Chapter 8 The Uniqueness of Timeshare Resort Operations

Explain the major differences in the way traditional resorts/hotels and condominiums operate with respect to the role of: Guest/Owner Characteristics Marketing Reservations The Front Office Housekeeping Maintenance and Engineering Accounting and Finance

Guest/Owner Characteristics The target market for timeshare ownership is the growing masses of middle-aged baby boomers who want the advantages of owning a resort property without the headaches. People purchase timeshares for one or more of four reasons: Flexibility over when, where, and how they vacation. Economics—Owners report they save money over the long term. Certainty about the availability and quality of popular resorts. Safety and secure environments for family vacations.

Guest/Owner Characteristics (cont.) Owners give three reasons as to why they hesitated before buying. financial concern about using the timeshare enough to justify the expense of the purchase the resort experience will not meet the expectations created during the sales presentation Two areas of concern to owners are the actions of their homeowners’ association and their annual maintenance fees.

Guest/Owner Characteristics (cont.) In terms of activities, skiing, golf, sightseeing and beach/waterfront activities are more important to timeshare owners while entertainment, shopping and dining are more important to hotel guests.

Marketing Resorts offer timeshares in a variety of formats. Over 90 percent sell interval interests in increments of one week of use each year or as points offerings. The standard type of ownership is the deeded week, offered by almost 90 percent of resorts.

Marketing (cont.) The way timeshares are marketed depends on the motivation of the potential investor/guest. Home from home occasions Swapper occasions Activity occasions Family holiday occasions The most popular marketing programs for selling timeshare products are referrals in-house guests, telemarketing and direct mail.

Reservations and Front Desk Front office procedures at whole and interval ownership resorts have much in common with those at traditional resorts. Reservations at a traditional resort might come in via a toll-free number or direct calls from prospective guests while, at interval ownership resorts, they can also come from an exchange company or a vacation club.

Reservations and Front Desk (cont.) In a traditional resort, the number of rooms available for rent is determined by management while, in a vacation ownership resort, the number of units available is determined by the number of owners who want to rent or exchange their units. The person reserving the unit may own a specific unit, own the right to stay in an unspecified unit, be the guest of an owner, or “just” be a regular tourist looking to stay at a resort.

Reservations and Front Desk Employees who take reservations at vacation ownership resorts have a much more complicated task than do their counterparts at traditional resorts, which feature few room types. Some resorts have separate check-in facilities for owners. Work patterns at interval ownership resorts differ from those at both whole ownership or traditional resorts. At the former, guests check in and out on turnover days.

Housekeeping The principal differences are in: Size and Location of Units: Most vacation ownership units have two bedrooms and two full baths and can sleep up to six people. Public spaces in a vacation ownership resort can include hospitality areas consisting of a check-in desk, concierge desk, and cashier, game rooms, restaurants, and stores. The lobby must be able to accommodate large numbers of people and luggage during weekly arrival and departure times.

Housekeeping (cont.) Size and location of units: The outdoor landscape is important to creating an ambience that enhances the overall experience of the guest. While a standard room can be cleaned in 30 minutes, it may take up to 90 minutes to clean a condominium unit. The problem is not just the size but also the complexity of the cleaning task. While hotel rooms are located in an enclosed building, condominium units in a resort may be spread over several acres.

Housekeeping (cont.) Arrival and Departure Patterns Staffing Patterns In a traditional hotel, guests come and go during the week. In a vacation ownership resort, most guests arrive and depart on the same day. All units in the property have to be cleaned in a matter of hours. Staffing Patterns Many housekeepers are needed—but for only one day a week. Owner Relations Some owners develop strong feelings toward the person taking care of their unit and want assurance that that individual will always handle their unit.

Maintenance and Engineering Because of the interest and involvement of owners, there is more pressure on the maintenance department of a vacation ownership resort compared to a traditional property. Because units are not standardized, it is difficult to specify the same bedding, seating arrangements, and decor for each. In ownership condominiums, the maintenance function is often run as a break-even proposition. A system has to be set up to ensure that all work is properly billed.

Accounting and Finance Seventy percent of all timeshares are financed internally with down payments ranging anywhere from 10 to 30 percent and the remainder financed with an interest rate much higher than if financed through a bank. Timeshares generate returns of more than 20 percent. Developers not make money from timeshare sales they also generate revenue from interest they receive on five- to seven-year loans they make to timeshare buyers. Timeshare developments generate revenue after the development is complete through timeshare management.

Accounting and Finance (cont.) On turnover day, all units have to be cleaned in a matter of hours. Interval and whole ownership resorts rarely overbook. Advance deposits and full payment on arrival are common. Key control can be a problem at interval resorts. Large whole ownership resorts have a separate department dedicated to owner relations.

Accounting and Finance (cont.) Ownership properties have different accounting needs compared to traditional hotels. The essence of condominium and timeshare management is about revenue sharing rather than merely adding up posted numbers. Owners expect to receive the correct amount of rental pool income from their units on a monthly basis since they are paid based on a formula based on the percentage of their possession in the timeshare agreement.

Accounting and Finance (cont.) While hotels keep two types of accounting records – one for guests in the form of guest accounts or folios – and one for business, condominium resorts need three sets of records: Guest (unit-renter) accounts for each guest Owner accounts are unique to resort condominiums Owners association accounts are used to prepare budgets and financial statements for the owners association

The End!