While there are no easy answers to the inventory problem, here are some strategies to mitigate the problem. Assuming that the Clubs will want to take care of their disenfranchised Owners, it is likely that they would tweak the Club policies to allow for onetime extensions of expiring points and spread the demand over to future years. Also, many including Disney Vacation Club have already placed restrictions or stopped Owners from borrowing points from future year entitlements in order to not exacerbate the inventory crunch. Some Clubs may also be willing to use some of their unsold inventory to fulfill some of this obligation instead of renting it out assuming that the payback would be in the form of higher upgrade sales to the Owners that occupy them. Hilton and Wyndham have already stated that they are going to lean on the Owners for more upgrade sales this year.
Another creative strategy would be to promote more out-of-network usage of points. For some Developers and Clubs that have access to powerful Partner Connectivity Platforms, their Owners could use their points to potentially book Hotels or other out-of-network experiences. It is also likely that this will be a good time for Developers to negotiate great deals with Hotels and Experience Providers struggling to increase their bookings. The costs incurred in provisioning these out-of-network stays and experiences can be traded off appropriately with the likely ability to sell more at their sales decks as they use their own inventory to optimize the mix of Owners and Prospective Buyers at their resorts.
Last but not the least, it should be noted that this crisis has awakened the Developer to the necessity of reconfiguring their products, processes, and systems. In particular, there is an urgent need for new-age digital platforms that can help rethink their processes that are stuck in the rigidity of their legacy systems. The ideal time to execute change is when markets are in disarray and conventional performance metrics go out the window. In fact, many clubs are already reconfiguring their physical resorts, re-tooling systems and preparing new value propositions for market re-entry.
In conclusion, while it is counterintuitive, there will be an inventory crunch for many Developers and Clubs for the rest of the year and beyond. But this is also good news. The reason is that timeshare Owners are going to be driving this summer to the nearest resort to take a welcome break from all the stress from COVID 19. However, due to the shutdown, there isn’t going to be enough inventory for the remainder of the year to service all the Owners this year. Clubs will have to use a variety of creative strategies to help them manage this inventory crunch. The crisis has also resurrected the need for Developers to innovate or die by initiating change across all their systems and processes. The upside to all of this is that Owners will still be vacationing, and Developers will be in active sales!
Sri Raghavan is the CEO of Club Alchemy LLC. Club Alchemy is a state of the art, digital, cloud-based, Inventory Management, Partner Connectivity, and Booking Platform tailored to meet the needs of the timeshare industry. Club Alchemy platform supports several major Developers and over 300,000 Owners with their vacation needs. Prior to founding his company, Sri was the Senior Vice President of Global Revenue Management and Analytics at RCI. You can reach Sri by writing him at email@example.com.