Timeshare developer, exit company wage war of words over settlement

A settlement has been reached in a long-running legal feud between an Orlando-based timeshare developer and a company whose business is helping owners get out of timeshare contracts.

Who won?

That depends on which litigant’s announcement of the settlement is considered.

“Holiday Inn Club Vacations Inc. Secures Major Win and Exposes Timeshare Exit Team for its False, Misleading and Deceptive Practices,” shouts a press release from Holiday Inn, formerly Orange Lake Resorts with a flagship facility near the Disney complex.

“Orange Lake Takes Back Nearly 1,300 Timeshares from Frustrated Owners in Landmark Settlement with Timeshare Exit Team,” boasts a media alert from Reed Hein & Associates, a Lynwood, Washington-based firm that does business as the “Timeshare Exit Team.”

It’s the latest skirmish in an ongoing war between the $10 billion timeshare industry and so-called exit companies, who intervene and promise to get owners out of their unwanted timeshares, often for thousands of dollars in upfront fees. The strategy typically involves cutting off all communications between timeshare developer and owner, and instructions that owners cease paying the mortgage on their timeshares and associated annual maintenance fees.

The settlement comes as 19 major lawsuits wind through the courts against exit companies and attorneys.

Brian Rogers, head of the Timeshare Users Group, an online family-run self-help organization that it says provides an unbiased source of consumer information and advice on timeshares, doesn’t see a winner in the Orlando case.

“This is a mess,” Rogers told GrowthSpotter. “Consumers don’t win in this battle. It’s two separate sides fighting for the right to extract as much money as they can from timeshare owners. They’re both deplorable. They both lie and deceive consumers. They’re two sides of the same dirty, disgusting coin.”

Holiday Inn Club Vacations was the plaintiff for the suit, filed in August 2017 in the Orlando division of U.S. District Court for the Middle District of Florida. The company is one of the largest timeshare developers in the nation, with 29 resorts and more than 7,900 villas with more than 365,000 owners.

Holiday Inn, rechristened from Orange Lake Resorts in 2019, alleged that the Timeshare Exit Team unlawfully interfered with the company’s consumer relationships and prevented it from communicating with and assisting its timeshare owners.

[ RELATED: Orange Lake Resort plans new buildings, River Island pool enhancements ]

The matter was scheduled to go to trial on Jan. 20, the day the settlement was announced.

The agreement is confidential, but the parties did discuss some details, leading to the split decision on who prevailed.

The Timeshare Exit Team paid an undisclosed financial settlement and agreed to refrain from soliciting or taking money from Holiday Inn timeshare owners. The agreement also allows Holiday Inn to communicate with its clients (under consumer law, when legal proceedings involving a timeshare exit commence, the company is allowed to communicate only via lawyers).

“We believe strongly in our press release. Generally, when the thought process is, ‘We won, and we paid them money,’ I would question that you won,” said Tom Nelson, president and chief executive of Holiday Inn Club Vacations.

“We were able to get a financial settlement from them, we were able to extract enough pain hopefully to slow their activities, we got them to not solicit our customers again, and we got them to agree to allow us to communicate with those who were represented by them so we can actually help those people get to a good end point and to limit damages,” Nelson told GrowthSpotter. “We view that as a major win for us. It was the outcome we intended when we first filed suit. It’s no more complex than that.”

Reed Hein, meanwhile, boasts that it successfully negotiated a path out of the timeshare contracts of 1,300 customers of Holiday Inn, something that previously wasn’t on the table. “We were ready to go to trial,” said Brandon Reed, chief executive of the Timeshare Exit Team. “I couldn’t wait to go to trial. They very much wanted to settle, and we did. We did what we felt was best for our customers.”

He told GrowthSpotter of his initial reaction to Holiday Inn claiming victory in the litigation: “The first time I saw that, it was sent to me through a text, and my response was a GIF of somebody laughing and spitting out the drink they were drinking. It was really frustrating when I saw that.”

Issues relating to the $10 billion timeshare industry have gotten the attention of various state legislatures, including Florida’s. But developers have been successful in protecting their interests in the political arena.

Reed is a founding member of the Coalition to Reform Timeshare, which is pushing a Timeshare Bill of Rights. That prioritizes the right to unilaterally terminate an unencumbered, non-deeded timeshare; the right to record timeshare a company’s entire sales presentation; freedom from any high-pressure sales techniques and verbal misrepresentations; and the right to a 24-hour cooling-off period after signing a timeshare contract.

Nelson said Holiday Inn will not be shy about legal action in the future. In 2018, the company sued a Tennessee exit company whose founder was ultimately disbarred by the Supreme Court in that state.

“In the end, we are working for our customers against people who use deceptive practices to offer a service -- guaranteed exit -- that they legally and ethically can’t actually do. And we think that’s a fraudulent business practice,” Nelson said. “We will continue to take on exit companies that do this.”

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