Why Is the Timeshare Market In America Dying?

People have been getting away and traveling to their timeshares since the 1970s. The unique concept relies on shared ‘ownership’ of a particular property or resort stay, allowing all involved their own periods of vacation time every year. But while the timeshare market grew steadily over the decades, recent years have seen a noticeable decline.

Just why is the timeshare market in America dying? According to the data and national news stories from the past few years, there are some things current and potential owners need to know.

The Vacation Home Industry Now Includes More Options

Back in 1974 — when the first timeshare was sold — vacation home choices were quite limited. For those who didn’t want to stay at hotels or constrict themselves further by staying with family and friends, they could buy a second house somewhere if they had the funds. Rental homes were possible, but they were relatively few and far between. So, the timeshare option felt like a breath of fresh air with its shared ownership and alternating time model. These days, however, many view the timeshare as yet another outdated and impractical choice.

The success of services like Airbnb and Vrbo make it easy (and affordable) for the average person to find a vacation home almost anywhere in the world. This is important, as timeshares limit the owner to either vacationing in one place all the time or having to fill the slot by selling or renting it out. People are looking to explore further away from their own countries, with the World Tourism Organization showing more than 1.4 billion international trips in 2018. Those numbers dipped during the COVID pandemic of late 2019 through the present, but the reopening of national global borders has already shown a rise. That said, both Vrbo and Airbnb surpassed hotels and other traditional vacation stays during the pandemic.

A Struggling Market Indicates Future Losses

As with most industries, timeshares follow trends. People were happy to get involved with timeshares when the market was thriving, but now that they are in decline, national news reflects growing wariness. In fact, recent data shows that more than 4.4 million people now sell or trade off their timeshares into the secondary markets every year. Others choose to rent their timeshare to others instead of using it themselves, at least while they wait for the right opportunity to sell. However, there are further problems with this (as we’ll discuss in just a moment).

While negative growth does not guarantee continued losses, it is a good predictor of them. When taking into account the rise of Vrbo and Airbnb (both of which offer short and long-term rentals to suit varying needs), it stands to reason that the timeshare industry may continue to struggle with the competition.

Opportunities to Off-Load Are Limited

In the traditional timeshare setup, anyone not using their allotted times or ‘shares’ was free to sell them. It has become more challenging to sell in recent years because the supply far outweighs demand. Rentals are further challenging for liability reasons. This leads to a timeshare cancellation. Learn about how to write a timeshare cancellation letter.

Because most timeshares are part of a larger property that is considered commercial and owned by a company, a regular homeowners policy does not apply. But if someone staying in your timeshare gets injured, it’s you who can be found liable. Even if you do manage to sell the timeshare afterward, most states allow years for a claim to be filed. In Texas, for example, people have up to two years to file a personal injury claim.

Property Values Decreases Over Time

Unlike houses and other properties where a person has full ownership, they are restricted with what improvements they can and cannot make to the timeshare. Because of its shared ownership, any upgrades are generally at the discretion of the timeshare company. This means most properties are left to become outdated and lower in value as time marches on. Furniture like sofas and chairs alone, for instance, may stay looking relatively new for around seven years, but it’s rarely in decent shape after 10 or 15 years. And of course, this also depends on how your fellow timeshare owners treat it.