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What are the five most important issues facing the timeshare industry today?
#1 Preserving & promoting the quality of the resort are always close to the top of the list in my mind. It’s so much easier to keep a resort realistically funded and properly maintained than it is to let things slide and then play an endless game of catch up. There are two areas in which we positively cannot fall behind: the finances and the physical plant. We always try to think from a worst case scenario when making budget recommendations to our clients, and we advocate frequent and rigorous use of the business judgment rule. Tricom uses a very conservative approach when reviewing accounts past due, and we aggressively pursue collection of all delinquencies through the use of an annually updated and reviewed Delinquency Policy. Step #1 is to have a Delinquency Policy, Step #2 is to follow the Delinquency Policy. We also advocate a very low “pain threshold” when it comes to classifying accounts as “doubtful.” Doubtful accounts are, in all likelihood, accounts that ultimately will not pay and will end up going to foreclosure. Recognizing, as early as possible, that our client is not going to receive those delinquent funds is essential to maintaining a fiscally healthy resort. The Association should not plan to spend money it will never receive. Regarding the physical plant, keeping on target with scheduled renovations, ongoing preventative maintenance programs and the updating of the properties’ components are also critical. As an example, at one of our larger desert properties, the Owners were informed early last year that a “pool chiller” would be purchased for use this summer in the most popular swimming pool at the resort. A pool chiller cools the water temperature in a swimming pool by about 15 degrees in areas where the air temperature can often exceed 110 degrees during the day, providing a much more refreshing swim. It would have been very easy to defer this “luxury purchase” in the name of the sagging economy, but we feel that disappointment should be avoided whenever possible - especially when our Owners may be having a challenge paying their obligations on time, yet they are demonstrating a diligent effort to do so. Our job is to make sure the Owners stay “in love” with the resort they purchased, and to avoid anything that even remotely resembles buyer’s remorse. Good discipline and common sense are always warranted in any economy, and these both really pay off when times are lean. If the foundation you have laid is solid, feel free to build upon it!
#2 Next would be finding and keeping good employees – beautiful resorts are our main appeal, but our power is in our people. Focusing on quality, conducting ongoing training, and remaining competitive in the marketplace are all key to our long term success. We have a duty to ourselves and the people we represent to find and retain the best and the brightest. Our company is an ESOP, which means all employees have a vested interest in the overall long term success of the organization through their ownership stake – from the President of the Company down to our fine front line employees. It is true that in a sagging economy, we look for more innovative ways to save money without sacrificing quality, and this can produce some interesting results. Our training division, Tricom University, has been using extremely cost effective “web based” training programs to conduct group educational sessions on the internet, without the added cost of the transportation and lodging necessary when utilizing more traditional “in person” training environments. Web based training has been a very effective tool for us, and we have discovered that we can put a training class together, send out electronic invitations, and be “in session” in a matter of minutes. In the area of compensation, we have not experienced any marked reduction in the availability of dollars to competitively compensate our team members. We would always recommend keeping “merit increases” intact as opposed to offering “bonus” or “holiday incentives” – if a choice between the two had to be made, and we have made it known throughout the Company that everyone needs to “kick it up a notch.”
#3 This would probably be about our obligation to stay current and remain teachable. “Going green” is the mantra of the day, and for good reason. Resorts are big consumers of building materials, utilities, food service items, chemicals, textiles – the list is pretty endless. We have an ongoing obligation as good citizens to make the best use of the latest technological and ecological advances available to us, not to mention the savings we realize for our clients. We are currently looking into the advantages of using an energy broker, and it appears that we will be able to save our clients a significant amount of money on electrical and natural gas utility costs. We have taken significant advantage of rebates offered to change out older, less efficient appliances, in concert with our ongoing upgrade and renovation plans. We strongly recommend the installation of double pane energy efficient windows whenever replacement projects are undertaken or proposed. Compact Fluorescent Lightbulbs (CFL’s) are being installed everywhere. Air conditioning “limiters” are a great energy saving value. AC limiters prevent an air conditioning unit from being set to some unrealistically low temperature setting, only to see the unit rendered useless because it has frozen up on itself and will take hours to thaw. New technology is now available that softens water without the use of salt, and we’re looking into that as well.
#4 Keeping it fun. Timeshare is about rest, relaxation, family & friends. Many of our Owners are struggling financially, and they are making a diligent effort to keep up their end of the bargain. We need to do the same. Beautiful places and smiling, caring faces. Respect our Owners. Pamper our Owners. Recognize that without Owners, there would be no resort. We keep our activity schedules current, up to date, and encourage everyone to have fun! We see increased interest in offering activities that are more “home-style” in nature, promote family time, and cost less.
#5 Finally, there are a lot of “peripheral” activities we do to drive the success of the business. One of these is rentals to the public, which really accomplishes two things at once: First, it brings in revenue that would otherwise be paid by the Owners. Second, it exposes people to timeshare in the best way possible – as paying Guests. Many timeshare Owners started as nightly renters. They were sold on the idea of vacation ownership through their superior experience. We train our team to function as “concierges” for our Owners and Guests, and this service opens a valuable dialogue to offer additional time at the resort, and the opportunity to purchase additional services. We do a lot of follow up, we contact previous Guests with offers of reduced rental rates during periods of higher than usual vacancies. With the downturn in the economy, there is a lot of room to “play” with rental rates, rate programs and delivery systems. We’ve learned a lot about our properties in ways we might not have had the hospitality landscape not changed so dramatically.
I think the focus can shift depending on the current economic climate, but not the overall direction. I personally feel we need to compete harder and smarter in a downturn to properly position ourselves for the inevitable recovery. We always try to remember that when one door closes, another one opens. Vacation ownership is, quite frankly, bigger than a multi-year recession, and if we’re consistently good stewards of the things that have been entrusted to us, it will pay off many times over.
Keeping delinquencies to a minimum, as we discussed above, is an absolute commandment. I was taught a long time ago: “Thou shalt not ignore thy non-performing intervals.” The assessments are the lifeblood of any common interest development, and this holds true in the vacation ownership world as well. Once our delinquencies rise much above five percent, we’ve got a real issue on our hands. Our goal is two percent or less. The temptation to “defer” inventory recovery efforts (foreclosure) may loom large, but we don’t recommend deferring the recovery of any inventory under any circumstances. Non-performing inventory tends to have a life of its own, and it also owes its own property taxes. Move that week into the hands of someone who wants to go on vacation!
We are not experiencing a measurable rise in delinquencies, and in some cases, the delinquencies are lower than they have been in years. Owners who are happy with their timeshare are making a conscious effort to keep that portion of their lives intact. I’ve spoken to people who have lost their homes, and they’ve contacted us to let us know they’re keeping their vacation. It’s a reasonable and prudent thing to do because the value of the experience remains under almost any circumstance. We’re always willing to talk to someone who is asking for help. We offer payment plans, as well as a deed back program to anyone who feels they may be in over their head.
We have not laid a single person off due to the economy, and we are moving forward wherever there are projects “on the deck.” Following our established disciplines ensures the funds for future projects are available. One of our largest clients is currently in the third phase of a six phase suite renovation, and everyone involved couldn’t be more excited. It seems everyone pays attention a little bit more when times are tough, and a downturn like the one we’re in can really give us a different perspective - one of appreciation.
Following our philosophy about keeping delinquencies to a minimum, once we have a week back in the Association’s inventory, our job is to get a dues paying Owner into the interval. It is certainly true that the market has changed dramatically in the area of re-sales, but we’re very talented in finding ways to think “outside of the box.” We wouldn’t be advocating something no one wanted to buy, and in the end, we’d only be fooling ourselves. It always goes back to basics, if our finances and the physical plant are in order, everything else falls right into place. Unfortunately, I cannot go into more detail about our unique approach to re-sales, as some things must remain proprietary in nature if we are to retain our competitive edge.
__________________________________________________ ________________________________________
Bill McCarthy says: “Never promise more than you can deliver, always deliver more than you promised, and smile!”
Bill McCarthy has been in the hospitality industry since 1992. He began his career with Holiday Inns Worldwide, and he is currently an Area Project Director with Tricom Management, Inc. based in Anaheim, California. Bill serves resorts in the Southern California beaches & deserts, and all the way north to Lake Tahoe. He is a Certified Community Association Manager (through the California Association of Community Managers,) a Certified Hotel Administrator (with the American Hotel & Lodging Association) and a Registered Resort Professional (through the American Resort Development Association.)
#1 Preserving & promoting the quality of the resort are always close to the top of the list in my mind. It’s so much easier to keep a resort realistically funded and properly maintained than it is to let things slide and then play an endless game of catch up. There are two areas in which we positively cannot fall behind: the finances and the physical plant. We always try to think from a worst case scenario when making budget recommendations to our clients, and we advocate frequent and rigorous use of the business judgment rule. Tricom uses a very conservative approach when reviewing accounts past due, and we aggressively pursue collection of all delinquencies through the use of an annually updated and reviewed Delinquency Policy. Step #1 is to have a Delinquency Policy, Step #2 is to follow the Delinquency Policy. We also advocate a very low “pain threshold” when it comes to classifying accounts as “doubtful.” Doubtful accounts are, in all likelihood, accounts that ultimately will not pay and will end up going to foreclosure. Recognizing, as early as possible, that our client is not going to receive those delinquent funds is essential to maintaining a fiscally healthy resort. The Association should not plan to spend money it will never receive. Regarding the physical plant, keeping on target with scheduled renovations, ongoing preventative maintenance programs and the updating of the properties’ components are also critical. As an example, at one of our larger desert properties, the Owners were informed early last year that a “pool chiller” would be purchased for use this summer in the most popular swimming pool at the resort. A pool chiller cools the water temperature in a swimming pool by about 15 degrees in areas where the air temperature can often exceed 110 degrees during the day, providing a much more refreshing swim. It would have been very easy to defer this “luxury purchase” in the name of the sagging economy, but we feel that disappointment should be avoided whenever possible - especially when our Owners may be having a challenge paying their obligations on time, yet they are demonstrating a diligent effort to do so. Our job is to make sure the Owners stay “in love” with the resort they purchased, and to avoid anything that even remotely resembles buyer’s remorse. Good discipline and common sense are always warranted in any economy, and these both really pay off when times are lean. If the foundation you have laid is solid, feel free to build upon it!
#2 Next would be finding and keeping good employees – beautiful resorts are our main appeal, but our power is in our people. Focusing on quality, conducting ongoing training, and remaining competitive in the marketplace are all key to our long term success. We have a duty to ourselves and the people we represent to find and retain the best and the brightest. Our company is an ESOP, which means all employees have a vested interest in the overall long term success of the organization through their ownership stake – from the President of the Company down to our fine front line employees. It is true that in a sagging economy, we look for more innovative ways to save money without sacrificing quality, and this can produce some interesting results. Our training division, Tricom University, has been using extremely cost effective “web based” training programs to conduct group educational sessions on the internet, without the added cost of the transportation and lodging necessary when utilizing more traditional “in person” training environments. Web based training has been a very effective tool for us, and we have discovered that we can put a training class together, send out electronic invitations, and be “in session” in a matter of minutes. In the area of compensation, we have not experienced any marked reduction in the availability of dollars to competitively compensate our team members. We would always recommend keeping “merit increases” intact as opposed to offering “bonus” or “holiday incentives” – if a choice between the two had to be made, and we have made it known throughout the Company that everyone needs to “kick it up a notch.”
#3 This would probably be about our obligation to stay current and remain teachable. “Going green” is the mantra of the day, and for good reason. Resorts are big consumers of building materials, utilities, food service items, chemicals, textiles – the list is pretty endless. We have an ongoing obligation as good citizens to make the best use of the latest technological and ecological advances available to us, not to mention the savings we realize for our clients. We are currently looking into the advantages of using an energy broker, and it appears that we will be able to save our clients a significant amount of money on electrical and natural gas utility costs. We have taken significant advantage of rebates offered to change out older, less efficient appliances, in concert with our ongoing upgrade and renovation plans. We strongly recommend the installation of double pane energy efficient windows whenever replacement projects are undertaken or proposed. Compact Fluorescent Lightbulbs (CFL’s) are being installed everywhere. Air conditioning “limiters” are a great energy saving value. AC limiters prevent an air conditioning unit from being set to some unrealistically low temperature setting, only to see the unit rendered useless because it has frozen up on itself and will take hours to thaw. New technology is now available that softens water without the use of salt, and we’re looking into that as well.
#4 Keeping it fun. Timeshare is about rest, relaxation, family & friends. Many of our Owners are struggling financially, and they are making a diligent effort to keep up their end of the bargain. We need to do the same. Beautiful places and smiling, caring faces. Respect our Owners. Pamper our Owners. Recognize that without Owners, there would be no resort. We keep our activity schedules current, up to date, and encourage everyone to have fun! We see increased interest in offering activities that are more “home-style” in nature, promote family time, and cost less.
#5 Finally, there are a lot of “peripheral” activities we do to drive the success of the business. One of these is rentals to the public, which really accomplishes two things at once: First, it brings in revenue that would otherwise be paid by the Owners. Second, it exposes people to timeshare in the best way possible – as paying Guests. Many timeshare Owners started as nightly renters. They were sold on the idea of vacation ownership through their superior experience. We train our team to function as “concierges” for our Owners and Guests, and this service opens a valuable dialogue to offer additional time at the resort, and the opportunity to purchase additional services. We do a lot of follow up, we contact previous Guests with offers of reduced rental rates during periods of higher than usual vacancies. With the downturn in the economy, there is a lot of room to “play” with rental rates, rate programs and delivery systems. We’ve learned a lot about our properties in ways we might not have had the hospitality landscape not changed so dramatically.
I think the focus can shift depending on the current economic climate, but not the overall direction. I personally feel we need to compete harder and smarter in a downturn to properly position ourselves for the inevitable recovery. We always try to remember that when one door closes, another one opens. Vacation ownership is, quite frankly, bigger than a multi-year recession, and if we’re consistently good stewards of the things that have been entrusted to us, it will pay off many times over.
Keeping delinquencies to a minimum, as we discussed above, is an absolute commandment. I was taught a long time ago: “Thou shalt not ignore thy non-performing intervals.” The assessments are the lifeblood of any common interest development, and this holds true in the vacation ownership world as well. Once our delinquencies rise much above five percent, we’ve got a real issue on our hands. Our goal is two percent or less. The temptation to “defer” inventory recovery efforts (foreclosure) may loom large, but we don’t recommend deferring the recovery of any inventory under any circumstances. Non-performing inventory tends to have a life of its own, and it also owes its own property taxes. Move that week into the hands of someone who wants to go on vacation!
We are not experiencing a measurable rise in delinquencies, and in some cases, the delinquencies are lower than they have been in years. Owners who are happy with their timeshare are making a conscious effort to keep that portion of their lives intact. I’ve spoken to people who have lost their homes, and they’ve contacted us to let us know they’re keeping their vacation. It’s a reasonable and prudent thing to do because the value of the experience remains under almost any circumstance. We’re always willing to talk to someone who is asking for help. We offer payment plans, as well as a deed back program to anyone who feels they may be in over their head.
We have not laid a single person off due to the economy, and we are moving forward wherever there are projects “on the deck.” Following our established disciplines ensures the funds for future projects are available. One of our largest clients is currently in the third phase of a six phase suite renovation, and everyone involved couldn’t be more excited. It seems everyone pays attention a little bit more when times are tough, and a downturn like the one we’re in can really give us a different perspective - one of appreciation.
Following our philosophy about keeping delinquencies to a minimum, once we have a week back in the Association’s inventory, our job is to get a dues paying Owner into the interval. It is certainly true that the market has changed dramatically in the area of re-sales, but we’re very talented in finding ways to think “outside of the box.” We wouldn’t be advocating something no one wanted to buy, and in the end, we’d only be fooling ourselves. It always goes back to basics, if our finances and the physical plant are in order, everything else falls right into place. Unfortunately, I cannot go into more detail about our unique approach to re-sales, as some things must remain proprietary in nature if we are to retain our competitive edge.
__________________________________________________ ________________________________________
Bill McCarthy says: “Never promise more than you can deliver, always deliver more than you promised, and smile!”
Bill McCarthy has been in the hospitality industry since 1992. He began his career with Holiday Inns Worldwide, and he is currently an Area Project Director with Tricom Management, Inc. based in Anaheim, California. Bill serves resorts in the Southern California beaches & deserts, and all the way north to Lake Tahoe. He is a Certified Community Association Manager (through the California Association of Community Managers,) a Certified Hotel Administrator (with the American Hotel & Lodging Association) and a Registered Resort Professional (through the American Resort Development Association.)
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