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.

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