More than a decade ago, a couple from Osaka Prefecture embraced their dream of owning a slice of paradise. They purchased a timeshare in Hawaii’s iconic Waikiki district for about 5 million yen (roughly $60,000 at the exchange rate of that time). The allure of having a guaranteed vacation spot in their favorite destination was too enticing to resist. Today, they find themselves desperate to sell the property, willing to accept as little as $100 (approximately 15,000 yen) in a market flooded with sellers and short on buyers.
“We want it to be sold, even for only $100,” the wife lamented. “We never imagined that selling it off would be such a lot of work.”
Pandemic and Economic Impact
The couple’s plight mirrors that of many Japanese timeshare owners who have faced travel restrictions due to the COVID-19 pandemic and are now grappling with the yen’s depreciation. Despite not being able to use their timeshares, owners continue to pay hefty maintenance fees, finding it increasingly difficult to offload their properties. This unfortunate situation has created a sense of urgency and frustration among many timeshare owners who once believed they had made a sound investment.
In 2011, a 72-year-old man from Osaka Prefecture was lured by a sales pitch at a department store, which led him to purchase a timeshare in Waikiki. At the time, the yen was exceptionally strong, and Hawaii, a favorite travel destination of his, seemed like a perfect investment. He paid about 5 million yen, a substantial sum that translated to roughly $60,000 due to the favorable exchange rate. The strength of the yen against the dollar made the investment seem even more appealing, as it provided a sense of value for money that was hard to ignore.
Timeshare Experience
The timeshare allowed the couple to enjoy a week in Waikiki each year. Over the years, they visited Hawaii nearly ten times, basking in the island’s tropical allure, stunning beaches, and vibrant culture. They also used points for local sightseeing tours in Japan, making the most of their membership’s benefits. However, since 2020, the man has been unable to travel due to the pandemic and declining health. Despite this, maintenance fees continued to mount, recently surpassing 300,000 yen annually due to the yen’s weakness. This has placed a significant financial strain on the couple, as they are paying for a property they can no longer enjoy.
Desperate to sell, the couple turned to a Hawaii-based real estate agent, only to find a sluggish market with few buyers. Even though hundreds of timeshares are listed, fewer than ten are sold each month. The oversaturated market and weak yen have created a perfect storm, making it difficult for owners to find buyers. The market conditions have shifted dramatically since their initial purchase, and what was once a desirable asset has become a financial burden. The couple’s experience is not unique, as many timeshare owners face similar difficulties in offloading their properties.
The Broader Market
Timeshare systems, popularized by major hotel chains like Hilton and Marriott, offer an affordable way to enjoy resort facilities. Typically, a timeshare in Hawaii costs between 2 million and 20 million yen, providing owners with a high-grade unit that includes a living room, dining area, and kitchen. These properties have traditionally been in high demand among Japanese buyers, with around 100,000 Japanese currently using the timeshare system in Hawaii. The appeal of owning a piece of paradise, even if only for a week each year, has drawn many to this model.
However, the weakening yen and rising maintenance costs have led to an influx of sellers. Real estate brokerage firms like Kujira Club, which deals in Hawaiian timeshares, have been overwhelmed with sales requests. According to Takashi Nakayama, president of Kujira Club, the company has been receiving about 100 sales requests a month since the yen began to weaken last year, far more than they can handle. This surge in sales requests highlights the growing dissatisfaction among timeshare owners, who are struggling to justify the ongoing costs of their investments.
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Annual maintenance fees for properties, especially those managed by Hilton, have soared to between 300,000 and 400,000 yen, a 15% increase from pre-pandemic levels. This rise is partly due to inflation in Hawaii and the depreciating yen. Despite these challenges, few buyers are willing to take over the properties, especially with the unfavorable exchange rate. The financial burden of these fees has become a significant factor driving owners to sell, even at a loss.
Furthermore, the Waikiki district, home to 80-90% of Japanese-owned timeshares, is not as appealing to U.S. mainlanders who prefer more scenic settings. Consequently, properties are selling at half or even a third of their previous prices, but this still hasn’t attracted buyers. Kujira Club currently has around 1,500 properties listed, with only a few dozen selling each month. One customer has been trying to find a buyer for three years. This mismatch between supply and demand has further complicated the selling process for many owners.
Market Dynamics and Future Prospects
“Hawaii’s hotel rates are skyrocketing, but timeshares, which offer good value for money, aren’t selling even at lower prices,” Nakayama noted. “Future prospects remain uncertain amid this protracted trend of the weak yen. We just hope the number of Japanese travelers to Hawaii will recover and so will the market of transactions in timeshares.” The current market dynamics have created a challenging environment for both sellers and potential buyers. Until there is a significant shift in these dynamics, many owners will remain stuck with their costly slices of paradise.
The emotional toll of this situation is also significant. The couple from Osaka, like many others, invested not just money but dreams and expectations into their timeshare. The inability to sell their property and the mounting costs have likely caused considerable stress and disappointment. The once-joyous trips to Hawaii are now overshadowed by financial worries and the burden of an unsellable asset.
Industry-Wide Implications
This situation also has broader implications for the timeshare industry. The rising maintenance costs and oversupply of properties could lead to a re-evaluation of the timeshare model itself. If potential buyers see the difficulties current owners face, they might be deterred from purchasing timeshares in the future. The industry may need to innovate and adapt to changing market conditions and consumer expectations to remain viable.
For current timeshare owners, there are limited options. Some may choose to hold onto their properties, hoping for an improvement in market conditions. Others might explore alternative uses for their timeshares, such as renting them out if allowed by their contracts. Seeking advice from real estate professionals who specialize in timeshares could also provide valuable insights and potential solutions.
Conclusion
The dream of owning a piece of Hawaiian paradise has turned into a financial burden for many Japanese timeshare owners. With the COVID-19 pandemic and the exchange value of yen exacerbating the situation, selling these properties has become an arduous task. Until the market conditions improve, many owners will remain stuck with their costly slices of paradise. The story of the Osaka couple serves as a cautionary tale for those considering similar investments, highlighting the importance of thoroughly understanding the financial implications and market dynamics before making such a commitment.
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