Over 100 new resorts in 2009 were welcomed by RCI, the world’s largest vacation exchange company. Demonstrating that vacation exchange remains a bright spot in the travel industry, RCI, considered the global leader in vacation exchange and one of the Wyndham Worldwide family of brands, announced that it added more than 100 new resorts in 2009 alone, including 10 properties under development.
Timeshare occupancy is strong despite a weak economy. According to the AIF State of the Vacation Timeshare Industry: United States Study, 2010 Edition, prepared by Ernst and Young, the timeshare industry reported an average of 79.7% occupancy rate in 2009, compared with the 54.7% occupancy rate at the hotel industry. Around 54% of resorts are at least 80-percent occupied, and 34% have occupancy of at least 90%. Only 12% of resorts are less than 60-percent occupied.
Timeshares By Owner attended the America Resort Development Association (ARDA) Convention in Las Vegas during the week of March 15th. Our radio show, Vacation Time on WDBO 580 am was privileged to conduct interviews with some of the leading figures in the timeshare industry.
They included Howard Nusbaum, President of ARDA, Franz Hanning, the President of Wyndham Vacation Ownership, and Rob Webb, Esq, Senior Partner of the Baker Hostettler Hospitality Group, and Jeffrey W. Frantz, CEO of Timeshares By Owner. These interviews provided valuable insight into the furure of the vacation ownership industry, and the ways for timeshare owners to deal with financial hardship.
A replay of the radio show, Vacation Time, can be heard on www.wdbo.com.
Among timeshare owners, owner satisfaction rates are high, while defaults are low. According to the latest research by the American Resort Development Association (ARDA) and Smith Travel Research, despite the fact that timeshare sales continue to reflect the national trend of lower consumer spending, there are 80% occupancy rates in timeshares versus a 60.4% hotel occupancy rate.
Timeshare buyers also remain happy about their purchases with 86% reporting that they are satisfied are very satisfied with their purchase. Research also indicates that nine out of ten timeshare owners are current on their monthly payments.
Timeshare owners often rent first. Half of recent purchasers have rented a unit prior to buying, according to the Vacation Timeshare Owners Report, 2009 Edition by the ARDA. Also reported, recent timeshare purchasers are younger, wealthier and happy with their vacation product.
Overall, more than six in ten timeshare owners are age 45 or older, with Bby Boomers ranked as the largest generation of timeshare owners (45%). However, recent purchasers are younger than timeshare owners in general, with 58% under the age of 45.
Timeshare division of Marriott International has hurt earnings. According to the Orlando Sentinel, Marriott International lost $466 million in the recent quarter on hefty impairment charges from its Orlando-based timeshare business, which declined drastically in the recession as vacationers cut back spending.
Marriott lost $1.31 a share for the period ending September 11 compared with a profit of $94 million or 25 cents a share a year earlier. In the recent quarter, adjusted timeshare contract sales declined 42% to $176 million, compared with $49 million in the prior year quarter.
Despite tighter credit markets and high unemployment rates, the U.S. timeshare industry continues to demonstrate its resilience.
Although overall sales continue to reflect the national trend of lower consumer spending, timeshare owners continue to enjoy their pre-paid timeshare vacations, with an 80% occupancy rate and an 86% product approval rate. This compares with a 60.4% hotel occupancy rate, according to Smith Travel Research.
Experts continue to paint a bleak picture of the industry’s financing operations as discussed in recent meetings where timeshare executives gathered for the 11th Annual Vacation Ownership Investment Conference recently held at the Peabody Hotel in Orlando.
Not much has changed since the capital markets ceased last fall, making it difficult for timeshares to fund development and sales. The good news is that, after a year, developers have at least adapted to the new conditions. Because of a lack of financing, timeshare developers deliberately slowed sales this year. Total industry sales this year are likely to total between $6 billion and $8 billion, which is equivalent to sales in 2004.
Recent surveys of the timeshare industry demonstrate continued owner satisfaction. The timeshare industry uses various types of studies to measure timeshare guest or timeshare owner satisfaction. The State of the Vacation Timeshare Industry: United States Study 2009 is prepared by primarily using data provided by the timeshare resorts, timeshare developers, and management companies, through a survey commissioned by the ARDA International Foundation (AIF) and conducted by Ernst & Young LLP.
The study has demonstrated that there is continued owner satisfaction with timeshares. One fact cited by the study point out that 41% of timeshare sales are from timeshare buyers who already own a timeshare with that developer. The AIF report also showed that timeshare resorts were able to add timeshare units and that timeshare occupancy rates have actually increased, with approximately 67% of resorts being at least 80% occupied, and 40% having occupancy of at least 90%.
Among the vacation ownership sales leaders reporting in the recent Sales Leader Survey conducted by Vacation Ownership World magazine, timeshare ownership sales declined at a 5% rate from 2007. Fractional sales volume fell by 9%. This is the first time since the survey started in the early 80s that ownership sales have decreased.
The timeshare industry has been heavily impacted by the worldwide economic downturn and credit freeze. Despite the discouraging news, there was still more than $8.5 billion in vacation ownership sales in 2008. Wyndham Vacation Ownership led the way with $1.987 billion in sales followed by Marriott Vacation Club International with $1.163 billion and Hilton Grand Vacations with $585 million.
