More evidence supporting Resort Group theory

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Mark,

I am a member of the Bluegreen Vacation Club and WorldMark. Neither charge me for reservations or cancellations. And, the maintenance fees for these two resort groups are amongst the lowest in the industry. So perhaps, the resort group model as I have defined it is indeed more efficient than one where a separate entity manages the resort with a third party exchange company. In addition, both the Bluegreen Vacation Club and WorldMark reservation system work like the hotel model today. I wouldn't call that utopia, I would call that something everyone else should standardize on. It isn't difficult to do. Resort developers just need to create a multi-site timesharing plan and design and implement it properly. Unfortunately, it does require automatic deposits or the availability problem remains and some people don't like that attribute.

That is the whole point of my assertion. And, when I say that resort groups will dominate timesharing over the next 20 years, that means they will be the predominant method of timeshare "exchange." In other words, I believe there will be a day when there will be more internal reservations booked through systems like IRIS at WorldMark than through RCI, II, SFX, DAE and all the rest of the exchange companies combined. That is a tall order given the 40 year lead timesharing exchange has on these systems. To answer Tony's earlier question, that is what I am predicting.

Whether or not such systems exist today is not the point I am making. For example, cell phones were used in 1986, but not by many people. Today, cell phones are the pre-dominant method of person to person communication. You can't say that that was true in 1986. Telephones used to be dominated by landline telephones. Now, it's cell phones. Video tapes used to be predominant for watching movies. Now, DVDs are. Timesharing exchange today is dominated by weeks exchange companies. I predict that internal reservation systems will pre-dominate in the future. It's simply a superior model. Even you labelled it as utopia.

It is far more intuitive for a customer to book a reservation with WorldMark than it is for any of the other weeks based system. I've used most of them, including SFX, RCI and II, so I speak from direct experience. As an example, I booked a 1 bedroom unit today at WorldMark San Francisco for Aug 5-12 for my mother and father's birthday. It took me about 2 minutes from the time I got the idea until it was booked online.

Don't get me wrong. I love timesharing and I love to play the timeshare exchange game, too. But, most people in the world do not want to have to be "flexible" with their requests. When they want to go to the Maui Marriott for July 15-22, they don't want a response that says, "I need for you to specify a range of dates and a range of resorts or locations that you will accept as an exchange. Resort groups with properly designed internal reservation rules and systems eliminates this from happening.

Also, don't view this as a knock on SFX. I think SFX is a great company and you have a very loyal and happy customer base. Keep up the great work. I appreciate that you help so many people here. I just believe that the market will choose a slightly different path as its method of choice for booking timeshare vacations over time.

[CaliDave Super Moderator Find all posts View Profile Close CaliDave]

I think your model will work for the larger resorts.. but I agree with Mark on the breaking up of weeks. Its a pain in the A$$

I own at a resort this is fixed unit, fixed week, Sunday checkin. only 9 2bd units.
Lets say they join a WM or HGVC type system.
I'd say half the owners are going to keep thier fixed weeks, fixed units.
The other half deposit the points.. Then when an exchanger or owners wants to book Friday to Monday reservation.. Two owners of back to back weeks will have had to given up their weeks or else the exchanger will have to change units on Sunday. This will be a nightmare.
The entire resort is 43 units, but they vary in size and view.

Your model will work perfect for larger resorts with float weeks and floating units.

[taffy19 Gold Contributor Find all posts View Profile Close taffy19]

When you start breaking up space at a resort less than weekly increments, for up to 2, 3, or 4 days usage, most of that demand is for weekends leaving mid-week space that has extremely small to no demand leaving empty units (known as "breakage"). This breakage is a nightmare for resorts and still has a cost factor.... it also diminishes the availability and ability for Owners to book weekly Vacations., which for most people is the primary reason they purchased in the first place.

Mark, I don't know where timeshare ownership is heading to but I know what I have experienced at Laguna Surf where they offer you the choice of splitting your week up in 4-3 or 3-4 or 3-2-2 or 2-3-3 and we tried it. Why would anyone want to lose half a day each time at your resort because you check in after 4 PM and have to be out by 11 AM. It is a complete waste of time and even more so if the resort is not in driving distance or you have to fly to get there. It is so much easier to book a hotel room for a few nights. I just don't see it.

I agree totally with you that it also diminishes the availability and ability for Owners to book weekly Vacations unless they keep the week starting always on a Friday and you are not allowed to make it two week-ends in one single week of use. Then it seems to work because everyone still gets a complete week but it must be complicated to do these reservations and they need extra housekeeping too. It has to be more expensive for the resort and the cost passed on to the timeshare owners. Nothing is free.

We would rather stay two weeks at a resort we enjoy than two days but most of the people here seem to like flexibility and moving around and packing and unpacking again. Nothing wrong with that but why not use a hotel for that? JMHO.

I still wonder how a point-based system handles all the week-end requests of a few days only, if this is allowed. There has to be "breakage" of a few days during the week unless you use "extra points" and someone wants these days. It is a way for the developer of selling you more points.

Another question is, how does a resort handle the heavy week-end requests because when the resort is full for the week-end, it is full so the requests cannot be filled. They may tell you that this is possible when you buy but how can they deliver?

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

I think your model will work for the larger resorts.. but I agree with Mark on the breaking up of weeks. Its a pain in the A$$

I own at a resort this is fixed unit, fixed week, Sunday checkin. only 9 2bd units.
Lets say they join a WM or HGVC type system.
I'd say half the owners are going to keep thier fixed weeks, fixed units.
The other half deposit the points.. Then when an exchanger or owners wants to book Friday to Monday reservation.. Two owners of back to back weeks will have had to given up their weeks or else the exchanger will have to change units on Sunday. This will be a nightmare.
The entire resort is 43 units, but they vary in size and view.

Your model will work perfect for larger resorts with float weeks and floating units.

I agree that small resorts are problematic for the resort group model. You see it in the current point systems. It is pretty aggravating when you don't find availability at those resorts. When there is limited availability, it's usually because there aren't enough units committed to the plan.

To be effective, you really need a minimum of 50 units with 50 intervals each per year. Otherwise, there just isn't enough availability to appear abundant to owners. You can specify 7-night stays and check in only on a few days per week. That works fine. Owners understand limits on duration of stay. They just don't like it when a resort is always unavailable.

Orange Lake Country Club would be a perfect add on to many different resort groups because they could dedicate entire buildings or sections of the resort to various multi-site timesharing plans. And, by committing whole buildings, there would be good availability.

[Mark @SFX Industry Representative Find all posts View Profile Close Mark @SFX]

Mark,

I am a member of the Bluegreen Vacation Club and WorldMark. Neither charge me for reservations or cancellations. And, the maintenance fees for these two resort groups are amongst the lowest in the industry. So perhaps, the resort group model as I have defined it is indeed more efficient than one where a separate entity manages the resort with a third party exchange company. In addition, both the Bluegreen Vacation Club and WorldMark reservation system work like the hotel model today. I wouldn't call that utopia, I would call that something everyone else should standardize on. It isn't difficult to do. Resort developers just need to create a multi-site timesharing plan and design and implement it properly. Unfortunately, it does require automatic deposits or the availability problem remains and some people don't like that attribute.

That is the whole point of my assertion. And, when I say that resort groups will dominate timesharing over the next 20 years, that means they will be the predominant method of timeshare "exchange." In other words, I believe there will be a day when there will be more internal reservations booked through systems like IRIS at WorldMark than through RCI, II, SFX, DAE and all the rest of the exchange companies combined. That is a tall order given the 40 year lead timesharing exchange has on these systems. To answer Tony's earlier question, that is what I am predicting.

Whether or not such systems exist today is not the point I am making. For example, cell phones were used in 1986, but not by many people. Today, cell phones are the pre-dominant method of person to person communication. You can't say that that was true in 1986. Telephones used to be dominated by landline telephones. Now, it's cell phones. Video tapes used to be predominant for watching movies. Now, DVDs are. Timesharing exchange today is dominated by weeks exchange companies. I predict that internal reservation systems will pre-dominate in the future. It's simply a superior model. Even you labelled it as utopia.

It is far more intuitive for a customer to book a reservation with WorldMark than it is for any of the other weeks based system. I've used most of them, including SFX, RCI and II, so I speak from direct experience. As an example, I booked a 1 bedroom unit today at WorldMark San Francisco for Aug 5-12 for my mother and father's birthday. It took me about 2 minutes from the time I got the idea until it was booked online.

Don't get me wrong. I love timesharing and I love to play the timeshare exchange game, too. But, most people in the world do not want to have to be "flexible" with their requests. When they want to go to the Maui Marriott for July 15-22, they don't want a response that says, "I need for you to specify a range of dates and a range of resorts or locations that you will accept as an exchange. Resort groups with properly designed internal reservation rules and systems eliminates this from happening.

Also, don't view this as a knock on SFX. I think SFX is a great company and you have a very loyal and happy customer base. Keep up the great work. I appreciate that you help so many people here. I just believe that the market will choose a slightly different path as its method of choice for booking timeshare vacations over time.

BocaBum - you make some very interesting points, and I appreciate this interaction with you.

.........I am a member of the Bluegreen Vacation Club and WorldMark. Neither charge me for reservations or cancellations. And, the maintenance fees for these two resort groups are amongst the lowest in the industry. So perhaps, the resort group model as I have defined it is indeed more efficient than one where a separate entity manages the resort with a third party exchange company. In addition, both the Bluegreen Vacation Club and WorldMark reservation system work like the hotel model today. I wouldn't call that utopia, I would call that something everyone else should standardize on. It isn't difficult to do. Resort developers just need to create a multi-site timesharing plan and design and implement it properly. Unfortunately, it does require automatic deposits or the availability problem remains and some people don't like that attribute........

They may not charge you for cancellations, but you are paying a charge for reservations. It is all factored into your maintenance fee and/or purchase price. There is a hard cost involved, and all costs are passed down to consumers.

Utopian is the words I used for those who believe a vacation ownership concept can work like a hotel concept of daily usage. As explained in my previous post, these are "two different concepts". If the main reason for purchase is for a Vacation Plan, then fragmenting time and space throughout the year in a property for daily usage 2 to 3 days at a time which is a "Get a way", not a vacation... then mathematically diminishes the availablity of "weekly available space" for vacationers to book. Because weekly usage becomes fragmented... Members are advised... "well we have 4 days here, or 5 days at another resort", but rarely a whole week for the Smith's to book their "Family Vacation" for a week. Most people buy timeshares as a Vacation plan more so than a 2-3 day Getaway plan...

A plan of vacation ownership that works on the model of daily usage like a hotel is a great sounding concept. However, one of the conditions that would allow that to work is for the developer NOT to sell 100% of the units, so there is a cushion to absorb the impact of breakage and the ability for more diverse and dynamic reservations.

It may be relatively easy for you to confirm your space right now within their system. However at such point they sell out of all their units, the dynamics may completely change with a possible diminishing ability to book space simply because there will be far more members next year than today.... more people sharing the same piece of pie. I hope they keep on building.

......In other words, I believe there will be a day when there will be more internal reservations booked through systems like IRIS at WorldMark than through RCI, II, SFX, DAE and all the rest of the exchange companies combined. ....

Not as long as it can be done more cost effectively by outsourcing. There certainly will be change over time, we are an instrumental part of that change and look forward to it.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Mark,

Thanks for participating in this dialog. We appreciate insiders views on these discussions. We don't get it very often.

I agree that the biggest problem with point systems is the potential for overselling of prime weeks in prime locations. Most of timesharing relies on breakage to balance the books. In other words, large numbers of people simply don't use their timeshares or exchange credits and they go empty or are sold off cheaply to keep occupancy levels up or salvage value from specific weeks. If it gets too efficient, then breakage doesn't occur and availability becomes tight. Or, the same thing occurs if too many people are chasing too few prime weeks. The developer needs to keep this supply and demand in balance. Good ones do, bad ones don't.

Your observation about continuously building out is the right one. Fortunately, when the system is designed properly, growth becomes a natural extension of the business model. If the resort developer is a good one, then the value of ownership increases with each new resort. On the other hand, the opposite can happen if poor resorts are added to the system simply to maximize profit vs. the value of the ownerships. For example, I can't prove it, but I feel that my Bluegreen ownerships increase in value each time they add a new resort. Whereas, I feel my WorldMark ownership is decreasing in value every time they add a resort. I don't have empirical data that proves what my gut tells me. And maybe I am reading too many message boards.

Also, I agree with your observation about outsourcing certain aspects of operations. I think that is a smart part of your business model. It keeps you in the game no matter which way the industry evolves.

As a digression, I would love to be the product manager for the Marriott internal exchange program. I would leverage the Marriott Worldwide reservation system and I would integrate it with a very strong rental program and I would implement the best features of all the various point systems. It would be a really fun project. The owners would be the big winners. And the big losers would be exchangers in II. We would create a smoking hot direct exchange program for our owners.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Mark, I don't know where timeshare ownership is heading to but I know what I have experienced at Laguna Surf where they offer you the choice of splitting your week up in 4-3 or 3-4 or 3-2-2 or 2-3-3 and we tried it. Why would anyone want to lose half a day each time at your resort because you check in after 4 PM and have to be out by 11 AM. It is a complete waste of time and even more so if the resort is not in driving distance or you have to fly to get there. It is so much easier to book a hotel room for a few nights. I just don't see it.

I agree totally with you that it also diminishes the availability and ability for Owners to book weekly Vacations unless they keep the week starting always on a Friday and you are not allowed to make it two week-ends in one single week of use. Then it seems to work because everyone still gets a complete week but it must be complicated to do these reservations and they need extra housekeeping too. It has to be more expensive for the resort and the cost passed on to the timeshare owners. Nothing is free.

We would rather stay two weeks at a resort we enjoy than two days but most of the people here seem to like flexibility and moving around and packing and unpacking again. Nothing wrong with that but why not use a hotel for that? JMHO.

I still wonder how a point-based system handles all the week-end requests of a few days only, if this is allowed. There has to be "breakage" of a few days during the week unless you use "extra points" and someone wants these days. It is a way for the developer of selling you more points.

Another question is, how does a resort handle the heavy week-end requests because when the resort is full for the week-end, it is full so the requests cannot be filled. They may tell you that this is possible when you buy but how can they deliver?

Emmy,

This problem is actually solved quite easily. What you do is have an open reservation period where only 7-night stays or more are allowed. Let's say that that is 12-months to 6 months in advance of check in. Then, everyone who wants to book a week has plenty of time to do it.

Then, at 6-months (or some other defined period), partial week stays are allowed. Point values are always higher for weekends than weekdays. So, sometimes people will just book Sun-Thurs and stay somewhere else on the weekends to save on points. It works quite well, actually. All the rooms in prime locations get booked out.

And, the beautiful thing is that when the reservation system is properly designed, you can see exactly what is available. If you have some time some day, let me know and I'll demo you the WorldMark reservation system. Once you see it work, you will actually wonder why anyone would want to use anything else.

[CaliDave Super Moderator Find all posts View Profile Close CaliDave]

I think if the resorts are large enough. The can still be 100% sold out and not have many problems with weekend only useage.

We see this at the HGVC's in Vegas. I bought HGVC primarily for the flexibility of staying weekends. So I give up my full week and get 2 weekends. Thats fine with me.

I'd guess out of the 10,000 owners at Flamingo, probably 500 or more don't use thier points at all during a given year. There is always excess in a sold out resort.

[Mark @SFX Industry Representative Find all posts View Profile Close Mark @SFX]

........It has to be more expensive for the resort and the cost passed on to the timeshare owners. Nothing is free.

We would rather stay two weeks at a resort we enjoy than two days but most of the people here seem to like flexibility and moving around and packing and unpacking again. Nothing wrong with that but why not use a hotel for that? JMHO.

I still wonder how a point-based system handles all the week-end requests of a few days only, if this is allowed. There has to be "breakage" of a few days during the week unless you use "extra points" and someone wants these days. It is a way for the developer of selling you more points.

Another question is, how does a resort handle the heavy week-end requests because when the resort is full for the week-end, it is full so the requests cannot be filled. They may tell you that this is possible when you buy but how can they deliver?

Hi Emmy -

....................It has to be more expensive for the resort and the cost passed on to the timeshare owners. Nothing is free.

Precisely. In a regular weekly booking, there is one check-in and one check-out, requiring one clean-up. If you only split the week 4/3... you now have two check-ins and two check-outs. I believe the cost is around $60 per clean-up. I won't even go into the cost of 3 or 4 check-ins per week. We all know who pays.

.....We would rather stay two weeks at a resort we enjoy than two days but most of the people here seem to like flexibility and moving around and packing and unpacking again. Nothing wrong with that but why not use a hotel for that?....

Precisely... that's what hotels are more designed for as their business model... daily occupancy.

............ still wonder how a point-based system handles all the week-end requests of a few days only, if this is allowed. There has to be "breakage" of a few days during the week unless you use "extra points" and someone wants these days. It is a way for the developer of selling you more points.

In points based systems, the highest demand for less than weekly usage is the weekend (Thur, Fri & Saturday). The demand is extreme, and typically greater than supply. This leaves them with mid-week empty units commonly known as "breakage"... The demand for this space is extremely low to zero.

Resorts have to spend much time/cost developing distribution channels to rent out this breakage inventory to generate revenues to offset costs, and hopefully make a little profit. Even with multiple distribution channels it is still considered as a liability.

[Mark @SFX Industry Representative Find all posts View Profile Close Mark @SFX]

Mark

Isn't one of your stratigic alliances with HGVC? HGVC is points based group and I don't see them changing anytime soon.

Are you doing the administrative trades with Club Intrawest or is HGVC doing this direct with CI?

Short

Short - thank you for your post. We have relationships with both companies ... I cannot divulge any details of the relationships.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Hi Emmy -

....................It has to be more expensive for the resort and the cost passed on to the timeshare owners. Nothing is free.

Precisely. In a regular weekly booking, there is one check-in and one check-out, requiring one clean-up. If you only split the week 4/3... you now have two check-ins and two check-outs. I believe the cost is around $60 per clean-up. I won't even go into the cost of 3 or 4 check-ins per week. We all know who pays.

.....We would rather stay two weeks at a resort we enjoy than two days but most of the people here seem to like flexibility and moving around and packing and unpacking again. Nothing wrong with that but why not use a hotel for that?....

Precisely... that's what hotels are more designed for as their business model... daily occupancy.

............ still wonder how a point-based system handles all the week-end requests of a few days only, if this is allowed. There has to be "breakage" of a few days during the week unless you use "extra points" and someone wants these days. It is a way for the developer of selling you more points.

In points based systems, the highest demand for less than weekly usage is the weekend (Thur, Fri & Saturday). The demand is extreme, and typically greater than supply. This leaves them with mid-week empty units commonly known as "breakage"... The demand for this space is extremely low to zero.

Resorts have to spend much time/cost developing distribution channels to rent out this breakage inventory to generate revenues to offset costs, and hopefully make a little profit. Even with multiple distribution channels it is still considered as a liability.

I have the Bluegreen Vacation Club financials. The extra housekeeping fees associated with partial week stays adds 7.3% to the maintenance fees of the underlying resorts.

This is a bargain because Bluegreen owners are willing to pay a 19% premium
to maintenance fees for the benefits of partial week stays at multiple resorts.

Mark can argue that that 12% is the cost of the reservation system. I won't disagree with that. So, even though reservations and cancellations are free, there is a cost to owners for this privilege.

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

This may be wandering some from the topic, but Marriott owners have a good system right now, with a 21 day or more hold within Marriott owners before the week goes to the general II public. I cannot fathom why they would be unhappy with a exchange company that gives them preferential treatment above and beyond those of other exchange company members. The current system is unfair to non-Marriott owners and if they are unhappy they are just a bunch of whiners.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

This may be wandering some from the topic, but Marriott owners have a good system right now, with a 21 day or more hold within Marriott owners before the week goes to the general II public. I cannot fathom why they would be unhappy with a exchange company that gives them preferential treatment above and beyond those of other exchange company members. The current system is unfair to non-Marriott owners and if they are unhappy they are just a bunch of whiners.

Tony,

I believe that the Marriott system could be and should be even more unfair to non-Marriott owners. Marriott should be bulkbanking only non-prime weeks into II. Prime weeks should be made available to owners only. And, owners should be getting exactly what they are getting today from II. And, Internal reservations should be free.

I say this even though I am NOT a Marriott owner today. If they created this system, I would become one. As it stands, I have no need to become an owner since it is so easy for me to exchange into Marriott's during prime weeks.

If Marriott had a decent internal reservation system, it wouldn't need lock offs. Lock offs are weeks systems answer to differential value. Since some resorts like Marriotts are so much better than other weeks, you need to split a lockoff into it's piece parts and let those piece parts trade for 2 bedroom units for there to be anything closely resembling a fair trade for many locations.

That is suboptimizing the timesharing system due to an artifact of exchange.

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

If the owners don't grab a prime week that sits waiting to go in the II inventory for three weeks or more, shame on them. Once upon a time there was a cheap way to do Marriott: Buy a cheap green week and grab the prime red weeks in exchange. The problem comes if Marriott drop the resort from it's system- otherwise it's Marriott on the cheap. If Marriott goes internal- this system could work even better for the cheap green week owner.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

If the owners don't grab a prime week that sits waiting to go in the II inventory for three weeks or more, shame on them. Once upon a time there was a cheap way to do Marriott: Buy a cheap green week and grab the prime red weeks in exchange. The problem comes if Marriott drop the resort from it's system- otherwise it's Marriott on the cheap. If Marriott goes internal- this system could work even better for the cheap green week owner.

I would agree with you if all prime weeks were made available at a predictable timeframe. Since you never know when it is going to be deposited, you have to check every day in order to find the prime week you want. Most people don't want to do this.

A better approach would be to make all weeks available at the same time and use first come, first served. That is how most point systems work. But, week systems can do the same thing.

So, lots of prime weeks leak through the system when they wouldn't if another method of reservation would be implemented.