There’s an Internet meme going around that asks if we can unplug 2020 and do a restart because this version obviously has a virus. Unfortunately, that time-tested IT advice won’t cure our current situation, one that has our industry facing its toughest challenges yet.
With shelter in place advisories in place, empty sales centers and consumer sentiment bottoming out, there’s ample reason for angst. Still, the vacation ownership industry has survived the 2009 financial crisis and other catastrophes. In the wake of 9/11, timeshare owners were among the first to resume traveling, and resort destinations such as Hawaii welcomed the back with open arms. Early signs show that our intrepid vacationers are likely to return to home-like condominium accommodations before traditional hotels. After all, families will be able to be together in a private living room, cook together, and have separate sleeping quarters, all without having to mingle in crowds of other travelers. In a March 27, U.S. Travel Association survey conducted by MMGY, 25% more respondents (25% v. 20%) said they would feel safe staying in a vacation rental home/condominium versus a hotel/resort. As restrictions are loosened and families rush to be together again, timesharing will be poised to rebound.
To see how the industry is coping right now, Resort Trades checked in with a sources from different business sectors. Here’s what they have to say.
Across America, resorts have closed their doors to rental guests—and in many cases—timeshare owners, too. Marriott Vacations Worldwide closed its resorts to rental guests on March 25, having closed its sales centers two days earlier. “In most cases, our product structure doesn’t allow us to deny access to an owner,” explains Ed Kinney, global vice president. “However, many of the services at our resorts are not available, such as restaurants.” MVW’s corporate staff is largely working remotely, and according to a March 25 release, its executive leadership team is taking a 50% salary reduction.
Kinney also anticipates a quicker rebound for vacation ownership companies. “In spite of everything going on, people are going to look at vacationing as a way to celebrate coming out of this period. We will have the greatest opportunity to recover.”
Wyndham Destinations, whose business includes the Wyndham Vacation Clubs (Club Wyndham, WorldMark, Margaritaville Vacation Club, Shell Vacations) portfolio and RCI, has also taken strong measures to protect its employees and customers. The company’s offices are all closed with employees working from home where possible. The company’s president and CEO, Michael Brown, has chosen to forgo his salary for the remainder of the year. “At Wyndham Destinations, our priority remains the safety and well-being of our owners, guests and associates,” he said. “As the travel industry is currently being impacted by COVID-19 in unprecedented ways, we are working around the clock to ensure the safety of all of our constituents and the continuity of our business. The travel industry will endure, vacation time will remain as important as ever, and we will get through this difficult time. Our organization is squarely focused on taking the right steps to ensure that we are in the best position to welcome back our owners, members and guests as soon as possible.”
Wyndham Vacation Clubs closed all its resorts by April 3 with an anticipated reopening date of not before May 15. The vacation clubs are accepting reservations for stays after that date. All guests who have a reservation with an arrival date prior to May 15 can make changes without penalty up to 24 hours prior to the scheduled arrival. All its sales centers are currently closed, having come off an impressive performance in January and February, where tours were 9% higher year-over-year.
Other developers face similar difficulties. Breckenridge Grand Vacations in Colorado has announced that all their resorts are closed through June 1. Westgate Resorts has information on its website for specific resorts. As of April 9, Westgate Town Center Resort, for example, almost all food and beverage outlets are closed and housekeeping isn’t servicing rooms, but the pool is open.
Both Interval International and RCI are assisting their members with fast-changing travel conditions around the globe. RCI is allowing members to cancel Points and Weeks reservations for travel through April and receive 100% of their trading power back for a future reservation. In addition, the company is not charging exchange fees for cancelled reservations if members book a new vacation by October 31, 2020, for future travel.
According to the IntervalWorld.com website, members with check-in dates through May 31, 2020, have the full ability to change their destination or travel date and not incur an additional exchange fee. They said they will continue to monitor the situation and make necessary adjustments based on the circumstances. “We recognize the challenges and uncertainties presented by this pandemic, and we want to provide our members with the flexibility to adjust their vacation plans,” says Jeanette Marbert, president of Interval International. “The effects of COVID-19 will likely be felt for some time, and we will need to continue to evolve and listen carefully to our customers as they begin to travel again and when they do, Interval will be ready to help them plan their next great vacation.” Marbert adds that the company has taken all the steps necessary to ensure the safety of its associates and members, and to maintain business continuity across the organization.
According to Bill Ryczek, principal of Colebrook Financial Co., the biggest issue facing financial services is what to do with developers’ portfolios. “And it’s really too soon to tell what the end result will be,” he says. The recent Coronavirus Aid, Relief, and Economic Security (CARES) Act has provisions for forbearance and other relief to some mortgagees. Because financial services are considered an essential business, Colebrook is able to remain open and service their clients with most staff working remotely and two people in the office on a rotating basis. “As a smaller company, we have more nimbleness,” Ryczek says. “We can use our flexibility to help our clients react to these challenges. Timeshare developers tend to be optimists; they don’t only see the glass as half full, they see it as half full of champagne. I’ve been in timeshare for 41 years, and seen a lot of competitors go out of business. We can get through this.”
Concord Servicing was prepared for a work-from-home protocol, says Sonja Yurkiw, chief operating officer and general counsel. “We’ve been performing work-from-home drills on a recurring basis for the past 10 years,” she says. “When our Mexico City office had to close due to the H1N1 outbreak, we saw the need to have plans in place company-wide.”
Concord team members access their virtual machines from home using a secure network. The technology provides better security control and delivers a consistent end-user experience. “We don’t have to worry about what employees have on their own machines because they are simply windowing into their work computers with the same security protocol and restrictions in place,” Yurkiw says. “Even though we are working remotely, we are meeting our clients’ critical needs and have suffered no downtime as a result of this crisis.”
At SPI software, Gordon McClendon says his staff has also been able to work remotely, so they can assist clients with their technology needs. “We have a firm financial standing and are here to stay,” he says. Looking to the future of the industry, the comeback will depend largely on consumer attitudes. “We are a consumer driven economy, and it takes three to six months for a consumer to feel better after a downturn,” he says. “It’s going to need a lot of cheerleading.”
Design and Renovations
If there’s a bright spot in all of this, Margit Whitlock, Principal at Architectural Concepts Inc., has found that empty resorts are ripe targets for renovations when clients have the reserves to fund them. “We target our communication,” she says. “Some clients need a phone call; some just need a personal email from me to let them know we are safe and we care about their situation, and to offer up the opportunity to discuss ‘what’s next’.”
Leading her staff has meant setting up guidelines about remote working and in-office procedures. “I cope by caring and doing my best to be the skipper of the ship. We also toss in some comic relief and send each other silly stuff. You know just mindless, but it puts a smile on your face. In these tough times, you must stay positive. Also, I have my wine club set up for auto delivery.”
Judy Kenninger heads Kenninger Communications and has been covering the resort real estate industry for the past two decades. Let her know your ideas for future topics in the Resort Trades by emailing her at Judy@KenningerCommunications.com.