For many European owners it’s likely that they have never heard the term “Legacy Resort”. To explain in simple terms, a legacy resort is generally a small resort which in many cases is owner operated and is not part of the much larger timeshare groups such as Wyndham or Hilton. Put another way, the resort is standalone and sinks or swims by reference to continued timeshare owners staying put and paying their dues, this is where some problems start.
Legacy resorts came to the fore in the heady timeshare days of the 80s and 90s, a couple of decades when timeshare was in vogue and selling well. An individual, family or company may have had access to some building land and built a small timeshare resort. Alternatively it may have been a single large property, either way it was probably too small to interest the big boys, again another problem on the horizon.
Problems
Being too small is one of the largest problems; in the extreme we quote Marsh Harbor in North Carolina, this resort consisted of only 16 units and had approximately 800 timeshare owners. As regular readers will know, timeshare success is still driven by new sales, legacy resorts were mostly sold with fixed week contracts so this limits the amount of new sales. Once the resort is sold out, that’s the end. From that point on, the developer has to rely on maintenance fees only and maybe the odd resale.
As time marches on, Legacy resorts find that they have less and less owners paying and leaving the burden of costs of the operation to the developer. This introduces a vicious spiral, because the properties are aging, the need for refurbishment and reparations becomes greater, but often this essential work is delayed or cancelled completely due to lack of funds. The downward spiral continues because existing owners won’t pay their maintenance fees for the reason that the upgrade work is not being carried out.
The big boys will simply foreclose on the owner if maintenance fees are not paid and sell their “points” again. Given that legacy resorts are often aged and tired, foreclosing is not a good idea because the chance of reselling is extremely unlikely; foreclosing, apart from the expense, is also a guaranteed way to cancel any expected maintenance payments from that particular owner in the future.
Unfortunately, for many legacy resorts filing for administration and finally entering bankruptcy is the only solution. An example of a single property timeshare getting into not only financial trouble but total dilapidation was recently reported. A single old style colonial house in Great Barrington, Massachusetts is now almost derelict but once had about 400 timeshare weeks for sale and about 300 timeshare owners. No doubt because of the problems highlighted above it’s all over but there is still the matter of a $197,000 unpaid tax bill. The full story may be seen here.
Solutions
In the case of a resort declaring bankruptcy there really is no solution for owners even if they register as a creditor, in cases such as above, the taxman wants nearly $200,000 and in the list of creditors both the banks and the tax man come first.
To use a nowadays popular phrase, repurposing is a serious option. Most legacy resorts have an attraction, they are often in unspoilt places and not sandwiched between massive hotels and resorts in such places as Orlando. If they could be repurposed as either permanent dwellings or sold as holiday homes this could present a solution.
We mentioned Marsh Harbor earlier, this resort was repurposed and all 16 units were sold from timeshare ownership to private ownership. The good news was that all the then current timeshare owners were paid a percentage of the sales price for giving up their timeshare rights.
TCA comment
Although the term “legacy resort” may be new to European readers there are many such timeshare resorts dotted around the UK and the EU, two such resorts were reported by us recently. Some of the timeshare resorts in Europe are either complete hotels or part of; Radisson Blu Golden Sands in Malta is a prime example where a small part of the overall hotel is used on a timeshare basis. In the event that the timeshare allocation fails, the rooms will simply revert back to hotel accommodation.
In many cases, so called legacy resorts are well past their sell by date and the only solution is to demolish and rebuild. It can be said with a high degree of certainty that this route will not create a rejuvenated timeshare resort as may be demonstrated by a Devon timeshare that is suffering this fate. Our report may be read here.
For sure repurposing is an exciting proposition because it presents a win win scenario for all involved but our research would seem to indicate that the numbers of resorts that may benefit from this are fairly low and for the most part are USA based. In the final analysis it has to be said that if timeshare were still in the ascendancy then the smaller resorts would survive and thrive, sadly this is not the case. For every one that can either be saved or repurposed, we have to wonder how many fall by the wayside.
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