We Can Make $ 12.5 Billion On Existing Timeshare Owners – Skift
There are a lot of advantages in the timeshare industry, that is, if you can make that first sale.
Executives at Travel + Leisure Co., formed earlier this year when vacation rental and timeshare company Wyndham Destinations acquired Travel + Leisure for $ 100 million, see opportunities in vacation clubs and other sources. of income. The company’s Investor Day this month generally focused on how Travel + Leisure Co. can grow exponentially by operating consumer travel clubs as well as corporate accounts.
But what might shock some is how much money the company thinks it has on the table for its current membership base. Travel + Leisure Co. estimates that there is $ 12.5 billion in potential to upgrade current member owners over the next decade.
The number climbs even higher to $ 19.3 billion when you factor in other sources of income such as management and resort fees and interest payments. They just need travelers to get a taste of timeshare to start the upgrade momentum.
âIt’s not about marketing. It’s about owner occupation, âsaid Michael Brown, CEO of Travel + Leisure Co. in an interview with Skift. âThe more owners we return to our resorts each year, the more they benefit, [and] the more they buy.
Join us for a conversation with Travel + Leisure Co. CEO Michael Brown at the Skift Global Forum in New York September 21-23
Travel + Leisure’s takeover and accompanying rebranding continued Wyndham Destinations’ efforts to show that it is a company that has much more to offer than a burdensome reputation. timeshare from yesteryear.
Going to the same condo in the Bahamas the same week every year was how older generations enjoyed this area. Travel + Leisure Co. is meant to be flexible. The more people come to this realization, the more they will want to travel this way, the thinking goes on.
âThe average vacation length in the United States is between 25 and 28 days, and when you first discover a timeshare there is a lot of education and thinking, ‘You know, I don’t. am not sure this is right for me, and I’m willing to devote five or seven of my 28 days to this product, so let’s see how it goes, âsaid Brown. “It’s the initial dollar, so to speak, and then over time, usually in the first five years, they’ll spend another dollar because they experienced it.”
Companies like Travel + Leisure Co. as well as competitors like Hilton Grand Vacations have been able to market themselves to potential clients around the idea of ââhaving more space. Members end up spending 2.6 times their initial purchase over their lifetime, according to Travel + Leisure investment papers.
Upgrades and upselling are not unique to the timeshare business. Low-cost airlines Allegiant, Spirit, VivaAerobus and Wizz Air all made more money last year from additional charges than they did on their base airfares, Skift reported this week.
While $ 12.5 billion in timeshare upselling may seem like overkill, analysts don’t think it’s out of the realm of the possible. Travel + Leisure Co. had 867,000 owners in its member base at the end of last year and an annual retention rate of 98% of owners over the past decade.
But all of these free Broadway ticket deals and other incentives to get travelers to attend a long time-share presentation play a major role in reaching that financial goal.
âThe first sale is the toughest sale for a timeshare,â said Patrick Scholes, managing director of accommodation and recreation research at Truist Securities. âTo get the person in the door, you have to give them lots of luau tickets, Disney tickets, dinners, ski tickets, free hotel nights, etc.â
The first sales in the timeshare orbit are generally low in terms of margin because of all the sales incentives that come with them. The second and third sales or upgrades are where the profit margins really start to kick in. This upgrade in the food chain can even pave the way for billions of dollars in untapped sales.
âThey find that once you buy the product, the vast majority of customers are extremely happy with it and it’s much easier to access it,â Scholes said. “In fact, they just want to buy more, and they don’t need to be enticed by freebies and so on.”
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Photo credit: Executives at Travel + Leisure Co. see more than $ 12 billion in upgrade sales potential from its current timeshare owners. Travel + Leisure Co.