Since the latest recession began, the timeshare industry shows that it has been shrinking as characterized by low sales and the many owners trying to get out of their timeshares. But this year we can see the full extent of the pullback among the industry’s biggest players. Like the Starwood Hotels and Resorts Worldwide Inc. which disclosed in its fourth-quarter earnings report that it is taking a $362 million write-down as it stops most of its construction of timeshare resorts.
According to Starwood Chief Financial Officer Vasant Prabhu, their view of the timeshare business was that it was a nice adjunct to the hotel business as long as there are high rates of return achievable and they can get a nice spread on our capital. But today, the results of the business are at a level where you wouldn’t put more capital in.
Also included in Starwood’s fourth-quarter charge is the $255 million write-down of raw land where Starwood no longer intends to build timeshare complexes. Moreover, there’s a $17 million allowance for price cuts on existing timeshares and a $90 million write-down of goodwill from Starwood’s previous purchases to assemble its timeshare division.
The timeshare industry, which became a popular way of vacationing for many people, has struggled as some buyers no longer can afford the discretionary purchases. Several owners also are trying to get rid of such property as a way to cutback spending. Some of them even hire a timeshare transfer company such as the Transfer Smart just to get rid of it. On the other hand, big industry players like Starwood had been hurt largely since the economic meltdown broke out which resulted to a dramatic decrease in sales.