RDO7: A global perspective on timeshare
Howard Nusbaum, president and CEO of the American Resort Development Association (ARDA), left RDO7 Conference delegates in no doubt that timeshare is an economic force to be reckoned with.
“Wall Street is now reporting on our business, and how we do our business,” he told delegates at the annual industry conference that took place at the Pestana Chelsea Bridge Hotel in London on 21 September 2016.
As the industry awaits the publication of the ARDA International Foundation Worldwide Shared Vacation Ownership Study: 2015 in November, Nusbaum shared some impressive figures from the previous study. In 2010, the timeshare industry outside of the US region was valued at $4 billion, having 5,325 resorts, 491,214 units and a respectable 74% average occupancy rate – and this was at the height of the downturn following the 2008 global economic crisis.
“The global industry has seen six years of 5.5% annualised growth,” he said. “In 2013 the US industry experienced 10% growth, with $8.6 billion revenues from sales of vacation ownerships in the region. And, even during the darkest days of the downturn, nine out of ten timeshare owners were paying their maintenance fees, which our owners have to pay to use the product. That makes our consumer better than many others in terms of propensity to pay.”
Drive the ‘chatter’
Brand reputation management, delegates heard, was at the core of today’s ARDA. “We have done a lot of homework to develop what ARDA needed to look like over the next five to ten years and reputation management is a core foundation for ARDA to drive success in the future,” he said. “Advocacy is now bigger than just lobbying; it is building strong associations with the media and consumers. Market intelligence is looking forward to what is going on in the marketplace, sharing knowledge and networking. We need to give those tools to our developers.”
Consumer education, especially in resales and the secondary market, is going to play a big part in future industry growth, and that includes some tough love, he explained.
“We need to ensure our owners are not being told they can quit their timeshare without paying their dues, it’s not fair to other owners,” he said, adding that ARDA had created three websites to give consumers guidance on resales. “If you don’t educate your customers, those that don’t have their best interests at heart will do, and in a biased way,” he added.
The Airbnb short-term rental product is both good and bad for timeshare, Nusbaum told delegates. “You get to stay in spacious apartments with kitchens, which is good for us, as the lifestyle Airbnb promotes is what timeshare offers,” he said. “However, the product is not regulated – which is not good. Airbnb and other similar businesses should be obligated to provide safety standards, security, key controls, cyber security, health and safety codes… not to have any of these things is dangerous for consumers.”
Nusbaum also pointed out that a significant percentage of these short-term renters are a tenant/landlord product, or part of a residential association, with no licensing to rent out. The logical sequence of events would be retroactive legislation. He referenced the regulations put in place by ARDA and the industry regarding consumer loans, with particular reference to the Consumer Financial Protection Bureau (CFPB), a new US agency set up in the wake of the negative impact of the 2008 financial downturn.
“We have all the things they are looking for – borrowers do not lose their homes, shorter loan terms,” Nusbaum explained. “We convinced the CFPB that if all loan providers had the regulatory background we have, we wouldn’t need a CFPB!
“Not to accept rules which we can all live with is like not putting traffic lights up until someone gets killed at the intersection… Don’t wait until draconian legislation is introduced,” he told delegates. “Our role is to build confidence, with the street, our consumers and investors. We should let people know what the value of timeshare is to individual owners, as well as the wider positive economic impact of our industry as highlighted in economic impact reports.”