Ask RedWeek / April, 2017

Should timeshare owners care about ARDA World?

I heard about an industry conference last week called ARDA World. What is it, and what does it do that impacts regular timeshare owners like me?

RedWeek attended ARDA World in person, so we are pleased to pass along our observations for people who wonder what developers do when owners aren't present. ARDA stands for the American Resort Development Association - they are the Washington DC-based voice and lobbying arm for the timeshare industry. We also interviewed participants after the conference to get their take on the benefits of the event — and its meaning for owners. No surprise, the attendees gave the event great reviews. Here's our report.

A Timeshare Mardi Gras

It's impossible to go to New Orleans without wondering about touristy things like Bourbon Street, Jazz Bands, the Superdome and Cajun Seafood. Well, at the March 26-30 ARDA World conference, the largest timeshare developer event in the world, it was also impossible to get away from four days of non-stop talk about the future of the timeshare industry, including the 9.2 million timeshare-owning households in the U.S. that were NOT present at the conference. When you draw 1,600 devotees from all over the world, you get a timeshare Mardi Gras. If owners attended, they'd need eight days to get through all the issues and organizers would have to rent the Superdome for the conference, since it is right next door to the downtown Hyatt that hosted the event.

ARDA World is the developer industry's annual conference to celebrate its achievements and prepare for the future. It's full of networking events, educational panels, executive roundtables, and a marketplace for hospitality vendors — from mattress makers to pots-and-pan people, HOA software developers, exchange and management companies — to meet with existing clients and, ideally, line up new ones.

ARDA's Owner Advocacy

Here are some ARDA developments that should jump right out at owners. First, some statistics as compiled by ARDA:

  • Owners donated $5.5 million this year, through voluntary contributions on their maintenance fees, to support ARDA-ROC, the independent Resort Owners' Coalition that teams up with ARDA on consumer and legal issues that impact owners. The top two givers were owners at Diamond Resorts and Bluegreen Vacations, each of whom contributed $1 million for ARDA's representation. Owners from the Holiday Inn, Marriott, and Hilton vacation clubs donated $500,000 each. All of the other major and regional companies, including a couple of HOA management companies, donated hefty, but lesser amounts.
  • For their money, ARDA and ARDA-ROC lobbied various legislatures on ways to crack down on fraudulent transfer companies (South Carolina), block $25 per night tax hikes on owners (US Virgin Islands) and update timeshare laws in key states (including Florida), so that HOA boards have more flexibility to extend or terminate their timeshare plans. Mundane legal stuff, but important and hard to quantify in terms of an immediate benefit. ARDA-ROC's top two objectives, year in and year out, seem to be fighting fraudulent transfers and tax increases on owners who have no elected representation in the states that impose the taxes.
  • The average price of a new timeshare is $20,040. Compare that to what you paid, and what you think your timeshare is worth on the resale market, and you've got a good topic for an owner update meeting next time you visit your home resort. If in doubt, check RedWeek's valuation tool to find the market value for your intervals.
  • The overall timeshare industry is a $10 billion behemoth, growing at an annualized rate of 5.5 percent and almost fully recovered from the mortgage-and-lending crisis of 2008. The industry's historical high-water mark for sales was $10.6 billion, recorded in 2007. For comparison's sake, revenues for Major League Baseball are $9 billion; revenues for the music industry are $7 billion.
  • The deeded-week era is officially over. All major timeshare companies have shifted to selling points in timeshare trusts that give owners more flexibility and choices in vacations. At the same time, several if not all companies are exploring limited-term products, such as time-limited memberships in vacation clubs. Mark Wang, GEO of the newly public Hilton Grand Vacations company, predicted that five- 10- and 15-year contracts are on the horizon. The resale market, as RedWeek readers know, is bursting with thousands of fixed and floating weeks for rent or sale. Some developer companies (e.g., Marriott) will buy back deeded weeks from owners, then put them into their trust inventory, where they will be resold, at retail prices, as trust points.

No Quick Fixes for the Secondary Market

  • The secondary market continues to befuddle everyone. There was only one panel on the topic, and it was depressing while informative, discussing how legacy HOAs can gird themselves for one of several outcomes, including extended life, bankruptcy, or irrelevancy. Its title? "Association Survival." It was the final panel on the last day of the conference, convened late afternoon, deliberately, no doubt, to ward off voyeurs who like to watch disasters on TV. The message of the seminar was plain: plan ahead to run your resort like a business, or fold.
  • Two very prominent CEOs, Stephen P. Weisz of Marriott Vacations Club and Sergio D. Rivera, CEO of ILG's vacation ownership segment (Hyatt, Westin, Sheraton), called upon their colleagues to increase efforts to help longtime owners handle exit strategies. Rivera described it as a "call to action." Here's an excerpt from his statement about the secondary market: "We all have some form of program to support our owners, but that is not necessarily true across the industry. We need more in that regard. We have a cause that we need to really get on."
  • Here are a few other numbers for owners. The average timeshare occupancy rate is 80 percent, a number that hotel companies would covet. Timeshare "approval" ratings by owners is 83 percent. That high-approval rating is reinforced by the fact that the industry sells more upgrades to existing owners than new buyers. As of 2015, 54 percent of sales went for upgrades while 46 percent went to brand new buyers. Timeshare developers would like to even out that number at 50-50 to guarantee a steady and stable growth of the retail market.

Developers Study Buyer Regret, Remorse, and Rescission

ARDA World offered one educational panel that probably speaks to every owner in the timeshare universe. The title says it all: "The Effects of Buyer Regret on Rescission: Recognizing, Revealing and Rectifying Regret." The session was hosted by Dr. Amy Gregory, an assistant professor at the University of Central Florida, where she is in the third year of studying the impact of buyer regret-and-remorse on rescission decisions.

Here are some of Dr. Gregory's findings: The average rescission rate is 15 percent (which is identical, ironically, to the daily average percentage of people who buy a timeshare after a sales presentation). A whopping 85 percent of all buyers regret their purchase (for money, fear, confusion, intimidation, distrust and other reasons). Forty-one percent of buyers never thought they would regret their purchase, but they did; another 30 percent were neutral prior to buying, but then regretted it. A big factor leading to rescission, moreover, appears to be the lack of consistent follow-up from companies after they have closed a sale. Another pertinent finding from Dr. Gregory's research shows that 95 percent of all buyers go back to their resort and sales team for more information after the sale, usually within one to three days. This is the crucial period, according to Dr. Gregory, when a wobbly timeshare purchaser can fall through the cracks. Typically, these buyers want more information about maintenance fees, resale options, and pricing alternatives (some owners even want to buy more, right away). Reservation issues, which seem to spike anxiety and regret for many timeshare owner down the road, fall way outside the rescission period, so are not relevant to a rescission decision.

RedWeek interviewed Dr. Gregory after the conference for additional information, since regret-and-remorse issues have been studied many times. In the timeshare world, so-called "intervening factors" -such as negative feedback from a friend, finding conflicting information about timeshares on the Internet, frustration navigating company websites, or mixed messages from other sales personnel --- are much more influential in persuading buyers to cancel a purchase than any other factor. "We also know," Dr. Gregory said, "that remorse and price tags are positively related."

Studying regret-and-remorse is a multi-hundred-million-dollar puzzle for developers, which is why they are trying to get a detailed understanding of rescission decisions. For example, if the industry reaches $10 billion in annual sales, that means an additional $1.5 billion in sales were cancelled

"If you could maintain a dialog with all those people who walked away, you'd learn a lot, but the challenge is that so many people say no," said Dr. Gregory, who worked in the Marriott and Ritz Carlton organizations before joining academia. "Out of this, I hope, will come some explanations so companies can rectify and reduce regret (and rescissions). From a buyer's perspective, it will be a positive outcome if we can alleviate some of their regret at time of purchase."

Owners interested in learning more about regret-and-remorse may e-mail Dr. Gregory.

Keynote Speaker Says Success Hinges on Disruption

Every year, ARDA brings in a few outside voices and motivational speakers to provoke attendees to think outside the box. This year's keynoter, author Josh Linkner, promotes "disruption" as the only way for a company to stay competitive and relevant in today's business world. Like other keynoters at past conferences, he urged attendees to embrace the inevitability of constant change and stressed the need for reinvention. Companies that don't disrupt themselves to come up with better products and smarter ideas, he said, will get surpassed in the market by other companies that adopt change and creativity as the driving forces of their organization. Linkner's ideas apply to all businesses, but they seem particularly relevant to a timeshare industry that, historically, is risk-averse and slow to change. His messages also apply to owners who face "what next" questions in their personal lives. Linkner is a likeable figure who brought one other credential to ARDA that really hit home with the audience. He is the first keynoter in memory who actually owns, uses, and enjoys timeshares.

Interested in what was discussed at many of the other sessions during ARDA World? Here is a sampling: federal and state legislative issues; reputation management; resort operations, management and HOA councils; industry consolidation; developing new marketing campaigns; lifecycle of a complaint: preventing escalation and litigation; electrifying your sales documents; how to rejuvenate your owner referral program; create raving fans and ignite your social media results; the view of timeshare: Wall Street, Main Street and Your Street; and Cuba cubed.

RedWeek could not attend the Cuba panel, but we're pretty sure it was all about expanding timeshare horizons in Cuba.

About the author

This answer was provided by RedWeek's Chief Correspondent, Jeff Weir. Jeff is a California-based journalist who has covered California, Congress, and the White House. He also has roots in Silicon Valley, where he directed public relations and marketing programs for high-tech companies. He is also a timeshare owner and member of RedWeek.com.

Leave a comment

    4 Comments

  • Avatar for bonnie761
    bonnie761
    Apr 11, 2017 (2 weeks ago)

    Thanks for this article. I found it informative, and appreciate the statistics.

  • Avatar for garys777
    garys777
    Apr 12, 2017 (1 week ago)

    Morning. I found this article very informative. I'm a bit surprised that you don't have tons of feedback. I am particularly interested in the comments made by Sergio Rivera who suggested "a call to action" regarding exit strategies. At different time share presentations we have been offered significant reduction in purchase fees because of "returned" inventory. I called Westin to see if they would be interested in buying back our time share at a discount and of course they said no. It seems to me that that could be an exit strategy for leary time share buyers. At a discount they could purchase and resell quickly and improve sales and possible interest. I spoke to the wrong person at Westin - we own a time share in Kauai at Princeville - and I was led to believe that their inventory is sold out or nearly sold out. Do you know of a person at the purchasing end of Westin time shares who I could talk with regarding my interest to sell back our time share to Westin? Or do you know how I could most effectively communicate with Mr. Rivera to see about his interest to reinforce his "call to action" by directing me to someone who I could talk with regarding the buy back of this property? Or do have any interest to negotiate with Westin on my behalf for a fee? Sorry for my long winded response and thanks for publishing your notes. Gary Stamm

  • Avatar for doral19
    doral19
    Apr 19, 2017 (6 days ago)

    My add needed to be change the days and the price.I was not able to do it. Mariners Point resort (Falmouth MASS)...July 8-July 15....$1450.00 Please do it for me!Thank you.

  • Avatar for phyl21
    phyl21
    RedWeek.com Team
    Apr 19, 2017 (6 days ago)

    Dora -

    Our Resources section provides information on how to edit your posting.

    If you need further assistance, please Contact Us .

    Phyllis