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Classic Timeshare: Howard Nusbaum interview - ARDA 2002
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This story first ran Spring 2002 in the San Francisco Examiner. After my recent interview with Howard Nusbaum two weeks ago, I thought it would be interesting to rerun this one to compare. One signinficant difference would be the industry growth projections.
When Howard Nusbaum meets strangers on a plane, and tells them what he does for a living, he is often met with a blank stare.
"Resort development." Sounds interesting, but doesn’t give the complete picture. "Vacation programs. Fractional residences. Interval ownership." Blank stares, all. "Timeshare."
"Ohhhh, really? But, you seem so nice."
The University of Cincinnati grad is a hospitality industry veteran. For the last two years, he’s been president and chief operating officer of the nonprofit American Resort Development Association (ARDA). Prior to that, he was executive vice president and chief executive officer of the Ohio Hotel and Lodging Associations, and director of corporate relations for the American Hotel and Motel Association. And, before that, Howard had worked for a hotel management company, and specialized in hospitality industry advertising.
Nusbaum describes ARDA’s mission as that of “an advocate on behalf of the vacation ownership industry (including timeshare, fractionals, owners and resalers”. He continues, “we must educate government, fellow businesses and the consumer” on issues regarding timeshare today, including “the growth of consumer-centric sales practices”.
Howard cites industry surveys, many done by Dick Ragatz, president of Ragatz and Associates, a subsidiary of Resorts Condominium, International, suggesting that among U.S. households about 94 percent are familiar with timeshares. But, what these folks think about timeshares differ dramatically, depending on whether or not they own. Among owners, about 90 percent describe themselves as satisfied or very satisfied. Among non-owners, however, 34 percent are neutral, and 20 percent are downright negative. In other words, if you own a timeshare, you like it. In fact, Howard points out, “20% of new sales, last year, were to existing timeshare owners”. He would like to “educate the general public. An industry awareness campaign, like those conducted by the Plastics and Dairy industries, could lower sales and marketing expenses, controlling cost to both the consumer and developers”.
Nusbaum describes the industry as very regulated, on a state and federal level. “States regulate vacation ownership in terms of marketing practices, taxes and registrations”. ARDA works very closely lobbying legislatures for the right balance of protections. He is also concerned that any travel related “stimulus package includes timeshare. It is important that our friends and cousins in the hotel industry remain healthy, because if people are not traveling and staying in hotels, they are not visiting timeshare presentations”.
Howard is also working to develop strategic corporate partnerships. He seeks partners that provide “a synergy of marketing, achieving economies of scale for reaching the right consumers”. Part of ARDA’s role is to find businesses that “share customer demographics for affinity marketing programs”. A new program with American Express will offer cardholders double miles for using the card to make their down payment. Other potential partnerships include Diners Club and Ebay. Opportunities could include discounted mini-vacations at participating timeshare resorts.
Howard’s other thought is to make what is currently an exit program become more of an entrance program. Say you’ve attended a presentation, but didn’t buy. Before you get your gift and leave, a manager will often make you an intriguing offer. For a relatively small amount of money, usually less than $2,000, you can buy a sampler program. This usually includes a visit to the property with access to many of the perks and privileges of membership, usually good for a year. Generally, if you later buy the full program, the price of the sampler program is applied to the purchase. Howard believes it might be worthwhile to offer sampler programs first, kind of like test-driving a car.
Howard stays with the car analogy when we discuss ARDA’s role in the growing arena of timeshare resales. “You can’t have ten consecutive years of 15% new sales growth without creating an aftermarket. We need to create standards and practices for reputable resale agencies, including Homeowners Associations and developers. As an industry, we need to create a forum for resale entities to network and grow.” He discusses his recent purchase of a used Lexus. He bought it from a local Lexus dealer. He’s sure he could’ve paid less with a private party, but feels the extra money was well spent. His car was Lexus-factory certified, had been thoroughly inspected, and came with a warranty. Both the manufacturer and dealership had a stake in maintaining a reputation. He compares this to buying a pre-owned timeshare, knowing it comes with a clean title, financing opportunities, and all the benefits and perks. He urges consumers to visit the FTC web site (http://www.ftc.gov/bcp/conline/pubs/homes/resales.htm) before buying timeshare on the resale market.
The growth potential for the timeshare industry is tremendous. Industry surveys show that as many as four out of 10 qualified prospects would consider owning sometime in the next five years. If this quiet man has his way, that just might become a reality.
