Howard Nusbaum - Global opportunities and challenges as timeshare comes of age
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Howard Nusbaum, president and CEO of ARDA, looks at the current timeshare environment globally.
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Howard Nusbaum - Global opportunities and challenges as timeshare comes of age
- 2. Growing Global Opportunities and Challenges as Timeshare Comes of Age Presented by Howard Nusbaum RRP President and CEO ARDA
- 3. A presentation designed exclusively for
- 4. If everyone is moving forward together, then success takes care of itself. Henry Ford
- 5. AIF Research
- 7. Resorts Region Total Resorts % of Resorts Africa 220 4% Asia 334 6% Australasia 112 2% Caribbean 246 5% Central & South America 539 10% Europe 1,345 25% Middle East 53 1% North America 2,467 46% N. America (U.S.) 1,840 35% N. American (Non-U.S.) 627 12% Total, World 5,316 100% Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF
- 8. Units Africa 4% Asia 5% Australasia 0.8% Caribbean 8% Central & South America 12% Europe 18% Middle East 0.5% North America - U.S. 37% North America - Non-U.S. 15% Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF Total Units: 497,107
- 9. Sales Volume Africa, 4.40% Asia, 3.60% Australaisa, 1.70 % Caribbean, 4.10 % Central & South America, 4.50% Europe, 11.10% Middle East, 0.30%North America (U.S.), 49.10% North America (Non- U.S.), 21.30% Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF Sales Volume $14.12 b
- 10. Intervals Sold Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF
- 11. Maintenance Fees Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF
- 12. Occupancy Region 2008 2009 2010 Africa 80% 83% 81% Asia 69% 71% 70% Australasia 83% 84% 84% Caribbean 79% 79% 82% Central and South America 69% 73% 78% Europe 75% 74% 73% Middle East 58% 63% 55% North America 79% 77% 77% N. America (U.S.) 82% 80% 79% N. America (Non-U.S.) 74% 72% 72% Total, World 78% 77% 76% Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF
- 13. Rental Region Nights Rented Avg. Rate Africa 49,404 $100 Asia 1,750,939 $149 Australasia 175,056 $117 Caribbean 105,255 $160 Central and South America 30,948 $127 Europe 3,279,033 $131 Middle East 63,600 $143 North America 9,246,775 $154 N. America (U.S.) 7,900,000 $156 N. America (Non-U.S.) 1,346,775 $143 Total, World 14,701,010 $148 Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF
- 14. Output and Employment Central & South America Output: $3.14 b Jobs: 56,250 Income: $1.4 b Taxes: $273 m North America Output: $84 b Jobs: 653,247 Income: $30.7 b Taxes: $9.6 b Africa Output: $3.85 b Jobs: 101,658 Income: $1.8 b Taxes: $486 m Middle East Output: $475 m Jobs: 6,303 Income: $175 m Taxes: $46 m Australasia Output: $819 m Jobs: 8,159 Income: $255 m Taxes: $109 M Caribbean Output: $2.2 b Jobs: 48,580 Income: $753 m Taxes: $166 m Europe Output: $15.93 b Jobs: 134,527 Income: $6.2 b Taxes: $2.4 b Asia Output: $3.3b Jobs: 43,742 Income: $1.2 b Taxes: $317 m Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF
- 15. Shared Ownership Owners NORTH AMERICA SOUTH AMERICA EUROPE REST OF WORLD Canada Argentina Finland Australia Mexico Brazil France China United States Colombia Germany India Venezuela Great Britain Israel Hungary Japan Italy Malaysia Portugal New Zealand Spain Russia South Africa
- 16. Incidence of Ownership 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% Rest of World South America North America Europe Global 2.0% 0.6% 1.8% 2.5% 6.4% Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF
- 17. Products Owned Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF GLOBAL EUROPE NORTH AMERICA SOUTH AMERICA REST OF WORLD Weeks 50% 65% 47% 47% 47% Points 36% 22% 44% 16% 37% Fractional 17% 17% 12% 23% 23% PRC 13% 11% 12% 24% 13%
- 18. Vacationed Past 12 Months 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Global Europe North America South America Rest of World Owners Non-Owners 81% 77% 83% 76% 82% 43% 50% 50% 29% 42% Source: World Wide Shared Vacation Ownership Report prepared by Oxford Economics and TRiG for AIF
- 19. Challenges & Opportunities • Secondary Market • Legacy Resorts • Emerging Products & Structures
- 20. US State of the Industry 2012 Statistics Resorts 1,551 in 48 States # of Units 189,222 Intervals Sold 366,155 Sales Price/Interval $18,723 Sales Volume $6.9 Billion Occupancy 77% Maintenance Fees $822 Rental Nights/Rate 9.6 M @ $163 Rental Revenue $1.6 Billion Employment 215,291 Source: 2013 State of the Vacation Timeshare Industry: United States Study prepared by Ernst & Young for ARDA International Foundation
- 21. 2013 – A Good Year Q1 Q2 Q3 Q4 Q1 – Q4 Totals Net originated sales (B) $1.119 $1.329 $1.462 $1.399 $5.334 Net fee-for-service sales (M) $125 $144 $163 $131 $563 Net total sales (B) $1.244 $1.473 $1.625 $1.530 $5.897 Timeshare loans current 90.7% 91.4% 90.8% 89.8% 90.7% Occupancy 75.5% 80.5% 83.9% 80.7% 80.2% * Weighted average Source: 2013 Q1 – Q4 Financial Performance Pulse Reports conducted by Deloitte & Touche for ARDA International Foundation
- 22. strategicpriorities • Evolve the Regulatory Environment on behalf of the Industry and Owners • Support a Viable Secondary Market • Strengthen and Enforce a Clear, Current Ethics Policy • Enhance the Timeshare Industry’s Public Image • Explore Ways to Support Legacy HOA-Operated Resort Viability • Execute a Long-Term Membership Strategy • Provide High-Value Networking, Education, Business Development Opportunities • Expand our Focus on International Growth Markets • Support Industry Developers with Tools to Educate Lenders and Wall Street ARDA and the industry will work collectively to make our vision for the future a reality by focusing our collective resources and efforts on executing our shared strategic priorities. American Resort Development Association | 2013 – 2015 Strategic Plan Strategic Plan
- 24. STOP the “tax the visitor -- not the voter” mentality ARDA-ROC Services
- 25. Working Together
- 26. Bullish on the Future Economic Environment Available funding Greater efficiency Controlling marketing costs Societal Environment Demographics Focus on wellness Social Media Opportunities Abound Hospitality management Partnership services Cost efficient distribution channels Product opportunities
- 27. ARDA WORLD April 6 – 10, 2014 The Venetian Resort Hotel & Casino Las Vegas, NV
Notas do Editor
- If everyone is movingforward together, then success takes care of itself.Henry Ford
- Most of the data I am sharing with you today is from the 2012 World Wide Shared Vacation Ownership Report produced by Oxford Economics and The Research Intelligence Group for the ARDA International Foundation. Please note that information included in this report is based on calendar year 2010.
- Where in the world is timeshare?Today we are going to answer this question by sharing information about the state of the world wide shared ownership industry.
- There are over 5,300 resorts located in 108 countries around the world. North America accounts for nearly one half of all timeshare resorts. Europe is second – with 25% of the resorts.71% of all resorts are purpose built for timeshare.More than half of resorts, 56% are located within a mixed use property.Exclusive of the U.S., there were 64 properties under development at the end of 2010.
- The average size of a timeshare resort is 94 units. There are nearly one half million units located at timeshare resorts around the world. Over one-half of the units are located in North America – with over one-third of units located in the US. The two-bedroom unit is the most popular unit type – representing 41% of all units.NOTE: North America is defined as Canada, Caribbean, Mexico and the United States of America.
- The health of our industry is traditionally measured by annual sales volume. North America accounted for nearly two-thirds of all sales volume in 2010 with the US representing nearly 50% of all sales volume. In 2010, total worldwide sales volume was over $14 billion.
- Another way to measure the health of the industry is through the number of timeshare intervals, or their equivalents sold in a year. In 2010 784,505 intervals were sold. Of these 473,994 or 60% of intervals sold were sold in North America.
- Maintenance fees are needed to pay for the cost of operating a resort. The highest average fees are paid within the US - $731, followed closely by the rest of North America at $677. Lowest maintenance fees per interval are charged in the Middle East, where the average is $255.
- Occupancy is another measure of the health of our industry. The pre-paid nature of the product dictates that the owner will use the product. Average occupancies for the industry ranged from a low of 55% in the Middle East to a high of 84% in Australasia. The world wide average occupancy in 2010 was 76%.
- Rental is an important source of revenue for timeshare resorts. In 2010, over 14.7 million room nights were rented at a timeshare resort. At an average of $148 per night, rental generated nearly $2.2 billion in revenue for timeshare resorts.
- As part of the worldwide study, we conducted a study of timeshare owners in the 24 countries that currently have the most owners and/or have the potential of having the largest number of owners in the future. The countries were assigned to one of four regions for reporting purposes.
- In each of these 24 countries we measured the percent of households that own some type of shared vacation ownership. There are 20 million owner households among the 1.1 billion total households in these 24 countries. The incidence of ownership in these twenty four countries is 1.8%. Again North America leads the way with a 6.4% incidence . Europe and South American follow at 2.5% and 2.0% respectively.
- Earlier in the presentation we discussed the product types offered at point of sale – now we look at the products owners reported owning.Weeks products are the most popular around the world, accounting for the majority of product owned in all regions. Approximately one out of every three owners has invested in points products. Fractional and PRC products are owned by approximately one out of every 7 owners.NOTE: Owners could report owning multiple product types.
- Earlier we discussed occupancy levels reported by timeshare resorts. This chart demonstrates the propensity of timeshare owners to vacation compared to non-timeshare owners.In 2010 81% of timeshare owners reported taking a vacation in the past 12 months – compared to 43% of individuals not owning timeshare.
- The world wide industry is faced with a number of challenges and opportunities – many vary depending on region of world, however as I have traveled the globe three topics are raised frequently:Secondary or resale marketAging timeshare resorts that were sold out years ago and are under the direction of the ownersEmerging products and structures
- For the next few minutes I want to give you information about the current state of the US timeshare industry. This information is from the annual State of the Industry Report prepared for the ARDA International Foundation by Ernst & Young. This data is from year-end 2012.Let’s take a look at some key industry statistics:1,551 resorts located in 48 States (Kansas, North Dakota no timeshare). Average resort size is 122 units.Resorts represent 189,222 units – of which 63% are two bedroom units.In 2012 there were 366,155 intervals or interval equivalents sold for an average price of $18,723 – resulting in sales volume of $6.9 billion.Occupancy rate of all inventory was 77% (61% for US hotels)Maintenance fee – annual fee owners pay to operate, manage and maintain resort is $822.Rental is an important revenue stream for resorts. In 2012 9.6 million nights were rented at an average rate of $163, resulting in $1.6 billion in rental revenue.Nearly 215,300 individuals are employed in the US timeshare industry. Salaries, benefits and wages totaled $9.9 billion.
- The AIF conducts financial pulse reports on a quarterly basis. Results from all quarters of 2013 reflect a very good year for the US timeshare industry. As is typical, quarterly timeshare sales increased each quarter throughout 2013. Net originated sales for the year totaled $5.334 billion. Add another $563 million through fee-for-service sales and net total sales for 2013 were $5.9 billion. As we look at other key statistics:Fee for service sales increased by $241 million or 74.8% when comparing 2013 to 2012Loan currency was down slightly, 3.2% although 9 out of 10 owners are current on their monthly loan payments.Occupancy is up 1.6% for an annual average of 80.15%. This is the first increase in annual occupancy in three years.
- Industry leaders from all segments of the industry and ARDA Senior Staff worked together to develop a three-year Strategic Plan. Nine strategies were identified – four representing the typical work of the association and five addressing challenges and opportunities determined by the working group.Work of AssociationExecute a Long-Term Membership Strategy Provide High-Value Networking, Education, Business Development Opportunities Expand our Focus on International Growth Markets Support Industry Developers with Tools to Educate Lenders and Wall StreetAreas of challenge and opportunity:Evolve the Regulatory Environment on behalf of the Industry and OwnersSupport a Viable Secondary MarketStrengthen and Enforce a Clear, Current Ethics PolicyEnhance the Timeshare Industry’s Public Image Explore Ways to Support Legacy HOA-Operated Resort Viability
- In the US ARDA is the trade association representing the US timeshare industry. Our primary focus to advocated on behalf of the US industry. The ARDA Resort Owners’ Coalition (ARDA-ROC is the first line of defense against legislation that may negatively impact timeshare owners. Through ARDA-ROC, owners are a part of an effective grassroots lobbying coalition of timeshare unit owners dedicated to preserving, protecting, and enhancing vacation ownership.1.5 million timeshare owners voluntarily contribute between $3 and $10 annually to promote a legislative agenda beneficial to owners at the local, state and federal levels. ARDA-ROC is dedicating to protecting and enhancing vacation ownership for timeshare owners.Government regulations protect consumer contributions and insure funds are used solely for owner issues.
- ARDA-ROC’s main focus is to attempt to eliminate the “tax the visitor not the voter” mentality that exists in many US communities where timeshare is popular. In US, timeshare product is almost always backed by real-estate, these owners pay real-estate taxes. Yet local and state governments constantly try to burden timeshare owners – these absentee residents – with occupancy, ad volurum and other unfair taxes.
- These international timeshare organizations must work together to protect not only timeshare developers – but the timeshare owners as well.
- Economic Environment Funding for receivables hypothecation – smaller independent resorts and HOA trying to establish resale programsLaser focus on efficiency New Customer acquisition cost Societal EnvironmentConditions are rightFavorable generational demographicsSocietal focus on family, health and fitnessOpportunities aboundHospitality managementFee for Service Cost efficient distribution channels Product Opportunities
- In closing I invite you to Save the date for the 2014 ARDA Convention – ARDA World will be held April 6 – 10, 2014 at The Venetian Resort Hotel & Casino in Las Vegas, NV
- Thank you for inviting me to share my perspective on the international timeshare industry. I look forward to the opportunity of speaking with you and learning more about the opportunities and challenges you as owners believe you are facing.