Timeshare owners have taken a bad hit over the last 24 months with the closure of some of the biggest timeshare resorts.
Silverpoint Resorts were the largest company in Tenerife that entered into voluntary liquidation in 2019 to avoid court cases over alleged fraud.
Azure Services who operated from the 5 start Radisson Blu in Malta entered into administration in May 2020 leaving all their owners to pick up the pieces. They were the biggest timeshare company based on the island.
Now mainland Spain is rumoured to lose Europe’s largest timeshare resort CLC World Resorts. It is expected that they will enter into administration this Friday 16 October 2020. It appears the biggest timeshare companies are struggling the most as they have failed to bring in future business since the Pandemic. Many of their 20,000 owners will still be liable to pay their management fees despite having no accommodation to go to.
Why does it only seem to be affecting the biggest timeshare companies?
The bigger companies have the most over- heads, more employees, more owners and more compensation claim against them. Timeshare contract are divided into 2 separate contracts. 1 is the purchase agreement in the name of the timeshare company and the other is for the management company that maintains the buildings and the grounds. Although the management company is still legally entitled to charge the maintenance fees, the company that sells the timeshares are in a constant struggle to repay compensation to the thousands of owners who were mis-sold, whilst bringing in no extra revenue from new customers.
With the pandemic likely to extend into 2021 more and more owners will try to recover compensation. This gives the timeshare companies only one option, cut their losses and liquidate their assets. Small companies that only own one timeshare resort seem to be coping as they have managed to re-open their doors for now.
Why are timeshare owners still needing to pay their maintenance fees?
When a company enters into administration the resorts will keep their doors closed while they try to find a new timeshare resort to take control of sales. This is a lengthy process, especially since no one in their right mind will take on a business based on tourism during a global pandemic such as this. Timeshare owners are then stuck in limbo. Their contract is legally binding to maintain the upkeep of the resort. Their contract states that in return for paying the management fees they will receive accommodation subject to availability. It is the subject to availability clause that is forcing owners to continue to pay the fees as the timeshare company still exists, however the accommodation is not available. The administration process can take up to 24 months before they enter into liquidation before their assets are eventually sold off.
Once a timeshare resort enters into administration it becomes very difficult to successfully claim back any compensation.
Am I safe with my timeshare resort?
The smaller the timeshare company, the safer you are. If your timeshare resort owns or manage several resorts than is likely that they will follow suit.
My timeshare resort said that I could bank the weeks that I am unable to use, is this true?
It is a very easy way for a timeshare resort to handle a complaint by saying this. However, they have used those familiar words again “subject to availability”. Timeshare resorts first started selling fixed weeks of timeshare, once they sold every apartment 52 times, they created the now illegal product, timeshare points or floating weeks. The pandemic is likely to continue into 2021 leaving owners another banked week. There is absolutely no way that a timeshare resort would have availability to accommodate every timeshare weeks, points and fractional owner in any given year as they have been oversold, let alone now offer them 3 years’ worth of holidays in a single 12-month period.
If you are worried about what might happen with your timeshare resort and would like to speak to someone, fill out our compensation calculator and a member of our team will contact you. Our advice slots are limited to one appointment per owner to discuss any possibilities in claiming compensation.