2016 TATOC Conference Highlights: Howard Nusbaum, President and CEO, ARDA
In this latest report on the highlights of the 2016 TATOC conference, HELEN FOSTER looks back at the presentation by Howard Nusbaum, President and CEO of ARDA.
Howard Nusbaum, President and CEO of US trade body the American Resort Development Association (ARDA), opened his TATOC presentation with the observation that the European and US industries shared much common ground.
He went on to deliver the highlights of industry performance in the US where, delegates heard, sales volumes had increased by 23% since 2010, with prices recovering from their fall and now sitting at around $20,000 for a standard week of timeshare in the US. “The reason for the dip was people selling points, which were attractive to younger buyers because you can buy a small package of modest use, giving shorter term breaks,” he explained.
As in Europe, timeshare in the US boasts higher occupancy levels than hotels, with average occupancy levels of upper 70% for timeshare versus 62% for hotels. As an example of the resilience of timeshare, Nusbaum referenced the 2006 earthquake in Hawaii. “Timeshare saved the tourism industry at that time in Hawaii,” he said. “Timeshare has a 90% occupancy rate on the island. The pre-paid nature of the product means the attitude of our owners is, ‘if we get out of bed, we’re going’.”
Lifestyle trumps generation
Describing the US timeshare buyer demographic, Nusbaum said: “They are diverse; around 39 years’ old, and being a mix of Caucasian, African and Latino, they are looking like the ‘Modern Family’, as on the TV show. They have average household incomes of $100,000 per annum and 51% of new buyers have kids at home and that is a challenge.
“Today’s buyers, the Millennials, want activities on resort for their children and are prepared to pay more in fees for them. So you have a clash between new owners and existing owners who, for the most part, are not so child-friendly being of the older generation. It doesn’t make life any easier for resort management. Today, lifestyle trumps generation.”
And that is the great thing about timeshare, he said. “Everyone gets what they want with timeshare. Date nights because the kids have their own bedroom; consistent quality experiences, spending time with people you love. You don’t put Tuesday burger nights in your scrapbook – it will be the lifecycle events such as great holidays with the kids that make the scrapbook.”
US timeshare faces new challenges posed by the government in the form of proposed new taxes. The Resort Owners’ Coalition (ROC), which has a million subscribing members, is strong and protecting the integrity of timeshare in the US, Nusbaum told delegates. “The tax man is trying to say timeshare properties have a market value equal to the cumulative value of the sales made on each unit – so you could have a building of 100 units, each being sold 52 times at a $100,000 a time. ARDA and ROC say ‘No, that building’s real property value is the same as the condos across the street’.”
ARDA is also fighting a proposed tax on exchange in the State of Florida. Nusbaum explained how Airbnb had provoked a review of vacation swap business models. “Around 37% of Airbnb product – nightly rentals – have several properties to their name and no regular tenant. These are, in effect, rogue hotels,” he said. “They have no health and safety, no regulations to protect the consumer, all of which commercial operators have to pay for and Airbnb don’t. New laws are needed, but ARDA has to make sure they don’t impact timeshare as well, and you need to make sure that doesn’t happen here in Europe.”
Paying tribute to the advocacy of TATOC and European trade body the Resort Development Organisation (RDO), Nusbaum said kudos and congratulations were in order for Harry Taylor of TATOC, and RDO’s Paul Gardner-Bougaard and their teams that handled the EU Directive negotiations with the EU ministers.
Stressing the importance of education in every arena and at every level, Nusbaum commented: “Managing public relations and consumer enquiries is very important, ensuring there is a voice for the industry. TATOC has done this very successfully. Our goal is not to play God and punish bad behaviour; it is to change behaviours. If we identify a bad pattern of behaviour that is hurting our owners and members, we must use our membership to leverage change. Track patterns of behaviour and, if you get a lot of complaints about one resort or brand, it doesn’t mean it’s bad, just that something’s not working and we can help to fix it.”
GATE (Global Alliance of Timeshare Excellence) in the US has been working closely with RDO, Nusbaum told delegates, and TATOC joined GATE two years ago. His message was of the need to work together to capitalise on the strength to be found in numbers.
Nusbaum shared ARDA’s own successes, paying the congressmen to get lobbying access – as is the way in the US – to battle against various proposed state timeshare taxes. “If you don’t have a seat at the table you’re on the menu,” he warned. “You must be there and have strong representation.”
Solving things together
Talking about the issues faced by legacy resorts, exacerbated by further damage suffered by the industry during the 2009 recession and the ensuing lack of quality in those resorts, Nusbaum again alluded to the power of togetherness in providing the solution. “Large resorts are coming in and buying up the legacy resorts. Consolidation can be our friend there,” he said.
Asking the rhetorical question of how TATOC and RDO managed to muster so much support from across government bodies and regulatory authorities in Europe, Nusbaum said: “We are no stronger than our weakest link. Europe has had a harder road than the US, with the EU being somewhat new, the different languages and legal structures. Harry and Paul are to be congratulated in getting so many authorities to work with them.”
He went on to inform delegates how ARDA goes about making friends and influencing people. “ARDA is lucky, it has 1.5 million people to represent so the politicians have to listen. And we need them to listen, and to educate them,” he explained. “We also have to educate Wall Street – they love and understand timeshare because of the big brand timeshare spin-offs. Ours are publically-listed companies so they have an interest in us. But this has created the need for quarterly returns…”
Concluding, he painted a picture of the industry’s future. “Consolidation is a natural evolution. Timeshare industries will look like airlines – fewer brands, but stronger brands. I believe the golden days of timeshare are in front of us.”