Like the rest of the hospitality industry, the timeshare business was, as ARDA chief Howard Nusbaum says, “humbled” by the economic crash of 2008. Now, as vacation ownership nurses its wounds and climbs back to prosperity, the industry faces significant challenges, some of which may present new opportunities for owners and operators of traditionaland resorts.
At last week’s Shared OwnershipConference in Orlando, Island One Resorts’ CEO Sterling Stoudenmire gave a frank and thoughtful assessment of changes the timeshare industry must address in the coming years. As the business moves from a growth phase to one of maturity, it needs to face the prospect of slow or even no growth, said Stoudenmire. One problem is what he called the “boomer ditch,” or the downturn in the number of consumers reaching their 50s, the bullseye demographic for vacation ownership sales.
Another issue is what Stoudenmire calls “information asymmetry.” Before the explosion of social media, which gave consumers the ability to share their opinions and experiences about all products and services, timeshare marketers held the upper hand in the sales process. They were able to fully shape the message about the timeshare concept and costs and benefits of the specific products they sold. Today, the vast majority of potential timeshare purchasers arrive at sales tables armed with information, opinions and intelligence about exactly what they may be buying. Stoudenmire contends this paradigm shift forces the industry to become more transparent and offer products that provide greater value to customers.
“We’ve always been an industry that offers what is basically a homogenous product,” he told the SOIC audience. “One timeshare product is pretty much the same as all the others.”
The challenge, he says, is to present new products that are varied, are easy to understand, provide value and appeal to a broader demographic of potential customers. “We need to develop and offer a compendium of products to appeal to a wider variety of customer. It’s much like what the hotel industry does,” said Stoudenmire.
And here lies the opportunity for owners and marketers of traditional resort hotels. The new consumer who may consider a vacation ownership purchase won’t settle for anything less than value, variety and a wow factor that’s not always present in plain-vanilla timeshare products. The most important element is value creation. Timeshare marketers will be hard pressed to demonstrate they can offer a product that, once all costs (initial price, taxes, maintenance fees, exchange dues) are calculated, provides a superior vacation alternative to what’s available at resort hotels.
This is an opportunity that comes along once in a generation, so the visionaries in the lodging business need to go to work to devise the right products at the right prices to meet the new challenges and opportunities ahead. While it’s congenial for the timeshare and lodging businesses to consider themselves part of the larger hospitality industry, they’re actually competitors. When consumers buy timeshare products, they effectively turn their back on the traditional resort industry. It may be time to seize that business back from this competitor.