COVID-19: How the Timeshare Industry Was Affected

Looking back at 2020, we can get a clearer view of how the timeshare industry was affected by COVID-19. As the pandemic descended and the lockdowns and restrictions commenced, the vacation, travel, and lodging industries were hit hard, as hotels, resorts, lodges, parks, and other destinations had to be shuttered. People everywhere were forced to stay home, and the only viable way to vacation was a staycation with even local travel becoming impossible. Last year, according to the US Travel Association, money spent on travel dropped by 42 percent to $679 billion, and hotel occupancy rates dropped to a sickly 44 percent.

Globally speaking, National Geographic reports a loss of $2.1 trillion in revenue and more than 75 million industry jobs. While optimism is higher now that vaccines are available and distributed and more travel restrictions are lifted, the effects of the crisis will be felt for years to come. But what about timeshares in particular? They faced their own set of issues.

Timeshare Ownership During the Pandemic

As early as March 2020, timeshare owners and journalists pointed out that even though timeshares couldn’t be accessed during the pandemic, contract holders still had to make loan payments, cover maintenance fees, and take care of any other expenses. This, combined with rising unemployment rates, made timeshare ownership even less attractive than during “normal” times. Journalists and advocacy groups put out calls to timeshare companies to consider reducing pressure on unemployed owners, several of whom already offered loan deferrals and hardship programs for those with medical issues that interfered with paying their fees.

Other timeshare companies—mostly the larger ones—understood that owners couldn’t use their places during their scheduled time and skipped imposing cancellation and reservation fees. Other resorts and companies that work on the points system allowed contract holders to bank their points for the future, and sometimes offered to double points for 2021. But not everyone received or offered such benefits and consideration. Also, even as they offered temporary fixes, timeshare companies and resorts have continued to use the same tactics to sell more properties during the pandemic under the guise of more generous deals.

Less-reputable agencies and scammers often employed hard-sell techniques, collection agencies, garnish wages, and even contacted an owner’s family in search of payment. As the old saying goes, you can’t get blood from a stone, and with COVID-19 and unemployment, even the hard-sell only goes so far, leaving the companies to take the hit.

Will Timeshares Go Extinct?

Multiple industry experts and business analysts speculated on the possibility that the pandemic might nudge along the possibility of the timeshare model being phased out. Hotels and other accommodation establishments continue to offer a pleasant, affordable, and risk-free way to vacation with less privacy but also more flexibility and no extra fees. Timeshares are also being nudged out by the existence of online marketplaces and sharing systems like Airbnb, VRBO, Home Exchange, and others, which provide the benefits of a private living space while again skipping the monthly maintenance costs and other fees. Bed and breakfasts remain a traditional, cozy, and homely way to rest and relax on vacation with no hidden strings. Likewise, camping allows vacationers to carry their home on their back and put down temporary roots. In the same vein of home ownership, recreational vehicles and campers have seen an uptick in interest in recent years, permitting privacy, convenience, and easy travel from one place to another. What the future brings is anyone’s guess, but timeshares seem to be vanishing from the scene.

More than likely, in the wake of COVID-19, current timeshare owners who have struggled over the past year (especially if they received no help from the timeshare company) will seek out lawyers and timeshare cancellation services to get them out of their contracts. Meanwhile, potential buyers who are still reeling from having to pay for food, shelter, and a rent or a mortgage during lockdown are less amenable to locking themselves down again with a timeshare contract. In short, to survive and attract investors and owners, timeshare companies may have to reconstruct themselves into something far from the traditional idea of a timeshare. Still, don’t expect the timeshare companies to fade anytime soon.

What’s Next for Timeshare Owners?

That's a quick overview of how the timeshare industry was affected by the COVID-19 pandemic. So, what’s next for timeshare owners who feel trapped by their contracts? Whether through deeded timeshares, right to use timeshares, points systems, or another form, timeshare owners with adequate resources who are satisfied with the accommodations and costs will continue to enjoy their arrangements with the timeshare company or resort. For others who are still struggling, there are options for relief.

As mentioned above, owners can approach the company or resort and ask about relief through deferred payments or the like. More than likely, however, these will not be offered in the long term. Owners can attempt to sell back the timeshare, but often the company will expect a large fee to buy out the contract (funnily enough, this can make more financial sense compared to what the owner will lose in payments over the following decade, but it doesn’t hurt any less financially in the short term).

Timeshares can often be gifted or donated to a family member, friend, or charity, but owners are also gifting all the expenses that come with timeshare ownership as well. There’s also the possibility of exchanging one timeshare property for another for a single vacation. If a timeshare has been recently purchased and is still in the rescission period, the owner may be able to withdraw from the sale. Many states and other countries also protect consumers with laws that provide for a cooling-off period after a purchase. However, if the timeshare contract was signed before or during the pandemic, more than likely the rescission and cooling-off periods no longer apply. But there are other alternatives to getting out of a timeshare contract.

Calling in the Experts

If a timeshare owner is feeling overwhelmed by all this, it’s a good idea to call in an expert, whether it be an attorney at law or an agency that provides timeshare cancellation services to review the timeshare contract and determine the best course of action. Contact us for a free consultation today to explore your options.