-by InsideTheGate.com Staff
October 6, 2010 — A panel at the 12th Annual Vacation Ownership Investment Conference, currently being held in Orlando, FL, yesterday presented current performance statistics and relevant research on the U.S. vacation ownership and lodging industries to create a snapshot and predict future trends. Speakers on that panel included:
Probably surprising no one, economic surveys show timeshare sales have fallen from a peak of $10.6 billion in 2007 to $6.3 billion last year, the slowdown causing inventory to stack up from about 1.4 years of backlog in 2008 to 2.2 years in 2009. Employment in the industry over the same period has fallen about 30 percent, from about 279,800 workers to about 196,300.
The drop in sales nationwide during 2009, as compared to 2008, were stark. In Q1 2009 sales fell 39.8%; in Q2, 35%; 33.3% in Q3; and 20.4% in Q4. According to Michael Harding, sales so far this year are about on a par with 2009, though year-over-year growth is expected by the end of 2010.
Notwithstanding those figures, it was still a fairly upbeat presentation, with somewhat cautious predictions that the worst is over. Harding asserted that overall there is not necessarily a rapid drop in demand for timeshare and that since several developers are now able to go to the market, performance of timeshare paper will probably be better than people thought it may have been for the most part.
It was also noted that occupancy at timeshare resorts has trended, on average, a whopping 20 percent higher than the typical hotel. This is also not surprising, since timeshare owners tend to make long range plans for their vacations and follow through with them.
What was of particular interest to many attendees, though, and ought to be a heads-up to those timeshare professionals working in the sales centers, were some of the other statistics presented.
For instance, while the number of tours in the U.S.A. continues to be down this year, sales reps are closing a higher percentage of sales. In Q2 2009 vs. Q2 2010, there were 570,811 and 536,850 sales respectively, a drop of 6 percent. But closing ratios were up from 15.3% to 15.4%, the value of each transaction rose 1.2% from $16,204 to $16,393.*
Rescissions also dropped, from 14.4 percent to 14 percent, a 2.8% decrease.
What I did not learn is what percentage of those sales are new sales as opposed to upgrades, a salient issue since many companies, such as Bluegreen, are seeing a much higher ratio of sales to current owners vs new sales.
Regardless, those stats may be reflective of something other than Harding’s statement that “Folks that have resources are still traveling and touring, and that equates to a higher acceptance of product at the sales table.”
When the bottom dropped out of the economy developers took immediate and drastic steps to protect themselves. Sales centers were closed by the hundreds (especially off-sites); thousands of people were laid off, presumably leaving the cream of the crop still working the tables; tour qualifications were upgraded, weeding out some of the marginally qualified tours that used to be acceptable; and many projects that were in the pipeline were either put on hold or axed altogether. Developers, both large and small, pulled in their horns while they struggled to survive the downturn.
If it is the case that fewer sales reps at fewer sales centers with fewer but better qualified tours are making a higher percentage of sales, and the average sales ratio nationwide is still only 15.4%, with rescissions at 14%, there is certainly room for improvement.
I profoundly hope that the cautious optimism displayed at this particular presentation is more than spin and that the worst truly is behind us, and I think there are good reasons to believe that is true. Among those signs is an increase, small but noticeable, in the number of resorts hiring sales reps this year vs last year.
The timeshare industry is very resilient. I personally think we’re looking at another couple of years to see serious movement again with the buying public, but we’ll get through this and hopefully come out smarter and stronger on the other end.
*Note that according to the State of the Vacation Timeshare Industry: United States Study, 2009 Edition, the average sales price per interval in 2008 was $20,152, an increase of 5% from 2007. Specifically, the reported average price for weekly intervals was $19,836, and the average price for points-equivalent intervals was $20,299.
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