MIA, a fractional property in Riviera Maya, Mexico, recently affiliated with Interval International’s global exchange network.

Just as the vacation ownership industry has been slow to recover from its three-year slump, the financing environment in the segment been equally sluggish. Money is widely available to finance the receivable loans of timeshare buyers but, as one seasoned developer says, “There is zero money for acquisitions and development.”

During an interview at this week’s Shared Ownership Investment Conference in Orlando, outspoken veteran independent developer Sheldon Ginsberg said he’s never seen such a financing scenario as the timeshare industry. “If you have strong balance sheet and have experience, there is more receivables financing today than there ever was in the history of this industry,” says Ginsburg, chairman and CEO of Shell Vacations, developer of more than 25 vacation ownership resorts. “Take Shell, for example: We have a clean balance sheet and we’ve performed through good times and bad so people want to do business with a company like ours. But there is another side to it: There is zero money for development. To do [a development project], you probably have to finance it out of your own piggy bank.”

Speakers at a general session on capital markets at the conference agreed development financing is hard to find, especially for developers new to the industry. “One idea may be to approach a local lender or group of lenders with which you have existing relationships,” said Jeff Galle, director of business development for vacation ownership lender CapitalSource. “But be prepared to bring a lot of equity to the table.”

The panelists talked about the so-called “new normal” in the industry, in which weaker developers have left the business and the remaining players have returned to a focus on business fundamentals. “Yet, even though only the strong players are left in the game, credit terms aren’t easing very much,” noted Ron Goldberg, president of Wellington Financial.

One kind of timeshare transaction getting the attention of lenders is the fee-for-service project, said the panelists. When some sophisticated developers had to pull back their activities following the financial downturn, many of them offered their marketing and operational expertise to owners of assets—often distressed whole ownership condo projects or ailing resort hotels—that could be converted to vacation ownership projects. The trend has picked up considerable steam, with net sales coming from these partnerships rising from $35 million to $137 million.

Goldberg of Wellington Financial said his firm financed two fee-for-service projects in the past year and anticipates doing more. “These kinds of deals have performed well for us because of the experience and brand power of the fee-for-service companies and the projectability of success of these projects,” said Goldberg.

Despite the challenges facing the industry, the lenders on the panel are confident the lending environment will brighten in the coming year.

“I’m very comfortable most of the problems are behind us,” said Galle of CapitalSource. “We have renewed fervor for the timeshare business.”

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