ORLANDO, FL—The mood at the Vacation Ownership Investment Converence has been extremely upbeat the past several years. However, the mood at this years conference, which is taking place at the Peabody Hotel here, is a bit less optimistic. Howard Nusbaum, CEO of the American Resort Development Association (ARDA) commented on the industrys reslience, but acknowledged the vacation ownership segment is facing some tough times. “Timeshare was born in the 1970s during an unstable economy and we have grown through the energy crisis, the Gulf War, and Sept. 11. Hopefully this current situation is temporary,” he said. “Developers are definitely feeling some pain because if you cant get capital, you cant stay in business.” Nusbaum was hopeful the recent bill passed by Congress will bring relief. “Im hopeful. I believe well continue to out perform ofher sectors of the hospitality industry. But only if the credit market loosens up.” Nusbam added that the Baby Boomer population continues to keep conditions favorable in the vacation ownership segment. “There are 77 million Baby Boomers approaching retirement. Not only do they want to travel, but they understand the value proposition of shared assets.” The general consensus among the industry is that the fractional and private residence club sectors are feeling the most pain from the current economic situation. A panel including Johne Burlingame, Hyatt Vacation Ownership; John Melicharek, Baker Hostetler LLP; Rob Goodyear, Destination Club Management, LLC; John Sweeney, Global Resorts and Brian Ten Broek, Interval International discussed the state of the fractional and residence club market. “If you dont have a deal already financed today, its extremely difficult. I dont think there will be any deals done for a long time,” said Burlingame. Ten Broek commented on how quickly the market has changed saying, “A month ago things were bad, but not terrible. Now its very tough. If the credit market eventually eases up, I think well start seeing smaller fractional properties go into development. The real estate market coming down makes these types of projects a little more affordable to build.” The panel was in agreement that the major obstacle continues to be financing. “The developments that have their funds well-allocated and take care with their operating costs should go forward as planned. But the teams that are not well funded are looking to cut costs from the furniture, fixtures and equipment as well as from the amenities,” Goodyear said, stressing the importance properties under development continue to deliver on their promises. Sweeney noted that in times like these, it is imperative to stay open to new opportunities. “We tend to emulate not innovate in this industry and base decisions on the past. We need to stretch our imaginations and look at new opportunities and better understand how to market to the affluent market,” he said. “This is the first time the government is playing such a large role in our destinies. All we can do is wait and see how this bail out plan plays out.”
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