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Could international expansion help offset sluggish growth in the U.S.? “Global” was the word executives used most frequently on the quarterly earnings calls we reviewed.
Sean O’Neill
The three largest vacation rental and timeshare operators in the United States have experienced an overall decline in consumer spending.
During conference calls to announce quarterly results, executives noted that consumer reluctance to purchase timeshares is increasing, particularly among new buyers in the lower third of income brackets.
However, surveys suggest that people who already own timeshares have every intention of using them next year. The decline is due to high demand. In 2023, the sector recorded a sales volume of $11 billion – a full recovery from pre-pandemic levels.
Here are the key points Skift heard during the second-quarter conference calls.
Hilton Grand Vacation
The largest vacation property company, Hilton Grand Vacations, has cut its full-year EBITDA guidance to $1.075 billion to $1.135 billion, a decline of $125 million from a year ago. The company expects macroeconomic pressures on its target customers in the second half of the year and expects the flow of buyers’ trips to level off as growth continues.
“However, starting in June, we began to see a broad-based decline in consumer behavior,” said CEO Mark Wang. “This shift was evident across all of our brands and customer segments, but was particularly pronounced in our new customer segment.”
Hilton Grand Vacations wants to improve its direct online marketing to counteract the weakness in local marketing.
In addition, the company continues to integrate its recent $1.5 billion acquisition of Bluegreen and is restructuring its sales and marketing organization from two regions to five regions with multiple sub-regions to better support its expanded real estate offerings.
Marriott Vacations worldwide
Marriott Vacations Worldwide had mixed results in the second quarter. The company reported a 29% year-over-year decline in adjusted EBITDA and slightly reduced its adjusted EBITDA guidance for the year.
Marriott Vacations Worldwide saw a 12% decline in the effectiveness of its sales process for first-time buyers and announced it would adjust its sales promotions accordingly.
On a positive note, the company’s rental profit increased by over 60% year-over-year. The company is also expanding its footprint, opening a new resort in Waikiki in October.
Wyndham Destinations
Unlike its competitors, Travel + Leisure Co. was optimistic about its timeshare brand Wyndham Destinations. Travel + Leisure Co. raised its full-year 2024 EBITDA forecast to $915 million to $935 million.
Despite some headwinds, executives were optimistic about the growth prospects for vacation rentals, citing strong bookings. Many timeshare buyers and owners take out loans, and Wyndham Destinations is facing some pressure to service loans, particularly for customers with weaker credit scores. The parent company expects to have to set aside more money for lost loans than originally planned.
Executives said the number of new-owner tours increased 22% in the quarter and that average spending per customer exceeded expectations.
Executives attributed the strong performance in part to a new marketing program touting points earned and redeemed through hotel group Wyndham Worldwide’s loyalty program. Travel + Leisure Co.’s acquisition of Accor’s timeshare business this year also went well, they said.
globalization
“Global” was the word used most frequently by executives on these conference calls. Today, most of these three vacation rental companies’ clients and properties are located in North America. But each of these companies has plans to expand internationally.
Marriott Vacations Worldwide is planning a new Marriott resort in Thailand and recently reopened its second sales center in Bali.
Hilton Grand Vacations sees opportunities to increase its sales to Japanese buyers as the value of the yen rises against the dollar. Through the acquisition of Bluegreen, the company has expanded its geographic presence. It now has properties in Europe (28 resorts), Mexico and the Caribbean (5 resorts) and Japan (two resorts).
Travel and Leisure Co. reported an increase of over 50% in international travel flows in the second quarter, partly due to the acquisition of Accor’s timeshare business.
Maui still performs below average
Executives said Maui’s recovery from the wildfires a year ago has been slower than expected.
Both Marriott Vacations Worldwide and Hilton Grand Vacations have reopened their resorts, but the companies have not been able to sell their products to visitors because their sales teams have not yet been rebuilt due to layoffs.
At Marriott Vacations Worldwide, weak performance on Maui will likely result in a decline in contract revenue of approximately $10 million for the full year.
The CEO of Hilton Grand Vacations reported a similarly weak performance, with Wang stressing that there were difficulties in hiring new employees, particularly due to problems finding housing on Maui, especially for the brand’s properties near Lahaina.
Timeshare owners still satisfied
According to a July survey of 500 timeshare owners, 70% have already booked their next stay, twice the number of all travelers combined, according to the American Resort Development Association.
About six in 10 timeshare owners plan to travel in the next four months, as overall travel demand is expected to decline significantly, according to the ARDA survey.
Development of the stock index for the accommodation sector since the beginning of the year
What do I see? The performance of stocks from the hotel and short-term rental sector in the ST200. The index includes companies publicly traded on global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations and timeshare.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies valued at over $1 trillion into a single number. Learn more about financial performance in the hotel and short-term rental sector.
Read the full methodology behind the Skift Travel 200.
