Looking Below the Surface: Millennials as Timeshare’s Saving Grace
As the lodging industry is bending over backwards to keep up with consumer demands and the latest technologies in the sharing economy, the traditional concept of timeshare is at risk of becoming outdated. Timeshare developers were one of the first advocates of the sharing economy in the lodging sector, as their product offers the sharing of a holiday home, but the original long-term contracts for a specific period each year is an unattractive prospect for a growing group of consumers looking for new, exciting and authentic experiences every time they travel.
Tech-savvy Millennials are an increasingly lucrative target group, and timeshare developers and managers are investing to enhance and market the positive aspects of timeshare to attract these consumers. Increasing interventions from the industry demonstrate that short-term contracts and lifestyle brands are changing the industry positively, and could save the timeshare concept.
Is timeshare still relevant?
Having been around for over 40 years, timeshare in its basic form offers consumers the opportunity to buy a share in a holiday property, often situated in a resort. Typically purchased in stay periods of one week, the owner is entitled to a week stay in that property, and with membership of an exchange holiday programme, stays in other properties of commensurate trading power, each year for as long as their contract specifies. This predictability and protection from inflating prices is one of the main attractions of the concept.
However, the traditional long-term contracts tying timeshare owners into a 30-year, or even a lifetime, commitment is not appealing to Millennials, who typically want flexibility and the ability to control their holiday habits. Millennials – the population group born between the 1980s and 1990s – have been identified by the industry as the consumer group who value authentic and new experiences when they travel.
They are confident and look for value for money experiences. Online travel agents and mobile technology allow them to compare and book holidays anytime, anywhere, and for the best price available. While ownership of the latest technological gadgets has become paramount, possessing large items such as a house, car, or holiday property is not a requisite for success as it used to be.
The industry is responding
Those in the timeshare industry have responded to these changing demands. Holiday exchange service providers, which help owners to swap their stay weeks with others, have been around for many years, but, in recent years, there has been further innovation to attract and satisfy Millennial timeshare owners.
Many resort developers are changing their business model to include short-term products, with new contracts ranging from three to 15 years. Some resort ownerships now also offer points-based systems which give owners more flexibility to spend their points at other resorts, extend the length of stay periods, spend points on cruise holidays, access more lifestyle benefits, or save points for a longer or more luxurious holiday.
Another initiative in the industry is a focus on the luxury lifestyle. Consumers are increasingly exposed to celebrity lifestyles through popular media. Timeshare suppliers are responding to this trend by shaping luxury lifestyle brands. For example, Odyssey is a brand with resorts in Asia, Greece, and Austria. Building on the brand experience, the developer is planning to open a wine club and shop in London to attract new buyers to the Odyssey concept, while ensuring existing owners feel part of an exclusive membership club. By offering a luxury holiday experience, complete with DJ beach parties, spa facilities and juice bars, the resort developer is creating products and services designed to attract younger and health-conscious consumers.
Challenges remain, but opportunities are rife
Providers of timeshare need to take stock of the demands of Millennials and change their product to attract this increasingly wealthy consumer group. Not unlike successful sharing platforms like Airbnb, timeshare should not just be a one-week-per-year concept; it should offer brand recognition and a portfolio of other products that owners can identify with all year round. Using technology and modern media, owners need to be kept engaged and involved in shaping the lifestyle brand. Information provision needs to be accurate, booking needs to be flexible, and social media and mobile applications should be interactive and help shape a feeling of “belonging” amongst timeshare owners.
Furthermore, emerging markets can be targeted to attract a new flow of wealthy consumers. Millennials in developing countries are much wealthier than previous generations and therefore driven to get what their parents did not have. Euromonitor International research into gross income in BRIC and MINT countries among 15- to 34-year-olds shows that incomes in China are growing fastest, but that, at present, Mexico, Brazil and Turkey are more interesting markets for investment. Incomes in Russia are depressed by geopolitical turmoil, but the country offers long-term prospects together with China.
Average Gross Income of Population Aged 15 -35 in MINT and BRIC Countries (1990 – 2030)
Source: Euromonitor International
Continual investment in innovative new products and services remains the challenge for timeshare resort developers and managers, as well as for other industry suppliers. The industry needs to work hard to convince skeptical and better-informed consumers that timeshare contracts really do offer cost-savings on a holiday lifestyle and planning flexibility. If resort developers, managers and exchange services providers are able to do this effectively, and can build a strong and innovative brand, Millennials could well be the consumer group that revives the concept of timeshare.