Philippe Bourguignon: “If you put green activists together with regular operators, you can come up with

new ideas” PAGE 26

Richard McIntosh: “When somebody purchases a timeshare their brand loyalty increases” PAGE 22

Mary Ann Pulé: “I want to bring my experience as a developer to the marketing arm of my business” PAGE 28

VENTURES
Enterprising ideas for the vacation industry July 2008

QUALITY MARKET
HOW MADEIRAN DEVELOPERS ARE MAKING THE MOST OF THE MIXED-USE CONCEPT

TOTAL TURNAROUND
MACDONALD RESORTS’ STRATEGY FOR SUCCESS

LYING IN THE LAP OF LUXURY
HOW FRACTIONALS CAN HELP YOU REST EASY DESPITE RECESSION

VENTURES MAGAZINE JULY 2008

SERVING RCI’S MARKETS IN EUROPE AND THE MIDDLE EAST

CONTENTS

EDITORIAL
In opening this issue of RCI Ventures with my first editorial, I’d like to say that I could not be happier with my decision to join this industry and Group RCI. In the three months I’ve been with the company much of my time has been spent travelling to meet as many of our affiliates and clubs as possible, as well as my colleagues from across the Wyndham Worldwide family of companies. And I have to say, everyone I’ve met with has confirmed my belief that this is an industry of great people with exciting new ideas and a genuine passion for their product. I’m very much looking forward to meeting many more of you in the coming months. I believe that, as a service organisation, people are our greatest asset. It is the engagement of our people with our Customers – our affiliates and clubs, and our members/your owners – that plays the major role in creating success for all of us. Given my commitment to people and providing them with the tools to deliver service excellence – whether our own Guides or the staff throughout our affiliated resorts and clubs – I’m especially pleased that this issue carries a feature on our call centres, with a focus on our Cork operation. This article, on page 8, gives an insight into the scale of our operation and the ways in which we hope it’s helping affiliated resorts and white label clubs to grow their revenues. Driving revenues for our affiliates and clubs is obviously key to our success and Group RCI is continuing to invest in a number of new products such as its Rental and Exchange programme, Owners’ Exchange Club and The Registry Collection to do this. It was with interest that I read in the cover story on page 10 that the fractional product has out-performed the wholly-owned luxury leisure real estate market in the US. I firmly believe this product can do just as well in Europe and the Middle East and, clearly, so do the affiliates and associates of The Registry Collection who have contributed to this feature. We are working hard to encourage new entrants into the luxury segment of our market to expand its geography and portfolio. On page 24, Simon Jackson of Macdonald Hotels & Resorts shares the truly inspirational story of his determination to build a successful timeshare business out of a failing operation. This brings me back to my opening statement that the best things about this industry are its people. Simon’s story shows what a big difference the passion and drive of a fine leader and a good team can make to the industry. There are very many people in the business who share that same faith in their product and a commitment to quality. My initial feeling from those I’ve met is that the will is there for us to work together to continue to develop a dynamic timeshare market. I’m looking forward to working with my Group RCI colleagues and affiliates to ensure we play our part in reaching that ultimate goal. Sincerely Jonathan Back Managing director, Group RCI UK and RCI Europe
RCI Ventures, July 2008 3

Cover picture courtesy of Regency Resorts

4 MARKET OUTLOOK:
A news and views round-up from Europe and the Middle East

10 COVER STORY – THE FUTURE IS FRACTIONAL:
How luxury fractional resorts are beating the economic recession by providing an efficient alternative to wholly-owned holiday properties

16 MARKET REPORT – A QUALITY MARKET:
The island of Madeira has long been an exponent of mixed-use resorts, where the benefits extend beyond lead generation

20 ALL CHANGE FOR TATOC:
The Association of Timeshare Owners Committees (TATOC) is looking to the future with a rebrand and the launch of a resort accreditation scheme

22 HILTON’S TIMESHARE HIGH:
Hilton International Grand Vacations Company is gearing up for major expansion into Europe and the Middle East

24 TOTAL TURNAROUND:
An insight into the strategy that helped Macdonald Hotels & Resorts rejuvenate its ailing timeshare operation

26 INVESTING IN SUSTAINABILITY:
Delegates at a WTTC summit learned why the hospitality industry needs to take a greener approach to business

28 MAP – THE NEW MERCHANT OF VENICE:
Mary Anne Pulé is dipping her toe in the developer water by taking timeshare to the canals of Venice.

30 WEATHERING THE STORM:
RON HOWELL, sales director of HMC Funding, reveals why timeshare is well placed to beat the economic blues

VENTURES is published by Group RCI, Kettering Parkway, Kettering, Northants, NN15 6EY, United Kingdom. Tel: +44 (0)1536 310101. Fax: +44 (0)1536 314682. Email: ventures@europe.rci.com EDITOR: Helen Foster. ASSISTANT EDITOR: Sarah Lee. DESIGN: Richard Blaney. PRODUCTION EDITOR: Sarah Young. PRODUCTION CO-ORDINATOR: Claire Williams. ADVERTISING SALES: Media Line Ltd. Tel: +44 (0)870 250 8701. Repro: JP Repro. PRINTING: CKN Print Ltd. Madeira picture courtesy of Digitalrailroad. Original articles and contributions may be reproduced or transmitted only with written permission from the publisher. No responsibility is accepted by RCI Europe for any losses or other consequences resulting from advertisements or other material appearing in this publication. RCI Europe reserves the right to accept or refuse advertisements at its discretion without assigning any reason for doing so. © RCI Europe 2008.

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Marketoutlook
A R O U ND - U P OF I ND U S T R Y N E W S , V I EW S , A ND P E O P L E T O W ATC H
An artist’s impression of Gran Meliá Palacio de Isora, which boasts one of Europe’s largest swimming pools. Inset left: Alain Grangé

SMVC SEES PROFITS SOAR
Now in its fourth year, Sol Meliá Vacation Club (SMVC) has unveiled major revenue and profit figures, and plans for further expansion. The company reported revenues of more than $130 million and in excess of $50 million in net profits for 2007. This year looks set to be another banner year, with a revenue and profit increase of 22 per cent in the first quarter compared to the same period in 2007. In addition, the company – part of Sol Meliá Hotels & Resorts, the world’s largest resort hotel chain with more than 350 hotels in 30 countries – has revealed plans to open new resorts in Tenerife, the Dominican Republic and
INDUSTRY:

Puerto Rico. Alain Grangé, chief executive of SMCV, said: “We’re extremely proud of the fact that SMVC has made a substantial strategic and financial contribution to the Sol Meliá group during its short time in business.” Grangé believes being part of the wide family of Sol Meliá Hotels & Resorts has contributed to SMVC’s success. He added: “We have a fantastic corporate team of only 30 people with the right ‘glocal’ mission and vision. “SMVC has benefited from the unwavering support of Sol Melia’s chairman, D Gabriel Escarrer Julia, who immediately understood the importance of SMVC to Sol Meliá. That support

has been key to SMVC’s success. Together we benefit from synergies in marketing, sales, products, operations, financial strengths, customer loyalty and brand recognition.” Grangé also recognised SMVC’s relationship with Group RCI, which handles many of the club’s back office operations. He said: “Group RCI has been a contributor to our success by providing highlyeffective, customised membership servicing. “This programme gives SMVC members a one-stop shop, answering inquiries about membership options, making reservations for SMVC resorts, Meliá hotels worldwide, and proactively reaching out to

members via various outbound campaigns.” The latest SMVC European resort launch is Gran Meliá Palacio de Isora in Tenerife, which opens this summer. The 600-room complex will initially operate 140 one- and twobedroom club units. The resort is affiliated to Group RCI and Dimitris Manikis, vice president of global business development for the company said: “The Palacio de Isora is a prestigious affiliate property that will boost the industry’s profile in our heartland by delivering a high level of hospitality and luxury holiday experience.” Commenting on Sol Meliá’s entry into the market, Grangé said: “It was a big step for Sol Meliá to enter its brands into the shared ownership industry with SMVC, but their joint values and commitment to both product and the market have deservedly paid dividends to everyone involved, not least SMVC members.”

NEW CHAIRMAN FOR OTE
Richard McIntosh, managing director of Hilton International Grand Vacations Company, has been appointed chairman of Organisation for Timeshare Europe (OTE). His period of office will start in October this year, when the current chairman, Denes Pieke of Holiday Club Hungary, will officially hand over the leadership
4 RCI Ventures, July 2008
PEOPLE:

at OTE’s annual conference, to be held this year in Madrid. Paul Gardner Bougaard, chief executive, said: “The OTE board is delighted that Richard has agreed to take on the OTE chair. He brings with him a wealth of experience in the timeshare industry, together with the prestige and perspective of the Hilton brand to our organisation. We look forward to working with

him over the next two years.” Commenting on his new role, McIntosh said: “As chairman of OTE, I will become the figurehead for the timeshare business in Europe. This will be the first time a global hotel brand has stepped up and said it’s happy to say it’s in the timeshare business in such a public way. It will be good for Hilton and Richard McIntosh good for OTE.”

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EVENTS PROFILE
GLOBAL HOSPITALITY INDUSTRY LEADER APPOINTED PRESIDENT AND CEO OF GROUP RCI
PEOPLE: Former president of the North American Division of Starwood Hotels and Resorts, Geoff Ballotti, has been named president and CEO of Group RCI. Geoff Ballotti Stephen P Holmes, chairman and CEO of Group RCI’s parent company, Wyndham Worldwide, said: “Geoff has a sterling reputation and an impressive track record of accomplishment. Over the past 19 years, he has performed roles in real estate development, travel distribution management and multi-brand hotel operation, all of which make him the ideal candidate to lead our global vacation rental and exchange business.” Ballotti’s career has seen him working out of Milan, Rome and Brussels in various leadership roles. At Starwood he was appointed to run its largest operating division where he led a multi-branded portfolio of 450 hotels with 65,000 associates and system-wide revenues in excess of $10 billion. Before entering the hospitality industry, Ballotti, a Harvard graduate, worked for the Bank of New England in corporate and commercial real estate finance. Commenting on his new role with Group RCI, he said: “It was the people and leadership reputation of both Group RCI and Wyndham Worldwide that attracted me to the company. The diversity of the Wyndham Worldwide business model is exciting and I am looking forward to being part of the high-energy senior management team.”

RCI MIDDLE EAST HOSTS LRIC09
Investment opportunities in the Middle East’s shared-vacation ownership market will be on the agenda at the third annual Leisure Real Estate Investment Conference (LRIC09). The conference, organised by RCI Middle East, will be held in Dubai, at a venue yet to be decided during late January next year. It will focus on Dubai’s new sharedownership legislation and how this has been a catalyst for a $1 billion industry. It will also offer legal advice on how to structure shared-ownership resorts and feature leading brands such as Wyndham, Hilton, Sol Meliá and IFA Hotels & Resorts, highlighting the benefits of adding timeshare and fractionals to mixed-use resorts. For more information on both the venue and date of the event, email Cassie Curtis on cassie.curtis@rci.com or tel: +971 4390 1668.

EXPANSION DRIVES NEW CLC POSTS
INDUSTRY: Club La Costa Resorts & Hotels’ (CLC) buoyant expansion strategy has created two major new management roles. George Robertson, who joined CLC in 2003, is promoted to managing director, Russia. He will further develop CLC’s rapidly expanding Eastern European operations for both timeshare and real estate sales. CLC currently has two Russian sales offices in Moscow and Krasnodar with 250 staff. Plans are in hand to open new offices in the country. Roy Peires, CLC

chairman, said: “I have every confidence that George’s thorough and astute knowledge of the business will pay huge dividends in the very exciting Russian marketplace.” Claire Westhead, former managing director of Prime Overseas Property, a CLC subsidiary, now joins the parent company as deputy UK sales and marketing director. Westhead has a wealth of industry experience having joined LSI, which became Signature and then Sunterra, and is

now Diamond Resorts, 19 years ago. Eran Revivo, UK sales and marketing director said: “CLC is always searching for proven industry talent and in Claire we have someone ideally qualified.” Westhead commented: “No one in the industry can have missed Club La Costa’s impressive and dynamic development. This is a company that really delivers.” CLC is currently on a recruitment drive to further its expansion plans across Europe and beyond.

LEISURE REAL ESTATE MASTER CLASS
Scottish Development International (SDI) is presenting a valuable networking opportunity for resort developers and landowners, looking to capitalise on all Scotland has to offer in the way of an exciting and diverse holiday destination. On October 2, SDI will be hosting a Leisure Real Estate Master Class. The event will be sponsored by Group RCI and present an overview of the market potential. It is designed to signpost the way into the timeshare and fractionals business for new entrants, and experts will be on hand to offer advice on matters such as legals and funding. It will also provide established developers with the opportunity to meet with landowners to discuss the potential of entering into joint venture projects. For more information, contact Lorna Macmillan tel: +44 (0)141 228 2588 or email lorna.macmillan@scotent.co.uk
RCI Ventures, July 2008 5

Roy Peires

George Robertson

Claire Westhead

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Marketoutlook
A ROUND-UP OF INDUST RY NEWS FROM THE M I D D L E E A S T

Above left: The Nassima Tower. Above: Pictured from left, Geoff Ballotti, president and CEO of Group RCI, with Shafi Syed of RCI Middle East, Nabil Al Khaled of ACICO and John Paul Nichols, president and managing director, Group RCI EMEA.

John Paul Nichols, president and managing director, Group RCI EMEA, left, with Umar Mian of VH Dubai.

ACICO MOVES INTO SHARED OWNERSHIP
Aerated Concrete Industries Co (ACICO) is set to launch its first shared ownership property after affiliating Nassima Tower to RCI Middle East. The company expects to complete the development of the tower, which is in the World Trade Centre district of Dubai, in the fourth quarter of 2008. The 50-storey tower, located five minutes from Dubai International Financial Centre, will appeal to business and leisure travellers, and will have units ranging from one- to three-bedrooms. The Kuwaiti construction pioneer has expanded its presence in the Gulf Corporation Council, however Nassima Tower is its first move into shared ownership. Nabil Al Khaled, ACICO deputy general manager for business development said: “Dubai is becoming unreachable for many, with ever-increasing hotel rates proving a deterrent for return visits. The shared-ownership model allows for flexibility in accommodations and for visitors to enjoy this world-class city from one of the best locations year after year. “We chose the Group RCI exchange programme because it has the products and services that will help make our project a success.” Nick Turner, managing director of RCI Middle East, said: “ACICO will bring some extremely high-quality products to this market and we are very proud to be affiliated with this group for its first foray into this exciting industry.”
INDUSTRY:

FRACTIONALS TAKE OFF AT THE PALM
VH Dubai has signed an affiliation agreement with RCI Middle East committing more than 50 luxury apartments at the Palm Jumeirah to the deal. Owners will also buy into the VH Residence Club, in the first fractional offering of its kind by VH Dubai in the Emirate. Since its debut in 2007 VH Dubai’s occupancy levels have averaged more than 90 per cent and the company has achieved unprecedented growth in its opening year of operation. Nick Turner, managing director of RCI Middle East, said: “VH Dubai is offering the chance to own a portion of this idyllic eighth wonder of the world at a fraction of the cost of buying outright. We are pleased to be aligned with them on this project and to provide global services and benefits to future VH Residence Club owners.” Umar Mian, CEO and managing director of VH Dubai and the VH Residence Club said: “Due to the thriving interest and intrigue surrounding Dubai, guests are attracted to this stunning location at exponential rates and our unique offerings have been excellently received.”
INDUSTRY:

IFA SIGNS TO THE REGISTRY COLLECTION
IFA Hotels & Resorts has affiliated the IFA Collection Club to The Registry Collection, Group RCI’s luxury exchange programme. The agreement, signed at the Arabian Hotel Investment Conference, in Dubai, is the first for IFA, encompassing a wide variety of shared-ownership and leisure real estate products. The affiliation will give IFA Collection Club members access to the prestigious developments in The Registry Collection. Properties within IFA’s portfolio, including Pine Cliffs, in Portugal, the IFA Yacht Ownership Club in Cannes and Dubai, and future resorts such as the Palm Residence and the Kingdom of Sheba on
INDUSTRY:

VENTURES NEWS ONLINE
Can’t wait for the next issue of Ventures to find out the latest industry developments? Stay up to date by checking out the breaking news section on the new and improved rciaffiliates.com

the Palm Jumeriah, Dubai, and Zimbali in South Africa will be added to The registry Collection. Nick Turner, managing director of RCI Middle East, said: “We are pleased to be associated with IFA on its groundbreaking venture. The programme wraps many elements of leisure real estate ownership under one roof, from timeshare and fractionals to high-end whole-ownership real estate.” Piaras Moriarty, IFA Hotels & Resorts vice president vacation ownership, said: “We picked The Registry Collection because the IFA Collection needs a brand of extremely high quality to match it.”

6 RCI Ventures, July 2008

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GroupRCInside
I N F O R M AT I O N E X C LU S I V E LY F O R G R O U P R C I A F F I L I AT E S

A better way
Group RCI is set to launch an exciting new feature on RCI.com that will make its members’ search for their ideal holiday faster and more fun. As a result of significant investment, research and development work, Group RCI’s enhanced search tool has turned the process on its head. Instead of beginning the search with resort and holiday criteria and waiting for a certain number of results to come back, the member can now start with a global, mapped view of all accessible inventory and filter down to the resorts most suitable for their holiday needs. The enhanced search tool allows members to search for resorts close to the destinations they plan to explore and find resorts offering the facilities they want. Search results can be shown on a Google map or as a resort list. The new programme will be rolled out across Europe in multiple languages and members will be able to select their perfect holiday up to 18 months ahead. Andrew Hill, manager of online services for Group RCI, said: “This more transparent delivery of product means members can find holidays in the right place, at the right time, and even for the right reasons, whether lying on a beach or indulging in more energetic pursuits. “Initial introduction of this improved search methodology in the US has demonstrated increased levels of search usage, growth in visitor engagement on the website and a healthy level of positive member feedback.” Below is an annotated screen shot which highlights some of the new features of the enhanced search facility for Group RCI members.

More search filters
■ Members can add or remove selections to narrow their holiday criteria.

Resort list
Shows available holidays based on the search. ■ Click the resort ‘Name’ or ‘Resort ID’ link to access complete online resort listing. ■ Click ‘Available Units’ to see all unit sizes and available check-in dates for the resort. ■ Click ‘Read the review’ to read other members’ comments on the resort.

New map view
■ Members can search by region, travel dates, price or holiday type. ■ Click a specific region for a detailed Google map. In areas with no availability, the map turns red.

RCI Ventures, July 2008 7

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GroupRCInside
I N F O R M AT I O N E X C LU S I V E LY F O R G R O U P R C I A F F I L I AT E S

AT THE HEART OF YOUR BUSINESS
There are many ways in which Group RCI’s call centres drive business growth for its affiliates and keep the customers satisfied. JUDI EVERITT looks at the work of the company’s main call centre in Ireland which services one of Europe’s largest membership groups.
ust as a healthy heart is essential to the efficient flow of blood throughout the body, an effective call centre operation is vital in feeding the end business with happy customers. Group RCI’s largest call centre is based in Cork, Ireland, and is the first point of contact for the majority of the company’s 450,000 European members wanting to arrange an exchange holiday. As the start of the member journey, the call centre experience will colour members’ feelings about the timeshare product. This is exactly why the concept of ‘added value’ is of paramount importance to Jeff Cummings, director of operations at Group RCI. He believes the Cork operation could be more correctly described as a contact centre. Staff at the Cork site deal with inbound and outbound calls, as well as email communications from members. A customer services team is also housed on site at Cork, working closely with the teleoperators or Guides as they’re known within Group RCI because they guide callers towards the best possible holiday experience.

this 24 hours a day, seven days a week. However, most of our members choose to speak with a Guide to talk through ideas and different holiday options.”

KNOWLEDGE IS KEY
Guides are expertly trained to be knowledgeable about resort locations and travel services such as flights, insurance and car hire. Cummings added: “It’s our aim to provide a one-stop-shop solution for booking a holiday. It’s important our Guides know what is available and have the confidence to suggest alternatives when necessary.” Group RCI offers white label clubs for some of its affiliated developers. The customised service features telephone greetings in the name of the company from which members bought. Dedicated teams will service some of the larger clubs, having undergone specialist training in the club’s product and resorts. Guide education and training in turn improves call response times – a key factor in growing the business. Eighty per cent of calls to Group RCI’s call centres are answered within 20 seconds. Average talk time and call volumes dictate staff scheduling. Cummings said: “Our call centres around the world are the heartbeat of the business, generating revenue, fulfilling exchange, and supporting fee collection. “We also supply member feedback to our resort services teams so they can source inventory in the right places. Our Guides’ calls are monitored and their training is continuous because a discourteous manner or incorrect servicing will negatively impact our

J

Some 650 people work at the purpose-built Cork site, which covers an area of 10,300 square metres and was opened in 1999. Of that number, 474 are Guides, and 60 are customer care consultants. Eighteen European markets are serviced from Cork, each in its own language.

IT’S GOOD TO TALK
As many as 2.4 million member calls are forecast to go through the call centre in 2008. Interestingly, in times of ever-changing technology, Cummings says the humble telephone – albeit a sophisticated and advanced system – remains king. Feedback and the monitoring of booking confirmations has proven that members prefer to speak to an actual person. Cummings points out that Cork is also a sales centre, its objective being to ‘sell’ as many holidays as possible. Guides are charged with the personal responsibility of discovering what the customer really wants from their holiday and to sell them that experience. Cummings said: “We encourage members to search and transact online, as they can do

developers’ business, in the same way a terrific RCI Guide will positively influence it.” To recruit the best possible people, Group RCI offers attractive packages and work environments with great facilities, including a gym at the Cork site. Training begins with an initial four-week ‘classroom’ style session, followed by eight weeks on the job training, where a mix of live calls and classroom training in geography, resort operation, customer services and sales, alongside top performing Guides, ensures the new intake is equipped with the knowledge to help them enhance customer satisfaction. Geography training for Guides includes: ■ Educational trips to resorts to sample both the product and area, which Guides then present to their peers ■ Developers visiting Cork to present resort and destination attractions ■ A Global Guide Exchange programme whereby Guides exchange with peers in other Group RCI call centres ■ Weekly presentations, during low call times, on resorts/areas visited by Guides on their holidays. Cummings said: “Happy employees give exceptional service to members. If Guides feel confident with the product, they can fully service the calls. It’s important for a member-servicing organisation such as Group RCI to provide a stellar service to ensure customers remain loyal. It’s down to teamwork, and that includes our affiliate partners. We really appreciate their cooperation and support.” Cummings is proud to have succeeded in creating a truly

8 RCI Ventures, July 2008

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Janet Doyle and Jeff Cummings are constantly looking at ways to further improve member satisfaction and increase transaction rates.

WHAT THEY SAY ABOUT GROUP RCI
“It is evident that Group RCI has invested considerable time and resource in producing this dedicated call centre environment which provides its members and clients with a bespoke service catering for their individual requirements. There is clearly a philosophy of continual review allowing adaptation to the ever-changing circumstances they face. The philosophy focuses heavily on the staff and their development, one of the key factors in ensuring that clients receive the service they demand.” Guy Mantel, Club La Costa “The folks in Cork have helped us as a resort and given me an opportunity to make new friends. We spend hundreds of dollars to get someone to walk through our door and often ignore avenues that already exist. The ability to work with Group RCI and specifically with the call centres around the world has given us an opportunity to expand our marketing efforts with a much smaller investment per guest than our current programmes cost... truly a no brainer!” Scott Merritt, Silver Lake Resort

diversified culture within Group RCI. Guides from different countries are able to interact with their colleagues and learn about other geographic locations and the inventory available in their areas. This cultural diversity adds to the positive experience when customers contact the call centre to arrange holidays. He explained: “We now have, for example, the ability for our Spanish Guides to encourage Spanish members to exchange into Finnish inventory.”

Group RCI’s award-winning call centre in Cork services members in 18 different languages.

CARING FOR YOUR CUSTOMERS
In 2007, the Cork site received an Employee of Choice recognition award from the Irish Government and a Gold Award in the certified Excellence through People programme – Ireland’s national human resource management standard. Awards like this reflect the importance Group RCI places on its staff, and how they provide the customer with a positive experience. Janet Doyle is director of customer care at the Cork site, where pre- and post-travel services are operated. Members can call Group RCI’s help desk team with ‘live’ travel problems, should they arise, and available services include a 24-hour check-in to ensure the quick resolution of any difficulties which the resort’s own management are unable to solve alone. Pre-travel also includes advising members of pool or restaurant closures, for example. The majority of communications come in written form, but it’s a

situation Doyle wants to change. She said: “We are trying to educate members to call us directly, as a personal call enables consultants to build a rapport and ensure a first time resolution to member queries. From March 2007, we switched to a telephone response system whereby the majority of correspondence will be responded to by phone and closed first time.” Before her arrival three years ago, customer care consultants and Guides worked in separate divisions. Today, the two teams work closer together and, according to Doyle, “exchange regular feedback at all levels”. For example, Guides now listen in to calls made by customer care consultants so they can hear for themselves the impact on members any Guide error may have. She said: “This has proven very successful in helping to prevent a recurrence of the same mistakes.” Group RCI is continually striving to improve and perfect its call centre service to members, and thereby developers too. FAME or Feedback from Automated Member Emails is just one example of innovation introduced to enhance the service. It does this by ensuring members receive a system-generated email from Group RCI following each transaction on their account, which

requests an evaluation of eight key areas of their call experience. These areas include Guide courtesy, initiative, resort and product knowledge, as well as an overall satisfaction rating. This information is fed back to the Guide and their team leaders. FAME was launched in all markets and languages in February this year. Developers are increasingly benefiting from the customer care process through shared member feedback. Doyle has been visiting resorts in Spain, Tenerife and Portugal to assess the member experience and discuss how resort processes and those at Cork can work better together. She explained: “Opening up communication between us, members and resorts is important. Meeting with resort managers has been productive and the feedback we have received is that they are looking forward to working more closely with us in the future.” Recognising that its call centre operation is the lifeblood of business for its developers and itself, Group RCI is committed to the continual enhancement of call centre services to bring even greater numbers of happy holidaymakers into its affiliated resorts – and to keep them going back. V

ON CALL
Group RCI services customers in 18 different languages from six call centres across Europe and the Middle East. Affiliates are welcome to visit. For more details contact your Group RCI representative.

RCI Ventures, July 2008 9

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COVER STORY

PEOPLE THAT HAVE BEEN CONSIDERING BUYING WHOLE OWNERSHIP UNITS ARE STARTING TO ASK THEMSELVES WHY THEY NEED A WHOLE HOUSE OR APARTMENT WHEN FIVE WEEKS WILL DO RON HAYLOCK, BORGO DI COLLEOLI

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The future is FRACTIONAL
At a time when many economies are going into recession and the seemingly inexhaustible flow of credit is drying up, the prospects for one leisure real estate product are looking good. STEVE ADAMS discovers how the fractionals market is proving resilient in the face of recession.

W

herever you turn in the media, there are constant reminders that the good times are at an end for the foreseeable future. Inflation and interest rates are on the rise, credit is being squeezed and, to use an old English expression, ‘times is hard’. Against this background, however, one sector of the leisure real estate industry seems to be showing a healthy resilience to the current financial meltdown. The fractionals market, in the US particularly, is flourishing despite – and possibly even because of – the current economic gloom. According to a report by NorthCourse Leisure Real Estate Solutions, the consultancy arm of Group RCI, sales of fractional properties in the US, Canada and the Caribbean hit almost $2 billion in 2007 – an increase of 20 per cent on the previous year. During the same period, sales of vacation homes in the US declined by 30 per cent and investment home purchases by 18 per cent, according to the US-based National Association of Realtors.

ROBUST AND RESILIENT Peter Giamalva, left, president and
managing director of NorthCourse Advisory Services, explained: “The fractional product is clearly robust and set to grow. It appeals to people who want to purchase leisure real estate without the expense and aggravation of a whollyowned second home, even though they can afford one.” And in tough economic times, the managing of expenditure and the value of investments is more important than ever, according to industry expert Piers Brown, founder of web portal Fractional Life and organiser of Fractional Expo 2008 and other industry events. He said: “Given the credit crunch and economic uncertainties, it’s clear that property values are far from guaranteed and consumers are questioning the value of 100 per cent ownership of many luxury items.” Brown also believes the current market conditions are prompting many people to reassess what’s important in their lives. He added: “We’re on earth for a finite amount of time and we
10 RCI Ventures, July 2008

want different experiences and to discover more ways to make us happy while we’re here. Fractional products can do that without the expense and hassle that comes with life’s more exciting luxuries.” Stefano Tosato, below, managing director of fractionals-selling resort Relais Villa Petrischio in Tuscany, Italy, a full affiliate of Group RCI’s luxury exchange programme The Registry Collection, agreed that economic uncertainty could have a positive affect on fractional sales. He said: “Some buyers will certainly see fractional ownership as a better and lower-risk investment than buying a wholly-owned holiday property. The fractional product requires a lower capital investment which will act as an incentive in the current economic climate.” Ron Haylock, chairman of fellow Tuscan resort Borgo di Colleoli, which is also fully-affiliated to The Registry Collection, agreed the credit crunch was causing many to rethink their purchasing decisions. “People who have been considering buying whole-ownership units are starting to ask themselves why they need a whole house or apartment when five weeks will do,” he said.

LUXURY DIVIDENDS Owning something for a few weeks of the year – as opposed to whole ownership – is the basic premise of the fractionals model and has been applied to everything from jets and yachts to luxury cars, as well as real estate. There are benefits to buyers and sellers alike. The former are able to purchase higher quality products than they might otherwise be able to afford or wish to maintain, while the latter can potentially enjoy increased profitability courtesy of a bigger and more diversified market. The developer also benefits from a more cost-effective marketing and sales operation, as fractionals yield a higher profit per unit sold than timeshare and, because the period of use being sold is far longer, there are less sales to be made before the property is sold out.

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FRACTIONALS – THE FACTS
According to NorthCourse’s 2008 Annual Fractional Interest Report for the US, Canada and the Caribbean, fractional sales in North America increased by 20 per cent between 2006 and 2007, with total sales volume reaching $1.98 billion. Even though the growth rate slowed from the 32 per cent figure seen in 2005 to 2006 – potentially due to a general downturn in the economy – estimates showed “a continually strong growth in presales which may be an indication that consumer knowledge and acceptance of the product is increasing. Resales also saw significant growth – yet another assurance to consumers that investment in a fractional interest is very different than a non-equity club or a timeshare.”

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While a fractional purchase remains a form of shared ownership, when applied to leisure real estate it differs from many timeshare arrangements in one very important way – it is a deeded purchase. Giamalva said: “For most consumers timeshare provides their annual holiday accommodation requirement. When you buy a fractional, you’re looking to satisfy your holiday needs, diversify your investment portfolio, and make a real estate purchase.”

BUYING HAPPINESS A fractionals purchase is always about more than
simply making an investment according to Brown, who was introduced to the model through his own fractional super car ownership five years ago and now sees it as the way ahead in the leisure real estate arena. “Luxury is becoming more experiential – it’s not what you own, but what you do that ultimately makes you happy,” he said. “In terms of accommodation and holidays that means spa experiences, championship golf courses, fabulous locations and adventure. In such a market, fractional ownership can only gain momentum.” Brown’s optimism is reflected in the NorthCourse report, which suggests the resort industry is entering “a period of explosive

Fractional properties – and members of The Registry Collection – offer luxurious accommodation. 1: The brick arches and oak beams at Relais Villa Petrischio date back to the early 19th century. 2: Villa Petrischio was built on the highest hill of Farneta in Tuscany. 3: Another unit interior at Relais Villa Petrischio. 4: Lunch on the terrace at Borgo di Colleoli in Tuscany.
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COVER STORY

THERE’S A TRADITION IN EUROPE OF AFFLUENT PEOPLE OWNING A HOLIDAY HOME – AND THE FRACTIONAL MODEL JUST MAKES IT ALL THE MORE PRACTICAL AND EASIER TO ACCESS WARD WOODS, REGENCY RESORTS

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growth” with the long-term trend likely to produce “dramatic growth in the second-home real estate industry”. The report states that fractional real estate is a niche lifestyle product within this industry that serves the needs of two markets, and they are: I Affluent clients who can afford a whole-ownership second home but whose time constraints make it impractical. They want the use of a second home for a few weeks each year but not the responsibility and corresponding investment in an under-utilised asset. I The less affluent client who aspires to the status and luxury of an expensive second home, but can’t afford five-star quality. Optimistic forecasts and the identification of significant key markets will be music to the ears of developers of the 300 or so fractional properties currently dotted around the globe, as well as those seeking to enter the industry, which remains in its infancy, especially in Europe.

A FRACTIONALS FUTURE Many industry
observers agree that there is a bright future for fractional products beyond the established US markets. For example, NorthCourse estimates the fractionals market in the Middle East (ME) will be worth more than £1.2 billion per annum in sales revenue by 2020. Nick Turner, managing director of RCI Middle East, below, says the region is an obvious choice for fractionals development. “There are a lot of wealthy individuals who like owning portfolios of assets in the ME. The product here is high-end and more likely to be sold and bundled in four fractions for $250,000 rather than one week for $10,000 to $15,000,” he says. “But there are obvious opportunities in desirable European destinations where it’s too expensive to own a whole property – Italy, France, Switzerland and so on. I also understand there are developers looking at fractional propositions in Scandinavia, East Europe and Russia.” Woods agreed that Europe showed great potential, especially as many suitable properties were already in existence. “Europe is full of high-quality exclusive boutique properties – such as castles and chateaux in the UK, Italy, and Spain – that just need to be structurally reconfigured and better managed,” he said. “The fractional model will support a small property with 30-40 units because it guarantees management income and enables you to provide better services than if it was a struggling hotel.” Haylock suggested fractionals were probably better suited to the traditional resort rather than urban location, but said a key element was ease of access and travelling distance. He said: “I’m a little doubtful about whether it could work for longhaul destinations. British people would be targeted for fractional sales in

EUROPEAN PROSPECTS Regency Resorts, based in Spain, is one of only a handful of European resorts selling fractionals. Its fractional property, The Regency Country Club, is an associate of The Registry Collection and is located in southern Tenerife where the year-round season is a plus point. CEO Ward Woods, is convinced it won’t be long before more European developers look to build a presence in the fractionals market. “The fractional model is bound to do well in Europe,” Woods says. “After all, it already exists here – people have shared ski lodges for years. “There’s a tradition in Europe of affluent people owning a holiday home – whether it’s a cottage by the sea in Ireland or a bolthole in Brighton. It’s a traditional aspiration of most people and the fractional model just makes it all the more practical and easier to access.” Giamalva explained the European market could be being held back by a lack of finance. Banks and other institutions, he believes, need to develop a greater understanding of the product to enable consumers to finance their purchase. He said: “The British, Germans and French can arrive in Spain or even Bulgaria and get a loan on a wholly-owned second home – banks and financial institutions understand that. But there’s probably some education needed to get them to understand fractionals. It’s not like buying a week of timeshare. It’s a more formalised purchase, with the opportunity for property appreciation and rental income which, from the financial institution’s perspective, should carry less risk.”
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SUCCESS CHECKLIST
The NorthCourse report highlighted several factors that influence the success of fractional resorts, and among them were: I Use plan – successful resorts are more likely to offer a rotating calendar or customised use plan I External exchange – fractionals affiliated to an exchange programme such as The Registry Collection are more successful I Unit variety – successful resorts have different unit sizes and are more likely to have lock-off sections I Base share size – the length of fractional sold at successful resorts tends to be larger. The median is six weeks which goes hand-in-hand with longer high seasons I Maintenance fees – successful resorts tend to have lower maintenance fees, indicating that price sensitivity is often based more on on-going cost than the actual purchase price. This is especially true of the lower-priced fractional. Allowing maintenance fees to spiral is one of the biggest mistakes a developer can make.

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5: The apartments at Borgo di Colleoli mix contemporary amenities with traditional rustic charm. 6: Borgo di Colleoli is set in a 23-acre estate in the Tuscan countryside between Florence and Pisa. 7: The stone and marble designs and statues at Regency Country Club in southern Tenerife are based on the exotic island of Bali.

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Florida and US residents for European sales, but that would mean owners having to make two or three long-haul flights a year to use their allocation, and I think that would make people think twice.” With that in mind, Haylock said his marketing efforts would initially concentrate on the resort’s existing owners and rental guests. He explained: “It’s very important for people to see the product so we’ll be selling on site. We’ll target timeshare owners who want to upgrade, as well as taking advantage of the high volume of rental activity we generate to the resort.”

THE RIGHT SELL Woods said there was a natural link between
timeshare and fractionals – established owners were a perfect source market for the higher-specification product, and resorts could upgrade to make the offering without too much upheaval. “There’s no reason why a timeshare developer can’t get into fractionals – I think it’s a natural progression,” he said. “Having happy owners already in place is obviously a great help because you can upgrade and offer them a different type of product and access to much better inventory.” Woods suggested a mix of timeshare and fractional properties

brought two major benefits to the sales deck. He said: “The fractional product is high quality, giving clients who can’t initially afford it something to aspire to. We show all customers the fractional units so they know if they buy a standard timeshare they can potentially upgrade. The quality aspect of the product also attracts the best salespeople, which is a great benefit in a marketplace where there is a sales skills shortage.” While the timeshare link does help, Turner believed the nature of fractionals – where the title deed is part of the purchase – makes it a good fit for marketers of real estate. “From a marketing perspective, it’s an easy transition from real estate to fractionals because if you’re an established real estate developer then you’ll have a good database of consumers who did or didn’t buy your whole-ownership product, which is great for offering either a less expensive entry proposition or a better value property upgrade,” he said. Brown agreed, suggesting upscale estate agents were best placed to sell the product. He said: “Fractionals have to be sold in the right way. It’s really important that they are clearly defined and different from standard timeshare. Transparency – particularly in pricing – is also very important. It’s an upscale acquisition so the consumer understands
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COVER STORY

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LUXURY IS BECOMING MORE EXPERIENTIAL – IT’S NOT WHAT YOU OWN, BUT WHAT YOU DO THAT ULTIMATELY MAKES YOU HAPPY PIERS BROWN, FRACTIONAL LIFE

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8: Regency Country Club in Tenerife offers fivestar luxury five minutes from the popular resort of Los Cristianos.

FRACTIONALS AND PRIVATE RESIDENCE CLUBS
The fractionals market is made up of two products – traditional fractionals and Private Residence Clubs (PRCs) – which operate in similar ways. There are some fundamental differences between the two, however, and they are that: I A PRC, generally, has a higher specification of internal fixtures and fittings and a unique location I Fractional properties often operate rental programmes so owners can benefit from an income stream – a strong purchasing incentive I PRCs are seldom rented out, except for unsold developer inventory. PRC management generally don’t facilitate or encourage rentals as owners don’t want transient renters wandering around their property I A fractional property operates a scheduled use plan agreed at the time of purchase. Weeks are typically assigned through a rotating calendar so the owner knows which weeks they will own five to 10 years in advance I A PRC property allocates usage on a more flexible basis, using an annual or semi-annual reservation system, guaranteeing three to five weeks per year of use, allocating the remainder on availability I A PRC owner is typically a high-end customer with little ability to plan very far ahead, so they value the greater flexibility.

having to pay a premium for flexibility, and to cover legal fees and the developer’s marketing costs. However, reputable operators understand that greed is not a good driver and that there is most definitely a tipping point for consumers.” Turner added that the nature of the product also meant that marketing needed to be “high quality and low volume”, putting the emphasis on “opulence, luxury and exclusivity”. The latter is a key element when marketing to potential fractional purchasers, according to Woods. He said: “The clients feel they’re a cut above the rest and want to go to properties where they’ll be surrounded by people of a similar mindset.” Woods pointed out that offering membership to an exclusive grouping such as The Registry Collection, an exchange portfolio comprising Group RCI’s premier properties – fits the bill perfectly. Membership of The Registry Collection gives fractional owners the opportunity to exchange into some 120 luxury properties across the globe and is a useful sales incentive, according to Woods. “Most clients are primarily buying to visit
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a chosen property, but the possibility of being able to exchange is great and is an excellent sales proposition. Being able to whiz off to experience other worlds and adventure further afield adds an element of freshness to the holiday home experience.” Giamalva added: “The reality is that it’s not just whether you enjoy the place where you purchase the first two or three years, but further down the road – and it may only be once in a while – you might want to take the broader family with you and need more accommodation than you’ve got, or to do something unique. The Registry Collection allows buyers to take advantage of their original purchase but offers a broader spectrum of travel opportunities.” Tosato agreed the exchange element provided an excellent additional benefit and made “investment in fractional ownership more attractive” to potential clients. “Quality is key,” concluded Woods. “When spending that sort of money, the cash rich and time poor want to be assured of a quality experience every time, wherever they holiday. After all, that’s why they choose to buy a fractional in the first place.” V

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MARKET REPORT

A QUALITY MARKET
Mixed-use resorts are characteristic of Madeira’s holiday offering, but KATHERINE STEINER-DICKS discovers there’s more to this business model than great lead generation opportunities.

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n the early 1980s, interest rates in Portugal soared to 30 per cent. Achieving high sales volumes became more important than ever for Portuguese-based resort and hotel groups wanting to develop and expand their operation at that time, as investment capital became both tough and expensive to raise. A solution was found in the timeshare product. Hoteliers and resort developers discovered the integration of a timeshare element into their underlying business was a very effective means of raising money. It soon became a staple part of the economic equation in the running of many hotels and resorts, and Madeira’s Pestana Hotels & Resorts was the first of such groups to realise the significance of the financial contribution to be made by adding a timeshare operation to its activities. Peter Booth, Pestana’s group managing director, who has been with the company since 1983, is as committed as ever to the group’s timeshare business. Today its mixed-use timeshare operation is fully integrated into many properties in its portfolio of 85 hotels on three continents. Booth said: “Pestana was a pioneer in the Madeiran timeshare market. We sold our first timeshare in 1985 at the five-star Madeira Carlton Hotel. Currently we have 16 timeshare resorts in Madeira and on the Algarve which are all affiliated to Group RCI, plus RCI Points products in Brazil and Argentina. Our timeshare business contributes 15 per cent to the group’s operating profit and we have an ownership base of 30,000 families.

“With more than 20 years’ experience in the timeshare sector, our philosophy of integrating timeshare into our four- and five-star properties has remained unchanged over the years.” Madeira has been described as a small corner of sub-tropical paradise in the Atlantic Ocean. It’s just a three- to four-hour flight from most European capitals. But, more importantly for the timeshare sector, Madeira is a holiday destination to which people return year after year. This fact has been a key driver, not just to Pestana’s timeshare client base, but to other hotels on the island. Cláudio Santos, director, Porto Bay Hotels & Resorts, said: “Madeira is a repeater’s destination and, bearing in mind that our returning client rate in the hotel business is around 30 per cent, the possibility of offering our clients an interesting way to holiday through timeshare was a clear added benefit.” According to Santos, timeshare sales represent approximately 10 per cent of Porto Bay’s €50 million total group revenue. The company’s strength has been in innovatively adapting its operation to fit Madeira’s mixed-use model. Porto Bay has transformed its business from a single self-catering hotel business, launched with the opening of Suite Hotel Eden Mar in 1988, into a group of hotels including its five-star flagship hotel, The Cliff Bay. The founders and investors in the group identified the demand for a more unique upscale offering and opened the innovative

city resort hotel, Porto Santa Maria, in 2000. Situated in Funchal’s Old Town, the concept of this property was to fuse the attributes of a city hotel with a traditional beach resort. It’s an offering which is in high demand among more mature visitors. In December 2003, Porto Bay Hotels & Resorts opened Vila Porto Mare, which embraced its new fusion resort concept by integrating three individually-themed properties offering very different holiday experiences – Suite Eden Mar, Hotel Porto Mare and The Residence – under a shared space allowing guests to access the great variety of services and facilities within the complex.

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QUOTE: WITH MORE THAN 20 YEARS’ EXPERIENCE IN THE TIMESHARE SECTOR, OUR PHILOSOPHY OF INTEGRATING TIMESHARE INTO OUR FOUR- AND FIVE-STAR PROPERTIES HAS REMAINED UNCHANGED OVER THE YEARS. PETER BOOTH, PESTANA HOTELS & RESORTS

A GOLDEN OPPORTUNITY
The small island of Porto Santo, known as the ‘golden isle’, has about 5,000 inhabitants, most of them being fishermen which gives the place a traditional feel. As yet, this island is relatively undiscovered as a holiday destination. It lies 40 kilometres north-east of Madeira, pictured, and is accessible by boat or plane. Known for its brown and yellow landscape, it has, like Madeira, year-round sunny weather and up to nine kilometres of undeveloped golden sandy beaches. Its Thalassotherapy spa centre is the perfect place for visitors to pamper themselves, while it shares Madeira’s wealth of active pursuits such as walking and surfing.

STRATEGY PAYS OFF
With its impressive group of properties, Porto Bay management decided to integrate the timeshare element as part of its investment and revenue stream. But it has very specific timeshare strategies based on what is best for its business and target client base. Santos said: “We sell a timeshare product with a 10-year leasehold because it gives clients good legal protection for their ownership and it’s less bureaucratic than freehold.” Santos believes that a 10-year lease is the right duration because clients seem more

willing to commit to this period of ownership than a longer one. He explained: “Our strategy is to avoid resales which would necessarily happen more often the longer the duration of ownership. Industry data also shows that the percentage of unpaid maintenance fees increases with longer periods of ownership, so this way we avoid having to deal with that problem. It also lowers administrative costs and increases guest satisfaction.” Santos said that Porto Bay’s management decided not to use off-site personal contacts (OPCs) in sales. He said: “It’s just too much of an invasive method for our taste, and we

can’t control the brand image that is out on the streets with OPCs. We invest too much in image and brand building to endorse marketing practices that are uncontrollable.” Each hotel group has an opinion about which timeshare product and marketing strategy best supports its business model. Pestana’s Booth said over the years the group has offered both fixed weeks in fixed units and the points product. Fixed weeks and units have continued to be a popular option for the group in Portugal, where it builds a new timeshare resort every three to four years. Booth added: “We are a traditional hotel business that has branched out into
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MARKET REPORT

C An artist’s impression of the Pestana Promenade Hotel which, in the first 18 months of marketing, has beaten all Pestana’s previous sales records.

C The Pestana Porto Santo Hotel is Pestana Hotels & Resorts’ newly-opened property which is set to come into timeshare later this year.

innovative products. And we’re one of the few hotel groups that have evolved through new products, while still retaining a high quality, traditional hotel feel. We offer a full range of products, from timeshare apartments to fractionals, full freehold apartments and villas, and the latest model in hotel room ownership which we have launched in London with the opening of the luxury Pestana Chelsea Bridge Hotel.” Pestana is not only innovative when it comes to integrating different products, but also in bringing customers into its overall service. The company charters a Boeing 737 and has been running weekly flights from London’s Gatwick airport to Madeira for 15 years, as well as taking seat allotments on other airlines flying out of the UK. Pestana’s guests can also book through its UK-based tour operator, Atlantic Holidays. Pestana flies about 700 passengers a week into Madeira and they are a mix of hotel and timeshare customers who are brought together in an environment where word of mouth recommendations form a very persuasive method of marketing. Booth said: “We have an aggressive

marketing plan that reaches a captive audience staying in our hotels. We have PR desks in our hotel lobbies to promote our timeshare product to potential clients, and we use cocktail parties and excursion programmes. “Getting new sales is difficult, which is why I think the hotel sector should look more seriously at this business. Hotel operations have a readily available database of quality leads. “Seventy per cent of our sales come from in-house timeshare customers staying at our resorts – that figure rises to 85 per cent if you include lead generation from our hotels. Pestana’s timeshare customers tend to buy smaller properties initially, upgrading their accommodation when they see Pestana delivers what it promises.” But how is Madeira’s timeshare market faring in today’s testing economic times? Booth said: “Over the last 20 years the timeshare sector has been resilient to economic downturns as people always want, and often need, a holiday. And our timeshare product is a quality product at a competitive price.”

As the world’s financial markets were beginning to feel the pressure from the US sub-prime mortgage crisis, Pestana boasted a record year for sales in 2007. “Already our sales for 2008 are matching those for the same period in 2007,” Booth reveals. “Our pricing is competitive starting at €5,000 for an entry studio property.” These impressive sales figures were helped by the launch of the Pestana Promenade, a mixed-use property on Madeira which is scheduled to open in February 2009. This mix of 236 hotel units and deluxe timeshare apartments has, in the first 18 months of marketing, beaten all Pestana’s previous resort sales’ records. In April the company also opened Pestana Porto Santo, a five-star hotel on the island of the same name which forms part of the Madeiran archipelago. The 300-room hotel is likely to launch timeshare sales in the second half of 2008. The project also includes 250 freehold villas and apartments. Pestana also offers financing to customers, but Booth says that only 10 per cent take up the service, so it’s not a large part of the business.

RENTAL VALUES
According to Holiday Lettings, the approximate average rental values per week for a standard holiday home on Madeira throughout 2008 are: 2008 JAN FEB Euro 377 300 MAR 322 APR 302 MAY 307 JUNE 314 JULY 322 AUG SEPT 322 311 OCT 307 NOV DEC 310 337

SELECT SERVICE
Santos admits that Porto Bay’s pricing may be more expensive than its competitors, but it can prove that the high price reflects the high quality of service. “We do not centre the sales process on the exchange system, although it has proven to be an important sales driver,” he said.

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QUOTE: MADEIRA IS A REPEATER’S DESTINATION AND, BEARING IN MIND THAT OUR RETURNING CLIENT RATE IN THE HOTEL BUSINESS IS AROUND 30 PER CENT, THE POSSIBILITY OF OFFERING OUR CLIENTS AN INTERESTING WAY TO HOLIDAY THROUGH TIMESHARE WAS A CLEAR ADDED BENEFIT. CLÁUDIO SANTOS, PORTO BAY HOTELS & RESORTS

C Porto Bay Hotels & Resorts’ The Residence is one of three individually-themed resorts at the Vila Porto Mare complex.

C An interior of one of the units at The Residence, where timeshare is sold under a 10-year lease and a higher price reflects the quality of service.

“Around 90 per cent of our clients are from the UK and our average age is close to 45. “Families are certainly a segment that is going to grow for us, because that’s where the saving for the consumer is more impressive. People that can afford to pay extra for additional area, comfort and service are our ideal clients.” Booth and his colleagues take customer service seriously, so much so that they keep a database of guest comments that goes back 20 years. If a customer makes a point of suggesting the pillows could be a little fuller, when they return the next year they can rest their heads on, you guessed it, a fuller pillow. “If you want to keep your guests coming back, then you have to ensure the service they receive gets better with each visit,” says Booth. The UK is Pestana’s primary source market, providing 65 per cent of resort visitors year-round. The Finnish comprise 15 per cent of visitors in the winter season, the Germans 10 per cent yearround, the Scandinavians five per cent during the winter, with other European groups – French, Italians and Portuguese – at five per cent. Booth concluded: “We’re fully committed to this business. I think many in this sector aren’t, perhaps because they’re not sure about it. We see it as a way to build customer loyalty, which then helps guarantee occupancy, which then generates a family and eventually another generation of owners.” V

MADEIRA – GROUP RCI PERSPECTIVE
Ovidio Zapico, Group RCI’s regional director, Spain, Portugal, Italy and France, pictured, gives his view on the qualities of the market in Madeira. “Madeira is an important destination for us. It may be a small island but there are some major industry players offering a high-quality holiday experience to their owners and our members. “Our affiliates in Madeira and Portugal have led the way in pioneering the highly successful mixed-use model. Building on the success of combining hotel and timeshare operations, they are now taking a refreshingly innovative approach to mixing lifestyle and experience offerings within their resort complexes providing an exciting range of activities and amenities for their guests. “The very economic climate which gave rise to the growth of timeshare in the 1980s – high interest rates and the ensuing onset of a credit crunch – is back with us today. “Timeshare, in all its forms, provides a great opportunity, not only for real estate developers, but for hoteliers as well, to continue to grow their operations through the integration of alternative models. There’s a lot of truth in the old proverb that it isn’t good to put all your eggs into the one basket. “With the wider range of products now available, such as Group RCI’s Rental and Exchange programme, there is something to suit every ■ For more information on timeshare in Madeira and Portugal, contact Paula Rodrigues, tel: +351 965628848 or email: paula.rodrigues@rci.com resort, leisure real estate developer or hospitality group. “As our associates in Madeira have discovered, timeshare models are an excellent fit with the hotel operation, where the ability to market to hotel guests on site who are already familiar with the resort is a big advantage.”

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TATOC REPORT

Almost two decades after it was formed, The Association of Timeshare Owners Committees (TATOC) is launching a radical drive to raise its profile and better serve both timeshare owners and the industry. STEVE ADAMS reports.

All change for TATOC
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ATOC was formed in 1989 and has long been Europe’s leading association for timeshare owners, as well as a key industry lobbying group. But much has changed in 20 years and at its annual conference and AGM in March, TATOC leaders acknowledged that an overhaul was needed. The event wasn’t entitled ‘Embracing Change’ for nothing, explained chairman David Eastburn. He said: “Since I became chairman, I’ve felt the driving need to make TATOC more proactive, and in particular, the need to remedy the public perception of timeshare as generated by a hostile and nearly always uninformed press. “The perception is often strengthened by organisations which purport to represent consumers’ interests, but in practice are only interested in making money out of the misfortunes of those who have suffered from scams. These people, who are outside of timeshare, continue to denigrate the industry. This serves only to devalue our holiday ownership.” In turning things around, TATOC has rebranded itself as Timeshare Association (Timeshare Owners and Committees), or Timeshare Association for short. TATOC chief executive Harry Taylor, said: “The move was necessary to portray the consumers’ overall satisfaction with their timeshare experience. “Our priority is to add credibility for the consumer and the media, and raise the profile of the industry. “We changed the name to make it more understandable and easier to find through internet search engines. Some people know what we’re about but many resorts don’t know what we do.” In addition, TATOC’s constitution has been changed to extend membership to all timeshare owners, as opposed to merely owners’ committees. Taylor explained: “Our original remit was to work with owners’ committees and that’s still very much the case. These member resorts represent more than 250,000 owners. However increasing numbers of individual owners wanted to join from resorts that are not members.” Taylor said individual memberships would cost £20 per year and come with a package of benefits including legal and other advice, a regular magazine and a membership card offering discounts at a number of shops and other outlets.

Left, Harry Taylor with Group RCI’s Marj Anderson at the AGM. In recognition of the importance of working with timeshare owners, Group RCI has appointed Anderson, resort services manager, as its dedicated TATOC liaison officer. Right, David Eastburn addressing the TATOC AGM.

Taylor added: “The people who apply generally want to get involved and have a voice and these are the people we want as members!” But the most significant new initiative is the launch of a resort accreditation scheme, which will see resorts undergoing a stringent annual inspection in order to obtain the TATOC seal of approval. The inspection will, importantly, include the monitoring of sales and marketing practices and standards of customer service. Taylor said: “If flying the TATOC flag over a resort means it’s being policed beyond the quality of the unit, then that’s what we’re aiming for. We want people to be confident that the resort has sales ethics, a definite procedure for the resolution of complaints, and so on. “It’s obviously very consumer-oriented which has earned a lot of interest and acceptance from the media, MPs and MEPs.” Taylor said he hoped to have four resorts accredited by the end of August and at least 10 by the end of the year. Resorts taking part will only have to pay to cover costs associated with the inspection visit and other administrative charges. “TATOC’s not a profit-making venture at this time,” he added. “The association will continue to be funded through sponsorship from credible companies and advertising in our magazine.” The organisation’s plans have met with widespread approval, according to Taylor. “We’ve had a fantastic reaction from developers and the industry in general,” he said. “Ultimately it’s about the right to have a good holiday experience, and we’re all working to achieve that.” V

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BUSINESS PROFILE
QUOTE: “THE BIGGEST CHALLENGE IS THE FACT THAT OFTEN HOTEL OPERATORS VIEW TIMESHARE AS COMPETITION, BUT WE HAVE STATISTICS TO SHOW THAT WHEN SOMEBODY PURCHASES A TIMESHARE THEY GO ON TO STAY IN THE COMPANY’S SISTER HOTELS MORE THAN PREVIOUSLY.” RICHARD McINTOSH

HILTON’S TIMESHARE HIGH
TEAM WORK: HIGVC AND GROUP RCI
“Our relationship with Group RCI goes back to the opening of our first resort, Coylumbridge in Scotland, in 1980 in our pre-Hilton days. “The Hilton Group took over the hen Richard McIntosh became country properties in the mid-1990s and club manager in 1985 at the Group RCI was chosen as an essential Craigendarroch timeshare resort in Scotland, he element to be integrated into the then never dreamt he would still be there 23 years newly-launched HIGVC. later as managing director of HIGVC. “Today, Group RCI operates a But that is exactly what he is and, number of our back office systems following a takeover of the Hilton Hotels from its Cork call centre, while our Corporation by Blackstone Private Equity last US-based sister company HGVC is autumn, he’s about to embark on a new given the same support from Group mission to help take the company’s timeshare RCI’s US call centres. That support division worldwide. includes the handling of some of our Currently HIGVC – a Group RCI affiliate bookings and day-to-day running of operating timeshare lodges alongside its HIGVC’s business. traditional Hilton Hotels’ accommodation “One of the biggest and most product at each of its resorts – has three crucial areas of support we receive Scottish timeshare properties affiliated to the from Group RCI is in investigating and RCI exchange network. They are Hilton identifying business opportunities. Craigendarroch, Hilton Dunkeld and Group RCI deals with a lot Hilton Coylumbridge. of people across the HIGVC’s first venture outside international hospitality Scotland came with the opening of a industry and its business mixed-use resort in Vilamoura, development team feeds us Portugal, last July, as well as a leads which have proven to franchised operation in Sharm El be very useful. Sheikh, Egypt. HIGVC operates as part “Having the ability to Richard McIntosh of the larger Hilton Grand Vacations meet so many people, faces an exciting Club business, whose 46 resorts are Group RCI works hard to new era in his career as he is tasked with based predominantly in the US. connect the right people expanding HIGVC together to create operations A WORLD OF POSSIBILITIES partnerships that will help throughout Europe and beyond, as well The combination of timeshare and to grow the business.” as taking on the OTE luxury hotel product has clearly worked Richard McIntosh, chairmanship from well for the Hilton group and it’s an MD, HIGVC October this year.

The Hilton International Grand Vacations Company (HIGVC) is set for worldwide expansion. GAYLE GREEN talks to the man who will be taking the company from its Scottish base towards growth in Europe and the Middle East.
offering which the new owners now plan to expand further throughout Europe, the US, and across the rest of the world. McIntosh is delighted by the prospect of HIGVC’s international growth and is looking forward to his new role. He said: “I’m excited about the opportunity to grow our business now I have been given a clear remit to go out and do so. It’s a big challenge but it’s what I’ve wanted to do for a long time.” McIntosh will work alongside his colleagues from the US to further the international expansion plans, and says they are already looking at new projects in Japan and Asia. Additions to the company’s timeshare portfolio may not necessarily be in the form currently seen in Scotland and Portugal however. McIntosh explained: “We will be looking at business opportunities along various business models for the vacation club. It might be that Hilton is the primary developer or we might look at things such as licence agreements and franchises similar to the model we operate in Egypt, or even affiliations.”

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MANAGING CHANGE
McIntosh’s career, and the Craigendarroch resort itself, have seen many changes and challenges over the past quarter of a century. Following a hotel management course at a college in Edinburgh, McIntosh, originally from Nairn in Scotland, joined a hotel chain in London and worked both in the city and

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in Holland. He then spent five years working at a golf and country club in Exeter, where he combined his hotel expertise with his love of golf. But it was the move to Craigendarroch in 1985 that introduced him to the timeshare arm of the industry. Having worked as the country club manager at the resort, he eventually joined the timeshare sales and marketing team, becoming the resort’s sales manager before being appointed general manager overseeing both the timeshare and hotel operations. When the Stakis Group took over Craigendarroch in 1996, it brought with it two existing Scottish timeshare resorts, Dunkeld in Perthshire and Coylumbridge in Speyside. It was only when the Hilton group bought out Stakis in 1999 that the timeshare and hotel operations at each resort were once again separated, with McIntosh being given a remit for the group’s timeshare operation, HIGVC, and the job of investigating a variety of expansion opportunities across the globe. Given the number of takeovers and changes, McIntosh faced many challenges during the course of HIGVC’s development. He said: “The biggest challenge with each takeover has been pushing to expand the timeshare side of the business. The Scottish timeshare resorts brought across with the Stakis takeover were given a very low priority. “I was working for a company where the hotel operation accounted for 99 per cent of business activities and so, inevitably, timeshare was always going to get a low focus,” he said. “It was the same with the Hilton group acquisition, because its leadership had no experience of timeshare or understanding of its true potential.” McIntosh worked hard to give the

timeshare arm of the business the attention it deserved and, in doing so, he proved that luxurious hotels located next to timeshare lodges and apartments could be a winning combination. He said: “The biggest challenge is the fact that often hotel operators view timeshare as competition, but we have statistics to show that when somebody purchases a timeshare they go on to stay in the company’s sister hotels more than previously because their loyalty to the group brand increases. “On average, occupancy at our timeshare properties runs at 95 per centplus year round, so timeshare brings clients to the group’s hotels throughout the year. In this way, the captive audience using our combined site facilities automatically increases the spend into our hotels.” The takeovers have also been good for McIntosh on a personal level, enabling him to climb the career ladder. He added: “I’ve been really fortunate in being able to progress my career throughout the changes within the company and being able to keep my Craigendarroch base at the same time, while developing a strong, albeit small, team of colleagues.”

THE HIGVC PORTFOLIO
■ Hilton Craigendarroch in Royal Deeside, Scotland, comprises 99 lodges, plus a Hilton hotel with leisure facilities ■ Hilton Coylumbridge in Speyside, Scotland, has 61 lodges with an adjacent Hilton hotel with leisure facilities ■ Hilton Dunkeld in Perthshire, Scotland, comprises 22 lodges and a Hilton hotel with leisure facilities ■ Hilton Vilamoura as Cascatas Resort & Spa on the Algarve, left, became the first hotel resort in Portugal to carry the Hilton International flag when it opened its doors last year. Set in a four-hectare site, the mixed-use resort comprises 69 timeshare apartments, 69 residential apartments, a five-star Hilton hotel, spa and golf complex. ■ Hilton Sharm Dreams Vacation Club in Sharm El Sheikh, Egypt, right, offers 95 studio apartments and villas, spa and health club.

TAKING THE OTE CHAIR
And there is soon to be a further development in McIntosh’s business life. From October this year he is set to take on the role of OTE chairman for a two-year period following the ratification of his nonexecutive appointment by a meeting of the OTE Board at the end of May in a move that will be good for both the HIGVC and the industry body. V

Top of page, clockwise from far left: External and internal views of Hilton Dunkeld, a unit’s main living area at Hilton Coylumbridge, and bedroom, lounge and swimming pool facilities at Hilton Craigendarroch.
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CASE STUDY
QUOTE: I HAD TO TAKE A LONG HARD LOOK AT THIS AND TOLD THE OWNERS THAT WE WERE GOING TO CHANGE OUR WAYS. WE HAD TO LOOK AT OURSELVES, COME CLEAN AND BE HONEST ABOUT WHAT WE HAD DONE WRONG. SIMON JACKSON

Just four years ago Macdonald Hotels & Resorts was considering the future of its underperforming timeshare operation. Simon Jackson shares the strategy that has turned around this division of the company with DINAH HATCH.

TOTALTURNAROUND

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hen Simon Jackson became managing director at Macdonald Hotels & Resorts in 2004, he was told the company’s failing timeshare division was not performing well. The choice was simple – turn it around quickly or there may not be a future. Jackson was clearly the right man in the right place at the right time. His CV describes someone who likes a challenge. He left thriving travel tour operator, Airtours Holidays, to join ailing Sunterra in the US which, at the time, was in Chapter 11 bankruptcy. So for Jackson, turning round Macdonald’s nine timeshare sites – which the company acquired in 2001 after a period of managing them for Barratt International Leisure – it was simply a case of rolling up his sleeves and starting again. And the result was a business turnaround that put smiles on the faces of the group’s top management. After only a year on the project, Jackson had achieved a break-even point for the timeshare operation. Today the business is turning a multi-million pound profit.

and the relationship was problematic and sometimes confrontational. “We didn’t have a good reputation among the owners and lots of them wanted to get out of the system. On top of that, the industry as a whole was suffering from a bad period of press coverage and seen as a world of scammers by the public at large. “I had to take a long hard look at this and told the owners that we were going to change our ways. We had to look at ourselves, come clean and be honest about what we had done wrong. We sat down with the club committees and said ‘this is how we have performed and this is why there is so much discontent’. That’s a very hard thing for a company to do, but it was really welcomed by the owners’ representatives and opened up regular communication between us.”

must be deliverable and within a standard time frame. The results of this resolution brought our owners back on board, and their response has been superb. “Between 2005 and the end of this year Macdonald Resorts and our owners have spent £15.5 million on improvements collectively across all our resort sites. These improvements have gone down so well that owner representatives are now saying they want to spend more – which means we will too.”

HARD CHOICES
Jackson made other changes too. There was a reappraisal of resort staff as a result of which some had to be asked to leave. “There were tough decisions to make about longstanding members of staff who were not going to change,” said Jackson. “The resort management was quite unpopular for a time, but these changes had to be made.” He also went about tackling the issue of staff training at all Macdonald’s timeshare resorts. Employees complained of never having received proper training and, in his view, had fallen into a pattern of “just making up how they did things”. Jackson introduced core standards and induction courses which, he said, raised morale “massively”. Staff benefits were also implemented and included incentive schemes such as awarding holidays and cash vouchers to long-serving employees. The refurbishment process and materials procurement was centralised by Jackson to enable the timeshare division to take advantage of the Macdonald group’s wider supply chain to get better quality materials at a reduced cost. He said: “Everything was being bought on a piecemeal basis, so we

ENGAGING OWNERS
A policy of engagement followed which saw the introduction of quarterly resort and news updates sent out to owners. Newsletters gave a breakdown of how owners’ money was being spent, as well as news of services and exclusive offers. Jackson said: “We brought in pre-arrival packs for owners and exchange guests that told them all about the resort they were about to visit.” A critical factor in the revival was establishing an official resolution that no actions should be promised to owners unless there was a certainty they would be carried out. Jackson explained: “Lack of delivery was a big problem. We said that if anyone committed money to a project of, for example, unit enhancements, then that

INVESTMENT AND COMMITMENT
Jackson took a year-by-year approach to the task, starting with working out where things had started to go wrong. He said: “There had been no proper investment in the product for many years and the properties and public areas were in a pretty bad state of repair. This had naturally caused a great deal of discontent among the owners, who were paying an annual fee and, in their view, not seeing much for it. There was little communication between the company and the owners’ representatives,
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Once owners at Macdonald Resorts properties could see their money was being used to transform properties such as Macdonald Dona Lola Resort in Malaga, Spain, top, and Garten Lodge at Macdonald Dalfaber Golf & Country Club, Aviemore, pictured after recent refurbishments, they wanted to spend more on the maintenance of their resorts.

C The newly-landscaped gardens of Macdonald Elmers Court

Country Club in Hampshire, UK, top, and leisure facilities such as the pool area at the Macdonald Dona Lola Resort in Malaga, Spain, send a message to prospective purchasers and existing owners that these are properties benefiting from healthy levels of investment.

said to our owners ‘let us tap into our group hotel supply chain’. We buy wisely for the hotels, so why shouldn’t we do the same for the timeshare properties? We then showed our owners what could be achieved by opening up a show lodge for them to view at Macdonald Dalfaber Golf & Country Club and then asked them if they wanted this standard across the other resorts.” Today the improvement in the Macdonald timeshare offering speaks for itself. Eight of the group’s nine RCI-affiliated properties are RCI Gold Crown resorts, while the other has been awarded RCI Silver Crown status. And this achievement has delighted Jackson. He said: “In achieving eight RCI Gold Crown resorts and an RCI Silver Crown award across our nine RCI-affiliated properties, we had some fundamental help. The Group RCI team suggested I go for the awards and when I chaired my first owners’ AGM in 2004, I knew they were right! Group RCI has really contributed to our improvement and has supported us

throughout, believing in the changes we said we would make.” During the past 18 months Jackson and his resort operations teams have met on a monthly basis with Group RCI’s affiliate services managers to discuss how they can support the relationship with their mutual customers. Jackson added: “Our Group RCI team has stood with us throughout the whole process and continues to support us in this way.”

NO GAIN WITHOUT PAIN
The picture looks good for Macdonald Resorts right now. But Jackson isn’t so sure things are as rosy in the timeshare industry at large. He said: “Along with altering public perceptions about the timeshare product, which are still hugely negative, the industry needs to address issues such as exit strategies. “The number of people today who want to get out of the system is huge. For instance, the grown-up children of owners don’t want timeshares passed on to them, no matter how great a time they had there as youngsters,

because they fear the responsibility of the management fees and the difficulty in selling, should the need arise. “It’s time for the industry to change its ways at point of sale and change the way the product is sold. For example, instead of selling in perpetuity, perhaps we should be working with a lease system for, say, 25 years or even less. Some operators including Macdonald Resorts do this, but does the public at large understand this type of product offering, or do they think it is just another scam? If it’s the latter then we must act. “While there are still older people who can’t sell their timeshare when they need to and don’t know which way to turn, is it any wonder the consumer perception of timeshare is so negative? “The industry as a whole must come together to address these problems and face up to them honestly and openly to give us all a better future. “The timeshare product is fantastic as our thousands of owners tell us – so what is the problem?” V
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EVENT REPORT
QUOTE: IF YOU PUT GREEN ACTIVISTS TOGETHER WITH REGULAR OPERATORS, YOU CAN COME UP WITH NEW IDEAS. PHILIPPE BOURGUIGNON, VICE CHAIRMAN OF REVOLUTION PLACES.

The Global Travel & Tourism Summit carried a hard-hitting message for the hospitality industry on the urgent need to take a more environmentally-friendly approach to business. HELGA LOVERSEED reports.

Investing in sustainability
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ver the last 20 years, our message has been very economics focused, but now we have to explain to the world that since travel and tourism is one of the major sectors, we have obligations that go beyond our economic impact.” So said Jean-Claude Baumgarten, president and CEO of the World Travel & Tourism Council (WTTC), speaking at the recent Global Travel & Tourism Summit held in Dubai. The summit was attended by more than 1,100 delegates from 75 countries, including representatives from the timeshare industry. Delegates were tasked with identifying the major challenges facing today’s tourism and travel industry and the need to protect the planet was one debate which dominated discussions. Geoffrey Kent, chairman and CEO, Abercrombie and Kent, set the scene. He told delegates: “The question is no longer whether or not sustainable tourism works, but rather how we can further the steps already taken towards addressing climate change, nurturing – rather than depleting – natural and cultural resources, and preserving our heritage for the enjoyment of future generations.” The theme was also taken up by Stephen Holmes, chairman, president and CEO, Wyndham Worldwide Corporation, Group RCI’s parent company.

He said: “There is a new generation of travellers out there who are conscious of the environment, so we as an industry have to do more to respond to their needs. When going into a new market, we are mindful of environmental jurisdictions and we are putting in standards for our franchisees to follow.” Sustainability, as it relates to the travel and tourism sector, embraces the challenges of controlling pollution – witness the difficulties of Beijing as it gears up for the Olympic Games – climate change, the alleviation of poverty, food shortages in developing nations which are also the emerging new travel destinations, and establishing ‘green’ protocols for the construction of new builds. Delegates heard that being able to balance economic growth with stewardship of the planet will dominate the travel and tourism agenda for decades. To achieve that balance, some speakers believed the sector would have to forge links with groups that have traditionally opposed it, such as human rights advocates who have criticised labour practises in the tourism industry, and environmental associations that have blocked resort developments. Philippe Bourguignon, vice chairman of Revolution Places, a group of lifestyle resorts adhering to sustainable principles, said: “If you put green activists together

with regular operators, you can come up with new ideas. In order to create a culture of innovation, one needs to mix people from different industries and, if possible, different nationalities.” Sonu Shivdasani, the founder of The Six Senses Resorts & Spas, suggested that a viable target for the hotel industry might be to reduce its carbon emissions by 50 per cent by 2013. Gerald Lawless, executive chairman, Jumeirah Group, pointed out the need for more research data on which to base a strategy: “We need facts and figures so that we can address the issue – even if the numbers are not what we would like to hear.” Airlines have come under attack for being among the worst polluters on the planet and Habib Fekih, president for Airbus in the Middle East, found himself having to defend his company’s new A380 craft. He explained: “The A380 burns less fuel per passenger per 100 kilometres than older planes and it has very low emissions, both in terms of noise and CO2. Moreover, because of its greater capacity, the A380 can carry lots more passengers at one time, without airlines having to add slots.” The debate made delegates aware of the importance of addressing these challenges if they are to preserve the greatest asset of their business – a healthy and attractive environment. V

C From the top: Jean-Claude Baumgarten. Geoffrey Kent. Stephen Holmes. Sonu Shivdasani. Gerald Lawless. Habib Fekih.

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DEVELOPER

MAP
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– THE NEW MERCHANT OF VENICE

Mary Anne Pulé, owner of MAP Destinations, will be drawing on more than 20 years of when she turns developer for her next project which takes her to the canals of Venice.

he industry is about to see the launch of one of the most unusual timeshare properties yet. Mary Anne Pulé has just sealed a deal with Floating House, an Italian company specialising in boating, to finance a timeshare operation based around a small fleet of custom-built luxury houseboats that will be moored in the heart of the iconic Italian city of Venice. Pulé, known to many as one of Malta’s foremost marketers, plans to unveil the first of these vessels in March 2009. The product will be marketed under the brand Venice on Water, and Pulé is confident her Venetian floating homes will appeal to a wide market attracted by their unique appeal. She said: “This is going to be a highend and luxurious product. In fact, the timeshare weeks will sell for between €18,000 and €20,000 – a price that reflects the year-round, high-season status of Venice. Pulé says initial interest in her houseboats has been higher than expected, even before MAP started to formally market the project. MAP’s sales and marketing director, Richard Alden, is confident the first boat will sell out before it even gets on to the water. Alden told RCI Ventures: “The more

novel the concept, the easier it is to sell – and we have had a number of sales already. “With this project, we wanted to step away from the usual self-catering apartment. This is different from every other timeshare around – and it’s in a location where there isn’t much timeshare at all. Living on a boat in one of the world’s most romantic cities will give our owners a totally new and unique experience.” MAP, which is based in Sliema, Malta, and has a staff of more than 100, will promote the new venture primarily through telemarketing, bolstered by some advertising in the US. Even in these early stages, Pulé and Alden have generated as many as 4,000 leads simply by contacting people on the MAP database. Pulé accepts customers may not want to spend weeks on end floating around the Venetian waterways, so a more flexible approach has been adopted that enables customers to spend a few nights on the water and a few nights ashore. Venice on Water is initially being marketed in Pule’s home territory of Malta, a market she knows well and where she hopes her product will appeal to the island’s 15,000 boat owners.

She explained: “I have experience in the Maltese market and I know the people love to go abroad and to go boating.” The next source market in Pulé’s sights is the US, where MAP is already involved in the marketing of the East Clare Golf Holiday Village in Ireland. MAP also plans to turn its attention to the UK market. The initial plan is to start with one houseboat. However, since there are 10 licenses available from the sales company, the long-term aim is to build up to this number, giving MAP 500 weeks to sell. Pulé feels confident the success of this project will eventually lead to more licenses being made available. The appeal of these luxurious floating apartments isn’t confined to boating types. Anyone wanting to jump aboard can hire their own skipper for an extra fee or can opt to learn the ropes in a couple of hours. Pulé said: “If a customer can clearly pilot the boat and establish themselves as a good skipper, there is no reason why they can’t go further afield to explore the rivers of Italy. But for those wanting to stay in Venice, there’s lots to do. There’s the Lido and plenty of islands. We’re also planning to provide 25 itineraries to make it easier for people to plan their routes.”

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experience in timeshare marketing SARA MACEFIELD reports.

The houseboats, measuring nine by three and a half metres, can accommodate up to six guests. The vessels will take four months to construct and are being purpose-built in Malta. The hulls will be fabricated from a light aluminium which is more durable than other materials and is less expensive to maintain. The hulls have also been specifically designed for the shallow waters of the Venetian Lagoon. The craft will have two bedrooms with ensuite facilities – including a bath. There will be a kitchen/galley and living area plus a sun deck outside. A separate cockpit will house the boat’s GPS satellite navigation system. For Pulé, Venice on Water represents a long-held ambition to do her own thing and she was spurred on by what she sees as the lack of new timeshare developments in Europe. She said: “As a developer, to build a resort would cost millions, but I can invest in something like this for a fraction of that cost and still be in control.” Then it was a question of finding the right opportunity, and this came about through Group RCI, which invited the MAP team to meet developers and view some potential timeshare projects in Italy. “We met

with some people from Venice who had the licenses and were looking for a partner and we felt Venice would be ideal,” said Pulé. Negotiations and completion of the legal process has taken two years and is nearing completion. With the project about to set sail, Pulé hopes this will be her stepping stone to other development. It’s an area where she feels she can use her experience of marketing timeshare resorts to her advantage. She added: “I know exactly what the client wants and needs.” But the MAP managing director, who founded the company in 1986, is keen to stress that this new direction will not affect her existing operation in Malta, where she markets some of the island’s most prominent properties. She said: “We value our developer partners. Infact, our developers are very excited about adding Venice on Water to the overall industry portfolio of exchange options. They believe the more holiday options our owners have, then the more value they will get out of their timeshare ownership. “I want to bring my learnings and experience as a developer to the marketing arm of my business, as it can only deepen my understanding of my developer clients and strengthen our relationship.” V

ABOUT RICHARD ALDEN
Richard Alden is group sales and marketing director for MAP Destinations and has 12 years’ experience in the timeshare industry. In 1996 he was a sales manager at Anfi Beach Club in Gran Canaria, before moving to Malta where he became sales manager for the Island Residence Club @ Radisson SAS Golden Sands Resort & Spa. In 2004 he joined MAP Destinations, initially as sales director, following which he was appointed to his present role.

Top of page: These computer-generated images of the Venice on Water houseboats illustrate the comfort guests will be able to enjoy while cruising around the waterways of the Italian city. Far right: Mary Ann Pulé.
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FINAL CALL
QUOTE: FOR THOSE OF US THAT WERE AROUND IN THE LAST RECESSION, IT WAS DURING THESE TIMES THAT WE SAW TIMESHARE FLOURISH. AND NOW THE INGREDIENTS ARE IN PLACE FOR A REPEAT PERFORMANCE. RON HOWELL

RON HOWELL, sales director, HMC Funding, has given some thought to how timeshare will fare in these times of financial turmoil. Against an economic backdrop of credit crisis, rising interest rates and repossessions, he evaluates the strengths of the industry.

WEATHERING THE STORM

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Well if we are to believe everything we read in the newspapers, we might as well close up shop and go home. But the truth is that the leisure industry, and I include timeshare in that category, is far more robust and resilient than many people think. Of course some sectors are being negatively impacted by the current economic cycle, particularly the wholly-owned second-home markets in Spain, the UK and parts of the US. The timeshare industry, on the other hand, is much more diverse today than it was 20 years ago and that will protect it from the worst a recession can throw at it. Products such as fractionals, destination clubs, mixed-use resorts and others which comprise a combination of hotel, whole ownership and timeshare have a great deal of flexibility, both in terms of usage and on the financial front. Some of these products come with the added bonus of belonging to established and professional rental and exchange programmes which provide owners with options to generate a rental income from the unused time in their properties. This turns the luxury
30 RCI Ventures, July 2008

of a holiday home into a working asset, paying its own way while still being there for holidays. The profile of the industry’s typical customer gives it another advantage. Aged between 40 and 65 years of age, largely homeowners with good credit ratings, these customers are well insulated from the current financial crises. Expansion and growth in the timeshare industry has been stifled in the last 10 years due to the increased popularity of the whole ownership of holiday homes, fuelled by soaring property prices. It’s now becoming very apparent, however, that in parts of the UK, US, Spain and, to a lesser degree, Portugal, property prices are falling dramatically. This, coupled with the fact that many second-home speculators have suffered a reversal in their fortunes and guaranteed rental periods have expired, makes the timeshare product and its cousins look like the more attractive deal. In today’s climate consumers are likely to be much more amenable to purchasing a timeshare product with all its associated exchange

holiday benefits than purchasing a second home. A wholly-owned property does not offer them the flexibility or options of a timeshare and, with the current fall in house values, a full purchase no longer guarantees a return on investment. Furthermore many property developers in these areas have either stopped building or have developments under way that remain unsold. It’s no surprise to see a significant rise in these developments being re-designated as fractional developments and sold as quarter, eighth, sixteenth shares or even holiday rentals. While this alternative strategy has merit, the difficulty for the traditional property developer will be finding the sales and marketing expertise. This is where the timeshare market can come into its own since it has the experience and expertise to capitalise on the current climate. For those of us that were around in the last recession, it was during these times that we saw timeshare flourish. And now the ingredients are in place for a repeat performance.

ABOUT HMC FUNDING
HMC Funding is one of the leading providers of financial products to customers, marketers and developers in the hospitality and cruise finance, timeshare, fractional and whole ownership industries, across the UK, Europe, North America, the Middle and Far East. HMC Funding is a partner of Clydesdale Financial Services Limited, which is backed by Barclays Bank PLC, one of the UK’s leading financial institutions operating in the timeshare market.

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