Caught in the nation's credit crunch, Orlando-based Westgate Resorts, one of the nation's largest time-share companies, is shutting down much of its sales and preparing to lay off hundreds of people.
Company President David Siegel said Friday that Westgate is facing a financing squeeze that came on with the suddenness of a "heart attack." He blamed the national financial meltdown and said until the situation in Washington straightens out, Westgate and all other time-share companies likely are in for very hard times.
He gave no specifics on how many people would lose their jobs, except to say the layoffs would be made in the next few days. But he acknowledged that the ax would fall on "hundreds" of people, with cuts affecting construction, sales, accounting, telemarketing, marketing and administration companywide.
He said sales will be shut down for some of the company's 28 resorts in 11 states, but would not give specifics.
Westgate Resorts is privately held, with Siegel as principal owner, so its finances are not publicly disclosed. Siegel, a personal billionaire, said this year was shaping up to be record-setting with more than $1 billion in sales.
His company, founded in 1970, was the seventh-largest employer in Central Florida with 8,113 workers in 2007. The company, the largest privately held time-share company in the world, employs more than 10,000 nationwide.
Properties include the Westgate Palace in Orlando, which consists of two towers featuring 408 luxury suites near International Drive. When it opened in 1996, Westgate Lakes Resort & Spa, located on Turkey Lake Road near Universal Orlando, quickly became the second-largest time-share luxury resort in the world.
Siegel said Westgate is managing to pay all its bills and will continue to meet all its obligations. But he said there is no money for new business.
"We're having a record year. We're in the most profitable year in our history and the banks are freezing our money," he said. "So we have no choice. In order for our company to survive we're going to downsize until the money starts flowing again."
The time-share business is cash-intensive, and companies keep that money flowing through lines of credit that are then paid off when they bundle and sell their mortgages as securities. All of the sudden, Siegel said, no one is buying those securities. About a week ago, everything looked fine, he said.
"It's kind of like you're healthy and suddenly you get a heart attack," he said. "But we're going to take our medicine and get healthy again."
Not everyone in the industry is so sure that will be the case. Lisa Ann Schreier, a time-share book author and consultant with TimeShareInsights.com, said the credit market also is so bad for consumers that this would be a bad time for the industry even without any corporate-financing crunch.
"People do not have this much disposable income," she said. "People are scared. And with the credit crunch, it will be harder and harder for people to finance time shares. I think the time-share industry for too long has thought itself recession-proof, and I don't think so."
Scott Powers can be reached at spowers@orlandosentinel.com or 407-420-5441. Mark Chediak of the Sentinel staff contributed to this report.
Copyright © 2009, Orlando Sentinel
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