It's no secret that the timeshare industry has witnessed its fair share of change over the last few years, especially with all the consolidation and spin-offs. Just recently, Wyndham Worldwide (NYSE: WYN) announced it will be mirroring the actions of Marriot and Hilton and will be spinning off its vacation ownership division, ultimately resulting in two publicly traded companies.
AETHOS Managing Director Andrew Hazelton had the opportunity to sit down with Scott Bahr, who earlier this year took the helm as chief executive officer of ResortCom International, a pioneer service provider to the timeshare industry. Hazleton and Bahr's candid conversation enables the industry to gain insight and understand how all these changes will ultimately affect the overall state of the timeshare business – now and in the future. Knowing that ResortCom is heavily focused on the technology side of the business as well, the conversation lead to a healthy dialogue around the impact technology continues to play in the timeshare space.
Hazelton/AETHOS: There has been a lot of change and consolidation within the timeshare business in the last five to seven years. How have some of those changes affected the overall state of the business and what, in your opinion, is the health of the timeshare industry today?
BAHR/ ResortCom: Three dynamics were in play post-2008:
- Hotel companies realized they could maximize shareholder value by spinning off their timeshare divisions, causing the spun-off divisions to focus on operational necessities;
- Lending standards tightened, preventing those companies targeting lower- to middle-income customers from maintaining their prior sales levels;
- Business models and product forms rapidly changed, driven by new hospitality industry competitors and the arrival of Millennial buyers, causing peril for those unable or unwilling to adapt.
A handful of well-positioned, agile players saw this for the unique business opportunity it was, significantly advancing their strategic and economic positions through acquisitions matching their business models. Now, with many of the expected hotel brand spinoffs completed and operational capabilities back in place, credit returning to reasonable levels, and a new set of market leaders emerging, the industry is well positioned for a future certain to include further disruption in product form and alliance strategy-to the distinct advantage of fast, nimble market innovators.
HAZELTON: Overtime, there are always industry disruptors, i.e., Airbnb, impacting the hotel space. What distributors in your opinion have impacted the timeshare business?
BAHR: Timeshare has always bridged various vacation alternatives, but never more so than today. Timeshare buyers expect flexibility and experiential travel, and hotels have expanded their offerings to offer larger, more family-friendly alternatives. So, while HomeAway is an obvious answer, timeshare struggles with the question of whether tour operators and boutique hotels are collaborators or competitors; with each player crafting a set of answers according to their operating model, capacity constraints, non-secured collaboration partners and basic rental assumptions, this will, in the long term, define every developer's product form. Today's timeshare sales pitch typically includes city hotel room offerings, cruise options, group tour alternatives and a portfolio of local experiential offerings. A recent study showed four out of five timeshare owners intend to cruise in the next five years, so the disruption is the business model allowing tens of thousands of cruisers to pay for their vacation using vacation club points. The true disruptors, given this scenario, are the handful of business development leaders able to broker these mega-deals and hold them together over the long term, thus reallocating net margins among the various players.
HAZELTON: Since taking the helm at ResortCom recently, what have you focused on the last few months and what will you continue to focus on to keep driving and growing ResortCom's business?
BAHR: ResortCom has been around for three decades, evolving from its origin as the internal servicing arm of a leading Latin American timeshare developer to its current state-servicing half a million customers for dozens of developers. We handle loans and maintenance fees, timeshare and hotel reservations, pre-arrival services and custom sales and marketing programs on a global scale.I'm excited to release our new ResortConnect® servicing platform, which will make it 30 to 50% more efficient for developers to manage relationships with their timeshare customers. We're also finalizing exciting new concierge and travel planning technologies, found in only a handful of luxury hotels. Beyond these product enhancements, I've focused on our team-putting the right people in the right seats on the bus, so to speak, to ensure we service every existing client with our trademark personalized approach, even as we ramp up our growth rates. Of course, the final piece of the puzzle is process efficiency, and we've looked at everything from our governance models to our new client onboarding procedures, to ensure our entire business is prepared for the growth we've set in motion at ResortCom.
HAZELTON: Talk to us about the impact that technology is having on the timeshare space and what ResortCom is doing to maintain a competitive edge.
BAHR: For many timeshare developers, the passion is building and selling amazing resorts. ResortCom is a committed partner to a growing portfolio of developers-helping them fulfill the promises made at the sales table. As I shared, we've spent millions developing our new technology portfolio over the past few years, redoubling our efforts this year to release ResortConnect, a dramatically more efficient and user-friendly platform for maintenance fees, mortgage management, payment processing, reservations and related services. Our new technologies, paired with our decades of industry experience and ongoing willingness to tailor our product and service approach while still delivering financial advantages to our clients and world-class customer satisfaction to their members, will make us a clear choice for many developers.
HAZELTON: As the timeshare business continues to change and evolve, what should we pay close attention to over the next 12 to 15 months?
BAHR: I see two dynamics in motion that will change our industry by the end of 2018: Curated Customer Experience and Business Model Reinvention. We are working with a growing number of developers who are looking across the entirety of the customer experience. For example, we are working with a large timeshare company today to make 60-second check-ins a reality for their members - even at peak times on Friday afternoons. Increasingly, the goal is to create member relationships not unlike that of a high-end country club.I also see increasing competition forcing more timeshare brands to rethink some aspects of their business models that were previously considered sacred cows. A lot of timeshare companies built or borrowed many of their servicing systems, built teams and processes around making them work for the developer's unique business model, and just kept adding cost and complexity as they grew. Now we're seeing developers coming to specialized companies like ResortCom for our ability to deliver much more cost-effective, efficient technologies and servicing teams whose expertise actually can help deliver higher customer engagement and revenue-generation metrics at the same time!
To learn more about the needs of talent management in the timeshare sector in the AMERICAS region, contact Andrew Hazelton at [email protected].