More Proof that Timeshare is on the Upswing

We've heard the good news reports from industry leaders that the timeshare industry is experiencing an upswing. Reports of strong growth and positive comments are coming from all sectors of the industry. If you need more proof, this month’s Fitch Rating Outlook for timeshare should provide it. According to the rating agency, U.S. timeshare ABS delinquencies fell again in the past quarter to their lowest level in eight years. Fitch also reports consistent year-over-year improvement since 2012 with:
  • Delinquencies down for second quarter 2015 – 2.66% down from 2.79% in the first quarter of 2015 and 2.92% in second quarter 2014.
  • Defaults down for second quarter 2015 – 0.57% down from 0.67% in the first quarter 2015 and 0.66% in second quarter 2014.  On an annualized basis, defaults were 6.42% for second quarter 2015, down from 6.51% in the first quarter 2015. This represents three years of quarterly improvement, as well as the lowest level of defaults for timeshare ABS in six years.
Fitch's Rating Outlook for timeshare ABS remains stable due in part to the delivering (to decrease financial leverage) structures found in timeshare transactions and ample credit enhancement levels.

What This Means to Us

To owners, developers, managers and everyone with an interest in timeshare, this is very good news. It supports the positive attitude about timeshare currently trending in our industry. When people are happy with their timeshares, they pay their bills and they don't default. 

Business 101 Review

In case you were wondering, ABS stands for Asset-Backed Security. A definition from says it's essentially the same thing as a mortgage-backed security, except that the securities backing it are assets such as loans, leases, credit card debit, a company's receivables, royalties and so forth. It is not backed by real estate or mortgage-backed securities.

The Fitch timeshare ABS index is an aggregation based on pools of securitized timeshare loans originated by various developers. Expected cumulative gross defaults on underlying transactions can range from 9% to above 20%. Delinquencies and defaults may vary on an absolute basis, but most transactions supporting the index exhibit similar overall trends.

The Fitch timeshare performance index summarizes average monthly delinquency (over 30 days) and gross default trends tracked in Fitch’s database of timeshare asset backed securities (ABS) dating back to January 1997. It is available on a quarterly basis. For more information go to 
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