How do we bring sustainability into the hospitality business? How do we sustain continued occupancies? How to meet the break even points or ROI in the shortest span of time? How to ascertain customer loyalty? How to control business in low seasons? Worldwide these challenges are faced everyday by owners and operators in the Hospitality Industry.
There are 9.5 million timeshare owners globally and over 7000 vacation ownership resorts around the world. Vacation ownership gives holiday makers the opportunity to purchase a lifetime of holidays at today’s price. The Vacation Ownership Business Model has a tremendous potential in the Shared Ownership Industry. Considering it unlocks the value of unutilised inventory, shown consistent growth of 18-20%, it minimizes seasonality and generates extra cash flow. It also stretches the average stay of guests in your hotels and resorts.
The Vacation Ownership model augments your product by enhancing the variety (of location / category and style) and flexibility (of date / preference and region) to your guest members (both corporate as well as individual). Also developers could be least affected by business cycles because a major portion of revenues would be obtained upfront.
It answers your occupancy issues and generates upfront cash. It must also be noted that the hospitality industry is increasingly witnessing shorter cycles due to uncertain circumstances like natural disasters, economic crisis, terrorism, political uncertainty etc. Again, VO is the best way to hedge your business as these uncertain circumstances affect your occupancy rates and have a direct negative impact on your revenue. As you would have generated cash upfront from your members for a specified number of years in the VO business model, such downturns will not have any adverse effect on the business.
If you as a developer intends to expand your footprints, all avenues for raising funds need to be explored. Here once again the VO business model can significantly contribute to your fundraising efforts. With this business model, Developers can leverage its existing hospitality assets to generate revenue by sale of memberships. You can view your members more like individual investors who instead of receiving dividends will get room nights every year for a specified duration.