Timeshare Branding Strategies During A Down Economy

With practically every component of the recent economic downturn – lower consumer spending, tighter
credit markets, depressed real estate values – having a negative impact on the vacation ownership industry, it’s no surprise that sales fell off in 2008 after years of rapid growth.

At US$9.8 billion in 2008, timeshare sales industry wide dropped by 8% from 2007, compared with compounded annual growth of 13% from 2003 to 2007. Mortgage securitizations came to an abrupt stop due to frozen credit markets at the end of 2008, leading to widely reported layoffs among most of the larger developers.

So, that said, what’s a poor timeshare brand marketer inclined to do with their messaging in response to these downward trends? Surprisingly, very little.

“Our branding message has actually been reinforced by the current economy,” says Mark Waltrip, chief operations officer for Westgate Resorts. “Owning your vacation provides a greater value than spending your money on hotel stays.” According to Waltrip, the downward trend in the economy has not forced a change in Westgate Resorts’ branding message. Instead, the recession has given their existing value proposition more relevance.

“We have seen our sales and marketing efficiencies increase or hold steady across the country, even as
the economy shifted downward,” he says. “We attribute this to the value proposition we provide the consumer that demonstrates the value of owning your vacation versus renting hotels.”

For Westgate Resorts, whose branding message is typically delivered at the point of initial marketing contact with the consumer, the message is closely tied to the overall sales process, moving from marketing to sales to ownership. For companies with larger global brands, like Wyndham Vacation Ownership, brand messaging is usually established prior to that process. As a result, consumers already have brand awareness at the point of initial marketing contact.

Nevertheless, according to Adam Schwartz, Wyndham Vacation Ownership’s chief communications officer, maintaining their already established value proposition has been the prevailing brand strategy.

“We haven’t changed our messaging as a result of the economy,” Schwartz says. “In fact, we’re focusing on highlighting the value proposition of our products now more than ever because that message continues to
resonate with our current owners as well as our prospective consumer base.”

Schwartz says that Wyndham Vacation Ownership enjoys some advantages because the company’s timeshare products deliver additional perceived value for value-conscious consumers.

“Our message doesn’t stop at the value of taking vacations and spending time with your family,” he says. “Since we offer a points-based product, we focus on promoting that flexibility and customization since that is what consumers have come to expect more and more.”

While the core branding message at Wyndham Vacation Ownership has not changed significantly due to the economic downturn, Schwartz says they have emphasized parts of that message differently. A customer service initiative termed “Count on Me!” has drawn a positive response from owners, prompting the company to use it more prominently over time to emphasize the value of the consumer experience.

“We have maintained a laser focus on our Count on Me! customer service initiative, which was actually launched in the months preceding the recession.” Schwartz says. “However, that focus has remained an
absolute priority for us, despite the events of the last 12 to 18 months, and we’re continuing to receive high marks from our owners on the service they receive from us during every interaction.”

For Westgate Resorts, the recession has impacted who they target with their message and how they deliver it. According to Waltrip, the company has started directing its message more specifically toward the demographics that prove to be most profitable. Primarily, this is in an effort to satisfy a credit market that has become much more selective than it was just a couple of years ago.

“Our strategies have been impacted more by the credit markets than by penetration,” he says. “The current credit markets demand that we improve the quality of our sales and the performance of the mortgages that our timeshare sales generate. Our business model is very dependent upon using receivables financing to monetize the mortgages we create to fund future sales. In order to obtain this financing, we have to improve the quality of our consumers.”

As a result of the demands of the credit markets, adjustments have been made in Westgate Resorts’ primary marketing segments: OPC site marketing and specialty marketing programs like vacation package sales and telemarketing. Even with the revised strategy, the value proposition message is substantially the same.

“We have had to make significant changes to these marketing programs to include introducing credit scoring of the consumer prior to and during the sales process, and the elimination of marketing channels that provide sales prospects who have routinely low credit scores.”

Moving forward, timeshare developers will have a wealth of lessons to be derived from the recession of 2008-2009. American Resort Development Association President and CEO Howard Nusbaum, was recently
quoted in an article as saying, “Surviving this storm is leading us to a better business model, one that is more efficient than our industry has ever known.”

Waltrip echoed Nusbaum’s comments, saying that Westgate Resorts has focused on assimilating the lessons learned while responding to the economic downturn.

“It has certainly refocused our attention on how we spend our money and the value of enhancing the credit worthiness of our consumer. We have actually become more profitable on less sales volume, and I am
certain we will carry this forward regardless of the changes in the economy.”

Andy Cingolani is a writer and marketing consultant in Orlando, Florida. He has more than 20 years of experience, with a background in timeshare and advertising. For more details, visit www.andycingolani.com.

Vacation Ownership Investment Conference A Success Once Again

The 11th annual event draws a decent crowd despite economy

The 11th Annual Vacation Ownership Investment Conference (VOIC) was held September 14-17, 2009 at the Peabody Hotel in Orlando, Florida – a venue known for its quirky longstanding tradition of “marching” ducks in and out of the library each day at the designated time like clockwork.

VOIC itself seems to run like clockwork as well. But while the yearly event has occurred regularly for more than a decade, there were some doubts this time around given market conditions. Not that the conference wouldn’t be held – its organizers remained committed throughout – but that attendance would be soft. Many people were pleasantly surprised that the event actually did happen, thinking that it would be canceled like some other industry meetings.

But just over 500 industry professionals attended the event – and while that is down from the previous year’s 626 official attendees, conference organizers were very pleased thinking attendance might be as low as 300 to 400 people. What’s more, 20% of attendees were based outside the United States, which is an increase year-overyear – and a fulfillment of the intent of VOIC to help educate potential new entrants to the industry, whether they are involved with timeshare, fractional, private residence club or destination club projects. And the feedback from attendees was that the conference went extraordinarily well.

Networking and More
Following tradition, VOIC kicked off with its golf networking event, this year held at Shingle Creek Golf Club on its David Harman-designed course. Back at the Peabody, a fundamentals-oriented session and welcome
reception were held on the first day of the conference as well, but most the real takeaway content of the conference would be found during the many informational, educational and networking sessions occurring over the following two days.

A concerted effort is made to reach out to related industries (such as golf-course, hotel and second-home development) to help educate them on and draw them into shared ownership. The introductory sessions are
specifically geared to accomplish this goal. At one of these sessions, audience members were asked to raise their hand if they were a developer who was not in the industry but was currently exploring it. More than half of the approximately 300 in attendance did so. The conference reinforces the point that there are still plenty of opportunities in the vacationownership industry. In fact, actively lending companies – including several conference sponsors – were at the 2009 VOIC.

Despite the challenges in the marketplace, industry professionals were busy conducting business at and around VOIC during these four days in Orlando.

Knowledge Sharing
Perhaps what is most intriguing is the amount of insight industry experts are willing to share in an open forum. Those listening in could easily glean the benefit of years of experience in development, marketing and sales, finance and other key areas.

This year’s keynote speakers offered volumes of knowledge as well. A particular highlight was the irreverent and opinionated Robert Genetski, Ph.D., a featured conference luncheon speaker. Genetski, an interest-rate
forecaster and investment banker known for his research regarding and advocacy of classical economic principles, was an energetic and entertaining speaker who aptly held the interest of the crowd despite being an expert in a relatively dry field. Genetski’s criticisms of the U.S. Federal Reserve and multiple White House
administrations were delivered with insightful observations and sharp wit.

In what has become an expected and much-looked-forward-to event each year, Peter C. Yesawich, Ph.D., chairman and CEO of the Ypartnership agency, served as a featured luncheon speaker as well. Yesawich updated the crowd on the latest results from the widely anticipated National Travel Monitor, in which he explained travel and leisure patterns and how they are evolving. In addition, Yesawich also shared highlights from a recent survey of the resort real estate interests and preferences of affluent travelers.

Resort Tours
The fourth and final day of the conference comprised road trips to various Orlando-area resorts so that industry newcomers could see first-hand the daily operation of a successful project. This year, tour attendees chose among three visitation options that represented different products: Floridays Orlando Resort, which is a condohotel; Westgate Lakes Resort & Spa, representing independently branded timeshare; and Marriott’s Lakeshore Reserve at Grande Lakes, a hotel-branded timeshare resort.

The dates for next year’s Vacation Ownership Investment Conference have been set already: the 12th annual event will take place October 4 through 7, again at the Peabody Hotel in Orlando. For more information, visit
www.VacationOwnershipInvestment.com.

VOIC: Why You Should Attend and What You’ll Get out of It
The Vacation Ownership Investment Conference is one of the top industry events, focusing on the successful resort financing, development, branding, marketing, selling and management of vacation ownership properties. Industry professionals and those looking to enter the industry gain multiple benefits by attending:

- Discovering how vacation ownership can maximize a project’s earning potential

- Learning the latest on acquisition development and end-loan financing

- Exploring the boom in fractional resorts and private residence clubs

- Making valuable contacts, including developers, hoteliers, lenders, vacation ownership experts and government tourism officials

Attendance is geared toward resort developers considering or currently developing any type of vacation ownership product; lenders eager to learn about vacation ownership financing, and interested in meeting new and current vacation ownership developers; and existing players looking for capital or development opportunities.

Each year, the Vacation Ownership Investment Conference distributes to attendees complimentary copies of research studies and reports specifically created for the shared ownership industry. This year’s conference-goers received the following data, which has a retail value of US$1,500:

- Financial Performance 2009 Edition: A Survey of Timeshare & Vacation Ownership Companies – published and sponsored by the ARDA International Foundation, and conducted by PriceWaterhouseCoopers – helps in understanding overall economics of the industry and in tracking industry trends

- State of the Vacation Timeshare Industry, 2009 United States Study – published by the ARDA International Foundation and compiled by Ernst & Young – presents key characteristics of the U.S. industry

-Economic Impact of the Timeshare Industry on the U.S. Economy – commissioned by the ARDA International Foundation and compiled by PriceWaterhouseCoopers – is a detailed analysis of the direct, indirect and fiscal impacts the industry has on the U.S. economy

- Vacation Timeshare Owners Report 2009 Edition – commissioned by the ARDA International Foundation and compiled by Penn, Schoen and Berland Associates – evaluates various attributes of long-term owners and recent timeshare purchasers

- The Affluent Shared Ownership Buyer: 2009 Market Profile – drawn from the Ypartnership 2009 Portrait of Affluent Travelers – offers an in-depth exploration of the lifestyles, social values, travel habits and resort real estate preferences of the top 8% of U.S. households

- Affluent Market for Vacation Homes: Full and Fractional Ownership and Destination Club Membership 2009 – published by the American Affluence Research Center – tracks the behavior, attitudes and
preferences of the wealthiest 10% of U.S. households

Visit www.VacationOwnershipInvestment.com for more information.

Luxury Markets Symposium: One More Success

The Fourth Annual Luxury Markets Symposium – organized by Group RCI and sponsored by The Registry
Collection, and aimed at finding new business opportunities – was held October 6 and 7 in Mexico City.
Participants heard about trends and experiences they can take advantage of at their resorts.

The keynote speaker was Dr. Andrés Oppenheimer, a renowned journalist and expert on Latin American subjects. Oppenheimer spoke about the region’s future and how specific countries must take advantage of circumstances that will allow them to foster the tourism industry, and he explained that times of crisis are also times of opportunity.

During his talk, Oppenheimer highlighted that Mexico shows great opportunity for medical tourism and that – with a few modifications in its legislation – it must take advantage of this trend. On the same line, the famous journalist described the strengths of medical tourism, suggesting they are related to Mexican hospitality, the care provided in hospitals and the country’s low costs.

He stated that another valuable niche for Mexico is to concentrate on Chinese tourism. “Over 100 million Chinese are expected to travel through the world in the coming years,” he said.

Oppenheimer was very emphatic in his conclusion, stating that: “The economic context has been difficult. However, it is not the Great Depression of 1929. The United States is not going to disappear, and neither will the capitalist model. Today, this country’s gross domestic product (GDP) is larger than if you added together the four GDPs of the four countries that follow it in size.”

Discussion Panels
Group RCI set up discussion panels and used this learning environment to allow attendees to approach experts and express their opinions and knowledge about different areas.

Ricardo Montaudon, president and executive director of Group RCI Latin America, pinpointed the essence of the largest resorts for participants in the panel “The Experience of Mega-Resorts.” Montaudon defined them
as very successful, flexible businesses that provide different products for different clients. He also revealed that part of the secret for mega-resorts lies in the land where they are developed.

The panel on “The Advantages of the Mixed Use Project” concluded that it is a strategic, well-thought-out and well-analyzed model that becomes profitable both for the developer and its members. In order to find success with this model, the business must be well structured, designed and created according to the
country’s social and economic environment.

Areas of Opportunity
One of the subjects that attracted a lot of attention during the Luxury Markets Symposium 2009 was Active Living – the market for active adults over 50 who are independent and have a very social lifestyle. Data provided suggests that between 2007 and 2050, 10,000 people will retire in the United States every day. A business niche in two important markets was highlighted: the market with high purchasing power and the
middle market. In the case of Mexico, Morelia and Los Cabos were mentioned as places that have potential for the U.S.-retiree community.

One of the key points during the talk on “How to Differentiate Oneself in an Adverse Environment” was the way in which brands are crucial; it is the prestige of resort development firms that provides their guarantee. Another point was that this luxury market is about experiences and not just properties. An aspect that became clear among all attendees is that Mexico must reposition itself in the retirement market – and not just in the luxury niche, but also in other segments.

Not everything was about business, however. Symposium attendees were able to participate in two tasting events: a red and white wine-tasting with Monte Xanic wines, and another with Johnnie Walker.

The Luxury Markets Symposium 2009 clearly met its goal of accomplishing an exchange of experiences. Attendees learned new ways of confronting difficult moments, strengthened their knowledge in order to make their resorts grow, and saw trends that can help them diversify their businesses.

Timeshare Stripped Bare

European Seminar Included Timeshare Professionals and Owners for Frank Discussions

Late September 2009 saw Dial An Exchange host a controversial seminar titled Timeshare Stripped Bare. The venue was the picturesque Barnsdale Hotel & Country Club timeshare resort, located in the middle of England’s smallest county and nestled on the banks of Rutland Water – and arguably one of the most popular resorts in the UK.

The seminar saw a unique combination, with timeshare industry professionals and timeshare owners invited to attend. Some industry insiders even expressed nervousness at involving owners in sensitive discussions on some of the industry’s biggest challenges and most controversial subjects.

As the conference proceedings unfolded though, it became clear that there were no grounds for such concerns. The event attracted an intimate but engaged group, consisting of some of the major players within the timeshare industry, resort committee members and individual timeshare owners who were keen to hear what the experts predicted for the future of timeshare.

The seminar was organized and moderated by David Lilley of Dial An Exchange and supported by parent DAE Live, representatives of which had journeyed from Australia to support the event.

Given the provocative title to the seminar, independent observers could have been forgiven for thinking the event was being staged to attack and undermine the timeshare industry. This was definitely not the case.

Lilley made a point of drawing out the many positive experiences that timeshare extends to its customers, and despite the fact that there were many disgruntled owners in the audience, when Lilley asked his ritual question about the levels of satisfaction that owners get from the product, many hands were raised in acceptance of the undisputed fact – that when timeshare is sold and serviced correctly, it is a wonderful product.

Lilley kicked off the seminar with a typically forthright appraisal of the challenges the timeshare industry in Europe faces. The concerns raised in Lilley’s opening address were emphasized and quickly justified by the opinions expressed by three of the business delegates in attendance.

When Lilley asked the question What percentage of timeshare owners in Europe wish to exit?, however, the weighted answer from the three knowledgeable people in their opinion was a remarkable 50%.

Legislative Issues
Following on from the opening introduction, Geoff Chapman, a director of TATOC, delivered an interesting and precise summary of TATOC’s work to support timeshare owners. Chapman presented a variety of statistics sourced from the existence of the TATOC help line. The most pertinent parts of Chapman’s presentation centered on where consumer issues originate from, with bogus resale companies and holiday clubs being the biggest issues.

Simon Jackson, managing director of Macdonald Resorts, shared his views on the subject of product repositioning and new product development. Jackson has already developed a reputation as an executive who would happily engage in a united alliance to tackle the industry’s biggest challenges, but with the seeming absence of such initiatives, he is clearly prepared to pioneer new activities. This was evidenced by the Macdonald 5 Year Holiday Product, which was very well received, commended by all members of the audience and described as the product of the future.

One of the most memorable presentations of the seminar came from Ramy Filo, chairman of DAE Live and CEO of Classic Holidays. Filo revealed that the Australian timeshare market is somewhat ahead of Europe in many areas.

Australia already has a sales certification platform and a clear appetite to create products that have appeal to the customer. One of the most poignant messages that emerged from all the speakers on display was Filo’s simple but powerful statement: “The way I see it, we have products and we have customers. If the products are not appealing, we need to change the products because we cannot keep changing the customers.”

Phil Watson, managing director of Worldwide Timeshare Hypermarket, gave a lively and frank discourse on the subject of resales. Watson encouraged owners to be less clumsy in handing over money to companies that make unsolicited cold calls and stated that members wishing to relinquish their ownership needed to be realistic about the value of their timeshare.

Watson shared some examples of his company’s media work and his personal attempts to change the perception of timeshare by embracing some of the more expensive but higher impact advertising vehicles, such as television.

New timeshare legislation is set to have a profound impact on the timeshare industry in Europe. Alex Radford, a solicitor from leading law firm Irwin Mitchell, gave a condensed and layman’s term summary of the EU legislation that becomes active in 2010.

In the audience debate that followed Radford’s speech, it became clear that whilst there are some commendable elements to the new legislation, other parts of it could be described only as a suppressant to reasonable and honest business. The total ban on any form of deposit, for example, is a restriction that is not placed on too many other industries around Europe.

Maintenance-Fee Defaults
The subject of increasing maintenance fees and the growing trend toward court action for defaulting owners was expected to create fierce debate. The reality, however, was that there was quite a degree of empathy and understanding toward those developers who now see it as necessary to take defaulters to court.

Martin Beesley is one of the few respected timeshare resort developers in Europe. He boldly took to the floor to explain why his two resorts (Fairways Club in Tenerife and Pueblo Evita on the Costa del Sol) had this year started to take court action against defaulters. Beesley explained that those owners who were choosing to default were simply placing an increased liability on the remaining members of the club, and this served only to compound the challenge of suppressing maintenance fee increases.

Beesley also pointed out that the bogus holiday pack companies seem to regard the owners at resorts where court action was not being taken as easy prey for their fraudulent products.

In summarizing the maintenance fee session, Lilley drew out a diagram to explain the consequences of taking court action versus those of doing nothing.

Whilst Lilley made the point that he personally had very mixed views on the subject of taking owners to court, the audience offered little resistance to the suggestion that court action, when thoroughly considered from a holistic viewpoint, was not necessarily as negative as some owners would suggest.

Other Noteworthy Presentations
One of the more eagerly anticipated speeches was delivered by Matthew Moody, former head of Revenue Management at RCI Europe. Moody covered the subject of trading power and had the business delegates transfixed at the complexity of the subject.

Paul Mattimoe of Perspective International took the delegates through a chronological summary of his company’s evolution, his survey on timeshare owners and general attitudes toward timeshare. He also shared the objectives of their two magazines. Mattimoe has broken many perception barriers with his new consumer magazine, Owners Perspective, arranging distribution deals that include the likes of British Airways’ First Class Lounges worldwide, more than a dozen similar airline, hotel and resort agreements, and respected UK supermarket chains such as Tesco’s and Sainsbury’s.

Consistently growing at a rapid rate and currently reaching more than 50,000 consumers a month, the magazine is attracting advertising support from many major hospitality brands and leading developers around the world.

TATOC Chief Executive Harry Taylor concluded his short interview with David Lilley to publicly recognize the work that David had done to support TATOC over the past few years with the award of six bottles of fine wine.

Veteran Sutton Hall resort chairman Neville Greenwood, with 18 years on his resort’s committee behind him, shared some insight into the trends that he has observed over the years, particularly in relation to  repossessed weeks and the methods his resort use to get them back into ownership.

The concluding session of the seminar was on the subject of sales certification.

The panel of the speakers and other business delegates all agreed that a sales certification platform would benefit European timeshare but this really needed to be backed by the authorities and enforced, for it to have any major impact and sustained value.

Under the spotlight of scrutiny and some heavy criticism for daring to cover such sensitive subjects in such a public way, Dial An Exchange emerged with strong credibility after tackling such thorny subjects. The comments made on timeshare owner forums has already justified and confirmed the value in such events. Timeshare owners want to see their issues discussed and debated with a solution-focused attitude.

With such a positive response and some useful networking sessions for the business delegates, you can expect that the next event will have at least a few more attendees – and draw even more attention.

David Lilley chooses to leave Dial An Exchange
While no announcement was made at the event, it transpires that the Timeshare Stripped Bare event was Lilley’s last public performance as Managing Director of Dial An Exchange Europe.

While working for DAE, Lilley had continued to operate his own marketing company (www.marketinginnovations. co.uk) since 2007.

When asked about his reasons for leaving DAE he commented: “Philip Green (the owner of DAE) and I decided we did not want to make an announcement about my departure at the seminar because we did not want to take the focus away from the objectives of the seminar.

I’ve had an enjoyable two years at DAE. I think they are a terrific, customer-focused company and Philip and I part as friends. Indeed, I will still be doing some work for DAE in 2010 at two of their members Roadshows, as well as organizing and moderating another business seminar. I will also continue to be editor of their Holiday Access Magazine.

My decision to leave DAE was purely that I wanted to explore other business opportunities and dedicate more time to some of my personal business projects. These projects include a specific rental service for owners at independent resorts called Rent Your Week and a rescue package called Resort Rescue for resorts that find themselves in financial difficulties.”

David Lilley can be reached at +44 (0)7872 13 13 14 or visit www.marketinginnovations.co.uk

Turkey Set For Tourism

George Sell explains how Turkey’s attractions and natural beauty put it in a strong position to go beyond a traditional reliance on domestic business and fully exploit the international vacation ownership market.

Turkey has all the ingredients – including history, culture and scenery – to be a top vacation destination, and the country’s government is aiming to take advantage by making a concerted effort to boost its tourism offering.

It hopes to increase overseas tourist numbers via a concerted marketing campaign and investing in infrastructure to support private investment in tourist facilities, with a long-term plan – the Tourism Strategy of Turkey 2023 – to create a more efficient, profitable and environmentally friendly tourism sector.

It’s not all talk – government assistance is set to go further than simply marketing campaigns and infrastructure, according to Behzat Aksaray, general manager of Club Dedeman, one of Turkey’s best-known hospitality brands based in Bodrum and an RCI affiliate. “There are certain government incentives when it
comes to tourism investments in Turkey,” Aksaray says, “such as land allocation to tourism investors on a 49-year lease basis, tax exemption on local machinery and equipment, tax duties and charges exemption on local purchases, reduced corporate tax rates, subsidies on the employer’s share of social security and employment tax, and interest rate subsidies.”

Vassilis Themelidis, an RCI regional director, adds: “The main advantage for developers is the establishment of Turkey as a major tourist destination and the attraction of tourists from various source markets.

“A Turkish developer has the ability to market the product domestically, to Europeans who are travelling to Turkey, as well as to visitors from Asian countries such as Iran who consider Turkey an ideal vacation destination. “Labor costs are relatively low compared to the European average and, as a result, Turkish developers are able to offer high levels of hospitality services.”

These fundamentals certainly make investment attractive for the shared-vacation ownership sector, but a significant issue is attracting more overseas visitors to a market that has traditionally been largely domestic.

As well as concentrating on more traditional beach resorts, forward thinking firms are looking to new trends such as spa resorts and conference tourism to boost visitor numbers.

One example is recent RCI affiliate Salutaris Thermal Resort, due for completion in 2010. Set in the mountainous province of Afyon, it will consist of a hotel plus 204 two-bedroom timeshare units, with amenities including a Turkish bath, saunas, indoor and outdoor swimming pools, thermal pools, a fitness
center and spa.

As the global economic downturn continues to impact both the tourism and real estate markets, there is also an increasing openness to moving to new models such as condo-hotels and fractional ownership
vacation properties.

“Due to the ongoing global economic crisis,” says RCI’s Themelidis, “developers are seeking alternative ways to offer their unsold properties. There is major potential for fractional and condo-hotel opportunities across Turkey.”

Nick Turner, head and vice president of business development for Europe at luxury exchange program, The Registry Collection, adds: “The Turkish market has all of the key fundamentals to make it a very good market for shared ownership. Turkey provides an attractive consumer proposition with a pleasant climate for up to 40 weeks of the year and improving tourism infrastructure has made key destinations more desirable for repeat visits.”

RCI is playing an increasing role in developing the shared-vacation ownership market sector and has affiliated seven new resorts in Turkey in the past 18 months, bringing its total to 42. “RCI has introduced customized trial packs specifically for the Turkish market which act as an entry program and a lead generation tool for Turkish affiliates, and provide the ability for members to test the affiliate’s product and RCI’s member services,” explains Themelidis.

“RCI also facilitates the introduction of international organizations to Turkish affiliates in order for them to initiate sales to major source markets such as Germany, the UK and Russia.”

Aksaray identified two major benefits of being an RCI affiliate. “Firstly, it enables our customers to go to different resorts and countries for their vacations,” he said. “The second is in helping low season sales – some customers are willing to buy low season in order to use it for exchange.  We specifically chose RCI because it’s the largest company in this field and it gives us a positive response rate to exchange requests.”

Tayfun Sarman of Club Armonia Bodrum Evleri in Bodrum also acknowledges the economic benefits of affiliation, saying that in an average year up to 30% of his resort’s business comes through RCI. Club Armonia Bodrum Evleri was completely refurbished in 2008 to bring its accommodation and amenities up to the standard RCI members expect.

Aksaray is convinced the timeshare model is ideal for the Turkish market. “I believe that timeshare and shared vacation, in a country where four seasons can be sold, is a very suitable and necessary product,” he says. “In Turkey people buy summer houses, but only use them for one, or in a few cases, two months. For the remaining 10 or 11 months the house stays empty and gets damaged due to lack of use and  maintenance.

“As a result, national wealth stays unused at the beachside. By putting this national wealth to use, timeshare not only helps the country, but helps people enjoy less expensive vacation home purchase and maintenance costs.”

To learn more about RCI, please contact Amanda White on +44 (0)1536 31 4651 or by email at amanda.white@rci.com, or visit www.rciventures.com.

Regaining Sales Momentum In The Affluent Market

As 2010 quickly approaches, most of us are hopeful, if not optimistic, that the recession and the worst of its
consequences are behind us and that the target market, the affluent consumer, will be in a financial position that allows them to increase their spending.

As you focus on what lies ahead for the private residence and destination club markets (which are the focus of this article and will be referred to as shared vacation ownership even though that term normally applies to typical timeshare and fractional product) and how you can increase sales for your products, you will need to have a measure of optimism.

For purposes of this article, the affluent market is defined as the wealthiest 10% of U.S. households, which includes 11.4 million households with an average net worth of US$3.1 million and an average income of
US$256,000 according to the research of the Federal Reserve Board.

Understanding Where Shared Ownership Should Be Focused
Recent studies by the American Affluence Research Center support three primary observations about the shared vacation ownership industry. These observations are keys to understanding where the industry should focus going forward.

First, the value of the homes (and thus the price points of shared ownership vacations) and their locations may be inconsistent with what some important segments of the market want.

Second, we have concluded that despite the impressive growth of the shared vacation ownership businesses in recent years, the affluent market is a very large and virtually untapped sales opportunity for private
residence and destination clubs.

Third, the affluent market is somewhat ignorant of the shared vacation ownership concepts and needs to be better educated to understand the private residence and destination club concepts and the benefits and appeals of each.

The relatively limited familiarity with PRCs and destination clubs among the affluent is rather surprising, especially given the growth in recent years in the number of PRCs and destination clubs, their marketing activities, and their media coverage. We believe that once the affluent have been better educated about the concepts of PRCs and destination clubs, the benefits and appeal of these two concepts will likely lead to a surge in sales that equals or exceeds the impressive rate of growth achieved in the years preceding the
recession. This is good news for the industry and a reason to be optimistic.

Understanding the Size and Composition of the Affluent Market
It is imperative that the affluent market not be viewed as a single, homogeneous population. At upwards of 11.4 million households, the affluent market is so large it can be segmented in many ways. According
to AARC’s study of the affluent and shared vacation ownership markets, the most likely target for PRCs and destination clubs is the approximately 6 million households that represent the wealthiest 5% of all US
households. These households have a minimum net worth of US$1.5 million and/or a minimum income of US$200,000 or more.

PRCs and destination clubs compete with full vacation home ownership. A closer look at the affluent market for full ownership of vacation homes reveals several key points to consider. First, 2.5% of the affluent market plan to build or buy a vacation home in the next 12 months (from AARC Fall 2009 survey). This represents a potential market of almost 300,000 vacation home purchases.

While the percentage of the affluent market that plans to buy a second home in the next 12 months is smaller than it was prior to the recession, it still represents rather substantial absolute numbers. These are potential buyers for shared ownership vacations if they can be educated on the advantages of shared ownership vacations versus fully owned vacation homes. Since full vacation home ownership is not widespread across all segments of the market, this leaves a huge market (at least 70% of the affluent market
own only one home) to pursue.

Full vacation home ownership is strongest among the top 10 percentile of the affluent market, those one million households with a minimum US$6 million net worth. Over half (54%) of this group owns a vacation home that has an average value of US$1.3 million.  This averages about two-thirds the value of the primary residence. On average, their vacation home is over 1,000 miles from the primary residence. This suggests seasonal rather than weekend usage. These factors are all clues as to how to plan the price points and locations of shared ownership vacations to be promoted to this group.

Only about 12% of this group owns some form of a shared ownership vacation. This group might be targeted with appeals based on trading their fully owned vacation home for the benefits of a shared ownership vacation. Even the half with no vacation home might be targeted with similar appeals reflecting the advantages of shared ownership vacations versus full ownership. Marketers of shared ownership vacations might want to focus their offerings on vacation homes in the US$1 to US$1.5 million range of value within 1,000 to 1,500 miles of the target market’s primary residence.

Among the other 90% of the affluent market (about 10 million households), only about a quarter report full ownership of a vacation home, which has an average value of about US$650,000. This averages about twothirds the value of the primary residence. On average, the vacation home is less than 700 miles from the primary residence. Over half are within a day’s drive (299 miles), with the largest percentage within 99 miles. This suggests frequent usage during the year rather than seasonal usage. Again, these factors are all
clues as to how to plan the price points and locations of shared ownership vacations to be promoted to this group.

Only about 15% of this group owns some form of a shared ownership vacation. This group might be targeted with appeals based on the financial advantages (especially potentially lower up front investment and maintenance expenses) of shared ownership vacations as compared to full ownership of a vacation home. Marketers of shared ownership vacations might want to focus their offerings on vacation homes in the US$750,000 range of value (to create attractive up front costs) within 100 to 300 miles of the target market’s primary residence.

In summary, over 60% of America’s most affluent households did not own any of the second home options listed in the spring 2009 survey, which included time shares, full ownership of vacation homes, PRCs, and destination clubs. The group reporting the least access to a vacation home was composed of the less affluent respondents. Yet, many of them have the resources to afford a shared ownership concept. This is the same group, however, that is least familiar with the concepts of shared ownership vacations.

Familiarity with Shared Vacation Ownership Concepts Is Limited
Both the spring 2007 survey and the spring 2009 survey of the American Affluence Research Center show that 6 in 10 of the affluent market indicate no familiarity with either the private residence or destination
club concepts. These results were generally consistent with a fall 2006 survey by PriceWaterhouseCoopers for Interval International in which 41% of their respondents said they had “heard of” fractional ownership.

Familiarity with the two concepts did not seem to vary significantly by age or gender. However, familiarity with the two concepts did increase as income and net worth increase. While this indicates the best prospects are starting to get the message, there is still much room for improvement.

The stagnant numbers for familiarity with industry products is stunning and indicates that current marketing efforts should be re-examined and new approaches developed. The overall sales and marketing models now being employed should be reviewed to assess why they have not been more effective thus far.

In its efforts to increase the appeal of its products and pricing in order to grow the business, the industry has introduced various pricing plans, purchase incentives, and product line extensions (including cruises, tour vacations, and private jet flights). The industry may have done itself a disservice by expanding the number of product and pricing options that have been created and offered to the market.

Both the PRC and destination club concepts involve some degree of complexity. The concepts are not easily explained or understood by the consumer. The introduction of various pricing plans and product variations
and product line extensions has probably added to the complexity of the concepts and thus consumer confusion. If not confused, at best the consumer lacks confidence in having real familiarity with the concepts.

Until the market has a better understanding of the basic concepts, it might be best to minimize multiple pricing strategies and line extensions and try to simplify the product and it pricing. The diversity of product and pricing features might be better left for a time when market has become more mature.

Three Key Conclusions
The messages for the shared vacation ownership industry seem clear. First, the basic product (home values, location, and intervals of use) and pricing strategies should be revisited and perhaps both simplified and better tailored to certain segments of the affluent market. For the more affluent market segments, homes of
US$1 to US$1.5 million value for both private residence and destination clubs might be more consistent with the product and pricing interests of the target consumer. For the less affluent market segments, homes with a value in the US$750,000 range within 100 to 300 miles of major cities could make an attractive product and price proposition.

For simplification, the options for features such as cruises, land tours, and private jet services could be eliminated. While the cruises and land tours are understandably popular features for many, these options seem to confuse or detract from the basic concept of vacation homes. In addition, our research indicates
private jets are rarely used by people with less than a US$20 million net worth, which represents a very small portion of the target market for private residence and destination club product.

Second, the affluent market needs to be better educated to understand the private residence and destination club concepts and the benefits and appeals of each. Simplification of the product and pricing could contribute to this process.

Finally, despite the impressive growth and increased visibility of the shared ownership businesses in recent years, the affluent market lacks confidence in its familiarity with the shared ownership concepts and thus is a very large and virtually untapped sales opportunity for private residence and destination clubs.

If the industry can effectively address these issues, I am optimistic that the shared vacation ownership industry will regain momentum as affluent customers begin to recover from the recession and increase spending on vacation properties.

Ron Kurtz is President of The American Affluence Research Center, which specializes in surveys and mailing lists of the affluent. He is the founder of The Management Resource Group, which provides strategic marketing consulting services to the travel and hospitality industries. He has consulted to such companies as The World of ResidenSea and The Four Seasons Ocean Residence Club. Ron’s experience includes 20 years in senior management positions in the cruise, airline, and hotel industries. He has served as the president or chief marketing officer of four cruise lines.

Ron earned his MBA degree at the Harvard Graduate School of Business and his BBA degree at the University of Texas. A frequent writer for trade publications and speaker at industry functions, he is often quoted in the media as a recognized authority on the affluent market and the travel industry.

Kilimanjaro Climb In Aid Of Ingane Yami Children’s Village

On December 8, 2009 a sponsored climb of Mount Kilimanjaro will begin. While countless other teams have ascended Kilimanjaro, this trek may be one of the most important ever.

The “Kilimanjaro Climb” aims to raise muchneeded funds for the building of a village for homeless children in the Durban area of South Africa, in particular for those orphaned by the AIDS epidemic.

The first phase of the village, to be named Ingane Yami (or “My Child” in Zulu, the local language) will consist of 25 individual houses, each of which will be home to 6 children of varying ages. A “house mother” in each will help to recreate a stable family unit and enable these vulnerable children to be brought up in a
loving environment.

The village ultimately will benefit from a community hall, crèche, clinic, recreational building and a sports field, thus enabling the individual talents and strengths of each child to be nurtured and developed before they eventually move on to lead independent adult lives.

This life-saving project is part of the Restoration of Hope Ministry, a charity organization. The land for the complex was purchased in 2008 and final planning approval for the village is expected to be granted soon.

Pearly Grey and Others Involved
Taking part in the climb will be James and Karen Beckley, the developers of Tenerife’s Pearly Grey Ocean Club, and Dougie Kirkwood, sales manager at Pearly Grey. They will be joined by, among others, Ward Woods, developer of the Regency Group, also based in Tenerife, and Troy Gerrity, a Tenerife wine distributor. The climb is expected to take up to five days and the team is hoping to raise substantial funds for this vital project.

Any sponsorship or donations will be very gratefully received. On behalf of the children, Pearly Grey Ocean Club asks that you help in any way that you can. For more information and/or to donate to this worthy cause, go to www.pearlygrey.com/en/kilimanjaro.asp

Additional information on Ingane Yami can be found on the Web at:
www.facebook.com/pages/Ingane-Yami/158647944443
www.twitter.com/inganeyami
www.flickr.com/photos/inganeyami/

Hurstfield Leads H10 Resorts To Shared Ownership Success

Bert Hurstfield left Original Resorts to focus his time and energy on growing the H10 Premium vacation club in the Caribbean. American-born Bert Hurstfield grew up in Vancouver, Canada. But he relocated to Mexico
in 1995, and today he calls Cancun, Mexico home. From his base there, he is busy producing vacation homes in Mexico and elsewhere for people throughout North America and Europe.

An Impressive History
Hurstfield started his career with the Mayan Group in 2001 and quickly rose to the top there. Then, in 2004, he began a five-year term as president of the vacation club for Original Resorts. While at Original Resorts, Hurstfield and his team sold more than US$60 million of inventory. It was during that time that he was approached by executives at H10 Resorts who were interested in creating a vacation club. Together they began H10 Premium. For the next three years, Hurstfield pulled double duty, acting as president of both Original Resorts and the H10 vacation club.

In 2009, Hurstfield decided to leave his position at Original Resorts and concentrate solely on H10. He
says it was a tough decision, but Hurstfield felt it was time to give all of his energy to the H10 group.
H10 Premium currently operates three sales rooms, two in the Riviera Maya and one in the Dominican Republic. “We are looking at the possibility and viability of opening up the European markets in the future,” Hurstfield says. “We have more than 40 hotels in the group, and most of them are based in Europe, with more opening every year.” To date the H10 vacation club has made more than US$40 million in sales, and that number is expected to double in the next two years. “I believe our success can be attributed to a few different things,” Hurstfield explains. “We have a fantastic program which puts the emphasis on giving the customer more value for their money, while still taking care of the hotels’ interests and bottom lines. In addition, we put a lot of emphasis on training our staff. Not only are they required to pass a test before they can begin speaking with clients, but they are also given ongoing training and updates.

“It’s our goal to constantly look for new ways to make the experience of the H10 guest more enjoyable and
memorable,” he continues. “We believe that special treatment is what keeps members coming back year after year.”

Another big reason for the vacation club’s success is the great support and back up of hotel operations.
Hurstfield says that “all the issues that hotels and vacation clubs have had in the past don’t exist with us. We are all working together for the common good of the client and for the future.”

H10 Premium
The H10 Premium vacation club features upscale ocean-front resorts in the Riviera Maya and Dominican
Republic, as well as the Canary Islands in Spain. The program is supported by the almost 30 years of experience of H10 Hotels, a company with locations in strategic destinations around the world. H10 Hotels has developed an internal quality assurance program named H10 Quality, which also holds external certifications of quality, such as the Q of Tourist Quality, the ISO/9001-2000 granted by AENOR and the
membership of UNESCO’s Biosphere Hotels.

The H10 Premium membership has many benefits, including:
- Internal international H10 Premium exchange at no cost
- Discounts and exclusive rates for reservations at H10 Hotels establishments located in vacation
destinations and major cities in Europe
- H10 Premium discounts in hotel stores, spa, restaurants and activities
- Guest certificates without cost
- External exchange through RCI

H10 Premium members also automatically receive membership in Club H10 – H10’s affinity program – and
acquire the Grand Class category, which is the highest category inside the Club. Club H10 benefits include
welcome presents at the resort, priority booking, turndown service, bathrobe and newspaper in room, a lunch or dinner invitation during each stay, courtesy minibar on the arrival day, express check-in and late
check-out, and exclusive and special discounts around the world in H10 Hotels. Club H10 members also earn points for hotel stays that may redeemed for services and future stays.

H10 properties associated with H10 Premium include Ocean Maya and Ocean Coral & Turquesa in Mexico;
the Dominican Republic’s Ocean Blue & Sand in the Dominican Republic; and H10 Rubicón Palace, H10 Lanzarote Gardens, H10 Las Palmeras, H10 Costa Adeje Palace, H10 Tindaya, H10 Playa Esmeralda and
H10 Costa Salinas in the Canary Islands.

For more information on H10 Premium, contact: Sarah Boeckmann, tel. +52 998 734 8322, e-mail sboeckmann@grupohp.com.mx Vianey Archer, tel. +52 998 734 8319, e-mail varcher@grupohp.com.mx

Q & A with Bert Hurstfield, President of Operations and Marketing for H10 Premium

When and why was H10 Premium created?
H10 premium was created in 2006. It was created as a way to increase loyalty to our Caribbean hotels.

How many members do you currently have?
To date we have close to 3,000 members, and adding over 1,000 members a year.

What benefits will someone who joins H10 Premium have?
We offer our members a combination of benefits. First, the ability to travel around the world using RCI Points, or All Inclusive weeks which can be used at any of our H10 Premium locations, including those in the Canary Islands. In addition to this, we offer extra benefits inside our H10 Premium hotels, such as, VIP check in, upgraded drinks, special amenities, etc. We are constantly looking for new ways to make H10 Premium members more comfortable and content during their stay with us.

Your membership seems to be offer a lot of extras to the client. Do you see this as a trend in the business?
Absolutely. I believe that most hotels are listening to the concerns and needs of their clients, and that vacation clubs will continue to get better as competition increases.

Are there any benefits that you hope to have in the future?
We are currently working on upgrading our members overall vacation experience. Simply put this means, we want their time with us to be an experience and not just a vacation. Part of this plan we hope to achieve with the use of personal concierges, whose job it will be to pamper our members from the time they get off the plane until the time they get back on.

What are your goals for the future of H10 Premium?
Two things. First, we would like to improve our program and our benefits whenever and wherever possible. Second, we expect to open more resorts in the future, giving our members more travel options inside the H10 family of hotels.

Perspective’s A List – Denis Ebrill

An Interview with Denis Ebrill, executive vice president of Sol Meliá Vacation Club, about the company’s parent company, marketing in the United States, and what’s next for SMVC.

You’ve been at the helm of Sol Meliá Vacation Club (SMVC) for a year now. What has that experience been like?
Let me put that question into perspective. I started in this position on September 1, 2008. A week later it was announced that Fannie Mae and Freddie Mac would be nationalized. Two weeks later Lehman Brothers filed for bankruptcy on the same day that Bank of America bought Merrill Lynch. Before the end of that month AIG was bailed out by the Federal Reserve to prevent it from collapsing, all of which wreaked havoc on one of the key indicators for the vacation club industry – the consumer confidence index.

On a more personal level, I received a tremendous welcome from the Sol Meliá team and have enjoyed great support for our vacation club business from the parent company’s leadership. There were nuances to the nature of the business model that I had to learn along the way. But all in all, the structure and approach to the business was very similar to that with which I was familiar from prior experience. Probably the toughest aspect of the past year was having to cut back our operating costs, which meant losing some great employees. We went through some difficult decisions that resulted in some lay-offs within our organization. That is not only tough on those who are laid off, but also on those who remain, especially in a relatively small, closely knit team like ours. We had, and continue to have, a great team of professionals.

Hopefully as we climb out of the current economic slowdown we will be able to re-integrate back into our
team some of those that we were unable to keep.

How does SMVC benefit from being a part of such a large, well-known and long-lasting European hospitality company like Sol Meliá?
Our vacation club business at Sol Meliá benefits significantly not only from the brand awareness, but even more so from the credibility and trust that are associated with our company. It is a huge advantage in the
European and Latin American markets where the brand awareness is high, and those are essentially the continents in which we do most of our business. One of our goals as we grow into the future will be to increase the awareness of our brands in the United States and Canada, which continues to be where the
majority of our SMVC members reside.

On the operating level, our vacation clubs are fully integrated with our hotels and resorts, and share a common campus in every one of our current locations. One hundred percent of our SMVC resorts are mixed use, which allows us to consistently provide the full-service resort experience to our members regardless of
where they choose to stay within our network. While there are other hotel companies that also focus on the mixed-use model, they typically have a blend of standalone timeshare resorts and mixed-use hotel/vacation club resorts within their systems.

How does SMVC strengthen Sol Meliá’s global hospitality offering?
There are clear advantages to both the vacation club and hotel in the nature of the mixed-use structure that we have adopted. There are two examples that come immediately to mind as to how SMVC contributes to the success of Sol Meliá as a whole.

One, in tough times like those we are currently experiencing, the vacation club business as part of its in-house marketing initiatives can continue to provide personalized services through the concierge, guest service and activities staff while at the same time provide an opportunity for hotel guests to learn more about our vacation club products and facilities. These are the types of services that often end up suffering when hotel RevPAR [revenue per available room] starts to decline.

Two, the nature of the vacation club business is such that we strive to maintain a consistent flow of prospective buyers through our sales facilities. This means running lead generation programs that enhance hotel occupancy while providing tour flow to the sales and marketing teams. Even if the pricing of these hotel vacation packages is heavily discounted, it helps create more activity and atmosphere at the resorts and generates incremental spending at the hotels’ revenue-producing facilities. As you know, the vacation club business is highly intensive in the area of sales and marketing. We have great talent in our team and everything that they work on inevitably has a positive halo effect on the image of the brand and overall brand awareness, which clearly benefits the company as a whole.

What are SMVC’s strengths in weathering the economic situation affecting everyone in the industry right now?
Our strengths come from within Sol Meliá as a whole. The company has done business in international destinations for decades and as a result is accustomed to dealing with and responding to the economic volatility that comes with the territory. Sol Meliá is a solid, well-respected company with the know-how to confront the current challenges and a strong balance sheet to back that up. The hotel and vacation club teams work closely together to take advantage of synergies and to support each other’s initiatives whenever
possible.

As an example, we have worked with some of the traditional hotel suppliers to develop marketing programs that benefit the vacation club and at the same time increase hotel occupancy. We have been able to help specific hotels increase their market share by providing marketing support and by sponsoring events and activities that help build trust and credibility with the hotel guests, thereby supporting vacation club sales efforts.

SMVC is purely an international product. How does that make you different from other companies with U.S. based products and what they are experiencing right now?
We deal with most of the same issues as our competitors with U.S.-based resorts. In addition, however, we face a number of novel challenges as a result of the venues where we do business. These include, among others, a variety of different sets of labor legislation that has significant relevance to our operating costs, currency exchange volatility, different legislative jurisdictions and regulations relative to the vacation club industry, and an array of political and geographical considerations that can impact the public’s perception of the destination. Overall, our U.S.-based colleagues enjoy a higher degree of political and economic stability and for the most part have U.S. employees selling to U.S. customers. We have to develop multi-skilled teams that can handle a variety of cultures and languages. So finding the appropriate talent and ensuring that
the quality of the sales process is consistent with the brand image and the values of the company is a primary objective. We believe we have some of the best, most versatile teams in the business who have demonstrated their proven ability to produce effectively in multiple cultures and languages.

What are your goals for SMVC?
To establish realistic and achievable objectives, focusing on what is profitable and works within the framework of our company’s beliefs and values. We are committed to achieving a balance between the success of our vacation club business and ensuring a positive guest experience. We will not sacrifice
hotel-guest satisfaction to generate a vacation club sale. If this means lower volume and/or slower growth, then so be it. We will adjust our business to that model. That said, we will continue to grow and expand in key destinations and focus on the satisfaction of our existing members through quality facilities and quality service. We want to keep our members within our network, are acutely aware of the value of a positive referral from an existing member, and are hugely encouraged by the volume of new sales we see generated by existing members through upgrades or additional purchases. There is no greater indication of members’ satisfaction than to see them buy more of our product.

What are your most successful locations now and what’s ahead for SMVC by way of new product and development in the next five years?
Our newest resort is the Gran Meliá Palacio de Isora in the southern part of Tenerife in the Canary Islands, Spain. We believe it is the most stunning vacation club product in Europe today. We have been in sales for
approximately nine months and are excited to see the level of acceptance and interest our hotel guests have in this product and the rapid growth we have been able to achieve in sales. We have similarly spectacular resorts in Punta Cana in the Dominican Republic with The Reserve at Paradisus Palma Real and just outside of San Juan at the Gran Meliá Puerto Rico, both of which are performing well despite the current economic environment.

We also have a new project under development in the Playa del Carmen area of the Riviera Maya near Cancun, in Mexico, that will be a great addition to our network of resorts, and to the existing ME Cancun and Gran Meliá Cancun resorts in the region. We will continue to look to grow in markets where our existing members tell us they want to be. We will plan carefully for intelligent growth opportunities, taking advantage wherever possible of existing resort facilities and the possibility of distressed asset acquisition if it fits our long-term growth plan.

How do you think the industry will change in the next five years and how will SMVC be affected by that?
The change is already well underway. We see a narrower choice of marketing programs simply because of the need to ensure profitability. I think it will be a long time before we see the type of receivables securitization
opportunities that we saw in the past. That factor alone forces us to rethink our approach to the business and restructure our teams so that we can achieve profitability on operations alone without having to be heavily dependent on financing income to do so. At SMVC we will not chase sales and marketing programs just for the sake of increased sales volume. We have already streamlined or eliminated a number of our
operations with a higher degree of profitability in mind. It hurts and it takes a change in mindset, but we have an obligation to our parent company and to our shareholders to ensure the profitability of our ongoing
operations – and that is what we intend to do.