I've heard my timeshare referred to as a "Legacy Resort." What does that mean?
Legacy resorts are the backbone of the timeshare industry — and if you've been an owner for 25 years or more, you're automatically an owner at a legacy resort. If you recently bought a resale on RedWeek.com at an older seaside or mountainside resort, chances are great you're also a legacy resort owner.
In almost all cases, legacy resorts, circa 1960 to 1990, are no longer affiliated with a major developer or travel club. They are single sites, managed by an HOA board of resort owners who are elected by the membership and rely, heavily, on an all-purpose general manager or a professional management company. Legacy resorts managed by experienced management companies tend to fare better, financially, than those that are managed by individual board members.
Legacy resorts also typically have "sunset provisions" in their governing documents that call for the expiration or termination of the timeshare association after a fixed term (e.g., 40 years). Many of today's legacy resorts are facing these imminent termination clauses and trying, with mixed results, to extend them. Others are just running the clock out to the end of their timeshare era.
According to the industry's lobbying arm, the American Development Resort Association, there are 1,580 timeshare resorts in the United States. While there is no direct count of legacy resorts, it is safe to say that the majority of those 1,580 are older, aging timeshares. Without drawing attention to it, industry insiders expect 10 or 15 percent to fail.
Many are still flourishing — particularly those in high-value, prime-destination vacation areas. But they all face common challenges, including an aging owner base that is dropping out, year by year, increasing defaults and foreclosures that put extra financial burdens on the remaining members. Many older resorts also need major repairs (new roofs, room updates, and plumbing) that are difficult to finance without a robust, and paying, owner base. One additional fact of life for older resorts: many members are averse to paying increasing maintenance fees to pay for repairs that are vital to their resort's survival.
That's a stark contrast to the overall developer health of the timeshare industry, where retail sales (of newer timeshares) have increased 10 straight years to a total of $10.2 billion in 2018, with higher numbers expected for year-end 2019. Almost all of those sales are packaged in points-programs that give buyers access to a network of vacation resorts. Legacy resorts, meanwhile, are typically tied to fixed-week, fixed-unit vacations that used to appeal to the majority of timeshare buyers. Today's buyers want flexibility, fun on-site experiences, and options for multiple vacations in numerous destinations. Fixed-week programs are nearly obsolete in 2020.
Points Replace Weeks as Timeshare Currency
The "points" product is just one of many changes in the timeshare universe that impact legacy resorts and their owners. Today, most major developers are experimenting with shorter-term lease and right-to-use products that do away with the lifetime-forever structures of original timeshare contracts. This is a direct response to a changing buyer marketplace populated by younger travelers who shy away from lifetime commitments.
Due to this sea-change in sales, the road ahead will not be easy for legacy resorts tied to the old business model.
To stay relevant, struggling weeks-based legacy resorts must find ways to replenish their owner base by attracting new buyers. This means, at a minimum, implementing resale and rental programs that bring new heads into their beds. HOA boards must also find ways to finance all current and future repairs, as needed, to keep up with an extremely competitive travel market. In the age of the Internet, with comprehensive timeshare resources such as RedWeek.com, the strengths and weaknesses of every resort are visible to owners, renters and potential buyers. This is why, industry experts say, many legacy resorts are aligning themselves with major travel clubs and developers — brand-name companies with resources and experience — to manage their way through 2020 and beyond.
