Rss Feed
Tweeter button
Facebook button
Technorati button
Reddit button
Myspace button
Linkedin button
Webonews button
Delicious button
Digg button
Flickr button
Stumbleupon button
Newsvine button
Youtube button
Search:
International Edition · North America Edition · Submit News Release · Advertiser Information


To book advertising space, or to talk to us about available packages and special offers
just call +1 407 792 2343 (USA) or +44 191 250 3501 (UK) or visit www.perspectiverates.com
Unique Travel Products To Help You Market And Sell
I Read Perspective Magazine...
"To stay informed on industry developments and expert commentary."
David Disick, Founder & CEO, Club Elysee, LLC

Regaining Sales Momentum In The Affluent Market

November 5, 2009 by Perspective Magazine | Timeshare & Fractional Reviews · Leave a Comment 

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 , will be in a financial position that allows them to increase their spending.

As you focus on what lies ahead for the and markets (which are the focus of this article and will be referred to as even though that term normally applies to typical and 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 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 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 businesses in recent years, the market is a very large and virtually untapped sales opportunity for and destination clubs.

Third, the market is somewhat ignorant of the concepts and needs to be better educated to understand the and concepts and the benefits and appeals of each.

The relatively limited familiarity with and destination clubs among the is rather surprising, especially given the growth in recent years in the number of and destination clubs, their marketing activities, and their media coverage. We believe that once the have been better educated about the concepts of 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 Market
It is imperative that the market not be viewed as a single, homogeneous population. At upwards of 11.4 million households, the market is so large it can be segmented in many ways. According to AARC’s study of the and markets, the most likely target for 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.

and destination clubs compete with full vacation home ownership. A closer look at the market for full ownership of vacation homes reveals several key points to consider. First, 2.5% of the 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 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 market own only one home) to pursue.

Full vacation home ownership is strongest among the top 10 percentile of the 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 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 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, , and destination clubs. The group reporting the least access to a vacation home was composed of the less 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 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 market indicate no familiarity with either the or 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” 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 concepts involve some degree of complexity. The concepts are not easily explained or understood by the . The introduction of various pricing plans and product variations and product line extensions has probably added to the complexity of the concepts and thus confusion. If not confused, at best the 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 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 market. For the more market segments, homes of US$1 to US$1.5 million value for both and destination clubs might be more consistent with the product and pricing interests of the target . For the less 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 and product.

Second, the market needs to be better educated to understand the and 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 market lacks confidence in its familiarity with the shared ownership concepts and thus is a very large and virtually untapped sales opportunity for and destination clubs.

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

is President of The American Affluence Research Center, which specializes in surveys and mailing lists of the . 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 market and the travel industry.

For information on advertising and editorial opportunities with Perspective Magazine & Owners Perspective Magazine; the leading independent B2B & B2C magazines for the and ownership industries visit www.perspectiverates.com


Tagged: , , , , , , , ,
Group RCI
Click Here For More Information

Click here for all featured news


20-Year Relationship Celebrated With Long-Term Renewal Between Interval International And Marriott Vacation Club 20-Year Relationship Celebrated With Long-Term Renewal Between Interval International And Marriott Vacation Club

Interval International, a prominent worldwide provider of vacation services and an operating segment of Interval Leisure Group, Inc. (Nasdaq: IILG), today announced the renewal of its master affiliation agreement with Marriott Vacation Club International, the timeshare division... [Read More...]
Guy Hall Promoted To Newly Formed Position Of Area Manager By Grand Pacific Resort Management Guy Hall Promoted To Newly Formed Position Of Area Manager By Grand Pacific Resort Management

Guy Hall Grand Pacific Resort Management,  a privately owned timeshare vacation ownership management company located in Carlsbad, CA has promoted Guy Hall to the newly created position of Area Manager.  In this new role, Guy will be responsible for the day to day operations... [Read More...]
La Amistad Foundation Selects Winter Park Construction For Construction Of Dormitories And Health Center La Amistad Foundation Selects Winter Park Construction For Construction Of Dormitories And Health Center

Jeff Forrest, President, Winter Park Construction Winter Park Construction (WPC), one of Central Florida’s largest and most respected general contractors, has recently been selected by the La Amistad Foundation to handle the demolition and construction of three dormitory buildings... [Read More...]
RCI Signs Two Year Advertising Deal With Perspective Magazine & Owners Perspective Magazine RCI Signs Two Year Advertising Deal With Perspective Magazine & Owners Perspective Magazine

Perspective International is proud to announce a two year advertising agreement was signed recently with RCI, the global leader in vacation exchange and one of the Wyndham Worldwide family of companies (NYSE:WYN) for its leading independent timeshare and fractional trade and... [Read More...]
Perspective International Sponsors C.A.R.E.’s 50th Semi-Annual Conference Perspective International Sponsors C.A.R.E.’s 50th Semi-Annual Conference

C.A.R.E. (Cooperative Association of Resort Exchangers) is pleased to announce that Perspective International Ltd is a media sponsor of its 50th Semi-Annual Conference, which will be held April 24 through 27,2010, at the Hilton New Orleans/St. Charles Avenue in New Orleans, Louisiana. “In... [Read More...]

Vacation Zorgvliet Private Residence Club