By Joe Sebestyen
The post-COVID-19 economy has created challenges for our timeshare properties. With rising inflation and the high cost of labor and supplies, having an actively engaged board is important for the success of a resort’s timeshare association. Timeshare boards should focus on these key issues:
Non-performing inventory
A primary concern for our resorts today is the cumulative impact of aging owners who cannot travel. As a result, non-performing inventory has created uncertainty with our resorts’ financial stability. This will require increased business resiliency to provide exit strategies for some of our owners. A very important priority for our boards and our future financial health will be assisting our legacy owners who want to deed back their units.
In addition, we must find other ways for these intervals to produce maintenance fees. A sophisticated, diversified rental program is one way to meet that need. Explore various ways to create such a program in-house, or through an external provider who won’t charge you the lion’s share of the rental revenues.
Fiscal responsibility
Today’s boards must be aware of economic conditions, capital strategy, insurance risks, and rising insurance premiums. Know your cash flow, and when your resort collects and spends most of the revenues from maintenance fees and new sales. Keep a watchful eye on your investments and reserve funds, so they remain safely invested and earn the best return on those investments.
Understand the insurance policies that you are purchasing; they will be critical for your success. Insurance companies are changing their coverage and providing less protection from hail and wind damage. Know your policy and what coverage you are purchasing. Have you had your resort appraised for a statement of value in the past three years?
Talent acquisition and retention
Whether we hire staff directly or through a service vendor such as a housekeeping company, landscaper, or management firm, we need the best and brightest people to create a great experience at our resorts. We must celebrate successes and ask for our teams’ thoughts and ideas for continuous improvement. Reducing turnover of talent should be on every board’s priorities. High turnover creates a loss of knowledge of how the resorts operate. Some staff members know the owners and their preferences personally. A high retention rate eases your level of concern with staff entering occupied units when owners’ and guests’ personal effects are present. Establishing career paths for staff members shows them that we care more about their future with us than just their present position.
At the Townhouse and Carriage Place Home Owners Associations, where I am board president, we had not bid out the housekeeping contract in 12 years. It was the most expensive line item in our operating budget and the one with the highest deficit in both associations. Recently we were fortunate to find a new housekeeping company that has attracted compliments from owners. This has enhanced our operational excellence and has improved our bottom line of the budget. We are operating at a net surplus as a result of the change.
Marketing and sales
Boards will play an essential role in overseeing urgent sales priorities and guiding the management company or marketing contractor to market and sell available inventory. We must create and sell innovative products that are appealing and affordable to prospective buyers. We need to be solutions-oriented and find ways to diversify our base of owners.
Gen Z and millennials now comprise over 50 percent of the new sales purchases. They are looking for new experiences and exciting destinations. Timeshare resorts are purpose-built for families to enjoy and create family traditions. Owners can lock in their price and find an inflation-protected way to vacation. Timeshares are a tremendous value and a hedge against the dynamic price increases of hotels. Rentals are an important revenue stream—and our potential future owners. Showing them the amenities of the resort and the value of ownership in a presentation could fill some of those sales needs.
Looking ahead, we should continue to innovate in the way we rent or sell timeshares, so that our customers will want to buy. If we can be in step and time with the products and services our customers desire, we should have a bright and positive future.
Ancillary revenues
Our board is exploring the possibility of capturing rental revenues from wireless telecommunications companies broadcasting their 5 G network from our roofs. This could bring $50,000 to $60,000 a year in rent revenue, while enhancing our wireless network for phones, TVs, and the signal around our resorts. Other possible sources of ancillary on-premises rental revenue may include a ski shop, a swim shop, and scuba-diving instruction in the resort’s pool.
Joe Sebestyen is president of the Townhouse and Carriage Place Home Owners Associations in Branson, MO.
Photo courtesy of the author.