Timeshare Industry Trends: Q&A with Brent Horak at BDO USA
- Dec 09, 2014
New York—BDO is the brand name for BDO USA LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. As an independent member firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,264 offices in 144 countries. Brent Horak, assurance partner in the real estate practice at BDO USA, offers insights into today’s timeshare industry in a Q&A with MHN.
MHN: The timeshare industry has been through some big changes during its lifetime. Are there further changes taking place? What’s driving them?
Horak: Millennials are becoming a new driving force in the timeshare industry. However, millennials might not be as financially capable of making such sizable investments as their older counterparts are. Some may also resist the idea of a long-term commitment, preferring the freedom and flexibility that comes with other travel and leisure alternatives. Despite this, many timeshare operators are now working to lure millennials by appealing to their tastes with green-friendly resorts and a heightened focus on wellness, among other unique features. In addition, many are using new technologies as well as boosting their social media and mobile presence to attract this new generation of potential timeshare owners.
MHN: How did the market survive the recession?
Horak: During the recession, financing was scarce for many would-be timeshare owners and operators alike. Many future owners looking to rent or buy turned to the secondary market of timeshare resales to avoid going to banks for financing. There, they could acquire timeshares directly from the owners at prices that were sometimes 60 percent less expensive than retail prices, according to BuyATimeshare.com. The site also notes that many timeshares survived during the recession by using a points-based system. This strategy, which is still used today, allotted owners a certain number of points annually, which they could redeem for multiple stays per year at different resorts, airfare and other travel-related expenses. This allowed timeshare owners to maximize their vacation dollars and operators to reduce their upfront purchase prices while maintaining solid sales.
MHN: Which markets are more attractive to today’s timeshare operators? Are there new market opportunities emerging?
Horak: Many timeshare operators are looking to acquire properties overseas as a way of adding value to their portfolios. They want to strategically increase the value for the owners of their properties, and many are doing this by seeking new assets in areas of the globe. Emerging markets like Asia are particularly attractive. Multiple factors, including the area’s sheer size, expanding and prosperous middle class, as well as changing attitudes toward vacationing, contribute to the region’s appeal to timeshare operators.
MHN: Which growth strategies are the most viable for operators and what impact could they have on the timeshare industry?
Horak: Timeshare operators are now beginning to look for ways to expand their offerings as a way to attract new owners. Many are moving toward resembling a full-service hospitality company by providing owners with the opportunity to have unique experiences, such as daily excursions or cruise ship trips. More than simply a property ownership, timeshares are becoming a vehicle for a fuller vacation experience. As increasing numbers of timeshare operators broaden their list of perks for potential owners, competition within the industry will likely rise as well. As a result, timeshare operators will likely need to work hard to distinguish themselves in the market, cultivate a portfolio of attractive assets and unique offerings and strategize how they will reach their target customer base through new technologies and media.