Know Your Self-Destruct Clause

The purchase of a timeshare requires due diligence on the part of the buyer. Before the decision to buy is made, the governing documents of your timeshare should be studied carefully. One often overlooked area of the documents is the self-destruct clause (also known as a sunset clause). Timeshare is not alone in this area, many types of contracts include a self-regulating clause for "what if" situations. For instance, in technology, contracts might address: how does a regulatory body adjust and adapt to ever-changing technological innovations? Or when does a product become obsolete? Timeshare has shown to survive the test of time up until now, but what happens if innovations in vacationing one day make timeshare obsolete? This is where the self-destruct clause in your contract comes in.

The Self-Destruct Clause

The self-destruct clause emerged in the timeshare governing documents of the 60's. Timeshare was a new commodity. The first developers thought they had something good, but wondered if everyone would still think so in 25-50 years. As protection, a self-destruct clause was written into the timeshare contract and continues into today's documents. It usually features a date in the foreseeable future when the timeshare would terminate, unless a vote is used to continue the timeshare form of ownership. 
According to The Timeshare Board Members Association (TBMA) there is no industry standard on the self-destruct clause.  Resorts have different provisions for due diligence, the need to obtain votes from owners and the need to comply with state statues concerning the issue. Your resort management should know if a self-destruct clause exists and what that clause requires of owners. Owners should be prepared years in advance of the clause end date, in order to provide the best possible outcome for all.

Research Study Will Look at Governing Documents

The TBMA considers the self-destruct clause and your governing documents one of the top issues facing timeshare in 2015. They’ve commissioned a study with Ph.D. Jeffrey Weinland to do an academic review of the governing documents and their impact on current owners and new buyers, as well as how disclosures are handled as part of timeshare resales. Many issues will be reviewed including what happens after interval ownership is terminated.  

Importance of Preparation

If your timeshare governing documents contain a termination clause that ends the interval ownership what does that mean to the owners? Weinland states that "it does not end ownership of deeded property. The owners still own the pieces. What they lose is their right to occupy a unit for a week. Instead they might all become tenants in common of the real estate and co-owners of the furnishings, fixtures and supplies."
A decision has to be made at this time as to what to do with the property. This is another reason timeshare owners should be prepared ahead of time. If owners and HOA board members know their options well in advance, they can make a more educated vote should the time come. Says Weinland, finding a knowledgeable professional can help "place a value on an ongoing business and also market a resort to developers who may convert it to a hotel or a condo, or raze it and build something entirely different."

First Things First

Weinland suggests some steps to help you to take control of the destiny of your resort:

  • Find out if your resort has the kind of clause discussed above and not one that kicks in after a disaster like a fire or earthquake.
  • Determine how the clause operates. (Is the default a termination unless the owners vote to continue, or is the default a continuation unless the owners vote to terminate, or is no vote contemplated at all and the only way to avoid termination is to amend the governing documents.)
  • Consult with professionals and establish a long-term strategy for communicating with owners so when the time comes you are in control. 

Maintaining the Health of your HOA

If your HOA is currently not in the best of health, what are your options? You can always seek professional care by going to a professional management company. The advantage of this is the professionals have experience with many timeshare HOA's and the knowledge to aid you in just about any situation. They help you look at the big picture and can identify areas of revenue generation or cost savings that you may have missed. You can also do it yourself, as many companies do. It requires more effort on your part, but if you have a strong, determined HOA, here are some ways to start you on your way to a healthy new year.

Your Most Valuable Asset

Your most valuable asset is your inventory. Every strategy we talk about in this blog will ultimately help you to safeguard your inventory. As a quick refresher, inventory is every room night in every unit and ideally you want it consistently booked. What you don't want is non-performing inventory, those rooms that are empty and not generating any income. So what can an HOA do?
To move that non-performing inventory you could try appealing to owners with special promotions. Many owners are looking for ways to add an additional day or two to their stay, or a week different from their usual time period. Some HOA's use in-house rental programs, but if you don’t have the staff and resources to do it right, there are outsourced rental programs such as RedWeek, and ResorTime.  Or, you could use a professional management company which provides a turnkey rental program. Both programs are good ways to reach and initiate travelers to the value of timeshare.

Make it all About Your Owners

Your connection with your owners is critical to building the owner engagement you need to keep your operation healthy. Develop a strong connection with owners and strategies to keep it strong. That connection should extend to the owners family members and guests who, if their experience is memorable, could be your next new owners. 

Connect with your owners

Knowing what your customers expect and need is key to engagement. Your staff should be fully trained in a culture of service, where owners come first. This means engaging owners in conversation, treating them like family members, making them feel welcome and responding to their needs. Find out when their birthdays and anniversaries are, or other special events they might have planned so you can acknowledge them and perhaps provide a place for the event. Survey your owners and guests, ask for input on what works and what doesn’t. Keep them up to date on what’s going on at the resort such as improvements, new activities, and special events. Information can be easily transmitted through social media, Facebook, Twitter, blogs, and emailed newsletters. Strong consistent communication with owners can also be used as an aid in preventing delinquency.

Communication is key to collections

Use your owner engagement strategies to prevent the collection process. A happy, and well-informed owner should never fall into the collection process. Make every effort to connect with owners who may be falling behind on payments. Make sure you have current phone numbers, addresses and emails of owners, and contact them right away if you have any concerns. Have a process in place for owners who need to deed back their ownership. 
Don’t neglect owners once they have caught up on payments. Keep the engagement. Follow up to make sure they’ve booked their use week or confirmed an exchange. If there vacation is sometime in the future, offer bonus time as a way for them to use their timeshare now. Keep the benefits of timeshare firmly in their grasp.

Keep your resort fresh and current

Last, but also one of the most important strategies for HOA health is making sure your resort stays fresh and beautiful, and is also a reflection of current travel trends. Be sure you are appealing not only to your current owners, but to the new generation of owners as well. Renovate rooms with the latest design trends, update common areas, keep landscaping looking fresh and make repairs on a timely basis. Offer activities for all generations to enjoy. Consider a waterpark, putting green, miniature golf course, or plan special activities both on and off site, such as wine tastings, guided hikes, surfing lessons. All the communication you’ve being doing with owners will help you to know what’s most important to them. A strategy only works if you follow it with consistency and are willing to adapt it when needed.

A Few Points for GM’s to Remember Going Into 2015

As you know, we've had a lot to be thankful for in 2014. The economy finally turned around and employment rose. Wall Street set many records with the Dow and we saw rising forecasts in most areas. Timeshare ownership reached a record high of over 9 million U.S. owners, and there was new growth in the global timeshare market as well. The industry also welcomed new owners that are more affluent, younger and more diverse. What can industry GM’s do to help keep the growth going?

· Know that change is good

One thing is certain - we can't rest on our laurels now. The mark of a successful company or industry is to stay ahead of the game by continually thinking about what comes next. At November's ARDA-West Conference one session was devoted to the key attributes that tomorrow's product must have in order to appeal to future generations and drive the industry forward. Everyone agreed that that we cannot become complacent about our customers. Ours is a service and people driven industry, and we need to understand the needs of our customers to keep meeting their demands.

· Know your customer

Before you can offer the perfect personal experience for your owners and guests, you need to identify who they are and what they want. Today's travel trends include a more personalized approach to travel offerings.  Many owners and guests use their mobile devices for every aspect of their life. They share their personal information and look for travel information on their mobile devices.  This sharing of information provides a great opportunity to personalize the owner/guest experience - is your customer celebrating a special event soon, what activities interest them, are they interested in points and rewards systems? Use what you find out about your guests to help you to best meet their needs.

· Know your technology

We don’t have to tell you about how technology has permeated every aspect of our lives and our owner’s lives. Changes in technology happen rapidly. Every day there is a new device, new app, or a new program to aid you in tracking every aspect of your business from booking to marketing. Not only should you know the technology of your business, it's also important to know the technology of your owners and guests. Your resort needs to support all their platforms too. Make sure you are using technology effectively. Does your resort offer Wi-Fi?  How do you use technology to reach and to inform your owners and guests of your offerings?  Can guests use their mobile devices to check in?

· Redefine your sales approach

Another major point of discussion from the ARDA-West session was the realization that timeshare is a product that is never going to be sought after, so the sales approach needs to change. One of the best ways to change it is to develop a culture of transparency within the industry. The sales approach needs to be transparent and honest. Telling it like it really is, is not difficult because we have so many good features to share about our product. 

·Support your story with data

In a recent article in Hospitality Net, Kelly McGuire, Executive Director, Hospitality and Travel Global Practice, SAS, reminded us of the importance of backing up our story with data. McGuire urges us to "build and support the analytic culture and find opportunities to provide training, add resources or invest in technology that helps build the culture." She adds, "the point is not the data itself, but the story you tell around the data." And what a story timeshare has to tell!

What’s Fueling the Values-Driven Travel Trend?

American spending and buying is undergoing a profound change according to recent studies of consumerism in the U.S. Where a person travels is no longer a reflection of status, but a reflection of that person's values. Travelers look for ways to connect their travel with people and cultures, and often hope to make a contribution to society while traveling. It's all part of a new values-driven consumerism that according to a survey led by social theorist John Gersema, is carried over to consumer purchases made in all industries.  The survey, conducted over the past 21 years, also shows a long-term behavioral shift. It looks like Americans are returning to the values-driven consumption of our society prior to the years of indulgent spending started in the 80's.

The Great Recession and September 11th rearranged our Priorities

Most travel industry professionals feel value-driven travel was triggered with the events of September 11th and accelerated by the Great Recession. Americans reevaluated what was really important to them and family reemerged at the top of the list.  Multigenerational travel is booming. Americans look at family travel as a way to strengthen the connection with those they care for, as well as an opportunity to celebrate and remember life’s special events. 

Timeshare Ahead of the Trend

Timeshare is perfectly set up to satisfy the multigenerational travel trend. Timeshare provides the ultimate setting for families to connect through travel. Resorts typically have accommodations that offer plenty of space for families to stay together in a comfortable home setting. They also offer a multitude of activities that families can participate in together, and specific recreational areas set up for special celebrations.

Authentic Travel

The term experiential or authentic travel is a term currently being used to describe an emerging trend in travel. Travelers want to get in touch with the local experience. They want a unique and authentic experience that allows interaction with the people and culture of the area they are visiting. As Joshua Bush, CEO of Park Avenue Travel in Swarthmore, Pennsylvania, puts it, "the global recession in 2007 and 2008 made people realize it’s not all about collecting things and material wealth, it's about experience."
Companies specializing in authentic or experiential travel say it is not the same as green travel. Their clients want to concentrate on what they can do for a village or an individual rather than saving the whole planet. People want to not only interact with the local culture, they also want to do something to give back to that culture. Projects involving sustainability, education, and health and wellness are popular.

Should timeshare get behind Authentic Travel?

Though the timeshare industry has been heavily involved in green travel, authentic travel really hasn’t been something we have heard much about. One resort that gives its owners and guests an opportunity to experience a bit of authentic travel is Royal Resorts, a timeshare company with resorts throughout Mexico. The company has a Sea Turtle Protection program that rescues and releases baby sea turtles, and protects their nests. Owners and guests staying at the resort during the season from August to November can watch the release of the turtles. A true authentic experience would give owners and guests the opportunity to actually participate in the protection and release of the turtles, and afford direct interaction with the people of the area.
Should timeshare get involved in providing authentic travel experiences for owners and guests? Do you know of any timeshare resorts that are doing it now? Give us your comments at