State of the Industry:Five Questions for Five CEOs
February 27, 2010The past year or two have been the wildest years our industry has seen in a very long time – and by wild, I in fact mean bad. While not every company suffered from the credit crisis, scores did, and the ripple effect meant that many suppliers and other industry-related companies paid the price as well.
By Matt McDaniel, editor
Today, though, the shared-ownership industry is back on track. Corresponding to the old maxim of “whatever doesn’t kill you makes you stronger,” the still-standing operations are lean and hungry to regain some semblance of their previous sales revenues.
In this edition, we’ve asked five influential CEOs to talk about the state of the industry, its biggest challenges going forward, the availability of finance and the impact on exchange. Each CEO was individually asked to respond to the same five questions. The participants, in alphabetical order, are Geoff Ballotti, CEO of RCI; Don Harrill, president and CEO of Orange Lake Resorts; Craig M. Nash, chairman, president, and CEO of Interval Leisure Group, parent company of Interval International; Howard Nusbaum, president and CEO of the American Resort Development Association (ARDA); and Ross Perlmutter, president and CEO of the Canadian Resort Development Association (CRDA).
From your perspective, what is the current state of the shared-ownership industry?
Geoff Ballotti: The timeshare industry, not unlike others, has certainly been affected by the economic downturn as consumers have curbed spending on travel. However, because of the pre-paid nature of timeshares, according to ARDA statistics, 2009 did see 80% occupancy rates and an 86% product approval rate from timeshare owners, strongly indicating that those who own are highly likely to use and are happy with the product. Whether we’re talking to ARDA, ATHOC or AMDETUR, we’re seeing a spirit of resiliency continue.
Don Harrill: Right now in the industry, we’re all taking a deep breath and looking at how to posture ourselves for future growth. Some have had to put development and sales on hold while they look at other ways to market their resorts and tell their story – but I don’t doubt we’ll see things turn around. With our Holiday Inn Club Vacations brand, we’ve truly been in the right place at the right time to set ourselves up for the future, with the new marketing channels we’ve created through our alliance with IHG (InterContinental Hotels Group). Through these new channels, we’ve seen a 13.92% increase in all sources of tours, 7.5% of which were through the IHG channels. This puts us in a great position to look at future development.
Regardless of the challenges that face every industry right now – including tightened credit markets – the timeshare industry will fare well in the end, because it’s a great product for families. It’s not something that people wake up one day and “need.” But when our guests explore the features and benefits of it and learn about how it can create invaluable memories for their families, and especially once they start using it every year to create unique vacation experiences, they love it. It makes sense for the modern family – it’s a smart decision.
Craig Nash: Our industry has reached a pivotal time in its history: We are redefining the way we do business in response to the “new normal.” In the U.S., tighter credit markets and dampened consumer confidence are part of the reality in which developers are evolving their business models to determine how best to build or acquire, market and sell shared ownership products. Similar to when the industry got its start here during the real estate recession in the 1970s, there is an oversupply of whole ownership condominiums and vacation homes that have the potential to be tomorrow’s shared-ownership products.
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