Posts filed under 'Developers'

Has Timeshare Become an Edsel?

The timeshare product has evolved considerably since its introduction in the 1960s: These changes, revisions, and “improvements” have been so numerous that modern timeshares bear almost no resemblance to either the original product or concept. While some owners enjoy the flexibility of the new timeshare products, many others seem to find them simply too confusing to use effectively. What’s interesting to note is the process of how timeshare evolved; a process that has some history of its own.

Behold, The Edsel

In the mid 1950s, Ford Motor Company began development of a car for “young professionals on their way up.” These were thought to be folks who had outgrown a Ford, but were not yet rich enough to buy a Mercury or Lincoln. In order to keep them from moving on to other products, such as a Chrysler or Packard, an “entirely new kind of car” was created: the Edsel.

During the planning stages, groups of target buyers were assembled and asked about what features they would want in a new vehicle. Feedback from these focus groups was later used in the design process. Ford assured investors that “the details of its styling and specifications were the result of a sophisticated market analysis and research and development effort that would essentially guarantee its broad acceptance by the buying public.” Thus, the Edsel became the first car to be designed by focus group… and it was a notorious flop.

Timeshare Presentation Focus Groups

In many ways, timeshare sales presentations resemble focus groups; participants are compensated for their time, they are exposed to a new product, and they are asked to provide feedback about their experience. Additionally, people who buy timeshares, and have the opportunity to use them, are later brought back on “in-house” tours, and again exposed to the product and asked to provide feedback. Timeshare developers have then used this feedback (reasons for not purchasing) to guide the creation of new vacation ownership products.

When focus group participants complained that “fixed” weeks were not flexible enough, “floating” time was introduced. When some participants thought the timeshare was just too expensive, “biennial” and then “triennial” ownerships were created. When participants refused to buy because they didn’t travel for one-week intervals, “points” came onto the scene. When some participants found the word “timeshare” to be a turn-off, non-deeded perpetual trust vacation clubs were sold as the alternative. And on, and on, and on… Now, it’s not uncommon for resorts to sell a timeshare that’s “points-based, every-third-year usage on the “B” cycle, held in a trust, mortgaged to the owner, gold membership level, with a pickle on the side.” Just kidding, about the pickle.

What I wonder is whether all this added complexity has really made timeshare better, or has it just made it an Edsel? Some of the best-loved products were created without consulting consumers: Carol Shelby said the name “Cobra” came to him in a dream. The Aeron chair was despised and considered ugly for its first two years, until it became the most popular office chair in the world.

Back to Basics/To Infinity and Beyond

In the course of my work in timeshare marketing, I spend a lot of time thinking about the Millennial Generation. For timeshare to have a future, Millennials will need to buy it, use it, and love it. They will need to “share” timeshare with their friends on Facebook and Twitter – and for this to happen, they will need to experience “pride of ownership.” Millennials are certainly comfortable with technology, and so it is possible they would take advantage of the complex systems of modern timeshare products to maximize their vacationing value. Were this to turn out to be the case, timeshare developers could keep on innovating and take vacation ownership “to infinity and beyond!”

But I’m not so sure Millennials will see the appeal in timeshare presented as a cutting-edge efficient solution to their vacationing needs (whether it actually is or not.) In their fascinating work on Generational Theory, Williams Strauss and Neil Howe suggest Millennials have a strong sense of community, and are civic-minded. These tendencies may actually make timeshare attractive to Millennials – if the timeshare industry can stop making Edsels and get back to basics. When timeshare was sold as a fraction (1/52) of a whole property, a shared ownership so to speak, it was a much more tangible product. Owners would expect to be involved in HOA matters, and to know each other personally. Certainly, Millennials will value the ability to exchange through RCI or Interval International, but the appeal of knowing their “neighbors” when returning to their home resort could be equally important.

Even though the Edsel turned out to be a failure, Ford actually sold quite a few of them: over 63,000 in the first year. Likewise, the modern “Edsel” timeshare continues to be sold at a decent pace. One could argue that the lessons learned from their Edsel experiment helped Ford become the company that made the Mustang. It’s time for the timeshare industry to build our Mustang – let’s get to work!

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3 comments October 31st, 2013

The Queen of Versailles, David Siegel, and Timeshare Resale Values at Westgate Resorts

It has been said that there’s no such thing as bad publicity, and perhaps that’s true for David Siegel, self-proclaimed “Timeshare King” and CEO of Westgate Resorts. After all, how many other CEO’s of timeshare companies can you name?

What is not so clear, however, is to what extent publicity received by Siegel has negatively affected resale values of Westgate timeshares. Perhaps this is one the reasons most timeshare developers prefer to keep a low-profile.

When Siegel and his wife Jackie decided to build America’s largest private home, a 90,000 square foot palace aptly named “Versailles,” they attracted the attention of filmmaker Lauren Greenfield. Over the course of three years, Ms. Greenfield filmed interviews with the Siegels and their staff – including behind-the-scenes footage of Westgate Resorts operations. The resulting documentary film, The Queen of Versailles, was well received; winning the U.S. Directing Award at the 2012 Sundance Film Festival. (Now available on Netflix.)

The timing, of both the construction of Siegel’s home and the filming of the documentary, happened to coincide with the recent financial crisis; turning what might have been just another story about the excesses of the rich into a saga of survival. Ezra Kline, of the Washington Post, dubbed The Queen of Versailles “the single best film on the Great Recession.” When Siegel is unable to procure financing for Westgate Resorts’ receivables, construction on Versailles is halted and the very fate of the company appears to hang in the balance. In a candid moment, Siegel declares, “this is almost like a riches-to-rags story.”

Needless to say, The Queen of Versailles became a PR nightmare for Westgate Resorts. Siegel was so concerned about negative fallout that, the day before the film’s premier, he sued the filmmaker for defamation; claiming Westgate Resorts was depicted “in an array of defamatory, derogatory and damaging ways.” According to Siegel, by the time filming concluded Westgate Resorts was as profitable as it ever had been. The lawsuit has since been dismissed, but Siegel remains in damage control mode; appearing earlier this year on CNBC with his wife to announce “record profits” for Westgate Resorts and continuing construction of “Versailles.”

There’s no reason to doubt that both Siegel and Westgate Resorts are now financially solvent, but numerous other timeshare developers have gone bankrupt over the past 5 years. (e.g. Celebrity Resorts, Consolidated Resorts) When timeshare developers fail, the underlying real estate (individual timeshare interval) is not directly affected, but the resulting negative “buzz” often has lasting effects on perceived resale value. And speaking of perceptions, The Queen of Versailles portrays Westgate timeshare owners as victims of the same predatory sub-prime lending practices blamed for crashing the economy. Overall, it’s easy to conclude that Siegel’s PR mistakes have damaged the value of timeshares owned by hundreds of thousands of Westgate owners (at least temporarily.)

That said, now may well be the perfect time to buy a Westgate timeshare resale. Westgate Resorts makes a terrific product: Its timeshares are really, really nice. The properties are located on prime real estate. The maintenance fees are reasonable. And, for now, the prices are artificially low! Take this Westgate Lakes Resort and Spa resale, for example, located on some of Orlando’s best real estate and featuring leather furniture, granite and stainless kitchen, private patio, lock-out floor-plan, and large jetted-tub in master – priced thousands under cost.

westgate-lakes-resort-and-spa-living-room

Siegel has described Westgate Resorts as the “Rolls Royce of timeshare companies,” designed to allow ordinary Americans to “vacation like a Rockefeller.” Love him or hate him, if you’ve stayed in a Westgate timeshare, you have to agree with him.

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3 comments October 17th, 2013

Orange Lake’s Holiday Inn Club Vacations Becoming Timeshare Giant

Consolidation seems to be the order of the day in the timeshare industry, with many small and independent resorts being acquired by a few key players. For the past 30 years, Orange Lake Resorts was known predominately for its popular flagship property near Orlando, Florida; the brainchild of Holiday Inn founder Kemmons Wilson. With the ambitious launch of the Holiday Inn Club Vacations brand in 2008, Orange Lake set out to become a timeshare industry giant.

So far, Orange Lake’s new vacation club concept seems to be a resounding success: Holiday Inn Club Vacations has re-branded existing Orange Lake properties in Orlando, Vermont, Wisconsin, and Panama City. Additionally, the Club has acquired resorts in Gatlinburg, Myrtle Beach, Las Vegas, and Galveston. I’ve always been a fan of  resorts that offer an “internal exchange” program – allowing owners to exchange directly through the developer, rather than through third-party exchange companies at an added cost. With the number of Holiday Inn Club Vacations timeshare resorts now available (plus more on the way), owners can plausibly take most of their vacations without paying an exchange fee.

A key feature of Holiday Inn Club Vacations ownership is its new “internal points system,” which functions similarly to the popular Wyndham Vacations Resorts points system. Owners can even opt to use their points at Holiday Inn hotels, and other Intercontinental properties that are not vacation ownership resorts. While I expect the new points system to become quite popular, there may be some hurdles for owners of existing resorts acquired by the club: Owners at Galveston on the Gulf Resort originally purchased points through Escapes! Vacations internal points system, some Sunset Cove Marco Island owners bought Hilton Grand Vacations Club points, while owners at the Smoky Mountain Resort bought RCI points. Over time these disparate points systems will have to be reconciled, either through upgrades or conversion, in order for the Club to reach its full potential… And, according to owners I’ve spoken to, this process is already well under way.

With the growth of Orange Lake’s Holiday Inn Club Vacations there is a lot to be excited about – especially for industry watchers like myself who are happy to see another heavy-weight competitor emerge in an industry that was getting a little too consolidated!

1 comment November 13th, 2012

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