Great Recession Causes Shift from Volume to Efficiency and Focus on Consumer Creditworthiness
Trade conferences oftentimes are a barometer for how well that particular industry is faring. If that is the case with the 12th annual Vacation Ownership Investment Conference (VOIC), held October 4 through 6 in Orlando, then there’s good reason for the shared ownership industry to be optimistic.
Just under 500 attendees – 483 to be exact– heard from experts in timeshares, fractionals and private residence clubs (and related industries) on the viability of various products, the availability of developer and consumer financing, and trends in vacationing and vacation ownership.
“We were a little concerned whether attendance was going to be down potentially,” says David C. Gilbert, executive vice president of resort sales and marketing at Interval International, a founding and organizing sponsor of the event. Turns out he needn’t have worried, as the numbers were up slightly from the previous year. But numbers aren’t necessarily the most important factor.
“While we didn’t have that many fewer attendees in 2009, the mood was very different; I think people were almost in a hibernation mode last year,” adds Gilbert. “It was ‘hunker down, hibernate, wait and see, stabilize, maximize efficiencies.’ In 2010, people believed the worst was behind them, and they were talking about ways to grow their business, and talking to other companies about partnering. It was a more normal business event mood. And almost every attendee I talked to said the event had a very upbeat tone.”
At the event’s first session, Timeshare 101, speaker Jim Beckham Jr., who is chairman and CEO of Global Resorts, asked the audience of about 300 if they were there to evaluate the industry. Approximately 50 people raised their hands. “From our standpoint, that’s a pretty significant proportion for an event of our size,” Gilbert notes, adding that he was pleasantly surprised at the number of new potential entrants to the industry given the effects of the economy on shared ownership.
Looking to the Future
The theme of this year’s conference was Looking to the Future, and the emphasis was on helping organizations find the tools and information necessary to structure their companies to be successful in this new business paradigm. Because shared ownership has experienced significant change during the past two years, it’s beneficial for both potential new entrants and industry veterans to hear what others are doing and learn about successful strategies and tactics to manage their business moving forward.
“Educating potential developer entrants, lenders and governments is the whole reason that we – Interval International along with the other sponsors and supporters – work to put this together,” Gilbert explains. “It’s all about those three constituencies.” He sizes up the educational process this way: [member]
• Developers entering the industry must have the tools they need to be successful. “An unsuccessful developer doesn’t benefit anybody,” Gilberts says.
• Lenders must see that shared ownership is a stable industry that compares well to other consumer credit channels. “Educating the lenders is critical, and we had several new lenders at the event this year, which was really encouraging.”
• Governments without timeshare regulation must understand the benefits of constructive legislation to ensure the stability of these markets,” he says. “We had some government representatives there this year from some of the Caribbean islands, for example, that don’t have timeshare legislation.”
“Doing those three core things is the focus of the event,” Gilbert says.
The conference goals were accomplished through educational and keynote sessions, panel discussions, and networking opportunities. Particular sessions of note included the Meet the Leaders panel, which was moderated by Lodging Hospitality’s Ed Watkins and featured Jon Fredricks, president of Welk Resorts; Bob Miller, president of Marriott Leisure; Craig Nash, chairman, president and CEO of Interval Leisure Group; and Bruce L. Thompson, CEO Gold Key/PHR Hotels & Resorts. “No one was immune to the economic changes of the past few years, and these industry leaders talked about how they dealt with the challenges of the marketplace, the things they did to adapt the business to the new environment, and what they thought about the prospects for the future,” says Gilbert. “You got a perspective from a large, branded hospitality company; a mixed-use independent; and a regional brand. There was a good cross section of information on how each adapted their business and what their strategies are moving forward, and then their
read on the future,” he adds. “They were all cautiously optimistic – and while they didn’t say it was going to happen tomorrow, they all agreed things are turning for the better.”
Somewhat of a VOIC tradition is the annual consumer trends update from Peter C. Yesawich, Ph.D., chairman and CEO of the travel, leisure and entertainment marketing firm Y Partnership and a member of the board of directors of the Travel Industry Association of America. In his trademarked engaging style, Yesawich highlighted newly released research on people interested in purchasing shared ownership and leisure travelers at large. “That kind of insight is extremely helpful,” Gilbert notes. “I’ve heard people remarking on it since the conference.”
But it may have been Marci Rossell, Ph.D., who stole the show with her Roadmap to Economic Recovery presentation. Despite speaking on what is considered a dry topic, the former economist for the Federal Reserve System and former CNBC chief economist was able to captivate the crowd as she explained “just how we got into this mess and how we get out of it.”
“We probably heard more feedback on her presentation than almost anybody else,” says Gilbert. “Using layman’s terms, she clearly defined all of the factors that led up to the Great Recession, and she also clearly defined the factors that are going to bring us out of the Great Recession – what we need to look for and what should be happening when – it was very compelling.”
So what were the biggest takeaways for attendees this year? Gilbert says that if he had to boil it down to just a couple, they would be the emphasis of margin over volume and a focus on consumer creditworthiness. “There’s this whole theme that we keep hearing: it doesn’t pay to chase volume. That’s how it was when capital was so accessible, when we were in the high-flying times and the commercial funding resources were providing capital,” he explains.
“And consumers had so much access to finance – equity in their homes that was growing by the day, and they had equity in their equities. People lost a little bit of the focus on the margin of the various aspects of the business. So what you hear now from almost every experienced developer is that it really doesn’t pay to chase volume unless you’re really focused on the margin along the way.” Developers, for their part, are marketing more efficiently and requiring higher credit scores from prospective owners.
But attendees left the 2010 Vacation Ownership Investment Conference with more than just ideas, concepts, and new partners; each received complimentary copies of seven research studies with a total value of more than $1,500, certainly sweetening the value proposition of attending:
• State of the Vacation Timeshare Industry: United States Study, 2010 Edition (Source: ARDA International Foundation)
• Economic Impact of the Timeshare Industry on the U.S. Economy, 2010 Edition (Source: ARDA International Foundation)
• Financial Performance 2010: A Survey of Timeshare & Vacation Ownership Companies (Source: ARDA International Foundation)
• Shared Vacation Ownership Owners Report, 2010 Edition (Source: ARDA International Foundation)
• Shared Ownership 2010: A Market Perspective (Source: YPartnership for Interval International)
• The Shared Ownership Resort Real Estate Industry in North America: 2010 (Source: Ragatz Associates)
• The Shared Ownership Resort Real Estate Industry in North America: Mid-Year 2010 (Source: Ragatz Associates)
New Name Next Year
The dates and venue for next year’s conference have been set already: October 17-19, 2011 at the Peabody Orlando (the same hotel as for 2010). What’s changing, though, is the name of the meeting, as it will now be called the Shared Ownership Investment Conference. “I think some people, because of the extensive use of the term vacation ownership, see it as synonymous with the word timeshare and don’t really understand it as being representative of fractional interests and private residence clubs as well,” Gilbert explains. “So we wanted to be sure that this conference had an equal content representation for timeshare, vacation club, fractional, and private residence club products.”
It’s likely that the name change will serve only to broaden the reach of what has become one of the preeminent gatherings in the shared ownership industry worldwide. [/member]