Throughout America, tucked amongst the Chili’s, Applebee’s, and Outbacks, are some wonderful independent restaurants, where the recipes are original, the servers’ patter doesn’t come from corporate training manuals, and the décor reflects unique local tastes. There are community banks where the people know you by name rather than account number. And there are some terrific timeshare resorts around the country that are not part of a large franchise or a multi-resort chain. They have challenges, but they can also compete in ways that the flags cannot. After many years of evaluating resorts of all types, I’ve formed a few opinions about the keys to a successful single-site operation.
- Diversify Revenue Sources—A single site developer needs to recognize that a model driven primarily by front-line timeshare sales will probably not be effective. Unacceptable levels of marketing and sales expenses usually result when trying to compete head-on with the marketing machines that dominate high-traffic destination resort areas. Tour flow is a challenge in less populated markets. An effective rental program, event promotion (weddings, parties, etc.), commercial rentals, and a strong referral program are generally needed to supplement timeshare sales, particularly for seasonal properties.
- Don’t Try to Emulate the Chains—I used to work for a community bank, and we’d always have new management hires coming in wanting to change our processes because “that’s the way we did it at Bank of America (or Chase, or Citibank).” Smaller companies don’t have the resources of larger ones, and if you try to emulate them you’ll just create an inferior version of a business model most of your customers didn’t want in the first place. That’s why they came to you. Take advantage of your ability to provide personal service in a way that chains cannot; that’s your competitive advantage.
- Maintain Continuity of Personnel—One of the reasons people choose to vacation at a single site resort is that they want to feel like part of the family. They probably won’t get that feeling at a branded resort, and they won’t get it at yours either if your staff turns over every year. Guests like seeing the same faces year after year, and they love being recognized as returning owners. Your staff is your brand, and if you choose and train them well, they can create a stronger bond than the most recognizable logo. Lenders also like the continuity of working with an administrative staff that’s competent, responsive, pleasant, and familiar with the lending relationship. Take care of your good employees and do what’s necessary to keep them.
- Manage the Exchange Process for your Owners—Exchange organizations are what made the timeshare industry viable when nearly all resorts were single-site stand-alones. Now that the industry is filled with multi-site developers and clubs of various persuasions, the role of the exchange companies has evolved, but they remain an integral part of the single-site product. You need to make sure your owners can use the system effectively, which involves educating them and lobbying on their behalf. Occasionally, we get calls from misdirected timeshare owners. When we try to refer them to the correct place by asking them the name of their resort, many can’t remember where they own. They tell us they bought RCI or II. With a little prodding, we can usually get them to recall the name of their home resort, but the fact that they initially identify with the exchange company is indicative of its importance in their purchase decision. Make sure your owners get the full benefit of their affiliation.
- Partner with Similar Resorts—You can obtain some of the advantages of multi-site operators by establishing strong co-operative relationships with unaffiliated resorts. You can establish direct exchange options, share best practices, and you may be able to leverage vendors through bulk purchases. Attend conferences and read industry publications to avoid insulating yourself from the rest of the timeshare world.
- Have a Succession Plan—Among the most common weaknesses of smaller resorts is a lack of management depth. Smaller companies are generally the product of one person’s vision, but even visionaries are mortal. Every company needs a plan to enable it to operate effectively in the absence of the founder. The successor has to have a broad vision, not merely be a great salesperson or a highly efficient property manager. In a single resort setting, they also need to be versatile, with the ability on one hand to create and execute grand strategy, and on the other to decide what type of bed will work best in a studio unit. Strong leaders often have difficulty accommodating an equally strong associate, and having two people with vision, leadership ability, and drive on board at the same time is a challenge. Without a viable succession plan, however, it’s likely that the resort will need to be sold when the founder is ready to retire.
Bigger isn’t necessarily better, but neither is smaller. They’re simply different. We finance big companies and we finance some that aren’t so big, and there are great operators in each category. When we evaluate loan requests from single-site properties, we want to know that the developer has a keen understanding of their market, their business model, and the needs of their customers. If they do, chances are they’ll be good borrowing customers.