First: Yes, such individual timeshare ownerships exist. They usually have several of the following characteristics: They are highly seasonal weeks-based resorts, they are in over-built locations with too much supply relative to demand, they do not have name-brand pricing power, they are older.
In general, if a resort's annual costs to operate exceed the effective rental rate for the year, the resort is a death spiral waiting to happen. Over time, owners will default, and the foreclosed inventory goes into the resort's rental pool. But the rental pool cannot recoup costs, driving those costs up for the remaining owners, which causes more of them to default. Rinse and repeat.
There is
a quaint little resort directly on the water on Maui's western shore that is in this situation. It's a shame. We've stayed there on an exchagne in the past, and while it is not at all luxurious, the location is great. But the owership fees are north of $3,500 at this point, while a week's rental in early August (pretty much peak time for Hawaii, per Interval's TDI) is about $3,000 even, with a 14-day cancellation window. Some of that might still be a hangover from the Lahaina fires, but still. Something like half of that $3,500 is bad debt---weeks that do not generate MF payments that cannot be offset by rentals.
Highly seasonal weeks-based resorts are a bit of a corner case. In those, there is a relatively small number of weeks where rental rates are significantly higher than costs, but the off- and shoulder-season weeks have rental rates at or below costs. The problem with these resorts is that every week pays the same in fees, but different weeks have wildly different values. Such resorts
can continue if there are enough "prime" weeks to keep it afloat. A few sell weeks only in packages that mix prime weeks with others. For example, many resorts in Northern Michigan sell summer weeks but only when bundled with one or two others during the calendar year.
The other way out for these resorts is to convert to a points-based system, where prime weeks require more points, but once the weeks are sold the horse is out of the barn. Prime weeks owners rarely convert, so the only way to make it work is to bundle it together with other things to lower the average per-point cost. That's been Wyndham's strategy to preserve some of its older seasonal resorts, but even that has its limits---they are divesting all or part of about a dozen different resorts this year for exactly this reason.
Orlando has a surprising number of resorts that are underwater, including some name brands. This is partly because it is one of hte most overbuilt areas for timeshares anywhere on the planet. There are a few others---Las Vegas and Williamsburg both come to mind---but Orlando is easily the worst offender. That's partly becuase you build resorts where (a) there are a lot of people on vacaiton and (b) the land is cheap.
Underwater weeks can still have some value. If fees are still low enough, they can work as traders into higher-fee weeks. This is the saving grace for a lot of Orlando Marriott weeks. There might be some event weeks that still deliver decent value that are fully booked by owners. And so on.
Disney has several things that most others do not--a fully-functional Reality Distortion Field, local control of lodging capacity, and an incnetive to keep rental rates high*. So, it is unlikely that Disney's prevailing rental rates for any resorts associated with the theme parks will drop below the goosed-up operating costs that the owners pay. That's less clear for VB, HHI, or even Aulani, all of which are built in second-tier locations coupled with high operating costs. But, there are various black swan events that could change that. For example, if for some reason air travel became significantly and structurally more expensive, that is big trouble for WDW.
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Vidanta has locations with similar properties, especially in Nuevo Vallarta and Riviera Maya. We used a bonus week at Neuvo a few years ago, and it was *lovely*. So, despite being quite seasonal, owning can still make sense there.
