Peak Season Is Still Ahead for Timeshare Stocks

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Heard on the Street: Like most travel names right now, timeshare stocks are trading at or near record highs. Unlike some, they may deserve it.

But you haven’t heard the pitch yet. Coming off a year of lockdowns, consumers say they value the space and privacy of a home share. Soon, they might be back to wanting the amenities and trusted brand name of a hotel. Timeshares can offer both.

The industry has evolved since the days when people bought a set week in a set room at a set resort. Today, the largest timeshare companies offer consumers the ability to use points to travel to their resorts across the world for varying periods priced according to demand. Timeshare companies mainly make their money in three ways: sales, fees and financing. Offering financing is often key to selling prospective buyers on the spot who wander into a presentation from the beach with a margarita, but little ready cash, in hand. Interest on timeshare loans typically runs 13% to 14%, according to Jefferies analyst David Katz, making the spread compelling in the current interest-rate environment.

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