As we have reported on many occasions the state of the timeshare industry in Europe is not looking good. We received news recently that Club Aphrodite Erimi near Limassol Cyprus is set to be wound up. A communication was sent to all club members in with their 2022 maintenance bills, we reproduce the content below:
“Dear Member,
We would like to take this opportunity and wish all our members and their families the very best for the festive season and we all look forward to a safer and healthier New Year.
We all had a difficult and challenging time over the last two years due to the COVID-19 pandemic. However, with a summer of travel looking possible, we are looking forward to welcoming you at Club Aphrodite next year.
Please note that next year will be the final year of operation for Club Aphrodite, as according to its constitution under term no. 18.1, ”The Club shall continue in existence until the 31st December 2022 following which date the Club shall then be wound up”.
Our sincere thanks for your loyalty throughout the past years and we look forward to seeing you next year.
Please find attached the Invoice for the Maintenance fees for 2022 in Euro Currency”.
From the above we can conclude that as per the constitution the club will cease to exist as of 31st December this year. No doubt the club has been suffering from dwindling memberships and financially the property can make a higher income by simply becoming a hotel.
Club Aphrodite is an RCI member and has very good reviews on Trip Advisor and other associated travel review and booking sites. At the end of the day, for timeshare to work there needs to be new owners and a steady income derived from maintenance fees. With no new sales and a dwindling membership the writing is on the wall for many small owner operated resorts.
The saving grace is that the resort appears to be keeping going so former club members will still be able to holiday there by following the market trend of booking online.
SC Clubhotel – Tignes Grande Motte
This time we visit the popular ski resort of Tignes, part of the Espace Killy ski area in the French Alps. Therein therein lies the Clubhotel resort of Grande Motte. Recently timeshare owners have been informed by letter that the “club” is being dissolved. Needing a majority of 75% votes to wind up the club, apparently the motion was carried with 79.8% votes in favour of closure.
The letter stated:
“The start of club liquidation operations, the main event of which is the sale of the company’s assets no later than May 6, 2022 with receipt of the net selling price on the day of the signature in the amount of €22,000,000”
It would appear that club members will be receiving some form of compensation as the letter goes on to state:
“As soon as the sale price is received, the liquidator will be responsible for paying you a deposit on the estimated liquidation proceeds within 30 days (i.e. at the beginning of June 2022 at the latest) and the balance no later than June 30, 2023 after the approval of the liquidation accounts by the general assembly”
Alpine resorts certainly have summer visitors but predominately they thrive on skiing. With the age demographic of members being much older and the reluctance of the younger generation to buy into timeshare it’s easy to say why such action is taken.
Across the pond
The closure of smaller resorts is not just confined to Europe. Recently we received news of a single property resort in North Carolina located at Carolina Beach is about to file for Chapter 11 bankruptcy. According to an article posted in Wilmington Biz a local online news site, The North Pier Ocean Villas, a two-building timeshare resort in Carolina Beach, will appear in an auction on April 7 as part of the Home Owners Association’s (HOA) Chapter 11 bankruptcy proceedings.
The report states the demise of the 42-unit timeshare resort was not sudden. Its financial failure bubbled slowly for decades, sealed by costly damage caused by and discovered because of Hurricane Dorian in 2019.
The HOA’s president, John “Jay” Hutchings, stated that active sales of the ’80s-era timeshare units stopped around 1997. As the years passed, owners no longer interested in using their shares – which each encompass the same week at the same unit – or who didn’t want to pay annual maintenance fees so gave their deeds back to the HOA. By last year, the HOA had accumulated nearly half of all shares (divided into 52 weeks each, the HOA owned 1,042 shares of the 2,184 total).
“Each year, I’ve taken a hit because people have just walked away not paying,” Hutchings commented.
Basically due to no new sales and owners leaving in droves plus the storm damage as referred to above and possibly inadequate insurance cover, the writing is on the wall for this resort. Jason Gamel, President and CEO of the American Resort Development Association (ARDA) makes an interesting comment. Although he was aware of the basics of the North Pier bankruptcy but not intimately familiar with the case, said it’s important to question whether the financial failure is the result of the timeshare structure itself or if it’s the function of the particular property.
Marina Bay Resort, Fort Walton Beach, FL
Lemonjuice Capital and Solutions announced the sale of the Marina Bay timeshare resort located in Fort Walton Beach, FL, for $11.2 million. Timeshare owners will receive, on average, $3,100 per timeshare interest as compensation.
The resort was originally built in 1962 as a hotel. It was later converted to timeshare in 1982. Marina Bay faced severe financial challenges due to aging building issues and owner attrition. As is common among older timeshare resorts, the base of maintenance fee paying owners declines, forcing resorts to raise the fees to cover budget shortfalls. These increases, borne by the remaining owners, often lead more owners to stop paying adding to an eroding owner base.
The property eventually lacked the funds to make repairs and to operate leaving the Board to explore options to avoid continued budget shortfalls. The Board of Directors retained the Lemonjuice team to assure the financial stability of the resort and to help owners exit with dignity.
Our comment
All examples cited would appear to have the same impact on owners but they are quite different. The Cypriot and French resorts are, and will continue as thriving businesses and are simply closing their timeshare operation. The North Carolina and Florida resorts are old, tired, badly damaged, haemorrhaging owners and not selling to new blood. Given the American expression location, location and location it has to be questioned as to why North Pier Ocean Villas managed to get itself in such a mess because it certainly has the three “Ls” location, location and location
Properties like North Pier Ocean Villas and Marina Bay and many more in Europe represent legacy timeshares, built among the largest initial wave of timeshare growth in the 1980s, with sales activity ceasing decades ago.
For timeshare in its current format to survive there is a need for not only new blood but also a continuing need to collect annual maintenance fees. In all these cases new sales had dried up and existing owners were leaving making the timeshare business untenable. For these reasons the standards drop, the decor and maintenance become unaffordable so get pushed to the side. People nowadays are not willing to tolerate substandard accommodation especially as the “annual” holiday is all important and to many the highlight of the year.
Small and legacy resorts are not the only resorts to come in for severe criticism. Online review sites often have posts complaining about the quality of the resorts, a common thread is the need for both decor and furnishings to be updated. These negative comments also include the major players. Below is an example of a comment from an owner at Diamond Resorts Cypress Point:
“This place is tired. We had a 3 bedroom unit and I’m sure 10 years ago it was beautiful. Clean enough but could be better. We are time share owners and our home resort puts this to shame. The sofa and living room chairs are beat and simply past their time and same for the beds. Staff were nice, pool area OK. There are better choices in Orlando.”
The end
News such as this only goes to confirm that timeshare is definitely falling out of vogue. In most case we cannot see the actual resorts falling into rack and ruin; they will simply reposition themselves as hotels or aparthotels. With current holiday trends and bookings increasingly taking place online it’s easy to see that greater returns can be achieved by simply closing down the timeshare operation and throwing the doors open to the big wide world of tourism.
We will finish with a couple of comments from owners at North Pier Ocean Villas
Mary Caudill, whose in-laws own an August timeshare, said she never had maintenance issues until about three years ago. In 2019, the washer in her unit was broken and she had to use a neighbour’s to launder her clothes. “In the last few years, we have watched it deteriorate and be poorly taken care of and watched our rates rise with nothing being done,” she said.
“My husband takes his tools down every year, and he has to do repairs to our room,” said Agnes Strushensky, a Pennsylvania-based owner who has spent two summer weeks in her unit for the past 15 years. Though the maintenance fees had risen, Strushensky said her family doesn’t mind paying them – they were still less than the market rate for a rental in Carolina Beach.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk