September 2009 Developments - 32

Resort Management Positioning for the Economic Turnaround hat are you doing to position your timeshare properties for the recovery? Although there are clearly many challenges at this time, there is good reason to prepare now to be ready for the economic upturn. While timeshares remain the occupancy leaders in the resort world according to Smith Travel Research (hotels dropped ﬁve percent from 2007 to 2008, whereas timeshares experienced a two percent increase over the same time period), the construction of new timeshare properties has slowed drastically. So why should this be the time to build and renovate? Truly, there is no better time, as construction and labor costs are lower than they’ve been in years, and labor is more readily available. Alan Wilson W saving some contractors from going out of business and saving construction jobs. “We’re not holding our breath for stimulus funding,” Pontius said. “The basic problem with timeshare construction is that it’s too capital-intensive. If we can reduce our dependency on capital, that’s the key.” One of the ways Bluegreen is coping in a “capital light” way is through feefor-service relationships, which consist of both resort management and sales and marketing services. “We’re moving through developers’ standing inventories,” said Pontius, “which will lead to another round of construction.” The latest forecast for the U.S. economy from the Federal Reserve suggests that it will stabilize by the end of this year and start to grow slowly in 2010. would be willing to pay 10 percent more to stay in a green lodging facility. The average U.S. resort property is just starting out on the sustainability journey. Most professional establishments refurbish building stock every seven to ten years, providing signiﬁcant opportunities for energy savings through the use of renewable materials and the recycling of construction waste. Some hospitality businesses have seen energy costs slashed by as much as 40 percent when efﬁciency is maximized during refurbishment. Operators are tapping into this in small ways, offering linen reuse programs, keycard return, and eco-friendly cleaning products. Ultimately, the greatest impact will be achieved by improved building fabric, improved water efﬁciency (a resort pool alone can account for as much as 10 percent of total energy costs), improved indoor environmental quality, and renewable energy technology for heating, ventilation, air conditioning, and lighting. At Marriott Vacation Club International (MVCI), “green building efforts run the gamut from energy-efﬁcient light bulbs to supplementary energy sources, such as solar, through our partnership with SolarBLUE, Inc.,” said Ed Kinney, vice president of corporate affairs. Assembling the Right Team With “wariness” and “caution” as bywords, managers/operators looking to do resort construction must be more “choosy” than ever when assembling the right team for the job. According to Brian McDonough, senior vice president of the hospitality, arts, and leisure sector for Faithful+Gould, to do the best job possible, here are some tips: (1) select experienced vendors, (2) perform thorough background and reference checks, and (3) make sure maintenance programs are included in vendor bids. Maintenance cannot be overemphasized, says McDonough. “Proper maintenance saves money in the long term and enhances corporate reputation.” Supplier-vendor relationships in the resort industry are, for the most part, long-lasting, “and long-term relationships engender quality,” concluded McDonough. The Question of Funding In terms of timeshare, “the credit crunch is the issue, not consumer demand,” said David Pontius, RRP, president of Bluegreen Management Services. Raising funding for ground-up construction in the current economic climate is extremely difﬁcult, so many properties are logically turning to renovation and becoming more diligent about maintenance, as they realize the importance of sustainability, reduced running costs, and capital preservation. For properties that have already begun renovation, the prospects are brighter. For those that have not yet obtained ﬁnancing, however, the question is: “Where do we get the funds?” Ken Simonson, chief economist of the Associated General Contractors in Washington, D.C., said banks are getting “hammered” from both sides. The government is providing money to restore lending, but it has to be prudent. Examiners are looking at all the bad debt from real estate and construction loans. There is hope, however—according to Simonson, the federal stimulus package is 32 The Importance of Sustainability Sustainability has been touched on, but let’s get to the crux of the matter. Guests expect it. A recent survey by Deloitte indicated that 34 percent of respondents seek environmentally-friendly resorts, 38 percent have researched green lodging options, and 28 percent say they Timing Is Everything An average renovation project can take 6-12 months to plan, design, and Developments • September 2009

September 2009 Developments

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