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Etextbook PDF For Resorts Management and Operation 3rd Edition
Etextbook PDF For Resorts Management and Operation 3rd Edition
vi CONTENTS
Contents vii
CHAPTER 15
Casinos 417
Introduction 418
The U.S. Gaming Market 418
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FOREWORD
Between the two of us, we have known Bob Mill for 15 years. That’s a fair number of
years. During that time, we have come to know him as a consummate teacher of and
researcher on the art of resort management and operation. The way Bob explains
the arcana of our industry is a skill that few have. His observations are honest,
refreshing, and, dare we say, exciting, in a way that only someone intimately familiar
and unabashedly in love with our industry can make them. In short, we are honored
to offer this overview of what we both believe to be the finest book on resort
management and operation in print today.
The beauty of Bob’s book, and what makes it remarkable reading for both of us,
is that although we are separated by 30 years of industry experience, we have found
this latest edition to reach out generationally and deliver a definitive look at resort
management and operation that speaks personally to each of us. That’s quite an
accomplishment.
With this Resorts: Management and Operation, Third Edition—which, by
the way, is a true indicator of the book’s value to our industry and those who have
the good fortune to enter it—Bob has again improved and updated his seminal look
at the resort industry. His chapter-by-chapter updates deserve high marks for
assuring that this text remains not only relevant but also cutting-edge.
Throughout this edition, Bob has added sidebars on careers to each chapter.
And in almost every chapter, he has updated the data.
More specifically, Bob has added a major section on resort management and
operation in the 21st century; and additional material on timeshares, destination
clubs, sustainable development, four-season ski areas, and the move to establish
base villages where the emphasis moves from ski operations to real estate, global
water conservation strategies, environmental certifications, the emerging market
segments of women and minorities, resort communities, quality service, interna-
tional shopping festivals, sales analysis, revenue management, performance metrics
and trends, waterpark financing, ecotourism, an adventure development index, and
a new section on China (Macau).
Thankfully, all the chapters and information that made the first two editions of
Resorts: Management and Operation such a success still form the backbone
of Bob’s definitive book. In our positions as CEO and president of Hershey
Entertainment and Resorts, Hershey, Pennsylvania, and senior resort manager,
Hyatt Windward Pointe, Key West, Florida, we’re ever more aware of the importance
of the family to the resort business. It’s not just about mom and dad going to golf
school at a resort; it’s about the whole family doing it together. It’s not just about
mom and dad enjoying a five-star or four-diamond resort experience; it’s about the
whole family creating memories together that will last a lifetime. Bob’s book
includes a strong focus on the role of these entertainments in creating the type
of reality that customers want to perceive while they are on holiday.
This intense focus on the resort industry is important because no word in the
English language evokes the immediate and electric response of the word ‘‘resort.’’
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x FOREWORD
Foreword xi
In this Third Edition, Bob keeps the three sections that composed his earlier
editions: Recreational Facilities, Lodging/Food and Beverage, and Guest Activities.
As in the previous edition, segments on marketing, operations, guest activity
programming, design, and dealing with the future are not separate chapters, but
are incorporated throughout other chapters so that readers can more easily see how
each of these activities impacts other topics.
A consistent theme is the impact of these three elements on resort operations.
There is a separate chapter on recreational amenities, guest activities, the unique-
ness of resorts, and the importance of retail shopping opportunities. The chapter on
spas includes pools and indoor waterparks. Three types of resorts (mountain-based,
beach, and golf/tennis) are each given two chapters. And there is a strong emphasis
on sustainability issues in the chapters dealing with management—especially as it
concerns mountain and beach resorts.
There are chapters on cruise ships, specialty resorts, and, in particular, casinos.
With the advent of ‘‘racinos’’—racetracks that have been granted the opportunity to
add slot machines—casinos on Indian reservations, and Class-3 casinos, this chapter
is a welcome addition to the resort education milieu.
Regardless of who you are, you are either in or entering one of the great
professions of the world. Resort management is often exhilarating. It is often
rewarding. It is always hard work. But, frankly (don’t tell our boards of directors),
even the hard work is a lot of fun! In no other service industry can a group of like-
minded individuals have such a profound impact on the physical and emotional
wellbeing of their customers. We are guides through a world of fantasy, a world that
soothes rattled nerves, calms pounding hearts, and envelops weary bodies in a
delicious cocoon of heightened senses.
The challenge for our industry is to consistently deliver these unique experiences at
a level that is beyond guest expectations. Our reward is . . . well, our reward is obvious.
It is in the warm greeting from generations of the same family who return to our resorts
year after year. It is in the look of absolute contentment as a guest settles in to a good
book while surrounded by gardens of magnolias, begonias, and orchids . . . or a crystal-
blue ocean . . . or both. And it is in the wide-eyed excitement of a guest who regales an
audience with stories about a hole-in-one or ‘‘the one that got away.’’
The Third Edition of Bob Mill’s Resorts: Management and Operation is
the first step in transforming each of these fantasies into breathtaking reality. We
enthusiastically invite you to take this step and join us in the most exciting industry
on earth.
TED J. KLEISNER
Chief Executive Officer
Hershey Entertainment & Resorts, Inc.
Hershey, Pennsylvania
RANDALL Z. WILLIAMS
Senior Resort Manager
Hyatt Windward Pointe
Key West, Florida
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PREFACE
The traditional hotel school deals very effectively with the second element.
Departments of Park and Recreation Resources have traditionally dealt with the first
and third elements within the context of public rather than private recreation.
xiv PREFACE
New Quick Getaways have been added to most chapters on the topic of
careers.
Chapter 1 now features a major section on the twenty-first century together
with additional material on timeshare and destination clubs.
Chapter 2 includes increased coverage on the important topic of sustainable
development.
Chapter 3 has more material on four-season ski areas and increased
coverage of the movement to establish base villages where the emphasis
moves from ski operations to real estate.
Chapter 5 includes a major update of the material on beaches and islands,
covering scuba, romance-related, boaters, and U.S. attempts to improve the
environmental impacts at beaches and marinas.
Chapter 6 adds sections on water conservation strategies worldwide,
environmental certification, and trends.
Chapter 7 updates information on golfer characteristics while adding
sections on the emerging market segments of women and minorities.
Chapter 8 adds a section on resort communities.
Chapter 9 includes an added section on quality service.
Chapter 11 has new information on international shopping festivals as well
as a major section on operations focusing on sales analysis.
Chapter 12 adds major sections on operations: specifically revenue manage-
ment, operating like a hotel, performance metrics and trends, in addition to
increased material on waterpark financing.
Chapter 13 has been reoriented toward adventure in resorts rather than
adventure travel and now features increased coverage of ecotourism and
a new section on adventure development index.
Finally, Chapter 15, discussing casinos, has added sections on the growing
influence of gambling and casinos in Macau, China.
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Preface xv
ADDITIONAL RESOURCES
An Instructor’s Manual (ISBN: 978-1-118-15222-5) is available for instructors
teaching this course. It contains the learning objectives for each chapter along
with the corresponding major lecture points. An electronic version of the Instruc-
tor’s Manual, along with the PowerPoint Lecture Slides to accompany this
textbook, are also available for download to qualified adopters from the publisher at
www.wiley.com/college/mill.
The Test Bank has been specifically formatted for Respondus, an easy-to-use
software program for creating and managing exams that can be printed to paper or
published directly to Blackboard, WebCT, Desire2Learn, eCollege, ANGEL, and
other eLearning systems. Instructors who adopt Resorts: Management and
Operation, Third Edition can download the Test Bank files for free.
The book’s companion site (www.wiley.com/college/mill) provides readers
with additional resources as well as enables instructors to download the electronic
files for the Instructor’s Manual, PowerPoint Presentations, Test Bank, and
Respondus Test Bank.
ACKNOWLEDGMENTS
I am grateful to the faculty of the Department of Park and Recreation Resources at
Michigan State University for exposing me to the specialized knowledge going into
managing resorts that depend on the natural resource base for their success. In addition,
they provided the foundation of the material on guest activity programming.
The administration at the Daniels College of Business in general and the
Knoebel School of Hospitality Management in particular have always been support-
ive of my research and writing activities.
Thanks to Wiley and, in particular, Mary Cassells and Jenni Lee, who saw
potential in this effort and provided guidance and encouragement throughout the
entire process. This Third Edition is all the better for the detailed, helpful, and
insightful reviews. The following people generously took the time to provide
thoughtful comments and suggestions, the vast majority of which are incorporated
into the book to make it an improved text. They are:
xvi PREFACE
It has been a joy to have the research assistance of wonderful students in the
Knoebel School to assist me in my efforts: McKenna Hall, Alana O’Grady, Claudia
Alvarado Cruz, Samuel Lopez, Caitlin Lorenz, Monica Parker, Elizabeth Morrissey,
Mary Cochrane, and Alyssa Leslie. These are truly exciting young people to be
around. I know they will be successful in anything they decide to do in the future. I,
of course, take full responsibility for any errors throughout.
Chapter 1
RESORTS: AN INTRODUCTION
LEARNING OBJECTIVES
1. Identify the major factors influencing the development of the resort industry.
2. Identify the various ways resorts can be classified.
3. Place different types of resort offerings on a time-equity continuum.
INTRODUCTION
To understand where the resort industry is today, it is important to consider how
resorts have evolved through the ages. A historical perspective leads to a picture of
the modern types of resorts.
HISTORY OF RESORTS1
The sole purpose of a resort, in the classic sense, is to afford its users a place
for escape or restoration from the world of work and daily care.
—CHUCK Y. GEE
Resort Development and Management
Roman Empire
Prior to the eighteenth century, pleasure travel was not available to the masses. Lack
of time and money combined with poor transportation and a general lack of
facilities to make travel something that one had to do rather than wanted to do.
However, the roots of the resort concept can be traced to the Romans.
Extending from the public baths, resorts were initially built in and around Rome
before being developed for the pleasure of Roman legionnaires and consuls
throughout the empire—from the coast of North Africa to Greece and Turkey,
from southern Germany to St. Moritz in Switzerland, and on through England. In fact,
Bath in England still has relics dating to A.D. 54, when it was known as Aquae Sulis.
The first baths, introduced in the second century B.C., were small and modestly
furnished. Men were separated from women. Later, the baths became integrated,
larger, and more ornate. They served both health and social purposes. The public
bath allowed for relaxation, while the sale of food and drink on the premises
encouraged social interaction. A typical structure consisted of an atrium surrounded
by recreational and sporting amenities, restaurants, rooms, and shops.
Outside the major centers of population, baths were located by mineral springs,
which were known for their restorative powers. The Greeks had earlier associated
mineral springs with the gods and had built holy wells and altars on the sites. Roman
legions appropriated these sites for the construction of baths.
The Roman Empire began to decline at the beginning of the fifth century A.D.
Social life at the English resorts languished until the seventeenth century, when it
was refueled by improvements in roads and the introduction of the stagecoach.
Europe
In A.D. 1326, Colin le Loup, a Belgian ironmaster, was cured of a long-term illness by
ge. As thanks, he developed a shelter there to
the iron-rich waters of a spring near Lie
welcome others. The popularity of the area grew so much it was renamed Spa,
meaning fountain.
Back in England, King Charles II restored the monarchy in 1660 after years of
Puritan rule. He spent time at the popular resorts of the day—Bath, Tunbridge Wells,
and Harrogate. Thus began a long history of attractions being popularized by the rich
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Introduction 3
and famous, a tradition that continues today. In other parts of the world, royalty
continues to be the trendsetters, while in North America, stars of popular culture
determine the ‘‘in’’ places. There is an old saying in tourism that mass follows class.
Destinations are initially made popular by a small band of influential people. This puts
the place on the map. Seeking to emulate this group, others are attracted to the location.
A second factor leading to the popularity of the spas was the endorsement of the
medical profession. The waters of Tunbridge Wells, for example, were promoted as an
aphrodisiac. Likewise, bathing in and even drinking salt water was regarded as a cure
for numerous diseases and helped promote seaside resorts. Popular activities at the
baths included gambling, dancing, and other forms of entertainment, including
concerts, grand parades, and the pump room, where health-seekers ‘‘took the waters.’’
The rise in popularity of the spas created a demand on the part of the affluent for
more private facilities. This led directly to the development of the Swiss resort
industry. Before railroads were built, guests traveled long distances over poor roads
to arrive at their destination. Having spent so much time and effort in reaching the
spa, they wanted to spend a long time—up to two months—to get their money’s
worth. This led to the development of facilities more extensive than those offered by
a modest inn. In Zurich, the most famous resort was the Hotel Baur au Lac, opened
by Johannes Baur in 1844. After several expansions, the hotel was completely rebuilt
C01 05/26/2011 14:51:21 Page 4
with an innovative design that still is used today. While all other hotels faced the
town, Baur built the new resort facing Lake Lucerne. He became the first developer
to recognize the benefit of a scenic view.
In the early 1800s, Switzerland was known as a summer resort. However, in 1860,
several English visitors were convinced to stay on for the winter. Skating was already
a favorite activity. In Switzerland, the guests were introduced to skiing and tobog-
ganing. While the initial attraction was the promise of health cures, the popularity of
the resorts was due more to the social activities organized by management. One
example was the Bains de Monaco, renamed Le Mont Charles (Monte Carlo) in 1863.
Operating in the winter months when traditional summer resorts were closed, it
offered guests year-round gambling. While the health spa was the overt attraction,
the real source of the resort’s success was the gambling.
North America
The earliest resorts in the United States were developed in the East and, as in Europe,
were established around spas. Resort hotels were opened in Virginia, New York, and
West Virginia in the eighteenth century. At approximately the same time, the seaside
resort became popular. Examples include Long Branch, New Jersey, and Newport,
Rhode Island. The latter was a commercial port where molasses was distilled into
rum, which was then traded for slaves from Africa. When the slave trade was
abolished at the end of the eighteenth century, the town turned to tourism for its
economic future. Wealthy southerners ventured north to escape the heat and
malaria of South Carolina in the summer.
Amenities
Early hotels were rather barren in terms of amenities. The forerunner of many
upgraded facilities to be later found in resort hotels was not a resort hotel itself. The
Tremont Hotel in Boston, built in 1829, is credited with introducing a number of
innovations in service, including:
elegant marble
carved walnut furniture in private rooms
a pitcher and bowl and free cake of soap in each guestroom
gaslight instead of candles
French cuisine and silver table service that included forks
bellboys to handle guest luggage
an ‘‘annunciator’’—the forerunner of the room telephone
Civil War
The American Civil War changed the nature of many Eastern resorts. Saratoga
Springs, New York, had long catered to southern gentlemen who brought their
horses (and their slaves) with them to race while they took the waters. As the
popularity of the springs declined, the resort focused on its social activities. A new
racetrack was built, but ultimately it could not compete with the higher purses at
Newport and Monmouth Park in Long Branch, New Jersey. The resort turned to
gambling and drew some interesting and some notorious characters until the early
twentieth century, when reformists took their toll.
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Introduction 5
White Sulphur Springs, West Virginia, changed too after the war. A shortage of
eligible men and a surplus of eligible women led the resort to position itself as a
place to find a worthy husband. The addition of a railroad line through the town in
1868 gave it a leg up on the competition. Not until 1891 was a spur extended into Hot
Springs, enabling The Homestead to compete successfully with the Greenbrier of
White Sulphur Springs, as it does to this day.
Resort Cities
America’s first resort city was Atlantic City. Developed in the late 1800s, it attracted
the middle as well as the upper classes. It built the first boardwalk to accommodate
those seeking the health benefits of sunshine and fresh air, the first amusement pier
that extended over the Atlantic, and the Observation Roundabout—later renamed
the Ferris wheel. The railroad brought day trippers; other guests stayed for the season
in boardinghouses and resort hotels. Today, buses bring day gamblers from New
York City and other metropolitan areas.
The railroads were instrumental in opening up areas of the country that were
previously inaccessible. Both railroads and resorts targeted the relatively few, very
wealthy individuals who, before the enactment of a federal income tax, had a great
deal of disposable income.
Winter resorts did not become popular until the development of the automo-
bile, which provided access to areas of the country suitable for winter vacations.
California, in contrast, was the first area to develop as a warm winter resort, appe-
aling to those looking to escape the winter cold. Florida, as a warm winter resort, was
developed later and more slowly. There, Henry Flagler saw the importance of
transportation in opening up new destinations and was instrumental in laying
railroad tracks to the south of the state. By 1920, Florida had surpassed California
in popularity as a winter retreat for North Americans.
The economy had barely climbed back from the stock market crash of 1929
when the Second World War erupted. Resort development was put on hold. The end
of rationing after the war precipitated a period of economic prosperity. Leisure
travel was available to a much broader segment of the population. The development
of the interstate highway system in the 1950s gave the average American great
mobility. The development of Disneyland in California in 1955 was followed by
numerous other theme parks in the 1960s and 1970s. Disney World opened in 1971 in
Florida and has set the standard for destination family resorts.
In the mid-1950s, the development of jet travel opened up, for North Americans,
areas of Europe and the Pacific that were previously inaccessible. Air travel was still
costly, however, and relatively few could afford it.
The early 1960s saw the development of the four-season resort. Realizing the risk
involved in relying for business on one season of the year, hotels sought to develop
year-round attractions. The Homestead added skiing in 1959, while resorts in
Colorado extended their season by developing golf and tennis packages and
summer music festivals. Others went after group business by constructing conven-
tion centers. It can be argued that the shift to conference business is the most
significant economic trend in resorts in the past 20 years. In fact, for most large
resorts, between 45 and 70 percent of occupancy comes from group business.
Resorts are attractive to corporate meeting planners because the resort is self-
contained. Attendees do not have to leave the premises and can enjoy various
recreational activities as a break from meetings.
Planned resort communities—large-scale communities with a variety of accom-
modation options, recreational facilities, and infrastructure—like Sea Pines Planta-
tion on Hilton Head Island in South Carolina and Costa Esmeralda on the island of
Sardinia in the Mediterranean have also emerged in recent years.
The past decade has seen a new type of resort entering the marketplace—
mega-resorts or family resorts. These properties are not necessarily the largest of
resorts. Rather, they are properties that have upscale amenities on-site such as a
spa, fitness center, shopping, recreational activities, and a fun nightlife. Exam-
ples include the Hyatt Regency Waikaloa in Hawaii and the Disney and Hyatt
Grand Cypress hotels in Orlando, Florida. Because of the high cost of amenities
provided and the often fantasy themes that are part of the resort experience, the
properties require high room rates and occupancies to be financially viable.
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Introduction 7
In contrast to the large resort hotel is the small boutique resort hotel. Targeting the
high-end market and emphasizing service, quality, and privacy, these properties—such
as the Ventana Inn in Big Sur, California—have a strong focus on lodging and related
amenities and offer limited shopping and residential development.
In Eastern Europe, Japan, and some parts of Western Europe, social tourism
contributed to resort development. Social tourism involves offering employees
vacations that are wholly or partially subsidized. While government and unions
subsidize much of the social tourism in Eastern Europe, the equivalent in Japan is
the corporate resort that is owned and operated by a major company to provide
vacations for its white-collar workers. A common alternative in Western Europe is
the holiday fund. Equal contributions are made by the employee, the company, and
the government to provide funds that employees use for vacation travel.
Lessons
Four things can be learned from a brief review of the history of resorts:
Types of Resorts 9
TYPES OF RESORTS
Resort communities work best when they are not 100 percent resort but have
a mix of full- and part-time residents. Full-time residents provide customers for
the doctors, the lawyers, and the restaurants year round. [This] enables the
community to provide a myriad of services that would not be possible with
just seasonal residents.
—CHARLES E. FRASER
Founder and Chair, Sea Pines Company
more likely to be located several hours by auto from the resident’s home and to be
marketed as second-home communities. Mountain/ski resorts have, in recent years,
moved away from their traditional reliance on the winter season to become four-
season resorts. Capitalizing on their spa heritage, many are using health as their
theme. Mountain resorts in the West tend to be destination resorts, while those in the
Midwest and Northeast, because of their proximity to large population bases, tend to
be regional in scope.
The increased popularity of golf has helped spawn an increase in the number of
resort properties themed around this activity. Growth is also a function of supply. As
the number of waterfront locations expanded, fewer sites associated with water
were available. As a result, golf-course resort developments have sprung up in
Florida, North Carolina, and southern California. They are also popular in desert
settings, which, lacking water, rely on scenery, climate, and golf to attract visitors.
Other resorts rely on specialized amenities, including tennis, equestrian facilities,
ranches, health, natural attractions, sporting expeditions, and entertainment.
1. Traditional lodging
2. Timeshare or vacation ownership
3. Condominium hotels
4. Destination clubs
Traditional Lodging
The resort hotel is the most common form of resort development. It requires a relatively
modest financial investment. The guest at a traditional hotel selects the property on the
basis of convenience. For the business traveler, convenience might mean that the hotel
is close to the highway or to the businesses to be visited. For the leisure traveler,
convenience translates into proximity to the beach or other tourist attractions. The
resort hotel guest, on the other hand, visits the development simply for relaxation. A
growing number of resort hotels, however, are seeking to attract the businessperson,
usually as part of a conference or meeting. The company holding a business meeting in
a self-contained resort setting keeps the outside distractions of a city to a minimum
while utilizing the recuperative effects of recreation to improve business productivity.
Resort hotels differ from their commercial counterparts in other ways. They are
located in areas that take advantage of attractive natural features, and they offer
more amenities, either on site or with easy access to off-site facilities. They can range
from as few as five rooms to as many as 1,500 or more. Facilities under 25 rooms are
independently owned and managed guesthouses, bed-and-breakfasts, inns, cabins,
or motel-type properties. They tend to be located in rural areas and cater to short-
stay guests.
Facilities in the 25- to 125-room range can include properties from the above
group as well as small specialty resorts. Many are called lodges and cater to hikers,
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Types of Resorts 11
Kiawah Island.
Photo courtesy of the author
hunters, and skiers. Part of this category is the growing number of boutique resort
hotels that cater to a small, upscale segment of the market. These are often located in
beautiful and delicate settings that are not appropriate for larger-scale development.
Resort hotels ranging in size from 125 to 400 rooms tend to be affiliated with a
chain and located in major resort areas. They can be either low-rise or high-rise,
though they are usually more horizontal than vertical in design. They have large
balconies and larger rooms than comparable commercial hotels, and offer more
amenities as well. Hotels with more than 400 rooms are located in prime resort
locations offering major attractions such as beach frontage (Florida, the Caribbean,
and Hawaii), ski facilities (Colorado, Utah), large theme parks (Orlando), gaming
(Las Vegas), and golf (Arizona, Palm Springs).
country/lakes (18 percent) and golf and ski resorts (each at 11 percent). Two major
factors have accounted for the growth of the industry.8 First, highly recognizable
international companies such as Marriott International and Hilton Hotels Corpora-
tion have entered the marketplace, enhancing growth and consumer acceptance of
the concept. Timeshare is attractive to hotel companies for two reasons.9 There are
multiple sources of income from actual contract sales to interest payments on
mortgaged units, maintenance, and club membership fees. In addition, timeshares
are immune to economic conditions once the sale is made, since owners have a
contractual obligation to pay not only their mortgage but also an annual mainte-
nance fee.
A second reason for the growth of the industry is that states have introduced
improved consumer protection regulations. The result is increased consumer
confidence.
Timeshare is also popular in Europe, where over 1.5 million households own
timeshare units.10 The British and the Irish own almost 40 percent of European
timeshares, followed by the Germans (13 percent) and Italians (9 percent). Occu-
pancy levels are much higher than that of the European hotel sector. Spain is the
most popular destination with over one quarter of European resorts, followed by
Italy (15 percent) and the United Kingdom and Ireland (11 percent). Additionally,
almost half of all Europeans who own timeshares have them in Spain.
One third of timeshare owners buy a timeshare in their own country. The
distribution is uneven. Reflecting the impact of a warm, sunny climate, over 90 percent
of Spanish owners and over 80 percent of Greek and Portuguese owners have bought in
their own countries. The average owner’s household income is more than 60,000 euros,
the average age is 55, 57 percent are professionals, and 26 percent are retired.
When buying a timeshare, consider the following features, in order of importance:
Quality of accommodation
Exchange opportunities
Credibility of company
Resort features
Affordable ongoing costs
Affordable purchase price
In the United States the largest segment of timeshare owners are the baby boomer
generation—those born between 1946 and 1964.11 Over half work full-time while
almost one in five is retired. They are more educated than the U.S. population as a
whole. The average household income is almost twice the U.S. average of $50,233. The
most attractive resort characteristics for owners are beaches, attractions/entertain-
ment, and shopping.
They are motivated to buy because of:
Types of Resorts 13
Eighty-six percent say they are satisfied with their overall experience. However,
several factors take away from timeshare value. They are:12
Finally, the club concept does not involve any ownership of real estate. Instead,
consumers buy shares or points in the club; these are exchanged for accommoda-
tion or travel. Hyatt’s Vacation Club and the Sunterra Corporation brand (Embassy
Vacation Resorts, Westin Vacation Club Resorts, and Sunterra Resorts) are examples
of the club-based concept.
Timeshare options have evolved in recent years. They started with traditional
fixed units in a set week, then added a floating-week option and, most recently, the
flexible-points option.16 Segments tend to be region-focused—based on a specific
geographic region—or theme-focused such as golf, fishing, skiing.
Condominium Hotels
In a condominium hotel, or condotel, guests buy fee-simple equity in the unit—
buying a hotel guestroom. They can be used as permanent or second (sometimes
third) homes. They are especially popular in hot real estate markets such as Miami,
Hawaii, and Las Vegas. They have developed to meet the needs of individuals,
especially baby boomers, interested in ownership of vacation real estate (approxi-
mately 1,000 U.S. baby boomers turn 60 every day).
Owners can earn income (depending on the policy of the hotel) by renting out
their units independently or through the rental program of the management company.
Condo hotel salespeople cannot promise that the units will generate income. To do so
might mean that the Securities and Exchange Commission would classify condo
hotels as securities. This would subject them to more stringent regulations. Thus,
buyers can be told only that they may have the opportunity to place their units into a
rental arrangement. While most developers prefer to avoid registration due to the time
and paperwork involved, it means that they are unable to require that owners
participate in a rental pool. This makes it difficult to make realistic income forecasts
for those owners who do participate in the pool. There are also potential problems
as owners react to the realities of the hotel business—seasonality, average daily
rates (ADR) versus rack rates, frequent renovation (and its attendant costs), etc. For
the project to have the best chance for success, it must make sense from a market and
economic point of view as a hotel before being considered as a condotel.
Some developers feel that the capital markets will no longer finance traditional
high-end hotels. Rather than spending several years looking for financing, they
produce a brochure and a model room and are often able to get 80 to 85 percent
financing of the project by pre-selling all of the rooms as condominium residences.
Individuals cannot get mortgages for hotel rooms but they can for condo apartments
that have kitchens and dining areas. Owners are responsible for maintenance and
operating expenses. Chicago’s Trump International Hotel and Tower pre-sold over
70 percent of its 286 units two years before it opened. Prices range from $815,000 for
a studio with a small kitchen and bathroom to $3 million for a two-bedroom with a
C01 05/26/2011 14:51:27 Page 15
Types of Resorts 15
large living room, dining room, and two and a half bathrooms. In addition, if owners
want their unit rented out, they must pay for upscale furniture, plasma televisions,
linens, and china that cost from $45,000 to $90,000.17
Condo hotels can be:18
Typically, the first type is not a good investment while the latter two can be.
There is no guarantee that resale prices will be greater than the initial cost of the
condo. The latter two options offer owners the opportunity to generate income
throughout the life of the project. Condo hotel unit owners can receive anywhere
from 30 to 60 percent of the revenue when their unit is rented.
Destination Clubs
Destination clubs offer non-equity membership that allows members to access the
club’s portfolio of homes. The homes and villas—three- to five-bedroom homes
typically on resort properties and near ski resorts or beaches—are owned by the
club company and are for the exclusive use of members. In a given year, members
get 10 to 60 days of usage at different locations. Members are given assistance in pre-
departure planning and concierge and daily cleaning services on site. One of the
more successful clubs, Exclusive Resorts, survived bankruptcy to grow its portfolio
to more than 400 homes in 37 locations. Its 3,400 members pay anywhere from a
$160,000 deposit and annual dues of $13,900 to $500,000 deposit and $59,900 annual
dues for 60 nights.
Mixed-Use Developments
The majority of high-end U.S. hotel and resort properties now incorporate some type
of residential component. According to the Lodging Industry Investment Council—an
independent industry think-tank with 70 high-profile members from the lodging-invest-
ment community—this trend will increase dramatically, with condo hotels and time-
share units becoming commonplace in parts of the luxury hotel market.19 Increased
numbers of resorts are utilizing mixed-use developments that feature a timeshare
component.20 In the past, developers built a property, then created demand for it.
Nowadays, the demand for timeshare products dictates production.
A major reason for mixed-use developments is the high cost of amenities.
Because high-quality amenities cost a great deal of money, being able to spread out
the use and cost of these facilities makes it cheaper for everyone. In addition to the
cross-utilization of amenities, hotel guests are exposed to timeshare products and
may well be induced to buy. In this way, timeshare operators can reduce their
marketing costs. The timeshare component brings a steady stream of revenue into
C01 05/26/2011 14:51:28 Page 16
Travel Clubs
Travel clubs have been viewed in the past as regarding consumer financing. The uncertain reg-
competitive and detrimental to traditional vaca- ulatory environment has created several problems.
tion ownership—timeshare. Now, however, they There is a perception that travel clubs are less
are increasingly accepted and the concept is desirable as a travel product. As a result, govern-
being utilized by traditional timeshare compa- ment authorities tend to be more aggressive in
nies as part of their product offerings. enforcement. Second, underwriting risks have held
Travel clubs give consumers the ‘‘right to back financial institutions from providing receiv-
request space-available reservations for prepaid ables financing for the provider. Third, even if a
or discounted lodging accommodations.’’ Addi- travel club operator has been able to secure
tionally, consumers may purchase such things as financing, he or she is often unable to understand
personal concierge services, travel, and other parts all of the applicable laws regarding the offering.
of the vacation experience. Consumers pay an up- Because of the lack of liquidity in global
front purchase price or membership fee, averaging credit markets, the amount of money available to
$4,500, as well as annual dues of approximately finance timeshare purchases has been reduced.
$200 if they wish to continue to receive program This is a major factor in travel clubs being seen as
benefits. They may cancel at any time. complimentary to timeshare. Traditional time-
Members are offered lodging at a particular share operations are seeing travel clubs as a
destination rather than at a specific property. low-cost alternative for consumers.
While some operators are vertically inte-
grated—performing all aspects of marketing, Source: Polvino, Anthony, and Lucas Smith. ‘‘Travel Clubs:
sales, and fulfillment—most separate out the Considerations for an Increasingly Valuable Vacation
Product,’’ Developments (October 2010), 50–51.
functions so that marketing and sales are
handled by one organization while a travel-
club operator deals with fulfillment. DISCUSSION QUESTIONS:
Most states do not have clear laws regarding Are travel clubs attractive to you? Why or why not? As
the operation of travel clubs. They are, however, the economy improves, will this continue to be a viable
subject to both state and federal regulations alternative for consumers?
the resort; everyone benefits. It does, however, take an experienced staff to meet the
differing needs of timeshare owners and hotel guests.
Because of the unique nature of timeshare financing, specialized timeshare
lenders have emerged. The financing of a timeshare property is different from that of
a traditional hotel. Most hotel mortgages are long-term deals wherein the payback
comes from the hotel’s cash flow, which is generated from daily operations.
Timeshare loans, on the other hand, are shorter-term loans based on the developer’s
ability to market and sell interest in the timeshare.21 In addition, the lending process
is more complex because of the regulatory issues involved in timeshare.
C01 05/26/2011 14:51:28 Page 17
Types of Resorts 17
Advice to Managers
Here is advice for a timeshare resort manager. $60 over the life of 12 towels and $85 over the
life cycle of 12 sheets.
Consolidate purchasing. The price of a prod-
Buy quality outdoor furniture. Initially, the
uct consists of the time spent researching,
placing the order, freight, receiving, and the cost is higher but it will last longer.
processing of accounts receivable. Develop a proactive bedbug plan. Encase the
When selecting a vendor, check references for mattress and box springs.
customer service.
Source: ‘‘Tips From the Experts,’’ Developments (Septem-
Consider a wireless system to integrate the ber 2010), 62.
front-desk system with everything else, from
locks to safes.
‘‘Green’’ textiles can save up to 50 percent on DISCUSSION QUESTION:
washing and drying costs. This can amount to Which idea is likely to save the most money for the resort?
Second-Home Developments
A second-home development is a project that consists primarily of second homes
and does not include a resort hotel. A second home is ‘‘a home that is owned fee
simple by an individual or family that also owns or rents another home as a primary
residence.’’22 In other words, the family owns both a primary and a second home.
While second homes are not necessarily found in resort areas, second-home develop-
ments are. They consist of a variety of types of properties—detached, attached,
multifamily—and can be combined with other uses. The Miami region of Florida, the
Phoenix region of Arizona, and the Palm Springs region of California are examples of
combination retirement, primary-, and second-home developments.
Compared to primary homes, second homes place more emphasis on outdoor
areas, they are developed at lower densities, and their design is less formal. They are
managed under a long-term arrangement by a community association rather than by
a developer or resort operator. However, the latter may be involved in management
of a principal amenity, such as a golf course.
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DANCE ON STILTS AT THE GIRLS’ UNYAGO, NIUCHI
I see increasing reason to believe that the view formed some time
back as to the origin of the Makonde bush is the correct one. I have
no doubt that it is not a natural product, but the result of human
occupation. Those parts of the high country where man—as a very
slight amount of practice enables the eye to perceive at once—has not
yet penetrated with axe and hoe, are still occupied by a splendid
timber forest quite able to sustain a comparison with our mixed
forests in Germany. But wherever man has once built his hut or tilled
his field, this horrible bush springs up. Every phase of this process
may be seen in the course of a couple of hours’ walk along the main
road. From the bush to right or left, one hears the sound of the axe—
not from one spot only, but from several directions at once. A few
steps further on, we can see what is taking place. The brush has been
cut down and piled up in heaps to the height of a yard or more,
between which the trunks of the large trees stand up like the last
pillars of a magnificent ruined building. These, too, present a
melancholy spectacle: the destructive Makonde have ringed them—
cut a broad strip of bark all round to ensure their dying off—and also
piled up pyramids of brush round them. Father and son, mother and
son-in-law, are chopping away perseveringly in the background—too
busy, almost, to look round at the white stranger, who usually excites
so much interest. If you pass by the same place a week later, the piles
of brushwood have disappeared and a thick layer of ashes has taken
the place of the green forest. The large trees stretch their
smouldering trunks and branches in dumb accusation to heaven—if
they have not already fallen and been more or less reduced to ashes,
perhaps only showing as a white stripe on the dark ground.
This work of destruction is carried out by the Makonde alike on the
virgin forest and on the bush which has sprung up on sites already
cultivated and deserted. In the second case they are saved the trouble
of burning the large trees, these being entirely absent in the
secondary bush.
After burning this piece of forest ground and loosening it with the
hoe, the native sows his corn and plants his vegetables. All over the
country, he goes in for bed-culture, which requires, and, in fact,
receives, the most careful attention. Weeds are nowhere tolerated in
the south of German East Africa. The crops may fail on the plains,
where droughts are frequent, but never on the plateau with its
abundant rains and heavy dews. Its fortunate inhabitants even have
the satisfaction of seeing the proud Wayao and Wamakua working
for them as labourers, driven by hunger to serve where they were
accustomed to rule.
But the light, sandy soil is soon exhausted, and would yield no
harvest the second year if cultivated twice running. This fact has
been familiar to the native for ages; consequently he provides in
time, and, while his crop is growing, prepares the next plot with axe
and firebrand. Next year he plants this with his various crops and
lets the first piece lie fallow. For a short time it remains waste and
desolate; then nature steps in to repair the destruction wrought by
man; a thousand new growths spring out of the exhausted soil, and
even the old stumps put forth fresh shoots. Next year the new growth
is up to one’s knees, and in a few years more it is that terrible,
impenetrable bush, which maintains its position till the black
occupier of the land has made the round of all the available sites and
come back to his starting point.
The Makonde are, body and soul, so to speak, one with this bush.
According to my Yao informants, indeed, their name means nothing
else but “bush people.” Their own tradition says that they have been
settled up here for a very long time, but to my surprise they laid great
stress on an original immigration. Their old homes were in the
south-east, near Mikindani and the mouth of the Rovuma, whence
their peaceful forefathers were driven by the continual raids of the
Sakalavas from Madagascar and the warlike Shirazis[47] of the coast,
to take refuge on the almost inaccessible plateau. I have studied
African ethnology for twenty years, but the fact that changes of
population in this apparently quiet and peaceable corner of the earth
could have been occasioned by outside enterprises taking place on
the high seas, was completely new to me. It is, no doubt, however,
correct.
The charming tribal legend of the Makonde—besides informing us
of other interesting matters—explains why they have to live in the
thickest of the bush and a long way from the edge of the plateau,
instead of making their permanent homes beside the purling brooks
and springs of the low country.
“The place where the tribe originated is Mahuta, on the southern
side of the plateau towards the Rovuma, where of old time there was
nothing but thick bush. Out of this bush came a man who never
washed himself or shaved his head, and who ate and drank but little.
He went out and made a human figure from the wood of a tree
growing in the open country, which he took home to his abode in the
bush and there set it upright. In the night this image came to life and
was a woman. The man and woman went down together to the
Rovuma to wash themselves. Here the woman gave birth to a still-
born child. They left that place and passed over the high land into the
valley of the Mbemkuru, where the woman had another child, which
was also born dead. Then they returned to the high bush country of
Mahuta, where the third child was born, which lived and grew up. In
course of time, the couple had many more children, and called
themselves Wamatanda. These were the ancestral stock of the
Makonde, also called Wamakonde,[48] i.e., aborigines. Their
forefather, the man from the bush, gave his children the command to
bury their dead upright, in memory of the mother of their race who
was cut out of wood and awoke to life when standing upright. He also
warned them against settling in the valleys and near large streams,
for sickness and death dwelt there. They were to make it a rule to
have their huts at least an hour’s walk from the nearest watering-
place; then their children would thrive and escape illness.”
The explanation of the name Makonde given by my informants is
somewhat different from that contained in the above legend, which I
extract from a little book (small, but packed with information), by
Pater Adams, entitled Lindi und sein Hinterland. Otherwise, my
results agree exactly with the statements of the legend. Washing?
Hapana—there is no such thing. Why should they do so? As it is, the
supply of water scarcely suffices for cooking and drinking; other
people do not wash, so why should the Makonde distinguish himself
by such needless eccentricity? As for shaving the head, the short,
woolly crop scarcely needs it,[49] so the second ancestral precept is
likewise easy enough to follow. Beyond this, however, there is
nothing ridiculous in the ancestor’s advice. I have obtained from
various local artists a fairly large number of figures carved in wood,
ranging from fifteen to twenty-three inches in height, and
representing women belonging to the great group of the Mavia,
Makonde, and Matambwe tribes. The carving is remarkably well
done and renders the female type with great accuracy, especially the
keloid ornamentation, to be described later on. As to the object and
meaning of their works the sculptors either could or (more probably)
would tell me nothing, and I was forced to content myself with the
scanty information vouchsafed by one man, who said that the figures
were merely intended to represent the nembo—the artificial
deformations of pelele, ear-discs, and keloids. The legend recorded
by Pater Adams places these figures in a new light. They must surely
be more than mere dolls; and we may even venture to assume that
they are—though the majority of present-day Makonde are probably
unaware of the fact—representations of the tribal ancestress.
The references in the legend to the descent from Mahuta to the
Rovuma, and to a journey across the highlands into the Mbekuru
valley, undoubtedly indicate the previous history of the tribe, the
travels of the ancestral pair typifying the migrations of their
descendants. The descent to the neighbouring Rovuma valley, with
its extraordinary fertility and great abundance of game, is intelligible
at a glance—but the crossing of the Lukuledi depression, the ascent
to the Rondo Plateau and the descent to the Mbemkuru, also lie
within the bounds of probability, for all these districts have exactly
the same character as the extreme south. Now, however, comes a
point of especial interest for our bacteriological age. The primitive
Makonde did not enjoy their lives in the marshy river-valleys.
Disease raged among them, and many died. It was only after they
had returned to their original home near Mahuta, that the health
conditions of these people improved. We are very apt to think of the
African as a stupid person whose ignorance of nature is only equalled
by his fear of it, and who looks on all mishaps as caused by evil
spirits and malignant natural powers. It is much more correct to
assume in this case that the people very early learnt to distinguish
districts infested with malaria from those where it is absent.
This knowledge is crystallized in the
ancestral warning against settling in the
valleys and near the great waters, the
dwelling-places of disease and death. At the
same time, for security against the hostile
Mavia south of the Rovuma, it was enacted
that every settlement must be not less than a
certain distance from the southern edge of the
plateau. Such in fact is their mode of life at the
present day. It is not such a bad one, and
certainly they are both safer and more
comfortable than the Makua, the recent
intruders from the south, who have made USUAL METHOD OF
good their footing on the western edge of the CLOSING HUT-DOOR
plateau, extending over a fairly wide belt of
country. Neither Makua nor Makonde show in their dwellings
anything of the size and comeliness of the Yao houses in the plain,
especially at Masasi, Chingulungulu and Zuza’s. Jumbe Chauro, a
Makonde hamlet not far from Newala, on the road to Mahuta, is the
most important settlement of the tribe I have yet seen, and has fairly
spacious huts. But how slovenly is their construction compared with
the palatial residences of the elephant-hunters living in the plain.
The roofs are still more untidy than in the general run of huts during
the dry season, the walls show here and there the scanty beginnings
or the lamentable remains of the mud plastering, and the interior is a
veritable dog-kennel; dirt, dust and disorder everywhere. A few huts
only show any attempt at division into rooms, and this consists
merely of very roughly-made bamboo partitions. In one point alone
have I noticed any indication of progress—in the method of fastening
the door. Houses all over the south are secured in a simple but
ingenious manner. The door consists of a set of stout pieces of wood
or bamboo, tied with bark-string to two cross-pieces, and moving in
two grooves round one of the door-posts, so as to open inwards. If
the owner wishes to leave home, he takes two logs as thick as a man’s
upper arm and about a yard long. One of these is placed obliquely
against the middle of the door from the inside, so as to form an angle
of from 60° to 75° with the ground. He then places the second piece
horizontally across the first, pressing it downward with all his might.
It is kept in place by two strong posts planted in the ground a few
inches inside the door. This fastening is absolutely safe, but of course
cannot be applied to both doors at once, otherwise how could the
owner leave or enter his house? I have not yet succeeded in finding
out how the back door is fastened.