard Nusbaum, chief executive of the American Resort Development Association. But older "legacy" players continue to wrestle with resell competition, he said.

ARDA is advocating for more regulation of the resale market, citing unscrupulous operators preying on owners.

"It's brought out bad players," Mr. Nusbaum said. "We believe the secondary market is under regulated."

But buyers like the resale market, where prices often fall into the $1,000 to $5,000 range, according t a study by The Research Intelligence Group. "This is a buyer's market on the resale market," Mr. Jaworski said.

But it's not competition; it's the potential for the resale market to tarnish the reputation of an industry trying to change its image that worries resort owners, Mr. Nusbaum said.

"No one is afraid of good competition," Mr. Nusbaum said. "We are afraid of an immature secondary market" populated with scam artists, he said.