Timeshare operators know that it’s time to evolve, having taken a battering from critics and the cottage industry of “experts” who have sprung up to help people get out of their ownership. As current product sets evolve and new services are introduced, programs are being reevaluated to keep attracting new buyers.
The challenge is more than just a marketing or sales issue; it’s generational. Millennials, having come of age during the Great Recession and seen first-hand the risks of over-extending oneself financially, have rejected, delayed or downsized a variety of financial commitments, from homes to cars and timeshares. This is a generalization, of course, but many Millennials find little in common with today’s timeshare programs, and this will impact participation unless the industry adapts to their desire for experiences versus products.
Defining vacation clubs and timeshares
To understand how vacation clubs and timeshares are evolving to attract younger clients, it’s important to understand their structures.
The traditional timeshare model is an ownership product in which several joint owners share allotments of usage in a single property or set of properties. Typically, timeshares are a long-term or perpetually-owned product registered in the jurisdiction where they are sold. These products are owned by individual buyers and often come with annual maintenance and other fees.
Many of these programs originally involved a deeded, fixed or floating week – and sometimes a specific unit. Today, however, most timeshare products include a more flexible points-based option offering a variety of vacation benefits and services beyond just resorts or hotels. Because these products are regulated, most programs offer a variety of consumer and product protections.
The main difference between timeshares and vacation clubs is that timeshare owners own real property or property in a trust, while most vacation clubs are not ownership products. Those participating in a vacation club, in general, simply have access to properties or services.
Optimizing vacation clubs for the next generation
One of the main reasons that timeshares are finding it necessary to rebrand is the desire among consumers for exit options after a period of product usage. The industry has long argued that they are unable to provide an exit or take back inventory-based product because they have already incurred significant marketing and sales costs at the time of the original sale. Timeshare developers and operators point out that taking back and reselling a product that is already 20 years old is not a profitable venture.
However, new potential buyers and existing owners are driving change. Many large operators now offer exit programs for long-time owners whose products have been paid for and who have accounts in good standing. In addition, regulators are beginning to scrutinize timeshare products and services. Some states are considering rules that would require new products to include an exit program before they even receive state registration. These trends – from evolving consumer preferences to escalating regulatory scrutiny – suggest that exit programs will become more common.
Another strategy vacation clubs can adopt is improved data analysis to better defines customer segmentation. This will allow developers to create and build new experiences by reimagining marketing and sales programming so they appeal to customers’ unique travel expectations.
Every major brand and most operators are crafting their own approach, utilizing their data so they can compete in an increasingly digital and hyper-personalized marketplace. The old methods of marketing and selling timeshares – telemarketing and multi-hour sales presentations – will not appeal to new generations of buyers. These consumers bring expectations honed from the constellation of other brands with which they interact and demand a brand relationship before they decide to transact. They also consider upfront product and price transparency as table stakes when considering vacation products and services.
Taking the sales experience to the next level
Developers and brands not only have to evolve product sets, but they will have to rethink their traditional approaches to advertising, marketing, and the sales process. Hilton Grand Vacations is one example of a company that has enhanced its sales experience to appeal to new consumers. Their groundbreaking Envision system has introduced technology and personalization to the sales process, improving guest participation, product knowledge and ultimately conversion rates.
Consumer and purchase data are already driving change to traditional timeshare practices. Consumer data are beginning to be utilized to create personalized marketing programming to attract new buyers to timeshare offerings. Other developers are considering personality profiling to match the right consumer with the right salesperson and content to personalize their sales experience and improve conversion rates.
Another key component of forward-looking vacation clubs is a mechanism for anticipating and resolving buyer concerns. Immediacy and transparency are key issues for future buyers. Disney Vacation Club is an industry leader in this area, capitalizing on its unique brand trust to increase the process and product transparency. This approach is producing tremendous public interest in their vacation products and services and may finally help put an end to the age-old industry adage that “nobody wakes up today and wants to buy a timeshare.”
We believe that today and tomorrow’s timeshare products can take advantage of new consumer expectations and come out of the shadows, participating in more traditional product advertising methods.
As timeshare and vacation club products evolve, new generations of timeshare owners will understand their appeal and bring about positive change to how they are marketed and sold. New offerings, coupled with transparency and progressive sales processes, will appeal to individuals who today might never consider participating in the purchase of a traditional timeshare product, and that is exactly what the industry will need to do to grow and thrive.
Bill Caswell is a global hospitality practice leader at North Highland, a consulting firm.