Despite the general market volatility, the timeshare industry has benefited from the steps taken to further increase efficiencies, DBRS analysts said late yesterday in a comment.
Timeshare sales slowed from 2009 to 2010, which can be mainly due to the economic recession and slow recovery, they stated.
Less capital availability triggered many timeshare firms to look at their marketing channels, concentrating on the most effective and efficient channels to target sales, analysts explained.
Over this period, many of these companies used "tighter consumer level standards and other organizational changes to conserve liquidity and to improve the bottom line," they said, adding that the amount of inventory available for sale is a metric monitored closely by timeshare firms.
In the last few years, these companies have lessened the levels of completed inventory available for sale, which is seen by the decrease of 17.4% from 2009 to 2010, DBRS analysts said citing the Financial Performance Report 2011: A Survey of Timeshare & Vacation Ownership Companies prepared by Deloitte & Touche for the ARDA International Foundation.
Those who participated in the survey reported an average of 1.9 years of completed inventory available for sale. This decreased from the similar findings published in 2010 survey where respondents reported 2.2 years of completed inventory available for sale, Deloitte reported in the surveys.
The change to lower completed inventory available for sale levels is specially seen when comparing the distribution of surveyed firms by years of completed inventory, DBRS analysts stated.
The DBRS report showed through the survey results that the distribution of companies measured by years of completed inventory available for sale and the percent of firms with two or more years of completed inventory levels at the end of 2009 was at 54.6%.
Meanwhile, the similar report for the end of 2010 presented the two-or-more-year completed inventory levels dipped to 43.5%. Additionally, the survey reported lesser inventory available for sale and not yet completed. A 30.8% drop was reported when comparing 2009 to 2010.
Aside from this, the reduced inventory levels available for sale and the capital expenditures related to timeshare inventory decreased by 17.5% from 2009 to 2010. This trend continued in 2011 given the results of the recent statistics published in the 2011 Second Quarter Pulse Survey: A Survey of Timeshare & Vacation Ownership Companies prepared by Deloitte & Touche for the ARDA.
The study demonstrated that capital expenditures related to new timeshare inventory projects and completion of existing inventory projects dipped 28.8% over the 12 months between 2Q10 to 2Q11, cited DBRS As the overall industry reported less capital expenditures, it is notable that 30% of the survey's responding companies increased capital expenditures to meet expected sales and growth expectations.
DBRS analysts said that timeshare sales have recently demonstrated a slight rise as of 2Q11. However, these sales continue to be affected by the broader economic stress. Still reduced inventory levels as well as overall capital expenditure reductions for new inventory demonstrate timeshare firms' continued focus on improving their bottom line, the analysts stated.
Stronger timeshare operators together with more focus on higher quality borrowers purchasing timeshares will likely pay dividends for timeshare companies, they said. Timeshare ABS buyers will probably benefit from deals that have stronger transaction counterparties and lower loss expectations related to better obligors, DBRS stated.