Howard Nusbaum is one of the most optimistic people in the hospitality industry, but even for him the past four years have been tough to endure. The crumbling of the economy and the meltdown in the financial system were particularly hard on the vacation ownership industry, the business he champions as president and CEO of the American ResortAssociation.
Not surprisingly, however, Nusbaum is feeling a lot better these days about the timeshare business. And, in fact, at the opening session of this week's Shared Ownership Investment Conference in Orlando, he said he sees “golden days ahead” for the timeshare business, which saw sales tumble from a high of $10.7 billion in 2007 to $6.3 billion in 2009. That was a particularly bitter bill to swallow because during most of the past decade the vacation ownership industry enjoyed double-digit annual increases in sales. As Nusbaum liked to say during the industry's heady times, “We're the little engine that could.
“It was humbling but also productive,” Nusbaum said of the dark days of late 2008 and 2009. With a dearth of consumer financing, the industry was forced to slow its tour and sales volume, a concept that had to be an anathema to an industry that traditionally revolves around prospecting and touring potential buyers and then closing sales. The industry took that time to get back to the basics of the business, to find and qualify more financially sound prospects and to focus on making profits from the sale of timeshare units, not just from securitization of timeshare loans.
As Nusbaum said, “Before the collapse of Lehman Brothers (the late 2008 event which kicked off themeltdown), the industry was focused on sales velocities; now it is rightly focused on profits.”
This dramatic about-face for the industry is already paying dividends, even though the rest of the economic picture remains gloomy. Timeshare tours, the lifeblood of timeshare, are up nearly six percent this year, sales volume in 2010 increased slightly and 90% of timeshare owners remain current on their loan payments.
The discipline and nimbleness of the timeshare industry in the past four years is a great lesson for the rest of hospitality and all businesses. What's worked in the past may not work today or in the future. Leaders with vision and courage understand and embrace that idea and are willing to look for new ways to be successful.
The continued comeback of the timeshare industry isn't assured, and a double-dip recession would surely slow its momentum. But the business model of the mid-1990s was no longer working, and the industry moved swiftly to find new approaches. That's a great example for all of us to follow.