Will Timeshare Industry Mirror Predictions for the Hotel Industry?

In a report released last week, Ernst and Young LLP identified key trends they project will impact the hotel and travel industry for 2009. The Timeshare Authority focuses on three of the trends that seem have as much meaning for timeshares as they do for hotels.

In a report titled, “Top Ten Thoughts for the Hospitality Industry,” released last week, Ernst and Young’s hospitality industry experts made ten interesting and timely observations about the state (and the future) of the industry. Looking at the first three, all seem to tell a bad news-good news story that may be equally as meaningful for the timeshare industry as for hoteliers.

Although the report is lengthy, HotelExecutive.com summed up the first three of ten items in this way:

1. Capital. Despite low mortgage delinquency rates, hotel values dropped in 2008 and will continue to drop in 2009 as the economic slowdown takes hold. Meanwhile, cash-rich buyers are waiting to make deals once acquisition pricing is attractive. A recent Ernst & Young LLP survey of US real estate investors revealed that 60% intended to take advantage of fire-sale prices and buy commercial real estate. With $400 billion already raised by private equity firms for distressed debt investment and a first wave of bankruptcy judgments expected this year, the transaction floodgates should open before the year is out.

2. Costs. If the recession has a silver lining it is that companies are concentrating on improving efficiencies and reducing costs. Hotel companies moving quickly to pare overhead at the corporate and property levels will not only save money but will position their enterprises to be more dominant players for the next cycle.

3. Business Development. A recent Google(TM) survey suggests that a third of travelers have made accommodation decisions based on reviews found online on sites such as TripAdvisor, Yapta, Travel Muse and Concierge. This is just one good reason hotel operators should step up their brand presence on the internet in 2009.

(Credit: HotelExecutive.com, “Ernst & Young LLP Identifies Ten Key Trends in 2009”)

So what’s the good news for the timeshare industry that rings out from these points? It’s simple:

Yes, there will be sales of existing timeshare resorts and land for development of new timeshare resorts that some savvy and stable buyers will be able to pick up at deeply discounted prices. But because of this, these timeshare developers or timeshare companies will be able to get the new (or refurbished and rebranded) resorts up and running, with less land debt than many timeshare deals have typically carried in the past. And because of this, they will be able to open, operate, and provide timeshare buyers with exciting new destinations, no matter the economic climate.

Yes, timeshare companies are having to trim the fat from their budgets. But this is almost always a good thing in business. Look for today’s recession to build a leaner but stronger timeshare industry, eager to provide quality service and products to a price-conscious consumer market.

And yes, the popularity of consumer feedback as a decision maker for people booking hotel nights not only bespeaks a growing preference by consumers to book vacation and travel lodging online, it also reminds us just how much confidence we travelers place in the opinions of others travelers. We like arranging hotel stays, timeshare resale transactions, and timeshare rentals online because it is easy to do, fits our busy schedules, and lets us comparison shop to our heart’s content. We also respect others whose vacation preferences are similar to our own … which says a lot about why demand is growing all the time for by-owner timeshare resales, or broker assisted timeshare sales from the current timeshare owner.

The full report is available as a free pdf download here: Hospitality Industry Report.