The Resort Trades

The following article appears in the October issue of The Resort Trades. We are very appreciative of their permission to share this article with you.

How Airlines are Beating the Challenge of Online Travel Agencies … and Why Timeshares Should Pay Attention

by Jason Tremblay

Less than twelve months ago, online travel agencies (OTAs) set the standard for bookings in the travel and vacation industry. In an article published this past February here in The Resort Trades, (“The gnome has a message for you”) we looked at the triple-threat OTAs present, offering easy online booking, one-stop shopping for travel services, and discounted prices on accommodations, rental cars and airfares. How, we wondered, could the timeshare industry, the airlines or any other travel service provider compete for bookings in a space where OTAs seemed to wield so many advantages in addition to being fortified by deep pockets and low overhead?

In 2011, according to travel research firm, PhoCusWright, 37 percent of travelers booked their flights through an OTA, while 34 percent went directly to the air carrier’s website to book. Today the percentages are reversed, with branded websites for air carriers surpassing OTAs. Apparently, the airline industry had a strategy well underway to level the playing field and even to regain the advantage.

Why is this three to four point gain such a big deal? The big deal lies in the fact that this seemingly minor shift represents a 7-point swing. It is what PhoCusWright describes as an “epic behavior” change in the metrics of consumer buying patterns.

With airlines recognizing that they were balanced precariously on the edge of a looming abyss, in which their own bookings were being cannibalized by the OTAs, many large and small carriers alike, began working aggressively to educe change. They started pouring more dollars into advertising and marketing and adding loyalty perks and incentives that were available only to passengers who booked air travel on the carrier’s website. As Rick Seaney, chief executive of comparison site Farecompare.com points out, “It’s simple math. If it costs you, the airline, $16 to sell a ticket somewhere else, and $2 on your own site, you have some money to play with.”

Airlines cannot afford to let Expedia, Travelocity, or any of the other OTAs become the only touch point for travelers; doing so would cost them their brand identity and ultimately their business. In an industry that inherently lives on the brink of profitability, air carriers have had no choice except to reestablish themselves as the primary site for market engagement.

Airlines operate on extremely thin margins, weighted down by high fixed costs. Every day an airline operates, it aces two challenging wildcards: the fluctuating cost of fuel, which accounts for more than 30 percent of its operating costs, and the unpredictability of the weather.

An airline calculates the value of your body in its seat at an industry high that might reach $4.00 and a low that is barely more than a dollar. According to an analysis by Oliver Wyman for the Wall Street Journal, airlines make only $164 for every $16,400 they spend on the typical domestic flight.

OTAs, on the other hand, don’t have to fly the planes; they merely need to sell the tickets. Nor do they have to build and maintain hotels or timeshare resorts. They can spend a lot of money attracting vacationers to their websites, the kind of dollars that airlines, hotels and the vacation ownership developers simply do not have in their operational models.

The 2011 white paper, “Breaking the Hotel Addiction to OTAs: a 3-Step Recovery Plan,” authored by Madigan Pratt & Associates, points out, that although OTAs can be “a valuable marketing and third-party distribution resource for hotels,” they can also be, “hazardous to the health of your hotel.” In “A Call to Arms: How to Shift Market Share from the OTAs to the Hotel Website,” (written by Max Starkov and published this past spring by HeBS digital) 2013 has been defined as the “Year of Realizing the Extent of the Pain Caused by the OTAs.”

Both reports urge hoteliers to strengthen relationship building with their guests and to fortify their brands through disciplined direct and database marketing. Above all else, the message to anyone who wants to compete and win against OTAs is to make your website user experience exemplary through sites that target desktop users, mobile users and tablet users as three distinct markets.

In short, hoteliers are being counseled to beat OTAs at their own game. And in view of the success that airlines have already demonstrated in creating “epic behavior” changes in consumer patterns–despite the tightest of profitability margins–this strategy is a strategic plan well-scripted for timeshare resorts and hotels.

• Although OTAs come to the table with much strength, they do have their weaknesses—many of which are becoming increasingly more evident.
•  OTAs are limited in their capacity to provide personalized customer service. They can rarely make exceptions to any of their rules, no matter how extenuating the customer’s situation. Their hands are tied when it comes to refunds.
• Currently, OTAs are busy gobbling up one another. While some will become larger (although not necessarily stronger), at least their numbers are being reduced.
•  In the U.S. as well as other countries, including France, Germany, and Switzerland, OTAs are facing various anti-trust issues. Consumer groups and other watchdogs are questioning the legality and ethics of OTAs that block hotels from offering lower rates through other reservation services.
• Across the U.S., OTA’s are being brought up on tax issues. These are primarily lodging and occupancy taxes that are in many cases made much worse by penalties and interests reaching back as far as ten years. Win or lose, such lawsuits are time and energy draining for any company. In the event the OTAs do lose, judgments against many companies could run in the hundreds of millions of dollars on a case-by-case basis.

If ever there was a time for timeshare resorts, resellers and brands to reposition themselves as the go-to resource for booking travel accommodations, 2013 is turning out to be the year. Timeshare and vacation ownership brands should not hesitate to take their cue from the airlines, limiting the inventory they share with online travel agencies and upping their game, their marketing, their engagement and their brand benefits. In the end, timeshares are real places and real people, offering amazing vacation values and experiences. Just don’t expect those gnomes to go away without a fight. This competition is far from over.

 

Thank you to The Resort Trades for publishing this article that looks at vacation ownership industry issues of consumer trust–issues that seem to never really go away in our business. As much as it seems to be stating the obvious, the timeshare industry cannot rely on their primary buyer of new timeshares, being the current timeshare owner.

The article is printed in entirety on the website for The Resort Trades and appears in print in the August edition of the publication. To view the original article: CLICK HERE.

Is timeshare owner satisfaction enough to sustain the vacation ownership industry?

by Jason Tremblay

When ARDA President Howard Nusbaum reports an 83 percent satisfaction rate by current timeshare owners with the vacation ownership product, we, as an industry, breathe a sigh of relief.

We are not the evil villains our critics make us out to be, pedaling a product that consumers are duped into buying and immediately regret.

No, we are okay; the 2012 edition of the “Shared Vacation Ownership Owners Report” assures us we are. And in a Sally Field moment, we reaffirm to ourselves, our staffs, our peers and the media that timeshare owners like us, they really like us.

But do they? Or do they like the timeshares themselves and just tolerate all of us who build, manage, sell, resell, and market the beautiful, spacious resort properties?

This is the age of relationship building. Whether you are growing a business, leading an organization, or running for political office, your success or failure typically is directly proportional to your skill at building relationships.

But as author Rohit Bhargava explains in his best-selling book, “Likeonomics,” we are living in “the society of distrust,” where the trust gap between people and the organizations with which they interact is ever widening.

According to Bhargava, research from the 12th Annual Edelman Trust Barometer Study showed that the United States was the only country studied where distrust in all institutions (business, government, media, and NGOs) increased, across the board.

Recognizing that relationship-building is the key component to business success and that we live in a social climate where distrust spreads like a devious virus, how does any industry flourish?

More importantly, how can the timeshare industry, with its long history of being misunderstood and too-often maligned, find a way to prosper? Perhaps it is time we did a better job of putting a face on our brands.

If you ask the average consumer to identify people who work in the timeshare industry, some would point to Diamond Resort International’s CEO Stephen J. Cloobeck, who gained a level of notoriety for his two appearances on the CBS reality show “Undercover Boss.”

A few others might recognize Westgate Resorts founder and CEO, David Siegel. Siegel, along with his wife Jackie, was the subject of an independent film called “The Queen of Versailles,” which chronicled their lives and their ongoing project to build a 90,000-square-foot home modeled after the famous French Palace of Versailles.

Interesting personalities and glamorous lifestyles in both cases, but neither of these top executives represent the face and lifestyle of vacation ownership’s rank and file. The men and women who handle reservations, greet guests upon arrival, and plan resort activities are timeshare’s real countenance.

So are the people who work in the timeshare industry at data entry, maintenance, accounting, marketing, and hundreds of other positions where owners never see the faces of these hardworking team members, yet whose ownership experiences wouldn’t be the same without them.

Like attracts like; it’s one of the first principles of sales that most of us learn. Your prospects are more likely to become your clients and customers when they identify with you.

This concept of commonality and connection is also the reason people connect with total strangers via social media – we like finding other people who have interests, backgrounds, experiences or even dislikes that are in harmony with our own.

When a company puts forward the real faces and real stories of its team members, it stops being a cold, impersonal corporation and becomes humanized.

Real people, who make others think of their sons and daughters, their parents, or even themselves, are far less likely to be attacked by clients, critics or the media and the marketplace in general. And they are far more likely to be able to deliver the most important part of relationship building, the two-way conversation.

Since the days when vendors crossed the country in wagons, peddling their wares, barking their message to their audience, and on to the time of radio, television and even Internet advertising, it has been too easy for communication between sellers and their customers to be a one-way street.

Historically, consumers have been told about a product or service. They have been told how owning the product would make them feel. And they have been told why they should lay down their money and make the decision to buy.

But have we as companies and corporations been good listeners, or have we done too much of the talking?

Using every platform that traditional marketing avails, fortified by social media and all the strategies that have come to be known as “new media,” the brands and companies of vacation ownership have to figure out how to be perceived as the warm, energized and caring personalities of the workers who make timeshare hum.

We must create opportunities for two-way conversations, and then we must be better at listening than we are at talking (i.e., selling, marketing and messaging).

We must interact and engage with our clients and prospective clients through ways that are authentic, and that start at the front lines of our team and work their way up, rather than being top-down driven.

Who among us is surprised that 83 percent of timeshare owners are satisfied with timeshare when you acknowledge that timeshares are beautiful resorts, rich in amenities, and purpose-built for fun, relaxation and recreation?

Of course, timeshare owners like timeshares; yet the question remains of whether or not they like us, the companies behind the timeshares.

The legendary advertising guru David Ogilvy spelled it out clearly when he said, “The more people trust you, the more they buy from you.”

Much about the traditional model of selling timeshare has been grossly inadequate when it comes to connecting with new buyers and fostering their trust. Though the timeshare sales model has worked in the past, at least to a degree that was acceptable to many in the vacation ownership industry, it is clearly not working today.

We know this because even as the branded hospitality providers – the cornerstones of the industry – announce their profitability in quarterly and annual reports, they cannot hide the fact that their success is based on tightening their margins, increasing rentals, and selling more timeshare weeks or points to existing owners.

Perilous and delirious describes the actions of any industry that believes its future is sustainable when the highest percentage of its client base is its existing customers.

As buying preferences and behaviors continue to change with each generation, failing to change with them is self-destructive, arrogant, and in many ways, dismissive of the potential market with which an industry needs most to be building a relationship.

The formula in today’s complex marketplace, where distrust comes naturally and trust is hard-earned, is to reveal the authentic personality of your brand through the people that make that brand run on a daily basis. We must all stop selling, start listening, and build trust, allowing the true personalities of our brands to shine through.

In the business of timeshares, we are all familiar with Crossville, Tennessee. The city, with a population of some 11,000, has two very important connections to the timeshare and vacation ownership industry. Crossville, Tennessee is home to The Resort Trades, one of the leading publications in timesharing; and it is also home to the Wyndham Fairfield Glade Resort.

Although it many not be widely known as a vacation hot spot like Orlando, Florida or Las Vegas, Nevada, the Wyndham Fairfield Glade Resort hosts over 90,000 guests and resort owners each year. This week, the property officially cut the ribbon on a new resort check-in and timeshare sales office.

Franz Hanning, president and CEO of Wyndham Vacation Ownership, explains, “Our company started here. It thrives here. We want nothing but success for this place. It is dear to the company. We want people to have the happiest moments of their life at Fairfield Glade.”

Coincidentally, the location also is where Franz Hanning got his start with the company. Hanning noted how much things have changes since then, pointing that starting in timeshare shares, Hanning himself did not make a single sale during his first month (June 1982) of employment at the Fairfield Glade. Says Hanning, “I tell this story to all our sales reps; you can really start with this company, go 0 for June and end up CEO.”

Although the 14,823-square-foot, state-of-the-art facility is new, and many aspects of timesharing have changed, other factors have remained consistent at Fairfield Glade over the past 30+ years. The team at the Wyndham Fairfield Glade still works with integrity, passion, commitment, and creativity. Dave LaBelle, regional senior vice president for Wyndham Vacation Ownership, says the corporate culture formed at the Crossville, Tennessee timeshare resort in the late ’70s and early ’80s set the foundation for this company.

Construction on the new facility began last November, with a groundbreaking ceremony. By the end of May, (ahead of schedule) the new guest check-in and timeshare sales center was open and operational. Purpose-built for service, function, and efficiency, the new facility includes environmentally friendly features, such as energy-saving lighting and flooring made from recycled materials. With design and planning a team effort, Sara King, executive vice president, praised the team involved, saying, “They understand how intentional design and how the environment can drive sales and drive revenue.”

Fairfield Glade, with over 23,000 timeshare owners is one of Wyndham’s more than 185 resort locations.

Each month The Resort Trades updates the timeshare and resort industry on new strategies, products, properties, and events that serve and enhance vacation ownership. This month’s issue includes the following article by Jason Tremblay on the exciting potential for utilizing “big data” to better serve the timeshare marketplace. The article includes a very interesting study generated by Shell Vacations which should give insights to us all about the dynamic tech future of the timeshare industry.

Thank you Resort Trades for permission to reprint this article here.

The Big Value of Big Data for Vacation Ownership

by Jason Tremblay

Most timeshare owners or resort guests have a smart phone within easy reach at all times. When owners or guests begin planning a vacation, they typically make one or more visits to the resort website, perhaps to a timeshare exchange site, and to the Facebook pages for the resort itself or the resort brand. At check-in, a tablet, a laptop computer or both will be among the items packed for the trip.

At every step along the way, owners and guests are exchanging data with websites, and a great deal of the information exchanged is with the websites of their vacation ownership company and related timeshare services. Yet until recently, much of the online data that businesses collected (across all types of industries) went unsorted, unparsed and unused. Companies failed to recognize the goldmine they possessed.

Our own company, SellMyTimeshareNOW.com, has been guilty of this type of oversight. When we originally founded our vacation ownership resale website, now a full decade ago, we were so focused on connecting timeshare buyers and renters with timeshare owners that initially we didn’t track the amounts of the offers being presented.

We weren’t offering timeshare brokerage at that time and the offers weren’t part of our revenue; nevertheless they were a highly relevant piece of data we should have been tracking.

Although our website now proudly states that since 2006, our company has delivered more than $2.4 billion in offers to timeshare owners, we don’t (and can’t) make any claims about the dollar value of the offers we facilitated between 2003 and 2006. That data is lost to us forever.

As obvious as it seems in hindsight that we should have collected this information, we are not alone in this type of omission. Just like the error we made in our resale company, developers, brokers, exchange companies and others in the industry have permitted too much golden data to slip through their fingers.

Perhaps we all assumed that by virtue of being the “hospitality” industry we were focused on face-to-face interactions and could leave the business of creating fancy algorithms for data analysis to Google. We couldn’t have been further off base.

Professor Thomas Davenport, Harvard Business School, and author of the study, “At the Big Data Crossroads: Turning Towards a Smarter Travel Experience,” writes, “The travel industry stands at a big data crossroads today, the new technologies and techniques offering the potential to translate increasing volumes of data into higher profits and more efficient operations.”

So what makes “Big Data” distinctive from any other type of data? Partially, it is the scope of the information. Data tends to yield the greatest insights when it represents big numbers – a large volume of respondents. Big Data is also far more correlational than it is causal, so part of the key in reaping the benefit of Big Data comes in recognizing which questions to ask and which answers to ignore.

In finding the big picture of Big Data, you have to be willing to overlook the small detractors that could derail your effective analysis.

Earlier this summer, Shell Vacations made technology industry headlines with its use of Big Data. Working with ZDirect and Arizona State University, Shell Vacations LLC, a Wyndham Vacation Ownership subsidiary, utilized an eight-question survey designed to determine the willingness of consumers, based on demographics, to pay for vacation rental amenities, such as larger timeshare units with additional bedrooms. The study sought to understand how timeshare owners perceive price in relation to value.

Although the concept of asking a few questions in order to gain information sounds simple, there are inherent challenges. Which questions do you ask? Do you ask eight questions, ten, or perhaps only three? How do you get people to respond to your questions, how do you manage the data and most importantly, how do you translate the data you acquire into dollars and cents?

In the Shell Vacations study, called the “Shell Vacations Hospitality 2013 Logit Study,” Arizona State University was involved for the specific purpose of determining whether the traditional survey method used by academia could be made to work by practicing revenue managers. In other words, can the hospitality industry take data collection and turn it into response and revenue?

According to information released by ZDirect, the Shell Vacations study generated $100,000 in room revenues for the company. To put the success of the Shell Vacations study in perspective, the standard click-through return rate in the timeshare industry for questionnaires is only 3 percent, with Shell Vacations projecting their questionnaire would receive only 1,500 respondents. Instead, 10,000 timeshare owners replied.

Shayne Paddock, ZDirect CIO explains, “Shell Vacations Hospitality was able to learn far more than originally intended; they not only understand future booking probabilities, but they know how to structure questionnaires that get big results and drive big revenues.

By asking very real questions, rather than hiding behind a lot of marketing smoke and mirrors, and being honest and upfront as to why they were requesting the information, they produced a huge amount of intelligence.”

We are already living in a Big Data world. Google, eBay and even Facebook were conceptualized with Big Data methodologies in mind, and in many ways, their resources can be there for our benefit and utilization. Cited in the “At the Big Data Crossroads” study is this example of MGM Resorts putting Big Data to work effectively.

Recognizing Facebook with its 1.1 billion customers as clearly being Big Data, MGM Resorts uses Facebook advertising in sophisticated ways. Facebook targets keywords in user profiles and other social signals, utilizes third-party data, and even offers tools such as Custom Audiences, (for advertising to your own client list via Facebook) and Facebook Exchange for real-time bidding on ad placement and retargeting.

By using a refined advertising strategy that takes advantage of these and other Facebook tools, MGM Resorts estimates a return on Facebook advertising that is between three- and fifteen-fold.

Only a few years ago, companies did not have the capability to acquire the scope of information that is available today, nor could they have handled the data flood it would have produced. The technology and systems weren’t in place.

Today the situation is very different. With big picture data, we can make better decisions, we can respond to our markets in more targeted ways and at the same time, implement plans that work faster and return more profits because much guesswork will be eliminated. Big Data doesn’t have to replace traditional data management, but we will be called on to find ways for the old and the new systems to coexist in a hybridized way.

As with other business practices, it seems that vacation ownership is on the brink of playing catch-up before many people even realize the game has started. Yet because of the types of data our industry obtains in order to function and the additional data we could all so easily obtain in order to function better, timeshares, travel and the hospitality industry is an ideal environment for Big Data implementation to thrive.

Big Data offers so many ways for us to get creative, inspire partnerships, and distinguish ourselves as front-runners; we’d be small minded to miss the opportunities it affords.