The Timeshare Beat
September 18, 2001
As expected, travel and tourism-related stocks took a nosedive yesterday when the stock market reopened for business.
Aside from airline losses, leading hotel, casino and online travel businesses lost nearly $8 billion in market
capitalization by the end of trading.
Included among the losses were publicly-owned timeshare and timeshare-related companies. Among these are:
In addition, the three leading hotel companies that also offer timeshare were hit hard. Marriott International Inc. (MAR), Hilton Hotels Corp. (HLT) and Starwood Hotels & Resorts Worldwide Inc. (HOT) lost a combined $3.8 billion in market capitalization by day's end.
Along with hotel and timeshare company losses, the cruise and gaming sectors suffered severe setbacks. Both of these industries also have close ties to timeshare.
The importance of travel and tourism to the global economy cannot be overstated. It represents about 6% of the USA's total economy and a whopping 25% of Hawaii's economy. Many countries, including most of the Caribbean Islands, depend almost totally on tourism for their ability to survive. A serious disruption in travel and tourism worldwide would mean massive layoffs in all sectors and in some cases could throw entire populations into utter poverty.
Experts in economics state emphatically and unanimously that it is critical to the world's economy that people begin to travel again, both for business and pleasure.
A study carried out by the University of Lausanne showed that almost 700 million people made a trip to a foreign country in 2000, spending an estimated US$476 billion. The study indicates that in the industrial countries the contribution of tourism is between 4 and 6 per cent.
Timeshare travel is particularly important to many economies because not only does timeshare ownership tend to fill up inventory during otherwise slow periods, it has been shown that timeshare owners stay longer in a location and spend more while they are there.
According to The World Tourism Organization, three main factors are currently wreaking havoc on the tourism industry: lack of consumer confidence in the safety of air travel; uncertainty about the near future; and weakening of the global economy in recent months.
In the past, tourism has proven to be resilient and it is hoped that such will be the case again and that once the intitial shock of the terrorist attack in New York has settled a bit and people have a clearer idea of what the future will bring, they will resume traveling. Some are convinced that this is what will happen around the globe, and that even though people may avoid flying and stay closer to home tourism and travel will rebound shortly.
Perhaps ironically, WTO is still preparing to celebrate World Tourism Day on 27 September. The host of this year's celebration is Iran and the theme is Tourism: a Tool for Peace and Dialogue among Civilizations.
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