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What We’re Reading – "Will Short-Term Rentals Kill The Timeshare Industry?"

What We're Reading -

While the timeshare industry has seen several consecutive years of growth, we’ve presented more than a few arguments from writers who believe that these profits rest on a hill of sand – and that the time may soon be coming when the foundation begins to slip away for good.

Another such argument came to our attention recently, in the form of an interesting piece from the investor-focused financial media outlet Benzinga, which asks “Will Short-Term Rentals Kill the Timeshare Industry?”

There are certainly some qualms we could take up with this piece; for one thing, the writer largely speaks to vacation rental insiders and higher-ups, who, obviously, have a vested interest in leveraging their own product over that of the shared vacation ownership industry.

But, with that noted, the arguments raised are fascinating, to say the least. In particular, we were drawn to this quote from Cliff Johnson, an executive for alternative accommodation company Vacasa:


“I believe many people have been burned by timeshares in the past or know someone who has, so the industry has taken on a negative connotation. I also think people inherently think of timeshares as a restriction on their travel, and today’s travelers value as much freedom as possible.”

While one must consider the source, this critique does ring true. Certainly, some of the biggest factors driving consumers away from the timeshare industry – even after they’ve already bought in – are “negative feedback from a friend, finding conflicting information about timeshares on the Internet, frustration navigating company websites, or mixed messages from… sales personnel,” as Dr. Amy Gregory recently pointed out an ARDA conference.

In other words, given the hassles and costs that have come to be associated with timeshares – including steep annual maintenance fees and the scams associated with the secondary market – the benefits of timeshare ownership can be incredibly hard to convey to new customers, creating what we call “The Timeshare Developer’s Dilemma.” When this happens, it can be extremely hard to draw in a pool of new customers, as our own Michael Finn has suggested before.

And then there is also the problem that many of the real benefits of a timeshare can be extremely hard to ever access, due to a confounding and complex reservation system and the restrictions that may exist for consumers who buy a “used” timeshare interest. With this in mind, many consumers – particularly the millennials who, as the Benzinga article notes, will largely determine the future of the industry – are unlikely to go with this consumer unfriendly product, and instead opt for the vacation solutions that are always at their fingertips, thanks to the rise of app culture and the growth of the vacation rental industry (which, it should be noted, is not without its own share of worrisome aspects).

One last interesting takeaway from the Benzinga piece itself? The ways in which vacation rental pros see a way for timeshare developers to “make things right.” There are a few ideas presented by interviewees in the article, ranging from the odd to the compelling. One of the most interesting comes from Cliff Johnson again, who envisions a future of:

“a rise in fractional ownership or crowd sourced funding with a twist that allows people to use a pool of vacation homes that they are investing in for a discount. This would flip the switch on timeshares, making shared ownership a real investment as opposed to a financial drain.”

For more, we encourage you to read the full Benzinga article, available here.

Led by Attorney Michael D. Finn with 50 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don’t hesitate to drop us a line with any questions or concerns. 

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