Friday, June 22, 2018

Welcome to Summer, While a Soggy Florida Braces for Hurricanes


RedWeek just returned from a long road trip where we attended industry conferences in sunny Las Vegas and supposedly sunny Orlando, but as soon as we got to Orlando, we got the word: Rained Out.

Not really, but the Sunshine State turned into the Soggy State during our visit, just in time for the start of Summer, which in Florida rhymes with Hurricane Season (June 1 to Nov. 30).  The region deserves a break, because it's still recovering and rebuilding from the last two years of hurricanes.  The sticky weather took a huge bite out of Florida and Caribbean tourism and timeshares in 2016 and 2017, and it looks like the weather gods are hungry for more.  Meanwhile, big brand hotel and timeshare resorts are rebuilding while independent timeshares are still negotiating with, or suing, their insurance companies to cover repairs from 2016 and 2017.  Welcome to 2018, ready or not.

Only thing we could tell from our visit, empirically, is that the Gators are doing just fine in the Orlando canals while visiting Families, soaked to the bone, plunged ahead to consummate their trips to Sea World and Disney, come hell or high water (excuse the pun).  Don't think Sea World offers an official Monsoon Ride, yet, but kids are getting a taste of it, anyway.

But that's not what this posting is about.  Florida's turbulent weather is just a backdrop for the annual weather report on the timeshare industry, issued this time each year by the American Resort Development Association (ARDA).

ARDA's CEO, Howard Nusbaum, delivered the highlights at the Timeshare Board Members Association meeting in Orlando, where 150 HOA board members and resort managers huddled to address the big and small issues that challenge the sustainability of their resorts.

ARDA's key messages: timeshares are still great; long live timeshare!

In addition to being the eye of hurricane season, Florida is home-base for 373 timeshare resorts, dwarfing #2 California (131), South Carolina (110), Hawaii (94) and Colorado (75).  There are 1,570 timeshare resorts in the US, averaging about 200 units per resort.  Timeshares exist in 47 states, with only Alaska, Kansas and North Dakota still on the outside looking in.  Hawaii and South Carolina are the key growth states.  Nevada, thanks to its mega-resorts, has the largest timeshares in the country.

Retail sales volume, among developers, rose 4 percent in 2017.  Annual sales hit $9.6 billion and are expected to exceed $10 billion in 2018.  ARDA does not track sales in the secondary market, but if it did, or could, the annual sales numbers would be a few hundred million dollars higher.  Maybe even a billion or more.  Since 2013, timeshare sales have increased 26 percent.

"We're almost back to where we were at the beginning of the downturn (in 2008)," Nusbaum said.

Timeshare occupancy hit 81.4 percent in 2017.  As Nusbaum pointed out, that's a number the hotel industry, with 66 percent occupancy, would covet.  The average selling price for a new timeshare interval (one week equivalent) was $22,180, a 6 percent jump from 2016.  Maintenance fees rose 1 percent to an industrywide average of $980 for a two-bedroom unit.

Timeshare rental income, meanwhile, increased 20 percent to $2.3 billion.

"This is where the Internet is our friend," Nusbaum said. "Rentals are (part of) your sales arm.  That's where people kick the tires (of a timeshare vacation)."

At the mega-macro level, timeshares are huge contributors of the US economy, Nusbaum added.  The industry employs 511,000 people, pays $10 billion a year in taxes and generates $9.8 billion in consumer spending.  Timeshare travelers also tend to spend more on their trips, with the resort community, than typical hotel travelers.


ARDA launches PR campaign to fight back against negative image of timeshare

In addition to touting the industry's economic contributions, Nusbaum exhorted TBMA members to join him in a campaign to "take back the narrative" and tell positive stories about timeshare.
TBMA members are a diverse group --- professionals and amateurs with admirable careers (mostly) behind them.  But there is one thing that unites them: as representatives of resorts that are trying to stay competitive, find new buyers and provide meaningful vacations to owners, they are sick and tired of Internet and radio ads, along with occasional feature news stories on travel, that portray  timeshares as a terrible ripoff.  They’re also aggravated by the seemingly endless string of “exit” companies that solicit owners to cancel their contracts based upon the idea that they were defrauded, 10, 20 or 40 years ago, by a developer that is no longer in business.

The antidote for this angst?  Nusbaum is the #1 advocate for the developer industry and, beyond that, for all legitimate segments of the timeshare universe that feel victimized by bad press.

Nusbaum delivered a rousing “we’re not going to take it anymore” speech to the TBMA attendees in Orlando, and they appeared to love it.

He said developers have been called bums and worse.  “We need to start talking about exiting responsibly.  There is a whole cottage industry hoodwinking people…”

Several major timeshare “relief” companies are being sued by major developers for alleged interference with customer contracts and encouraging owners to default on their payments.  Nusbaum is the point man in the industry’s effort to portray longtime owners --- and developers --- as victims of these companies.

“Whether owners love developers…or dislike developers, we are conjoined twins.  We are in this together (and) we have to make sure we can support each other,” Nusbaum said.  He also offered these nuggets for the TBMA attendees to remember him by:
A pet peeve?  #1: Lawyers who file "drive-by" lawsuits against resorts and others who solicit owners to cancel contracts. #2: The industry's reputation, which Nusbaum is paid to promote.
On lawyers: "We passed a bill in the House of Representatives that banned frivolous lawsuits (against resorts) … but we can't get it approved in the Senate. There are too many lawyers in this country and they can't make money, so they have to scam people.  I am jaded on the subject."
On fixing the reputation of timeshare: "Some developers have blood on their hands," Nusbaum said.  "I am an advocate for resort developers.  We are pro 'good' developers.  We want a robust platform but also that every single consumer is protected from lies and deceitful behavior.  These publicly traded companies (that now dominate timeshare) are the tide that is rising all of the boats in the industry.  They are bringing up practices that others have to follow."

For more on these subjects, visit our Ask RedWeek column for June.

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