The timeshare industry is a lucrative, albeit small, segment of the vacation and travel industry. However, it is susceptible to the cyclical changes in the economy, including low interest rates and high consumer debt levels.
Despite the challenges the industry faces, there is still significant opportunity for growth. It is a growing market that is attracting millennials and baby boomers with disposable income to spend on vacation experiences.
Globally, the vacation ownership (timeshare) industry is expected to grow at a CAGR of 4.4% over the forecast period of 2018-2028. This is driven by the increasing popularity of international travel, the rising aging population and the changing demographics in the U.S.
The industry has become highly competitive with the introduction of new products and services such as timeshare exchange, fractionals and vacation/travel clubs. Companies offering these services are able to expand their customer base and generate greater profits.
There are many factors that contribute to the success of the timeshare industry, such as the presence of brand names and strong marketing campaigns. Moreover, the industry’s reputation for fairness and quality makes it a great place for business.
Sales and Marketing Issues
The timeshare industry has a unique set of problems when it comes to selling its products. In fact, nearly 60% of the price of a new timeshare is driven by the costs of sales and marketing.
As a result, the industry needs to continue to improve its sales processes and lower the overall cost of sales. This will require benchmarking of best practices and incorporating technological advances that can reduce sales costs while maintaining sales volume.
Other challenges that the timeshare industry faces include the regulation of sales in each state and the difficulty in finding customers who are willing to pay the high initial fees required for the purchase of a timeshare. This is a problem that can be overcome by improving the Internet’s ability to find prospective customers and reducing the cost of sales marketing.
Taxation Concerns
The timeshare industry also faces concerns over the taxation of its profits and its impact on consumers’ purchasing power. This is a significant issue, since the industry relies on consumers to make annual maintenance payments in order to maintain their rights to use their properties.
This can create a negative cash flow situation for the resorts, especially those that have limited or no financial resources. Fortunately, the industry is addressing these issues through the use of technology and by partnering with credit card companies to provide secure online payment methods for owners.
Digital Billing and Payments
By providing easy, secure, online and mobile payment options for owners, the timeshare industry can save on postage and printing expenses as well as reduce call center staffing costs. Additionally, the introduction of an IVR (interactive voice response) system for making maintenance and other payments can help to eliminate a resort’s need to speak with a representative to complete each transaction.
The timeshare industry is also battling other industries such as Airbnb and TripAdvisor, which have been gaining popularity among consumers and offering better deals than the timeshare industry. These competitors have prompted the industry to look for ways to adapt to the competition and increase its profitability by offering more variety in vacation packages, locations and memberships.