Fitch Ratings has gained tremendous respect in the investor community over the last several years by providing highly analytical assessments of the risks and benefits of companies that investors and creditors may get involved with.  In recent news, 10 timeshare related transactions were reviewed by Fitch Ratings and were given a SMARTView date of November 16, 2009.

SMARTView, is a newly designed Fitch Ratings program that reviews companies for a more comprehensive analysis for transparency and accountability.

The review concerning the 10 timeshare related transactions stated that a rating action will not be released for another 30 days. It was also reported that none of the transactions were categorized as “Under Analysis.”

Although we have yet to see the actual ratings for these timeshare related transactions, it is clear that Fitch Ratings provides a well rounded analysis of companies and the risks and benefits of getting involved with them.

Timeshare owners automatically accept a financial obligation to their resort when they sign the contract and it is important for owners to understand the condition and health of the company they are involved with.  Making use out of resources like Fitch Ratings can help timeshare owners make good financial decisions and plan ahead.

In May of 2009, a similar story was released about a Fitch review for the Sierra Timeshares. Owners who tuned in to that story were able to get a good feel for the financial health of the company.

One of Fitch’s main purposes is to provide “opinions that are forward looking and include analysts’ views of future performance.”

Many times the ratings can come back positive with an AAA or AA rating, but it is good to know if a company you are involved with comes back with a BB or D rating. Essentially, you want to know where your investment stands based on the future forecast of the company you are invested with.

Apex Professionals LLC strongly encourages all timeshare owners to take advantage of the information that Fitch Ratings provides and stay in tune to what the future forecast may be for their particular resort/timeshare developer.

Wyndham WorldWide

As vacationers start spending less during recessions, Wyndham Worldwide (NYSE: WYN) also began spending less money and energy towards improving and sustaining their timeshare business; resulting in a negative report for their third quarter profits.

It was announced earlier this year that Wyndham would begin cutting back their marketing efforts by closing sales offices and spending less money on advertising, which resulted in a 35 percent decline in timeshare sales.

In one year, Wyndham’s earnings fell 27 percent from $142 million to $104 million and 80 cents per share to 57 cents per share.  However, earnings were reported at 58 cents a share which topped analysts’ predictions by 2 percent.

Wyndham’s decision to cut spending towards their timeshare business has reflected in their revenue report as well. They announced that revenue had declined 17 percent from $1.23 billion down to $1.02 billion. Representatives of Wyndham stated that the weak lodging industry is to blame for the noticeable decrease in revenue.

Wyndham Exchange and Rentals, also known as Group RCI, reported that revenue decreased by 8 percent along with the Wyndham Hotel group which fell 14 percent.

It seems that Wyndham is not the only one showing a decrease in both earning, sales, and revenue, rather the entire lodging industry is struggling to find vacationers who want to spend money during these tough economic times.  Potential timeshare buyers are choosing to save their money and cut back on luxury vacations.

As our country enters a season of financial difficulty, timeshare owners around the world are beginning to reconsider their once affordable timeshares as debt they need to get out of. Last year, the timeshare industry saw its single largest increase in maintenance fees. Over the last several years, many owners have begun to catch on to this trend.

A developer that seems to be a major player in this game of increasing fees is Diamond Resorts International. The annual maintenance fees for a DRI property have doubled since 2001, increasing from $695 to $1,400 today in 2009.

Owners of Diamond properties seem to have a common complaint and concern over how quickly the fees are increasing compared to the trend of decreased quality in the vacations.  Although, DRI is not the only company guilty of this trend, they are currently in the spot light due to owners demanding answers and drawing attention to the situation.

Like many other timeshare owners, DRI owners have been feeling powerless with decisions on maintenance fees and special assessments. This is mainly due to the fact that most timeshare owners associations and board members are employees to that particular developer. It is rare to find a large developer today that isn’t designed that way. With this structure, it is nearly impossible for the owners to have control over their properties and the fees that come along with it.

However, there are a few owners who aren’t willing to sit back and let it happen without a fair fight. Out of the 10,000 owners that belong to the South Shore resort approximately 250 owners have attempted to take back control of their timeshares. The only hurdle for these active owners is trying to get contact information from DRI for the other 9,750 owners who may want to join the fight.

According to the resort bylaws and regulations, DRI is required to, “keep an accurate and current list of members of the association of apartment owners and their current addresses…the list shall be maintained at a place designated by the board of directors and a copy shall be available, at cost, to any member of the association..” However, obtaining this document has proven to be more challenging than it should be. According to owners involved in this take-back attempt, they have been trying to get a list of deeded owners since February of 2009 and state that DRI’s response each time is that it is a “strict policy not to release the list.”

Another DRI conflict involves Mike Givens, who is a consultant for a consulting management company who was threatened with a lawsuit by Diamond Resorts for making “defamatory, false and tortuously interfering” statements in an article written in The Garden Island.

Given’s attorney lashed back with a cease and desist and expressed his unwillingness to step down by stating, “I assume that you have found it profitable in the past to attempt to silence criticism of you organization by threats, harassment and intimidation…these tactics may have the opposite effect from the one you seek.”

Although there seem to be a few timeshare owners out there who are fighting against the developers and management companies, it has been proven to be a long and difficult road. Most timeshare developers have all the time and money they need to drag out lawsuits for as long as they want, and the owners are the ones left holding the financial bag. The reality is increased costs for the developers will only reflect an increased cost in maintenance fees for the owners.

Apex Professionals believes that there is a huge lesson to be learned from stories such as this. With timeshares becoming continuously expensive, and developers becoming harder to fight in legal confrontations, it is simply easier to just discontinue association with the industry. It is expensive enough as it is being a timeshare owner it will only get more expensive if you attempt to fight a monster in court, or stick around to pay the bill for the developer.

If your timeshare ownership is causing grief and financial hardship for you and your family, then Apex Professionals LLC has an option for you that won’t involve lawsuits or upfront fees for advertising and listings.  It is better to get out now than after the storm has passed.

Every year the UK European Consumer Center (similar to US Consumer Protection) releases their findings on product and service complaints. As the 2008 figures were recently released by the ECC, the timeshare industry took the lead and accounted for over 38% of all complaints received. The complaints were comprised of discount holiday clubs, timeshares as well as resale and listing companies.

Along with consumer complaints, the ECC also tracks the number of enquiries that consumers make for more information on a specific industry/company or business. The number of enquiries made by consumers for further information on the timeshare industry accounted for over 20% of all requests.

The 300 plus complaints that were accounted for regarding the timeshare industry covered all categories of complaints. Some complaints were even accounted for as scams in the industry.

Jed Mayatt, an ECC Manager explained that many consumers end up getting involved in the timeshare industry because of the consumer’s nature to be vulnerable while on holiday and during recessions. Many timeshare companies promote memberships as a future “financial investment” which allows for many consumers to justify the large expense during times of financial difficulty.

Jed also commented that some complaints involved consumers who attempted to cancel their contract when the after-glow of the sale faded and buyer’s remorse set in. These complaints involved customers who attempted to cancel within one to two days of signing the contracts and were denied a refund and release from the contractual obligation.

Both the ECC and the US Consumer Protection place warnings for consumers who are likely to be targeted by timeshare related companies. Statistics have shown that older consumers tend to be targeted for timeshare presentations because of their trusting nature and presumed financial stability; unlike the younger population, who tend to be less financially able to buy as well as more skeptical about the service or product being sold.

Apex Professionals, a company who assists unhappy timeshare owners out of unwanted contracts, is not surprised by the ECC’s results on the overwhelming number of complaints involving the timeshare industry. It has been an on-going issue in the United States for several years and it was only a matter of time before these complaints surfaced in European countries.

The representatives from Apex Professionals LLC strongly recommend that consumers take the statistics from reputable sources like the ECC and US Consumer Protection to heart and avoid industries that fall high under the radar such as the timeshare industry.

Marriott International (NYSE: MAR) announced today its plan to take $760 million in pre-tax impairment charges on its timeshare segment this 3rd quarter. Sharp economic downturns have equated to a major reduction in national consumer spending on travel and leisure activities. Marriott noted that what was already a soft demand for its timeshare products in 2008 has weakened dramatically in 2009.

A write-down is an accounting term that shows the decrease in value of an impaired asset. This is most commonly used in scenarios where an economic change drops the book value of a holding or asset below the purchase price. The excess price is documented on the buying or holding company’s account as “written down” to the value that it may be resold as. Write-downs differ from the tradition write off by remaining in the balance sheet at the lower value rather than being completely dropped.

Last quarter we reported on the 76% decrease in profit for Marriott and this recent announcement seems to be a continuation of the downward trend we’ve seen for this company over the past year. Marriott also stated that they would be discontinuing funding for construction of new residential timeshare developments as well as reducing the price of its current holdings, some of which will be converted to other uses. Undeveloped parcels are slated for liquidation.

Marriott will be announcing its third quarter financial results Oct. 8, and is predicting the results will show about a 19 percent decline in revenue per available room, compared to the same time period last year.

What this means for those in the timeshare industry, be it developers or consumer timeshare owners, is that the value of and demand for timeshare properties are decreasing significantly. Apex Professionals recommends that prospective timeshare purchasers take this information into account before making any investments in timeshare properties. Marriott International represents one of the largest timeshare developers in the industry. If they are showing signs of weakness you can be assured that the industry as a whole is suffering and that property resale values will reflect this change.

Pending litigation in the UK regarding misleading and deceptive sales tactics leave as many as 2500 people deep in debt with their lending institutions. The situation is further complicated by the liquidation of the shell companies identified as doing business as companies providing free or low-cost holidays which were simply timeshare scams set up to appear legitimate business transactions.

The scam took the form of the classic bait-and-switch confidence game. The mark is offered one thing and something completely different is offered as a value-added incentive, or upgradeable for a minimal investment.

The bait took the form as a routine telephone call solicitation – whether it was from a pre-qualified list or whether it was simple cold-calling is unclear – when the person answering the phone was informed they had won a free – or low-cost – holiday. The hook was that the winner had to appear in person at a special presentation in order to claim their prize.

The switch took place at the presentation – a thinly-veiled marketing event – where the lures were cast by a number of relentless high-pressure salesman trolling for the biggest fish in the pond. The lures took the form of promises – all verbal, nothing written – that the holiday could be upgraded to a full-blown holiday, with 5-star accommodations in a choice of world-wide destinations for a low initial capital outlay, whose cost was to be defrayed – no payments – for a period up to one year, with loan package with a very attractive APR below 5%. Additional inducement in the form of cash-back monthly, which appeared to lower the cost even more. The hook was now well and firmly set, it was now just a matter of reeling in the catch.

Only when the fine print of the contract was read – and significantly, after the marketing event – did people discover they had actually signed loan documents for up to $30,000.00 with an APR of 24.50%. Most of the people who signed the documents had no idea the loan existed, never mind the exorbitant rate, simply because they had been effectively stalled by the shell companies into not expecting having to make any payments for a period of time. Blissfully unaware, the people who had in actuality signed a combination timeshare and loan package, did not discover the actual nature of the document until it was far too late to get out of the contract.

The shady financial companies were Easy Save Finance Ltd doing business as (DBA) Leisure Time Promotions; and, St. Frances Marketing Ltd DBA as Buena Viva, Classic Cruisers and Petchey Leisure. Both shells have gone into voluntary liquidation – a method of bankruptcy in the UK – with Easy Share filing in November, 2007 and St Frances in June, 2009.

The plaintiffs are taking action against the two financial institutions which financed the loans to pay for the holiday packages. They are identified as Barclays Partner Finance, a division of Barclays Bank, and GE Money. Both major institutions have acknowledged they are aware of the complaints and state they no longer accept business from either company. Hardly surprising, since the companies have been out of business for a while. Both have also stated they are addressing concerns on a case-by-case basis.

In the meanwhile, the plaintiffs only recourse seems to be the High Court. Argumentation for the plaintiffs is based on the premise that the people were actually signing loan documents which carry special protections under the UK Consumer Credit Act.

While this particular group was working out of the UK, the lessons learned and teachable moments are worth reiterating.

If it’s too good to be true, it probably isn’t true. If you receive a phone solicitation out of the blue, or as the result of entering some innocuous-sounding contest with phrasing similar to “Win a two-day three night holiday on the exciting and glamorous beaches of….”

If you have to go to a “special presentation” to collect your prize, or if attending an “opportunity seminar” on your arrival, that’s a red-flag waving.

If you hear the words “Bring your checkbook or credit card, we will need to verify your qualifications….” Another flag.

If you are offered an upgrade from a 3-star room to 5-star luxury suite by simply signing a document, don’t do it.

If you find yourself in a high-pressure situation and you are at all uncomfortable, just open your cellphone and either call your lawyer or a “wing man” friend who knows enough to help bail you out of a bad situation. Smile at the salesman and tell him, “I’m just having my lawyer check some details. Can I have your card, please?” If they turn pale and move to another person, then you bail out, too.

Above all, don’t sign anything. Not even a credit card receipt in the same building where the event is being held. Just get out.

Apex professionals strongly encourage vacationers to do their due diligence before agreeing to sign on the dotted line.

Marriott International, Inc.’s profits fell 76% in the last quarter. This dismal statistic was caused by less demand for travel and Marriot’s well-intentioned restructuring. Unfortunately, the restructuring failed and Marriott was forced to release a forecast which did not meet up to analysts’ expectations.

As we previously reported in the article “Marriott’s $23mil Loss could Spell Trouble for Timeshares“, Marriott is undergoing several cost-cutting measures with the goal of decreasing the effects on Marriott world-wide. Marriott has decreased its level of investment, reduced the number of hours employees work weekly to cut employee costs, and placed a temporary freeze on hiring.

Marriott is based out of Bethesda, MD. Reports show that net income plummeted to $37 million in the second quarter. That equals $0.10 per diluted share. There was a significant decline in revenue in the amount of 20%. Revenue was $2.56 billion. One year prior, net income was a whopping $157 million which equals $0.42 per diluted share.

Marriott’s properties include hotels and timeshares. Timeshare facilities exit costs and severance costs contributed to a total of $33 million spent on restructuring during the quarter. Marriott also reported $20 million in other costs related to reserves for loan losses and values of prior timeshare note sales. The hotel industry uses revenue per available room to evaluate businesses in the hotel industry. For Marriott, this metric was down 26.1% world-wide.

Marriott has not met the challenge of making predictions in the global market, given the current financial and economic conditions. They estimate the third quarter earnings may range between $0.09 and $0.14 per share. Analysts speculate that third quarter earnings may actually be $0.20 per share (Bloomberg News). As we previously reported in April, Marriott is suffering five year lows (Marriott Stock at 5 Year Low).

Marriott is not the only one feeling pressure because of poor financial conditions. Those same consumers who cannot afford to go on vacation (thereby keeping money out of Marriott’s coffers) are also finding it difficult to maintain their timeshares. It is a difficult situation. There are so many timeshares across the country at a time when it is difficult to find buyers. That’s why Apex Professionals wants to help you reduce your expenses by unloading your timeshare.

Apex Professionals actually helps people who no longer wish to remain locked into a timeshare agreement. We do not buy your timeshare, but offer an alernative solution. It is not cost efficient to hold onto a timeshare when it is not acting as the investment you had hoped. Face it, you don’t need another expense. Call Apex Professionals and speak to someone who can review your options. Remember, you do have a choice.

Apex Professionals LLC is committed to bringing you the latest news in timeshare developments. Last month we posted the news about the Sierra Timeshares 2004-1 $658 million dollar transaction being under review by Fitch Reviews. After the 30-day review period, the results have been announced.

Because of the volatility of the real estate market and the effect that it has had on the timeshares market, many people are at a crossroads when it comes to investing in these markets at the present time. Investors and timeshare owners alike have long since followed the Fitch review rating system as a means to gauge a certain project’s risk to a credit portfolio. Fitch Ratings performs in depth research on credit ratings and business transactions worldwide. It then uses the findings to calculate the risks and benefits for those who are involved or those who may become involved in certain transactions. The Fitch Ratings system can often make or break a project, due to its exacting knowledge and research in the business realm.

Ratings from Fitch review are either AAA or AA, meaning they are investment grade transactions and pose a lower risk to creditors and investors, or BB to D, which means they are more speculative transactions, which may pose a higher risk to creditors and investors. An investigation by Fitch Ratings doesn’t necessarily mean the kiss of death on a particular transaction, it just means that it is under review and that more answers are needed before a rating is given. One of Fitch’s most valuable tools is also its newest – a program called SMARTview that comprehensively reviews business transactions for transparency and accountability. It is quickly becoming an important tool for investors all over the world.

Ever since last month’s announcement from Fitch that Sierra Timeshares 2004-1 $658 million dollar transaction was being reviewed, many investors have been waiting with bated breath for the evaluation results. After the 30 day review was completed, Fitch gave the project a AAA rating, which means that it is Investment Grade. This will surely affect the project in a positive way and may bring a sense of relief to those involved.

The 2007 beating and subsequent death of Angel Nieva at a Las Vegas, Nevada timeshare resort has prompted his family, including his wife Lydia to file a wrongful death suit against the resort. Lydia was with Angel when they were both savagely beaten and robbed. The suit alleges the business in question failed to take the proper steps to ensure the security and general well being of their guests. It also alleges that the business in question declined to reveal the nature of the guests’ potential danger to them.

Angel and Lydia Nieva, both in their early sixties at the time of the incident, were attacked and beaten by numerous assailants on May 29, 2007 at a resort called “Tahiti.” They were also robbed of most of the possessions they carried. Local police confirmed that several perpetrators between the ages of fifteen and twenty-two were responsible for the attack. Angel and Lydia Nieva were discovered soon afterward, and were taken to University Medical Center immediately following the attack. Unfortunately, some time after arriving, Angel Nieva succumbed to his injuries. Lydia Nieva was treated and eventually released.

The following quotation is taken directly from the suit:

“There had been other similar assaults in the recent past on the premises of the Tahiti Village Vacation Club and…defendants knew that the security provided was insufficient to protect against these assaults and they failed to warn decedent (Angel Nieva) and his wife (Lydia Nieva) of those assualts and they also failed to rectify or amend their security practices and procedures in light of these previous assaults.”

In layman’s terms the suit basically alleges that the company knew there was a history of violent and criminal behavior occuring on their property. It also alleges that the company knew this, but still continued to invite guests to stay at their resort. And they did this without providing adequate defense from this violent and criminal element. They also didn’t make any of their guests aware of the potential danger.

The amount sought by the suit in special, punitive, or civil damages was unspecified at the time of this printing. The owner of The Tahiti Village Vacation Club is a company called Consolidated Resorts Inc. This company is located on Tropicana Avenue near South Decatur Boulevard. A spokesman for Consolidated Resorts Inc. refused comment on the pending suit.

Apex Professionals cares about your safety and well being. Violent and/or criminal behavior often occurs in repeated and recognizable patterns that allow for proper avoidance. Please research your vacation destinations thoroughly to ensure yourselves and your families a happy, safe and secure trip. Do your homework so your family can have a trip to remember for all the right reasons.

On May 28th, Wyndham Worldwide sold $225 million dollars worth of notes backed by their timeshare assets to Parsippany, a New Jersey based company. Because of the sale, Wyndham stocks gained 26 points, or 2.3 percent, rising to $11.54 a share during afternoon trading on the 29th. The stock plummeted to only $2.55 months ago, and the highest it has been at in the past year was $22.28 a share.

Each note that was sold is backed by vacation ownership that are properties of Wyndham and its subsidiaries. For the past year the market for timeshare-backed securities has basically been closed, with little if any investor interested in purchasing them. So it was a great deal for Wyndham to be able to make this sale. The timeshare business has always been particularly reliant on timeshare based securities to fund new timeshare developments, and so Wyndham was very happy about the sale. Many financial analysts are heralding the sale to Parsippany as a marker of a revival in the market for asset-backed securities.

While this is good news for Wyndham in the short term, in the long run, timeshare ownership is still a rather risky investment, and that is exactly because of the timeshare market’s high reliance on asset-based securities. Thus, the deal with Parsippany is not necessarily the safest way of securing Wyndham’s future and stability.

Asset-based securities are one of the least financially-sound types of investments, and have proved in the past few years to be really dangerous to the economy as a whole. In 2002, there was an odd financial situation in which there were many investors willing to lend out money, but few businesses that needed the extra cash. Because of this, many of these investors sought out new markets to invest in, some of which yielded high interest rates, but were high risk. This is how asset-based security investments were developed.

One market investors could invest in was the sub-prime housing market. The recent deregulation and liberalization of banking and financial institutions was allowing people, who never would have qualified previously, to get loans. Investors split the risk of lending to these less creditworthy borrowers by slicing up and recombining these loans with other investments. That way, when people defaulted on their loans, the loss was split between several different investors instead of hugely burdening one investor. At the time, many fund managers and leaders of investment firms were under a lot of pressure to meet quarterly targets and find areas in which to invest. This focus on short-term gains led many to make investing decisions that were actually detrimental to the company’s sustainable growth in the long-term. And in the long run, many of these investments have gone sour with countless home buyers defaulting on their loans and experiencing bankruptcy.

Asset-based securities have largely contributed to the financial problems that the United States and countries throughout the world are experiencing today. So for Wyndham to choose to continue to attempt to appeal to these types of investors is merely prolonging the larger problem. It is obvious that Wyndham is hoping that their decision to sell notes backed by timeshare assets will gain them positive press, and create more hope in investors in the short term. In such a dreary market, companies are doing anything they can in order to appear like business is growing instead of failing. This is obvious by the fact that Wyndham was able to announce to its Board of Directors that there was a cash dividend of $0.04 per share on its common stock, payable to shareholders June 12, 2009.

After all, with all of the drama in the boardroom several months ago with Wyndham stockholders trying to replace the Chairman by an Independent Director and the company’s CEO taking a 17% cut on his bonuses, the company is doing everything they can to keep investors and stockholders from bailing. And for most people, this short-term fix with Parsippany should help a little.

But, if you are looking into investing in timeshares, you should re-think your plans. Choose an investment with more moderate returns that is safer. Any part of the market that relies so hugely on securitization is going to be less stable and experience problems generating long-term growth. If no changes are made in the government to regulate and reform the way that banking institutions can use people’s money, requiring them to have a certain amount of the money backed up, insecure trading ventures such as asset-based securities will continue to cause larger and larger problems later. And the timeshare market, heavily dependent on asset-based securities, will always be a sector of the market that will fall fastest and hardest as a result of these problems.