I've been spending a lot of time on the three major publicly traded timeshare companies (HGV, WYND, VAC. Disclsoure: Long HGV) recently. At its core, the time share business is pretty simple (you lure a bunch of tourists in with the promise of a cheap vacation, you put them into a high pressure sales situation, and ~15% of them will buy a "lifetime vacation package" for ~$20k; I am simplifying / slightly mocking them, but only slightly), but as an investor the timeshare companies are actually difficult to look at: their accounting is complex (mainly due to the financing from their timeshare receivables), valuation is a bit difficult because each of them have slightly different revenue streams, their inventory position / investments can depress their cash flow but present different growth opportunities, and the strength of the "parent brands" (i.e. Hilton for HGV) probably needs to be considered as well. So I figured I'd throw up some thoughts on the time share companies, and if anyone has done any work on them and has different views or anything to add on them I'd love to see / hear them. Normally when I write something up I try to review lots of industry basics / background, but I was a bit all over the place in writing this post so instead I'm just going to dive right into the things I wanted to hit. I'll note the timeshare companies are
Buying into the timeshares $HGV $WYND $VAC
Buying into the timeshares $HGV $WYND $VAC
Buying into the timeshares $HGV $WYND $VAC
I've been spending a lot of time on the three major publicly traded timeshare companies (HGV, WYND, VAC. Disclsoure: Long HGV) recently. At its core, the time share business is pretty simple (you lure a bunch of tourists in with the promise of a cheap vacation, you put them into a high pressure sales situation, and ~15% of them will buy a "lifetime vacation package" for ~$20k; I am simplifying / slightly mocking them, but only slightly), but as an investor the timeshare companies are actually difficult to look at: their accounting is complex (mainly due to the financing from their timeshare receivables), valuation is a bit difficult because each of them have slightly different revenue streams, their inventory position / investments can depress their cash flow but present different growth opportunities, and the strength of the "parent brands" (i.e. Hilton for HGV) probably needs to be considered as well. So I figured I'd throw up some thoughts on the time share companies, and if anyone has done any work on them and has different views or anything to add on them I'd love to see / hear them. Normally when I write something up I try to review lots of industry basics / background, but I was a bit all over the place in writing this post so instead I'm just going to dive right into the things I wanted to hit. I'll note the timeshare companies are