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The frozen credit markets continued to take their toll on the region’s time-share industry. Wyndham Vacation Ownership announced it would slash a quarter of its companywide work force, including a "significant amount" of employees in its Orlando headquarters. The company said the layoffs are part of an extensive restructuring designed to free the company from its reliance on asset-backed securities when selling time shares.
Also on Monday, time-share magnate David Siegel said he will have to cut about 1,000 more jobs at Westgate Resorts -in addition to the 3,000 positions the company already has eliminated nationwide- if the credit markets don’t thaw soon. But Siegel said he’s trying to avoid the additional layoffs, which would reduce the company’s size to a level where he could run it with his own money and not rely on the securities market. "We cut out a lot of fat at the beginning," Siegel said. "I don’t want to start cutting muscle."
Orlando is the unofficial time-share capital of the world with 125 resorts and a combined 28,000 units. Also, many of the industry’s biggest names are based here.
The credit crunch, which is affecting businesses of all kinds, has been particularly hard on time-share companies, the industry says, because many companies package their customers’ time-share mortgages and sell them as asset-backed securities to raise additional cash. That market locked up about three months ago as convulsions racked the nation’s biggest investment banks, and wary investors began refusing to purchase securities based on time-share mortgages.
Time-share companies say that while sales remain strong, they are essentially selling themselves out of business because they can’t trade their customer financing for additional funds. Wyndham Vacation Ownership, one of the nation’s largest time-share operators, plans to cut about 4,000 of its approximately 16,000 employees. The specific number of job cuts planned in Orlando was not released. The company said it hopes to shrink to a size at which it can continue operating without relying on the credit markets. "We really don’t see those markets reappearing for the foreseeable future," said Franz Hanning, chief executive officer of Wyndham Vacation Ownership. "We want to take a proactive approach. We want to be in control of our destiny."
The company, a subsidiary of New Jersey-based Wyndham Worldwide Corp., plans to ratchet back its annual sales to about $1.2 billion in 2009, compared with approximately $2 billion this year. In doing so, it will eliminate sales offices and marketing programs and dismiss workers during the next 90 days, Hanning said.
The company did not disclose Monday which offices would be affected. The time-share units reported last month having about 3,100 employees in Central Florida.
Siegel, meanwhile, is trying to quash rumors among Westgate employees that the company is close to bankruptcy. "If you hear any rumors don’t listen to them," Siegel wrote to workers in a Dec. 5 memo obtained by the Orlando Sentinel. "If there are any changes you will hear from me."
Siegel also indicated in the memo that he and his wife, Jacqueline, are not getting divorced – the subject of another widespread rumor making the rounds at Westgate. He stated he and his wife "couldn’t be happier." Siegel said Monday that he issued the memo because the office rumors were affecting productivity. "Rumors are running rampant," he said. "I thought it would be best just to address them."
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
