In the next 5½ years a lot can happen. Marketers for the developers may find a
new lead generation method to actually replace telemarketing. The potential of cyberspace in our industry has yet
to be exploited for the primary market and from the looks of things it will remain the purview of the discounters
such as Expedia, Priceline, Travelocity, Hotwire and Cheaptickets as well as auction sites such as e-Bay and the
sellers in the secondary market. I say this simply because it's clear that selling, yes even hard selling the product
one-on-one, will remain the method of choice for an industry committed to group 'B' expansion. The dream of a market
where buyers actually wake-up one morning with the notion that they are going out that day and purchase our product
is even more far-fetched now that we are so far removed from the simplicity of the traditional group 'A' product.
The gap between groups 'A' and 'B' becomes more apparent.
Assuming that the potential of the internet highway will remain untapped and the creation of some new viable method
mass-marketing system will remain on the drawing board, the likelihood that marketing costs will be effectively
reduced in this decade are slim at best. With the costs of everything else required to develop, operate and maintain
the group 'B' product going up and the requirement to maintain, yes even increase, the contribution of our segment
to the corporate coffers thus the dividends of owning stock in the Brand, the purchase price of the original club
membership and the annual fees to maintain that membership will continue to increase. These increases may well
be disproportionate to similar increases in the group 'A' arena, both those offered in the primary market and those
available in the secondary market. These circumstances and the brand developer's disdain for the secondary market
have and will drive the wedge even deeper into the existing gap between group 'A' and 'B'.
In order to increase market share, the developers will continue to be creative when it comes to new product niches.
Fractionals and private membership entities will continue to expand both in their numbers and in their price points,
however, this growth will remain the province of the few. Several additional inventive drop products will join
bi-annuals in order to maintain an acceptable VPG number. Because of the necessity to be inventive in order to
survive, the developers will place additional pressure on the exchange firms to enhance club membership inticements.
The exchange firms have only one resource available to address this ever-increasing catch-22 situation and that
is the inventory of deposited use periods by their group 'A' members. This catch-22 situation is exasperated for
the exchange firms because the group 'B' methodology is first to internalize exchanging between their club members
then and when their members want to venture outside their group, demand that the exchange firm provide them priority
over all other exchange firm members. With most new development being of the group 'B' variety and many of the
group 'A' members becoming more and more disillusioned with their exchange firm membership, this catch-22 situation
is becoming critical for the exchange firms.
The smaller independent exchange firms have less of a problem with the priority member quagmire than the major
firms; however, they individually and collectively have a fraction of the total inventory currently committed to
those major firms. These circumstances and the lack of viable options for exchange by group 'A' members will continue
to widen the gap between the 'A' and 'B' factions. Unless a complete reversal occurs with respect to inventory
being deposited by group 'A' members being used for a variety of uses other than equitable exchanges for them,
critical mass will occur prior to the end of this decade and the odds are that the industry implodes.
Flexibility has been the battle cry within our industry for the better part of its existence in the United States.
Whole Condos would not sell so we opted for the flexibility of selling them by the week. Fixed weeks were thought
to be limiting so we opted for the flexibility of floating time. Same location every year seemed restrictive so
we established exchanging. Then came lock-offs, split-weeks, bi-annuals and dual exchange firm affiliations for
added flexibility. Timesharing itself had its limitations thus vacation ownership was coined. In the latter part
of the 20th Century, we began to tell consumers that no one should be forced to take a week (7 day) vacation and
created a new form of currency, which would allow them to take their pre-planned vacation dollars and spend them
with more flexibility.
Currently, we have identified the ultimate in flexibility. Now we tell the consumers that they don't even have
to own or be a member of a timeshare/vacation ownership plan in order to take full advantage of the far superior
vacation accommodations provided by our industry. The astute consumer can simply go on-line and rent one of our
timeshare/vacation ownership weeks for less than the average annual maintenance fee paid by a group 'A' owner.
These rental offerings are not being made by the group 'A' owners; they are coming from inventory which they deposited
with the exchange firms with the hope of obtaining an equitable exchange. Rather than being the recipient of the
benefits provided by this industry's flexibility tidal wave, the group 'A' owner is experiencing increasing restraints,
few options and almost no equality as part of an industry controlled by developers of group 'B' product and the
exchange firms that cater to them or their own corporate dictates. Little wonder that the group 'A' owners and
those who serve them are beginning to question the value of continued participation in this one-sided game.
As of 2002, the statistics indicated that of the inventory being sold by the developers in the primary market were
responsible for 73%, fully 23% were sold in the secondary market by resale firms or owner associations and about
4% changed hands through gift, inheritance or other methods. All indications are that the developer percentile
will continue to reduce and acquisitions from entities other than developers will continue to increase. This market
trend exists because the major industry players - developers, financial institutions, exchange firms and the primary
industry trade organization demonstrate little interest (if any) to the secondary market. Current trends would
indicate that of the estimated 1725 USA timeshare/vacation ownership resorts, about 1250 will be the group 'A'
type and for most of them the secondary market is the primary place where significant movement of available inventory
can occur. Without the support of the major industry player indicated above, the secondary marketplace could be
compared to shark-infested waters. Again, this situation contributes to the growing perception that two distinct
factions, with widely different interests, exist in the world of timesharing. Is there any entity (with demonstrated
integrity) currently operating within our industry willing to begin the process of bridging the existing gulf between
group 'A' and group 'B'? If so, now is the time to step forward.
All involved within any segment of our business acknowledge that we have penetrated the known marketplace by somewhere
between 5 and 10 percent. The number of consumers we would like to convert to customers is staggering and that
potential is the reason so many are aggressively pursuing new developments or expanding existing ones. Regulations,
which control the 'B' type developments, require that accommodation increments are available and controlled by
the developing entity for all the previously issued memberships and for the equivalent issue of new memberships
or additional currency in the form of points or credits. Almost every one of the major firms that make up group
'B' such as Marriott, Hyatt, Hilton, Disney, ILX, Shell, Bluegreen, Fairfield, Trendwest/WorldMart, Grand Pacific,
Starwood/Sheraton/Westin, and independents such as Orange Lake Country Club, the Shawnee Group, Grand Pacific,
Island One, the Welk Resort Group have introduced/acquired new resorts or announced expansion of existing ones
within the last 12 months. In order to keep up with the pace of selling memberships, many of the existing independent
clubs have acquired existing available inventory from group 'A' resorts. In many instances these clubs use that
inventory to bulk bank it with exchange firms to access inventory available for use without the 7-day interval
restrictions in place at most group 'A' resorts. In reality most all the inventory that currently exist within
group 'B' and most of the inventory that has been acquired by clubs from group 'A' resorts for use by their club
members is not available to group 'A' owners via the exchange benefit. If you take into consideration the points
affiliation preferences by one of the major exchange firms and the priorities provided by both majors to the brands,
little wonder exists as to why group 'A' owners feel disenfranchised.
There are several types of consumers and several types of customers. Regardless of the product/service produced,
the sales and marketing segments of any industry or development attempt to identify the consumers most likely to
purchase their wares. Demographics play an important role in this market identification ritual. If we can identify
the profile of those who have already purchased a product/service and are satisfied with their purchase, we can
direct our marketing efforts toward others in the marketplace that fit that profile and enhance our probabilities
of achieving a sale. Using the same principles, we can use the knowledge gained from experience with existing and
satisfied owners/users, to design or create a product that will enhance our opportunities to sell to others with
similar needs and wants. In most instances these alterations or adjustments to the sales and marketing effort or
the product/service itself are often subtle and relatively seamless, however, there are many instances where the
modifications were actually changes that required radical adjustments.
There are several examples of these concepts that could be used for purposes of clarification. One that comes immediately
to mind is the VHS arena. For several years players and movies of this type dominated the marketplace and millions
upon millions of households purchased versions of this product and were highly pleased with their performance and
the enjoyment they brought. Firms such as SONY introduced the DVD concept and almost overnight the VHS was outmoded.
Little (if any) thought was given by the developers and marketers about the millions upon millions who had purchased
a VHS player and movies or had accumulated several boxes full of family activities on VHS tapes with the use of
a VHS camera they purchased or borrowed. What little thought that was given amounted to the idea that sooner or
later all those customers, who had not purchased the DVD products immediately "just to keep up with the Joneses",
would eventually have to acquire the new concept because the old one would simple began to fade away. With just
a little imagination one could replace the VHS situation with the group 'A' and the DVD situation with the group
'B' of this dissertation. In both instances the consumer was converted to a customer and that customer was later
relegated to relative obscurity by new developments. The primary difference is with the VHS, the customer's investment
was in the hundreds of dollars rather than the thousands of dollars in the case of the group 'A' customers.
It is my opinion and position, that many of the owners of interval interest in the 1,250+ group 'A' USA resorts
have gone from consumer to customer, satisfied customer, repeat customer, concerned customer, disillusioned
customer, distressed customer to disenfranchised customer. The problem is different from the VHS-DVD situation
because the product the group 'A' customer purchased for all intent and purpose is equal to that being sold by
the group 'B' developers. The 2 bedroom-2 bath, sleep 6 - group 'A' resort accommodations 5 miles from Walt Disney
World in greater Orlando, Florida is in all respects equal to the 2 bedroom-2 bath, sleep 6 - group 'B' resort
in the same location. The same holds true for beachfront, mountain view, and/or urban locations. The only difference
is the method of delivery (points or credits), the retained financial benefits of the developing entity and the
likelihood of an equitable exchange for the use period deposited with an exchange firm. The question remains -
"what will be the status of these group 'A' customers as we roll into the second decade of the 21st century?"
FINAL THOUGHT
Group 'A' resort owners have very few legitimate places where they can let their concerns be known. If they are
active on-line, they may be a member of the Timeshare Users Group and if so they may join others members with similar
concerns on an active Tug thread. If you are not familiar with this organization, have a look at: http://www.timeshare-users-group.com/ or http://www.tug2.net/.
Another place that Group 'A' owners can go to is the hard copy magazine TimeShareing Today that bills itself as
the Trusted Independent Voice of Vacation Ownership an has delivered the same for over a decade. A trial subscription
of 5 issues to this magazine is only $10.00 and well worth the price to any timeshare owner. Again, if you are
active on-line you can go to: http://www.timesharetoday.com/.
I believe that as more and more group 'A' owners become informed about the current situation, the closer we as
an industry will come to a complete division of these opposing factions. The current situation is definitely not
a mutually beneficial relationship.
If owners within group 'A' were limited to exchanging between themselves and members of group 'B' had the same
limits a more equitable system would prevail.
If the owners within group 'A' were represented by an organization whose sole interest was the betterment of guest
services, property management, owner rentals, resales, and lobbying for protection from unfair regulations, laws,
statutes or taxes would they be better served than the current situation where their interests are greatly overshadowed
by developer interest?
What possibly could be done within the next year or so that would break the chain of negatives indicated in the
bold and italicized statement in the last paragraph prior to this final thought?
If most of the owners within group 'A' are not going to convert to a group 'B' membership, they are not going to
make referrals to group 'B' developers and their resort management is independent of a group 'B' developer or major
exchange firm, what benefit are they to those committed to the advancement of the group 'B' interest?
If equitable, according to our friends at Webster's, is fair and just and the exchange firms have commitments which
make it almost impossible for group 'A' owners to get an equitable exchange, why should group 'A' members continue
to be members of an exchange firm?
If these (and other similar) questions are not answered within the next few months, I fear that prior to the end
of this decade, the group 'A' and group 'B' interest will polarize to such an extent that nothing can stay the
inevitable total split.
I pray that this fragmentation, if it occurs, will product a win-win situation rather than a lose-lose one.
Your thoughts would be appreciated.
See "2010 Part 1"
