American Demographics....

TIMESHARING:

A STILL-BOOMING INDUSTRY SLOWLY

SHEDS ITS BAD IMAGE

"Hey mister, wanna' buy a timeshare?" Surprisingly, more and more people are saying, "Yes!" to this question and timesharing is slowly shedding its bad image. Understanding the demographics of the timeshare market is leading to big bucks for smart marketers.

Timesharing entered the '90s still suffering from a bad reputation, due to hard-sales techniques, unexplainable price drops, and low-quality resorts. This situation is changing, as the timeshare industry cleans up its act and consumers continue to look for ways to save money on their vacations.

Almost everyone knows about timesharing. A Gallop Poll study in 1990 found that more than 92 percent of middle-income households had at least some awareness of "vacation timesharing" as a product.

This awareness and exposure has led to many timeshare owners. Since 1990, more than 500,000 households have purchased about 700,000 timeshare intervals, representing sales in excess of $5.25 billion. There are now more than 2 million owners at more than 2,000 resorts worldwide. This boom is being fueled by better products, a cleaner image, and the entrance of big-time leisure industry players like Disney, Marriott, and Hilton.

"Timesharing is clearly gaining in popularity, not only here in the U.S., but also across Europe, Mexico, and in South America," says Tom Franks, president of the American Resort Development Association, the timeshare industry body. "We expect the industry to double in the next ten years."

Los Angeles-based Plog Research just completed a major survey for Resort Condominiums International, a leading timeshare resort exchange company. Additionally, travel and recreation experts Ragatz Associates has released several demographic studies of the timeshare industry over the years.

The Plog "Timeshare Owner Profile Study" for revealed that the median age of today's timeshare owner is 45 and more than 50 percent are college graduates. The average household income of timeshare owners is $60,680, well above the national median income. Of those surveyed, 70 percent owned one timeshare week and 30 percent owned more than one week.

Timeshare owners are heavy travelers. Their leisure travel consumes 25.5 nights per year over an average of 5.6 trips. The study found that timeshare owners spend 7 percent of their income on travel (excluding the initial purchase), meaning $3.2 billion in annual travel expenditures and $750 million in airfare expenses. These figures are well above those Travel & Leisure magazine cites for "frequent leisure travelers."

The U.S. leads the market, with 50.9 percent (1,200) of the resorts and nearly 50 percent of all timeshare units (60,380). However, Europe is establishing itself as a growth area, with 20.8 percent (490) of the resorts and 25,980 units.

Ragatz Associates has followed the growth and trends of timesharing and timeshare buyers. They just completed, "Impacting the Image of Resort Timesharing: Results of 16 Focus Groups Conducted with Non-Buyers and Buyers of Timeshare Intervals." The sessions revealed several central themes affecting the growth and direction of timesharing today:

(1) Non-buyers and buyers do not generally differ in demographic, psychographic, and vacationing patterns. The differences include: present financial status and priorities; being able and willing to make an immediate buying decision; and whether everything "clicks" with the salesperson.

(2) The image of timesharing has improved dramatically in the past ten years. Few participants had negative concerns about the concept or quality of the resorts.

(3) The most frequently-stated reasons for not buying, as well as the industry's lingering negative image, revolve around marketing and sales techniques, the hard-close style, and irrational drops in prices.

(4) Comparison shopping is now popular in timesharing.

(5) Many participants indicated a major shift in the decision-making process of consumers. This includes: greater concern with value, credibility, and durability; fewer impulse decisions; less willingness to purchase under pressure; being more influenced by quality and less by glitz; more interest in relationship selling; and greater awareness about timeshare products and "consumer beware" publicity.

Additional Ragatz studies, like "Timeshare Owners: Who They Are, Why They Buy" and their groundbreaking "1990 World-Wide Resort Timesharing Industry," have detailed the growth of timeshare development and ownership. A common thread is the economic impact of timesharing.

Obviously, timeshare developers aren't the only ones benefiting from this boom. This can be a great market for almost everyone involved in the travel industry. Those who can capitalize on this segment include travel agencies, hospitality marketing firms, suppliers, and the entire hotel industry.

For instance, Marriott did not enter the field until 1984 and they already have ten properties and more than 40,000 owners. They are currently building a brand new timeshare resort on Hilton Head Island, South Carolina, called Grande Ocean Club.

But all isn't perfect for timesharing's boom in the '90s. Lingering bad apples are a constant concern. One of Southern California's leading timeshare developers, Glen Ivy, is under investigation for allegedly selling more units than they had in inventory.

Another major concern with potential buyers, owners, and industry officials is how to handle those who want to sell their timeshare week. There is not an active market for "resales" and most smart resorts are just starting to coordinate in-house programs.

But people keep buying and the demographics keep improving. It's certainly an industry that is successfully shedding its bad image. Those interested in further information should contact the American Resort Development Association at 1220 L St. NW, Washington, DC 200