Growing Old Gracefully

As we all know, time is relentless. It marches on year after year like clockwork. We see the results of the aging process in the mirror every morning, and there’s nothing we can do about it unless we opt for cosmetic surgery. The same is obviously true when it comes to resorts that have been around for a while. While some folks like to vacation at the same spot every year, others enjoy visiting a new destination each time they go on holiday. Fresh new resorts have certain advantages over older ones, but many owners are creatures of habit. They know what they like, and they stick with it.

All resort operators face challenges every day, but how do these challenges differ for legacy properties? We recently asked several individuals involved in resort management that question. Jan Samson is senior vice president for corporate and business development with Vacation Resorts International.

“The biggest challenge facing legacy resorts is the existing owner base aging out, not being able to travel, or having limited opportunities to transfer their timeshare interests to family or friends. Resort physical plants must be brought up to standards that today’s traveling public is looking for. Getting the boards to understand and agree to the necessity of these improvements will continue to be an opportunity for management,” Samson told us.

She also said that management organizations will continue to be challenged by associations to develop alternative revenue sources to offset management expenses. “Associations’ expectations are trending toward a higher level of service and enhancements without increases in cost, nd in many cases, there’s an expectation of lowering costs in spite of increasing workloads of operations and management.”

“Legacy resorts must reinvigorate existing ownership and create vacation products that appeal to the Gen X and Y population. The timeshare industry products are changing to adapt to the new demands of the younger traveling public. As the new ownership comes onto the timeshare landscape, the latest vacation products, such as Interval’s Club Interval Gold Points program, will continue to attract this younger tech-savvy, value-minded traveler. The mindset of some legacy resorts is still stuck in the ‘80s philosophy — a week’s vacation at the same resort year after year. Exposure and education about travel products and trends available today will begin to eclipse the notion of a limited vacation for one week at one resort.”

Samson said a successful management program includes presenting independently controlled boards with forward-thinking tools to help them keep their timeshares viable and enjoyable not only for their existing ownership but for their future owners. “Being able to monetize HOA-owned inventory until desirable travel/vacation products can be successfully integrated into existing timeshare schemes is obviously important. Management companies that bring vacation options, sales opportunities and a realistic assessment of a client’s true viability, and of course the ability to influence change of any needed component, will be successful and continue their growth.”

Liberté Management’s Dennis DiTinno, agrees that a big challenge for older resorts is that the owner base has dwindled, causing remaining owners’ maintenance fees to increase, while creating unused inventory. “We are finding exchange companies sprouting up in all shapes and forms,” says DiTinno. “They will purchase 20, 40, or even 100 weeks ‘to help the resort.’ Then when their sales efforts don’t work, they simply give the weeks back. Imagine getting back hundreds of unit weeks at one time! It’s devastating to the resort and possibly illegal on the part of the resale company and the Board, which has a fiduciary responsibility to the owners.”“A better alternative might be to allow your management company to take ownership of the weeks, renting them to pay the maintenance fees and make a profit for the HOA. Another alternative to consider is that you can lease these units instead of selling them. Even a discounted fee would be better than losing the vote or board seats to a corporation. It’s also important to regulate the number of units that can be acquired by any one individual or corporation so as not to lose control of the HOA. Most importantly, add an exit plan to the contracts.”

“Establish a method of investigating new owners. Sometimes the owners purchase units and ‘donate’ them to the exchange company, in place of a membership fee, to be held in a trust with only the trust officers as owners of the units. If this has already happened to you check your contracts and contact your attorney. Management and other organizations have a fiduciary responsibility to and contractual relationship with the association to act in the best interests of the association.”

“Can we save our legacy resorts?” continues DiTinno. “Yes! The millennials are here and in more numbers than the original baby boomers.

Nigel Lobo, RRP, is chief operating officer of Grand Pacific Resorts, and he told us he views the issues facing mature resorts as opportunities rather than challenges. “These resorts have several hurdles to overcome, including maintaining operational excellence, funding long-term maintenance projects, and generating revenue to offset the costs of association-owned weeks,” he said. “But with a five-year strategic plan, mature resorts can maintain their vibrancy. Operational excellence refers to the day-to-day management of the resort and is reflected in the level of service owners receive. Mature resorts must devote themselves to developing their associates, activities, and maintenance programs, so that owners have a wonderful experience every time they visit their resort.”

“However, many resorts make the mistake of directing their maintenance fees to operations at the expense of reserve funding. Upgrades to the HVAC system and roofing may not have an immediate impact on the vacation experience, but they are critical for long-term success. Every resort can benefit from a professional reserve study.”

He went on to say that inventory redeployment is equally important, and that rental programs keep association-owned or delinquent weeks from draining the resort in addition to bringing potential new owners to the resort. “I also recommend shifting from a collections mindset to one of owner reengagement. Mature resorts with a strategic plan have a bright future. I see this every day as new owners discover the value of timeshare and catch the vision for a lifetime of vacations.”

We also spoke with Lori Entwistle, CHA, RRP, managing agent/general manager of Scottsdale Camelback Resort. She said the simple way to get your owners’ attention is to give them something. “Owner parties are great to engage your owners. However, the owners have to pay for them, and for legacy properties, that is an issue. Instead of a party, hold meetings in which you talk about what affects their ownership and how they can become an active owner. Pertinent, interesting, and honest communication is vital. Consider sending email blasts encouraging local owners to reserve services (spa appointments, event space, etc.) at the resort instead of at another local venue. Our newsletters discuss industry topics (the reserve study, resale scams, etc.) and how the Scottsdale Camelback Resort has been affected and is responding,” Entwistle said.

Another challenge she brought up is employee retention. “In a highly competitive market, it is difficult to find and retain employees. Retaining employees starts with forming a good relationship between them and their direct supervisor. We provide fun, interactive weekly training sessions for all supervisors, and participation is required. This is the supervisor’s opportunity to get away from their department and focus on improving a specific skill, such as mentoring or building teamwork within the department.”

Entwistle also pointed out that keeping the property updated is important. “It is difficult for a legacy property to compete with zip lines and lazy rivers. Legacy properties must update their facilities to remain competitive. Select projects with high visibility and multi-generational interest. A recent project at our property was to redesign the existing miniature golf course. The new design is larger, ADA-accessible and includes lighting for evening plays.”

Growing old gracefully is a constant battle; one that demands staying alert to current trends. But if managers maintain owner communications, continue to educate themselves (whether they are faced with threats or opportunities) and encourage teamwork among staff; it’s still possible for maturing properties to remain viable.