Wyndham Worldwide Lays Off 4,000 Because Timeshares Don't Pay Off

(MoneyWatch)  Wyndham Worldwide Corp. announced plans to lay off 4,000 employees, or 13 percent of its global workforce, and drop its expected timeshare sales to $1.2 billion from a projected $2 billion for 2008. It was all part of the company's plan to "eliminate its reliance on asset-backed securities," which basically means they can't get loans. And for companies in this recession -- it's all about cutting the dead wood.

Timeshares have been dead wood for Wyndham for a while, at least since 2007 when its vacation ownership segment began losing millions. Yes, part of it is because of defaulting residential loans that triggered a global credit freeze last year, but timeshares are also part of the same comatose housing industry -- their mortgages are also packaged and resold to banks as asset-backed securities, but now banks don't want it.

Timeshares may have it worse, though. Not only are they dependent on financing but also on disposable income. Few people can get financing without stellar credit and high income, but even those ideal customers may be recession-saving rather than spending. Wyndham's last quarterly report in November said the company targeted more-qualified buyers and closed struggling sales offices, but its projected 1,000 lost jobs seriously underestimated the market and the extent of the housing and credit crisis.

Just like home builders, companies will have to weather the storm, and hope for a sunnier 2010.

Photo of the Wyndham Vacations Resorts Palm-Aire in Pompano Beach, Fla. courtesy of Wyndham Hotels and Resorts