CLUBS SCARE TIMESHARE BUSINESS

The booming non-equity vacation club business is clearly a concern for the traditional timeshare industry. While segment leaders downplay the competition this relatively new product poses to typical timeshare offerings, they are concerned about the public relations fallout that may occur should any of these companies stumble.

Non-equity clubs offer well-heeled consumers a second-home alternative based on a partly refundable down payment and yearly fees that entitle them to vacation in luxury hotels for a set number of days per year. Examples of the concept include Exclusive Resorts, Dream Catcher, Private Retreats and Distinctive Retreats and others.

“It's a concern that these new products are so far ahead of regulations that control the business,” said Howard Nusbaum, president of the American Resort Development Association, at the group's recent annual conference in Orlando. “The non-equity club model doesn't have the transparency and consumer protections in place that vacation ownership does. My concern is if one of these companies fail, the media spotlight will fall unfairly on the timeshare business.”

Aside from that issue, most timeshare executives are giddy about the state of their industry, which will register more than $8 billion in sales this year, up sharply from $5.5 billion just two years ago.

“Our business is up dramatically, especially in the U.S. and in the islands,” said Rip Gellein, chairman and CEO of Starwood Vacation Ownership and the new chairman of ARDA. “The big companies are certainly getting bigger. There aren't many new companies getting into the business, but those who are in the industry are all doing well.”

Gellein and other industry leaders who participated in a general-session roundtable discussion were bullish on increased opportunities in the timeshare business, both in new product types and with new kinds of customers.

“As an industry, we're in the process of redefining ourselves,” said George Donovan, president and CEO of Bluegreen Corp. “We're really in the leisure business, and when we think that way we can see a variety of new opportunities, such as in the RV park business.”

Marketing to new customer groups is another strategy for many timeshare companies. According to John Burlingame, executive vice president/chairman of Hyatt Vacation Ownership and immediate past chairman of ARDA, his company is “actively marketing to singles and people with alternative lifestyles.

“Also, because it's so difficult in many traditional resort markets to secure land entitlements, we're beginning to look at drive-to markets for growth opportunities,” said Burlingame. “Just look at how successfully Great Wolf Lodges has used this strategy in the hospitality business.”

Before the panel discussion, Burlingame shared with the 3,500 attendees some of the association's successes during his previous two years as chairman. Among other things, ARDA was able to facilitate passage of the re-regulation law in California and to lobby a number of states to adopt ARDA's model timeshare regulations.

“We've also survived through the after effects of do-not-call legislation, and the process has made us all better marketers,“ he said.

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