Our Future in the Timeshare Industry: Only the Paranoid Survive

Tradition dictates that each ARDA World convention presents a “Meet the Leaders” session during which prominent developers provide an ‘in-the-trenches’ view of the state of the industry. This year attendees heard from Maurizio Bisicky, COO of Anantara Vacation Club (headquartered in Thailand); Michael Flaskey, CEO of Diamond Resorts [and a frequent contributor to Resort Trades, by the way]; Jon Fredricks, President & CEO of Welk Resorts and Tom Nelson, President & CEO of Holiday Inn Club Vacations.

The session moderator, ARDA President and CEO Howard Nusbaum, led a frank discussion about topics ranging from what is the most pressing legal and regulatory concern in the industry today, to how is the consolidation trend affecting the industry. In answer to the former, the replies were unanimous: Fredricks had coined an acronym for the thorny issue of cancellation/lawyer/relief company issue, “GOOYTs” for “Get Out of Your Timeshare” activity. The entire room appeared to groan in agreement. Nelson observed that the constant barrage of aggressive ads from lawyers, wannabe lawyers and other sharks offering to help hapless owners was upsetting to the public and, particularly, to owners who were being prompted to question their purchase. Flaskey admitted to seeing a dramatically rising incidence of default. ARDA is certainly seeking answers, but while the GOOYT activity is mean-spirited and, in the opinion of resort shareholders, unethical, it may be that it skates too close to the outskirts of the law to be successfully challenged.

Consumer Protection: Fair & Balanced?

Nusbaum observed that the consumer protection laws affecting sales and marketing practices are continuously being changed over the years and he wondered if the group found them reasonably balanced or running a little off-kilter.

The panel agreed with Tom Nelson who said he felt they were more balanced than ever since there has historically been so much pressure over the years for timeshare developers to ensure consumers are well informed. Nelson said Holiday Inn’s policy is to have buyers review and sign off on each of 20 points of an owner clarification document. Fredricks mentioned that Welk Resorts’ policy is to videotape closings if owners agree, which is becoming a common practice.

In Asia, a handful of developers feared the introduction of unfair consumer protection. In response,  Maurizio Bisicky said, the group launched a trades association in the region that will function like a ‘mini-ARDA,’ as he put it. The idea is to help control the introduction of legislation in the various jurisdictions through educating regulators rather than risking overly aggressive action.

Industry Shrink From the Survivor’s Viewpoint

Consolidation remained a hot topic again at this year’s convention, as it has previously. Where once there were dozens of independent developers, now there are much fewer, said Howard. Is it good for the industry? Mike, Tom and Jon see the trend as being positive when larger, more financially stable developers acquire smaller, possibly under-collateralized, resorts and add services, including refurbishment, management and prospective buyers.

Resort Trades advertisers have found it to be a challenge. On the one hand, resorts with better bottom lines can now refurbish, expand and enhance their services, which means increased purchasing. On the other side of the coin, many have found that their old standby contacts have disappeared or been reassigned. As one senior Marriott executive observed, you typically still have a number of decision-makers at the various properties. However, she observed, now you frequently have personnel changing their roles and the manager with whom a vendor previously worked may no longer be the supplier’s most appropriate connection. In our advertising sales calls, we are finding that the most successful advertisers are the ones who consistently appear in each month’s issue. They’ve found it’s no longer healthy to rely on their current book of business. “Success breeds complacency. Complacency breeds failure. Only the paranoid survive,” said the late Andrew Grove, former CEO of Intel.

The Paranoid Are Watchful

Paranoia is what prompted the early American Land Development Association, supporting retail land developers, to morph into the American Resort Development Association. The early timeshare developers recognized the need to protect the nascent industry from scammers and miscreants. They also were early adopters of research, conducting studies to track consumer interests, financial performance and regional variances.

It’s healthy paranoia that calls for the AIF (the ARDA International Foundation) to conduct and advance industry research. Research is a tool to wave in front of authorities when they question whether or not to tax our business model, for example. Or, in Maurizio’s case, an irrefutable resource to prove the industry’s value in emerging markets.

The financial and demographic data from the Foundation’s research is what tells developers what their consumers want and which expenditures are worth the investment. Research is the tool that helped Welk Resorts determine it could sell luxury villas with private pools to well-heeled owners who desired and could afford exclusivity. It’s what made Fredricks recognize the value of hiring a Chief Fun Officer and provide activities such as the ability to create your very own superhero.

Research helped guide Diamond to earn an 89 percent satisfaction rate through personalized customer service. Studying customer preferences helped lead them to begin presenting concerts featuring acclaimed artists, such as country singer Cole Swindell. “Our decisions are rooted in data-driven analyses,” says Mike Flaskey. “Psychographics has affected the company’s sales volume to achieve $374 million in vacation ownership interests.”

AIF’s research has helped the industry respond to the public’s call for flexibility with points, short-term ownership products and short-term stays. Research helped Anantara discover that “three point two nights is the magic number.”

Continuous Disruption; Continuous Growth

In her May 2018 Developments article, “The Evolution of Timesharing: Four Decades of Amazing Growth,” Marge Lennon said, “In the early timeshare years, the current buzzword ‘disrupter’ (think Amazon, Uber) had yet to become popular. But timesharing clearly was a disrupter to the vacation home and hotel industry. It made the dream of owning a vacation home financially possible–albeit for only a week–without the hassles of maintenance. After families began vacationing in two-bedroom luxury condominiums, the ‘plain-Jane’ hotel room lost its luster, thus impacting the hotel industry as well.

Initially, the hotel industry had considered timesharing a fad that would soon pass, but the ‘fad’ soon morphed into a transforming trend. In less than two decades, the timeshare industry sustained double-digit growth–unparalleled by other industry sectors for this period of time, bringing together the real estate, travel and hospitality industries in a combination that ultimately revolutionized American’s vacation habits.”

What we see nowadays in the industry are a handful of publicly owned and private developers still investing in new resort projects.  More and more, creative travel companies are selling prepaid vacations without the encumbrance of a deeded interest, not timeshare. The industry continues to morph and change.

What About My Future?

If you’re a professional working in this industry, you’re probably asking yourself, “What about me?” I’d urge you to take heart if things appear to be tumultuous to you right now. We are, indeed, in a state of flux. It seems our industry has been threatened time and again throughout the past 40-to-50 years and, yet, smart people find solutions. Creative answers are found.

People will always need vacations. Just like we need music, art, theater – we need joy in our lives; people need to feed their souls. After all, things that bring us joy are why we work so hard.

This industry always seems to be able to offer creative solutions. Where there’s a need on the part of the consumer, there will be those among us who perceive of this need and create a solution. We’ll just need to change our model. We’ll have to become the Uber or Lyft as compared to the taxi. We’ll need to be the horseless carriage, the electric light bulb, the cell phone.

 

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