Resort management - positioning for the economic turnaround 

Posted November 2009

Resort building and crane

The ‘stay-cation' trend looks set to continue for the next year at least, but some leisure destination markets are retaining their occupancy rates.

Timeshare property remains the occupancy leaders in the US resort world according to Smith Travel Research(this is an external link and will open in a new window).

Hotels dropped 5% from 2007 to 2008, whereas timeshares increased 2%.

Construction of new timeshares slowed drastically in 2009.

The issue is lack of funding and this is likely to remain a problem throughout 2010 and beyond.

  • Raising funding for ground-up construction is clearly difficult at present
  • Existing stocks of surplus units need to be sold before new construction is contemplated
  • Operators are instead seeking maximum value from existing properties, looking at renovation and maintenance
  • Sustainability, reduced running costs, and capital preservation are key drivers
  • Some operators are exploring new ‘capital light' solutions, eg. fee-for-service relationships (both resort management and sales and marketing services).

Sustainability: increasingly influential

  • Guests' expectations are changing and there is growing interest in environmentally-friendly resorts.
  • Operators are tapping into this in small ways, offering linen reuse programs, keycard return, and eco-friendly cleaning products.
  • Significant opportunities for energy savings through the use of renewable materials and the recycling of construction waste. 
  • Some hospitality businesses have seen energy costs slashed by as much as 40% when efficiency is maximized during refurbishment.
  • The greatest impact is achieved by improved building fabric, water efficiency, indoor environmental quality, and renewable energy technology for heating, ventilation, air conditioning, and lighting.

Conversion to timeshare - a relatively straightforward renovation

Many people are turning to timeshares to experience guaranteed leisure time and a taste of ownership in a constrained economy. Condominium hotels are converting to timeshare in answer to this consumer trend.

Conversion to timeshare is a relatively straightforward renovation and offers an opportunity to use renewable materials and recycle construction site waste. The flexibility of ‘lockout' units is another plus for timeshares, affording owners the option to rent part of their property.

What we're seeing in the market:

  • Restraint on renovation work and a halt on new construction
  • Restraint on renovation work will break in the next six to twelve months as properties are upgraded to remain competitive
  • Lower construction costs are encouraging some operators to carry out improvements and maintenance
  • Increased planning activity, as operators position themselves for investment and maximum return in readiness for an economic turnaround.
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