Is it me, or does this market seems poised for a correction?
- high upfront cost
- high / increasing recurring cost for "points" (token economy)
- corporate control of points value
- uncapped, perpetual membership fees
- high total cost of ownership
- corporate focus on pushing financing
- poor value proposition for new owners vs other lodging options
- robust secondary markets for reselling / trading weeks
- missing a payment results in default / forfeiture
Reminds me a lot of the Cab model...hack licenses used to cost as much as a house and were considered a solid financial play with predictable value.
The hack license owners never predicted Uber and Lyft
Same with Bed & Breakfasts and hotels/motels...they used to be a solid play, then along came AirBnB
What could flip this market on its head?
I've bolded a couple of points from your post in the quote above.
1.) Read this thread and you will see that for some, it is not a poor value proposition. For folks who can make rentals from private owners work for them and/or traditional resale weeks ownership work for them, the points model probably doesn't work. But the vast majority of people in the world don't do owner rentals, AirBNB, etc., they book online through regular hotel reservation sites. For many folks who value the flexibility, cancellation rights, etc. of traditional hotel-style booking, the points model is not a bad one.
2.) There is
not a robust secondary market for reselling weeks. If there were, developers would not be able to sell weeks (those who still sell weeks) or points for prices vastly higher than the resale market price. That is the problem in timeshare - there is no equivalent to the organized, managed resale market for regular real estate, which is made possible by a network of realtors and the Multiple Listing Service. Most potential buyers do not know about the timeshare resale market, and for those that do, it is a maze of small brokers, individual sellers, and a hodgepodge of places to go to try to find what you are looking for. As a result, for most people, the developer price is the only way they know to buy timeshare, and the lower prices offered at resale do not represent a major threat for the developer prices. Marriott even references the disorganized resale market in the "risk factors" they are required by law to disclose in their annual 10-K:
...if the secondary market for vacation ownership interests becomes more organized and liquid than it currently is, the resulting availability of vacation ownership interests (particularly where the vacation ownership interests are available for sale at lower prices than the prices at which we would sell them) could adversely affect our sales and our sales revenues...
...Development of a viable secondary market may also cause the volume of vacation ownership interests inventory that we are able to repurchase to decline, which could adversely impact our development margin, as we utilize this lower cost inventory source to supplement our inventory needs and help manage our cost of vacation ownership products.
3.) There is also not a terribly organized market for timeshare owners to rent their weeks. The average guy on the street has never heard of redweek.com. They may have heard of VRBO, but there timeshares compete with houses, whole owner condos, etc. Many of the people who try to book timeshares on VRBO don't understand the owner is trying to rent a specific week and often ask the owner for different weeks thinking it's a whole owner renting their wholly-owned condo.
The developer sales model succeeds because timeshares are
sold by the developer. They are not usually sought out by a potential buyer and bought because the customer has a specific need. Most people learn about timeshare via an incentive travel package to a timeshare resort that includes a required sales presentation, or other incentive-based inducements to attend a sales presentation. Unlike the OP in this thread, most potential purchasers base their purchase decision only on what they are told in that sales presentation, not on a more in-depth analysis where they educate themselves (as the OP did).
So what could flip the market on its head? Another major recession/depression or the emergence of a viable secondary market. But, if the secondary market did strengthen, that would probably raise resale prices as well as lower developer prices. They would likely meet somewhere in the middle.