The Timeshare Beat: Jerry Sikes; Our Order

1. & 2. - Reloads and Referrals. Some recent studies represent that more than 25% of all new Industry sales are a direct result of Order member reloads or referrals. The most recent ARDA study (referenced above) indicates that in 2004 industry sales were $7.87 billion. Given that number almost $2 billion annually in new sales come via Order members. Clearly it would be in the industry's best interest to maintain and/or even grow these wants. Their value is limitless.

3. Exchange Memberships - According to recent published information, RCI claims to have over 3 million members and Interval claims 1.6 million members. Assuming that the average annual membership fee were just $85 then Order members contribute annually in excess of $390 million to these two industry giants just for the privilege. Many other exchange firms exist and most charge no membership fee. Clearly it would be in the interest of the two major exchange firms to provide higher quality services, which result in 100% achievement of exchange satisfaction. Otherwise why would these TVO Order members retain their memberships in these industry entities?

4. Exchange fees - According to their 2004 Disclosure statements RCI and Interval made 3,466,110 exchanges. For the purpose of this article let's assume that all the other exchange firms collectively made 233,890 bringing the total exchanges to 3.7 million. Additionally, assuming that the average exchange fee (including both domestic and international) was $130.00, then Order members contribute in excess of $480 million annually in exchange fees to the industry.

5. Management fees - According to the ARDA 2004 Economic Impact Study, maintenance fees are slightly over $3 billion annually. Other reports indicate that the typical collective management fees average around 10% of the annual maintenance fee. Given that these numbers are correct then Order members contribute approximately $300 million annually in management fees to the industry. Most legal documents that create timeshare / vacation ownership plans contain language that indicate the intent to operate the facility in the; a) Worst case - mutually beneficial [collective owners - developer] or b) Best case - exclusively beneficial [collective owners] interests. If one simply follows the headlines one cannot help but wonder who is really the benefactor of these fees.

6. Property Taxes - According to the same ARDA Economic Impact Study for 2004, Order members paid in excess of $300 million annually in resort property taxes on behalf of the industry. The industry has done a satisfactory job in addressing this issue simply because it is in the best interest of the development segment to keep these costs under control - not because they (the development segment) actually has to pay the cost, but because it could easily become an issue at the closing table.

7. Annual Assessments - After reducing the maintenance fees by the $600+ million for Property Taxes and Management Fees, it should be noted that the balance of the Annual Assessment paid by Order members exceed $2.4 billion annually. This is a good thing and represents how much TVO Order members mean to the communities wherein their home resorts reside, however clearly the development segment and ARDA take credit for these impacts.

8. Contributions - At last report less than 600,000 Order members are annually making contributions to ARDA- ROC. Assuming that the 3.87 million people owning timeshares has grown over the last 10 months to 4.0 members, only about 15% of the current TVO Order members are supporting this worthy cause with contributions of almost $1.7 million. Do you think that this dismal result is a direct result of the attention paid to the majority of TVO Order members?

9. Brand Loyalty - A strong brand signals that the entity wants to build customer loyalty, not just sell product and is used to create emotional attachment to products and companies. This attachment then causes the market to make decisions based, at least in part, upon emotion-- not necessarily just for logical or intellectual reasons. Hospitality and/or entertainment entities such as Marriott, Hilton, Hyatt, and Disney have used their brands to make strong statements within the timeshare / vacation ownership industry. Cendant has used its strong position within the industry (RCI-Fairfield-Trendwest) to market its other 20+ consumer oriented brands (Avis/Budget - CheapTickets/Orbiz - Days Inns/Howard Johnson/Ramada/Travelodge - Century 21/ERA/Coldwell Bankers) to the almost 4 million members of the TVO Order. It would be foolish to attempt to place a value on this branding loyalty, however it could easily exceed $100 billion. Clearly it is in the interest of all brand timeshare / vacation ownership entities (not just the ones mentioned above) to maintain this 'ongoing business relationship' so they can continue to direct market these TVO Order members and to market their information to others.

10. Goodwill - Almost every Public Relations statement concerning timesharing indicated something like the following statement found at ARDA.org: "Today's owners enjoy their timeshare. Nearly 85 percent are satisfied with their purchase. In fact, better than three out of four report that ownership increases their looking forward to holidays. Over two-thirds say ownership increases the amount of time they spend on holidays, and their learning experiences. Over half cite improvements in health and happiness." Clearly it is in the interest of the industry to maintain this goodwill or at least the illusion of it. I guess a good test would be if the industry could point to something that it is actually doing, at its own expense and without any profit motivation, to enhance that good will. Can you name one?

That said, and those facts, what is the point?

I fully understand that ARDA stands for The American Resort Development Association and that when you go to the ARDA web page (ARDA.Org) and tab to the section 'Who We Are' you will find the following:

Who We Are

The American Resort Development Association (ARDA) is the Washington, D.C.-based trade association representing the vacation ownership and resort development industries. Established in 1969 as the American Land Development Association, ARDA today has close to 1000 members, ranging from privately held companies to major corporations, in the U.S. and overseas.

ARDA's diverse membership includes companies with interests in vacation ownership resorts, community development, fractional ownership, camp resorts, land development, second homes and resort communities. Members' range from small, privately held firms to publicly traded companies and international corporations.

Mission Statement
It is the mission of the American Resort Development Association to foster and promote the growth of the industry and to serve its members through education; public relations and communications; legislative advocacy; membership development; and ethics enforcement.

Note that ARDA indicates that their membership is 'close to 1000 members' and that these members are 'ranging from privately held companies to major corporations, in the U.S. and overseas'. No mention of the 4+ million TVO Order members.

Note also that the second paragraph was expanded to include 'companies' with interests in vacation ownership resorts… Again no mention of TVO Order members.

You will note that in its mission statement ARDA indicates that advocacy is one of its missions. A look deeper into the ARDA web site under the Industry Information tab you will find the following:

ARDA promotes the growth and development of the timeshare industry in the following roles:
Advocacy - actively involved in local, state and national governmental affairs, ARDA monitors regulatory issues impacting timeshare and engages in lobbying efforts focused on the establishment of a legislative environment that further enhances consumer confidence and fosters industry growth.

Note that this advocacy is limited to 'efforts' that 'enhance consumer confidence and fosters industry growth'.

Regardless of what is said on these noted web site tabs, ARDA has acknowledged some involvement by those who 'may' currently be advocates for TVO Order members by the creation of membership in ARDA beyond its 'Active Members' by including within its 'Associate Members' ranks 'Property Management Firms' and within its 'Affiliate Members' ranks 'Home Owners Associations and Property Owners Associations'.

Headway may be being gained in these areas as in a recent (Oct. 12th) press release concerning next year's ARDA Convention in Las Vegas. Lou Ann Burney, ARDA Vice President of Marketing and Communications included the following new information in the ending paragraph:

The American Resort Development Association is the Washington D.C.-based professional association representing the vacation ownership and resort development industries. Established in 1969, ARDA today has nearly 1,000 members ranging from privately held firms to publicly traded companies and international corporations with interests in timeshare resorts, community development, fractional ownership and resort communities. The membership also includes timeshare owner associations (HOAs), resort management companies, and owners through the ARDA Resort Owners Coalition (ARDA-ROC).

I am not sure how many of the current 'nearly 1,000' members of ARDA fall within the ranks of Management Firms however, I do know that less than 200 Timeshare Owner Associations (HOA's) hold such a membership. I am also aware that almost 600,000 timeshare owners are making a contribution to ARDA-ROC consequently they cannot be counted in the 'nearly 1,000' ARDA members.

FINAL THOUGHT
It is not my real nature to be a cynic, naysayer or malcontent however, at times I may come off as one. Rather, I would like to think of myself as an advocate for those millions of individuals and/or families who have become (by hook or crook) owners of some type of timeshare plan over the last 35+ years. It's not that difficult to see that those 4+million timeshare plan owners are in need of some advocacy and it's no stretch to think that the development segment of the timeshare / vacation ownership industry should allow ARDA to truly become that advocate. After all they (the development segment) created the TVO Order and have been the primary benefactor of most of the (now) nearly $6 billion (simply add up 1-10 above) in annual output.

New enlightenment, awareness and other factors such as DNA has proven that these TVO Order folks are really valuable members of the timeshare 'lineage' and real opportunity is at hand for ARDA (if allowed) to step forward and be the facilitator of bringing this long lost and almost forgotten relative into the fold.

As Larry the Cable Guy would say: "Git-R-Done"

JS 10/05