Just like any industry, the timeshare industry is hit hard by the unstable economy. As a result, timeshare properties became an unattractive purchase for potential buyers while some current owners try to get out of their timeshare contracts. The current economy also contributed to the significant losses of the timeshare companies. One of these companies is the Starwood Timeshares who reported EPS at $.22 for the third quarter of this year. This is contrast to $.62 in the same quarter in 2008.
The operating income from Starwood vacation ownership and residential declined $47 million compared to 2008. According to Frits van Paasschen, CEO of Starwood, over the past twelve months they have focused on cost containment and debt reduction. He added that their increasingly fee-based, capital-efficient business model will grow as REVPAR recovers and as their pipeline translates into unit additions. Their owned hotels are skewed towards the high end and have been particularly hard-hit over the past twelve months. This implies that they are poised for a strong rebound as the world economy recovers.
Moreover, the Starwood timeshare reported a revenue decrease of 31.7 percent to $125 million as compared to 2008. They implemented significant cost reductions through timeshare sales staff layoffs, not in decreased services to timeshare owners. The average sales price of Starwood timeshare dropped by nearly 22 percent which according to them is primarily due to increased sales of lower value timeshares.
With the current economy, it’s no wonder why several timeshare companies report losses as the consumers avoid purchasing such property. On the other hand, the current owners are also trying to get rid of their timeshares. Some even hire a timeshare transfer company such as the Transfer Smart just to get rid of such property.