NATIONAL REPORT? Product segmentation is a current trend in the vacation ownership market. Developers are targeting distinct demographic categories with timeshare products that meet varying needs and budgets. The result has been the introduction of vacation ownership products and services that correspond to the unique travel and leisure demands of many market segments. Thus, the question is: will a tiered approach be the future direction of this industry? An in-depth study of the U.S. consumer members of Interval International, conducted in the fall of 1999 by Simmons Market Research Bureau, points to a wide spectrum of demographic categories and certainly supports the move toward product differentiation and price segmentation. Two significant market trends include pursuit of the luxury and moderate tier product sectors. The Luxury Niche As identified by the study, the average household income of Interval?s membership base is $103,000. More than a third of Interval?s members have a household income above $100,000, compared to just 9.3% of the general U.S. population. The industry has identified and responded to the escalating affluence of its consumer. Disney, Hyatt, Marriott and Vistana have developed properties in high-demand locations with upscale amenity offerings. In the last several years, the market has seen further development of the vacation ownership luxury niche by Four Seasons as well as fractional products now offered by Club Regent and The Ritz-Carlton Club. Four Seasons entered the vacation ownership arena in 1997 with the opening of Four Seasons Resort Club Aviara in Carlsbad, CA. Additional vacation ownership properties in Punta Mita, Mexico and Scottsdale, AZ are expected to open in 2000. ?Our strategy with Resort Clubs complements an established approach used for our traditional hospitality offerings and is intended to bring a new level of quality and prestige to the vacation ownership industry,? said Duffy Keys, senior vp, Four Seasons Vacation Ownership. ?Our goal is to provide our Resort Club owners with Four Seasons luxury and service excellence, the advantages of a private vacation home blended with the amenities of a five-star hotel.? Mid-Tier Products While the luxury tier is growing and enjoying success, many experts feel that vast potential exists within the industry?s moderate-tier market. Supporting this is the fact that two-thirds of Interval?s members have a household income under $100,000, with the majority in this group having a household income between $50,000 and $75,000. This large, middle-income group demonstrates that the vacation-ownership industry?s segment remains alive and well. In response to the potential of this category, Marriott Vacation Club International launched Horizons, a moderate-tier level of vacation ownership product. Research shows that this segment accounts for approximately 55% of the U.S. market. With prices ranging in the $10,000 to $14,000 range, the Horizons? concept features resorts that are designed for the active vacationer and includes an array of on-site activities including miniature golf courses, movie theaters, barbecue and picnic pavilions, fitness trails and kids clubhouses. These amenities offer owners numerous activities within the parameters of each property. The Horizons? initiative complements Marriott Vacation Club International?s core product and the recent introduction of The Ritz-Carlton Club, luxury private residence clubs that offer fractional ownership to the most affluent travelers. ?We have successfully branded into multi-tiers in order to cater to the diverse lifestyles of today?s travelers,? said Ed Kinney, senior director of brand advertising and communications for Marriott Vacation Club International. ?Our goal is to provide our owners with a vacation experience that meets their particular needs and provides unparalleled flexibility as well as investment security through a succession of innovations designed to meet the dynamic of
