In the beginning stages of the Coronavirus outbreak, it was difficult for many of us to know what to expect. Now that the pandemic has lasted most of 2020, millions of people have lost their jobs. If you think about it, the hospitality industry has probably been devastated the most. In fact, Hilton Grand Vacations just permanently laid off 1,600 employees post six months of being furloughed.
According to the Orlando Sentinel, those fired received an email from the executive VP earlier this month explaining the move. Since the conglomerate is one of the largest timeshare companies in America, many weren’t expecting their tenured employment to end. In the email, Charles Corbin informed them that their employment and health benefits would be terminated on October 31st and that they may be eligible for a severance.
Leadership Responses From Hilton Grand Vacations.
After the news had gone public, Mark Wang, Hilton Grand Vacations’ president and CEO, had this to say: “Due to the prolonged impacts of COVID-19 and the uncertainty of the duration of the pandemic, we have made the extremely difficult decision to reduce the size of HGV’s workforce” His email went on to say, “It is with a heavy heart that we are making this necessary business decision, which we believe will position us for long-term success when the world, our industry and communities rebound from this challenging time.”
Since the prominent hotel chain has a heavy presence in premier tourist locations – like New York, Hawaii, Orlando and Las Vegas – the aftermath of COVID has really taken its toll on the business side of things. While the spokeswoman for Hilton Grand Vacations, Lindsay Graham, hasn’t provided many details, the Florida Department of Economic Opportunity received 1550 furlough extension requests from them in July. There are nine Hilton properties in the Orlando area (SeaWorld, Millenia, Universal Studios, MetroWest, etc..) that will more than likely be affected by this decision.
Will Hilton Benefit from Employee Furloughs?
Holding onto employees with furlough promises for this long may have had to do with the Employee Retention Credit. This is “a refundable tax credit against certain employment taxes equal to 50% of qualified wages an eligible employer pays to employees from March 12th until January 1st, 2021.” If an employer averaged more than 100 full-time employees during 2019, qualified wages are generally those wages, including certain health care costs, (up to $10,000 per employee) paid to employees that are not providing services because operations were suspended or due to the decline in gross receipts.”
Hilton Grand Vacations’ decision to permanently fire further employees only adds to a list of moves they’ve made since government shutdowns began. 30 days in, the timeshare company notified 6K+ of their employees that they were being furloughed until further notice. These were eventually extended six months as mentioned before. Shortly after, Hilton began announcing moves to repurchase shares to retain ownership. In the meantime, we haven’t seen much said to reassure or support their perpetually paying vacation owners.
Hilton Follows Timeshare Trend of Cutting Losses.
While the latest report from Hilton Grand Vacations states their revenue dropped 73% and they lost $48 million, some timeshare owners are struggling to survive. Despite billions of dollars in earnings for a good part of the last decade, timeshare companies seem to only be interested in securing their future by any means necessary. But should vacation owners be happy and feel lucky they’re able to hang on for the ride? Should they be concerned? Will points programs that are offered like bailouts entrap them further?
At the end of the day, it’s not our place to make speculations. But it appears Hilton is preparing for a “rebound.” Given the current state of affairs, the company doesn’t really have a choice but to let go of employees they can’t use. No matter how tenured they are, they can’t keep paying them when their current revenue stream is bleak.
Timeshare Ownership During a Pandemic.
In all, the travel industry has been left handicap for some time now. Theme parks in the Orlando area have been managing layoffs all year as well. Seaworld recently fired almost 2K and Disney let go of nearly 30K nationwide. While we’re yet to see just how much the government will step in to save companies that simply cannot thrive in the current conditions, the next few months should be telling. The unemployment rate in Orlando has already improved to 11% in September after reaching 22% in May.
Nonetheless, as the impact of the pandemic becomes more clear, consumers need to be on the lookout for potential timeshare scams that thrive in desperate times – like what we’re currently experiencing. If and when the economy reopens, companies like Hilton Grand Vacations will be looking for ways to regain their 2020 lost earnings.
In the long run, falling into a perpetual timeshare commitment may not be your ideal way of traveling. Especially if availability is slim or accommodations are not as expected. If you happen to run into any problems, you can always schedule a free consultation with one of our specialists.