TODAY'S STORIES
• Timeshare sees bright spot in economic gloom
• What a difference a few years make: PKF predicts market trends from 2008-2011
• Recovery requires close look at local economy

Timeshare sees bright spot in economic gloom

By Jennifer Kovacs, Senior Editor

While many timeshare companies have scaled back sales efforts because of the inability to sell consumer notes in the tight credit markets, it’s a controlled reduction and not one based on any noticeable dip in demand.

In fact, when times are tough, the value proposition that timeshare affords remains just as strong as ever.

“Every day, people are still buying timeshare. … The demand is robust,” said Howard Nusbaum, president of the American Resort Development Assn.

And as long as owners still are using the weeks they have purchased, timeshare continues to have a solid leg to stand on.

Nusbaum credited the success to a culture that still exists and believes hard work should be rewarded with some much-deserved family time. “There are health and wellness benefits that come from vacationing,” he said.

That idea is a big part of the sales pitch at Wyndham Vacation Ownership, said president and CEO Franz Hanning.

“Our value proposition at the point of sale is always about the importance of taking vacations, the importance of spending time with your family. … And the reality is, that part of the presentation resonates right now, just as much as it has since 9/11,” Hanning said.

So, timeshare customers continue to pay for their weeks, cover their maintenance fees, make reservations and go on vacation.

At Wyndham, occupancy is in line and bookings are even a bit higher than usual, Hanning said, though that’s not exactly the case in big-ticket locales like Hawaii, California or Las Vegas. Popularity instead has hovered around a mix of major destinations, like Orlando, or regional timeshare destinations that allow people to ditch the plane trip for an affordable car ride.

“Those regional drive-to resorts are full to the hills right now,” Hanning said.

Having that flexibility offered to timeshare owners who already have purchased their vacations is key, Nusbaum said. “Where a hotel has to depend on people who are making a reservation … timeshare has owners who are going to come,” he said.

Hanning added that in a downturn, owners also start to split vacations with friends and family, meaning there are newcomers to timeshare on properties that could prove beneficial for future sales.

“Now we have other prospects to talk to. Now they’re on vacation with them,” Hanning said.

And getting vacation-goers to resorts also means there’s a good chance they’re going to spend money there—either with the timeshare itself or in facilities under the same umbrella at a mixed-use property.

According to ARDA’s recent study, the Economic Impact of the Timeshare Industry on the U.S. Economy: 2008 Edition, spending that occurs onsite at timeshare resorts has increased at an annualized rate of 12 percent from 2002 to 2007.

For example, in 2007, each traveling party spent $231 shopping at the resort, $110 on recreation at the resort and $14 on other expenses and services.

Timeshare also proves to be beneficial for retail markets offsite from the resort, with parties reporting in 2007 spending $492 shopping offsite in and $213 on offsite recreation, according to the report.

So, Nusbaum said communities with a timeshare resort in place are seeing some good news as well. “They are very thankful right now,” he said.

jkovacs@questex.com

What a difference a few years make: PKF predicts market trends from 2008-2011

In PKF Hospitality Research’s Hotel Horizons report, PKF used 2008 and 2011 as bookends of the industry recession and calculated changes in supply, demand and revenue per available room for the 50 markets they study. And, while many markets won’t bounce back to 2008 levels by 2011, according to PKF predictions, some may succeed.

Check to see if your locale is listed—either in a positive or negative light—and then make sure you act accordingly. By having some idea of whether or not you’re in a long-term battle against the economy, you can take the necessary actions, from implementing clever marketing tactics to lowering your operating costs, to ensure your success. No matter what side you’re on, it’s going to be a struggle back to the top, but hoteliers can be proactive and do whatever it takes.

Markets seeing success between 2008-2011
Oahu, Hawaii: 6.1 percent decline in supply (but also a 1.2-percent decline in demand each year)
Fort Worth, Houston, Dallas and Austin (Texas): More than 2 percent increase in demand annually
Austin, Oahu, Minneapolis, San Francisco, Houston and Chicago: Six out of 50 cities that will post positive RevPAR growth in these years

Markets suffering between 2008-2011
San Antonio: 24.1 percent increase in supply
Oakland (Calif.), Los Angeles, Detroit and Tampa (Fla.): Top four of 25 markets that will see demand lower in 2011 than 2008; each will suffer declines greater than 2 percent annually
Charlotte (N.C.), New York, Orlando, Fort Lauderdale (Fla.) and Tucson (Ariz.): Compound annual declines greater than 6 percent

Source: PKF Hospitality Research

Recovery requires close look at local economy

It’s no surprise that this year will be a rough one for the industry, but paying attention to the local economy can be the biggest indicator of when recovery might occur.

In its Hotel Horizons report, PKF Hospitality Research predicts that by the end of 2009, two of the 50 markets they cover will show year-over-year gains in Q4 revenue per available room and will sustain the growth into 2010. Minneapolis and Orange County, Calif., are the two lucky markets this year, with Minneapolis benefiting because of its weak fourth quarter of 2008 and Orange County getting assistance from its proximity to Disneyland and below-average increases in supply.

Because the local economy is a main indicator of lodging success, San Antonio and Baltimore will both see increased lodging demand in 2009 from 2008 rates. However, due to an onslaught of new supply in these regions, the increased demand will not translate to increased occupancy rates, and both cities will see occupancy declines. For instance, hoteliers in San Antonio will see a 24.1-percent increase in competition from 2008 through 2011, which is the greatest increase of supply in the country for that time period.

But by taking note of what’s going on in the local economy, hoteliers can try to combat these problems. PKF found that 70 percent to 80 percent of a hotel’s performance is linked to the local economy, so everyone in the industry, from GMs to lenders, must be in tune with the area.

“In some areas, increased competition is driving the poor performance. In other markets, declining employment or income levels are suppressing demand,” R. Mark Woodworth, president of PKF-HR, says in a statement. “In the face of poor market conditions, some hoteliers will retain pricing power, while others will not. The differences are striking and require deep thought and analysis.”

So start thinking—and start taking action to help boost your local economy.

Source: PKF Hospitality Research