How Airbnb, VRBO, and HomeAway Could Kill Timeshares

My husband and I, in our early 30s, recently took advantage of a free stay at a timeshare – well, not exactly free. We had to sacrifice three hours of our vacation to listen to the sales pitch.

At the end of it, I wondered why anyone would buy a timeshare when they can just logon to Airbnb, VRBO, or HomeAway (NASDAQ: AWAY  ) and book even better accommodations anywhere they want without much advanced planning and usually for less than the annual fees on a timeshare package – all without that $6,000 to $30,000 upfront expense.

I asked our sales rep, a really friendly lady in her mid 60s, if she thought the VRBO trend would hurt the timeshare industry and she said, "what's VRBO?"

This was after we explained, to her amazement, how we managed without cable by subscribing to Netflix (NASDAQ: NFLX  ) and Hulu.

Born in 1981, my husband and I barely qualify as Millennials. Most descriptions of the generation say it encompasses people born between 1980 and 2000, while some weed us out saying the generation doesn't start until 1982 or '83.

Wherever is starts, it's a massive generation with an estimated 80 million members and some serious economic clout as we begin to reach our earning potential – especially since we're having fewer kids.

I tend to believe that the way my husband I live and the things we prioritize are pretty typical of people our age and younger.

So, is the timeshare industry in trouble?

You sure wouldn't think so if you were looking at the numbers.

Timeshare companies like Wyndham (NYSE: WYN  ) and Starwood Hotels & Resorts (NYSE: HOT  ) have seen their stock prices more than quadruple over the last five years while young private companies like Bluegreen Resorts have made headlines for rapid growth.

Wyndham announced 16% annual growth last month.

So, am I just wrong? What do other people see in so-named vacation ownership that I don't?

"Ownership," said the nicely dressed, dapper, late-30s closer at our timeshare pitch.

The big selling point for vacation ownership is that you have a deeded asset you'll own forever and be able to will to your children and grandchildren.

Hmm. Since about half of the sales price of a timeshare goes to marketing expenses and there is virtually no timeshare resale market, I had to wonder how valuable that ownership really is.

Why own something you can't sell without losing money if renting affords you infinitely more and better options with flexibility and almost no financial risk. After you factor in a seemingly inevitable loss if you are able to sell at all and the annual maintenance fees, vacation ownership might even be more expensive than vacation rental.

So, why are timeshare companies doing so well these days if people my age feel the way I feel?

Obviously, not all millennials would agree with me. But there's a bigger reason.

Baby Boomers

Baby Boomers are the second biggest generation in the U.S. these days. And their 75 million-plus ranks have arrived at retirement age. That means they have time to vacation and many have the savings to pay for it.

Even if Boomers have heard of VRBO, going online and renting a stranger's house and exchanging money with a faceless, nameless individual on the Internet might seem a bit crazy. Better to buy a deeded asset they can leave to their millennial children.

They're so sensible.

But what will happen to the vacation ownership industry when there are more millennials going on the free tours than Boomers? Sites like Airbnb, VRBO, and HomeAway are competition. It's relatively new competition and it's increasingly popular. If timeshares are going to survive, they better start evolving.

How to evolve

All the folks who make killer commissions selling timeshares will hate this idea. But – what if buying a timeshare were just as easy as finding a VRBO? Timeshares could become infinitely more affordable and work for Internet savvy millennials if we could just go online to shop for and buy them without the high-pressure sales pitch.

While existing timeshare owners might initially be miffed that they overpaid for their deeded assets, they'll probably get over it once they realize that asset has suddenly become salable.

Of course, there would be a lot of kinks to work out. Buying real estate over the Internet opens the whole business up to major fraud issues. But Internet security and the virtual world are already evolving. The timeshare industry just needs to work on catching up.

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  • Report this Comment On March 14, 2014, at 2:02 PM, BetzabethT wrote:

    Time shares are an okay option for travelers. However, timeshares have gained a bad reputation for several reasons, some salespeople’s lack of ethics, rental and resale companies offering profits for marketing timeshares and companies offering relief for unwanted timeshares by cancelling them. The timeshare industry must perform a deep cleaning otherwise the industry will be severely affected because of the lack of trust. This is a good article about time shares:

    http://www.timesharescam.com/blog/164-time-shares/

  • Report this Comment On March 17, 2014, at 8:44 PM, Just wrote:

    Just to respond to the writer. VRBO stands for Vacation Rentals by Owner. Which means when you rent from them they are simply paying off their ownership. So to say it will kill timeahare which is vacation ownership isn't correct because each time you rent from one of those sites you are helping them payoff their timeshare, hence the meaning of vacation rentals by owners. They bought it but your renting from them, and you get a one time use but in the end they will own it for a lifetime.

    You can rent a car or buy it, but in the end someone will own it. So you pay 800.00 a week to rent a vacation but they can take that money to pay 800.00 a month to own it for life.

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