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From the
September/October 2010 issue of:


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Developers Adding Fee-Based Services to Generate Revenue, Share Expertise
 
by Marge Lennon
Owner
Lennon Communications Group
 
For nearly three decades, the timeshare industry has enjoyed double-digit growth year after year … that is until 2008. With sales down and increased delinquencies from maintenance fees, many creative companies have implemented new programs to generate revenue streams and are now promoting the sale of their services to others. It is known within our industry as “fee-for-service,” which Wikipedia defines as “a standard business model where services are unbundled and paid for separately.” That’s pretty much what the three highly innovative timeshare developers featured in this story are doing … Shell Vacations, Grand Pacific Resorts and Bluegreen Resorts.

Karen Buttice, Shell Vacations Executive VP of Business Development explained her company’s position: “While most timeshare developers consider other developers their competition, we see opportunities to partner with them through programs that provide synergistic benefits for everyone involved. Now quality partners can leverage our highly successful systems and make them their own.“

Independent developer Shell Vacations (www.shellvacationsclub.com) launched fee for services in 2003 with a Direct Member (DM) agreement with Plaza Pelicanos Grand Beach Resort in Puerto Vallarta, Mexico. The DM Affiliate Program provides developers or resort associations the opportunity to attract new sales or upgrade existing owners by offering the SVC product, with its SVC points-based system, 23 resorts and over 1.3 million external benefits while continuing to sell their existing product.

Robert Rojas, CEO of Plaza Pelicanos, comments, “Since the start of our relationship with Shell Vacations Club in 2003, they have provided a very high level of service to our members as well as to us. With a very successful sales program, our company has been growing. This gives us the opportunity to affiliate Sunset Plaza, our new resort, with SVC. We look forward to continuing to work with them as we expand our resorts to other locations.”

Other Shell fee-based services include rental marketing to fill unused inventory, hospitality management for resorts or HOA’s, travel management and fulfillment, sales and marketing. Although most of the programs have been in place for several years, they are now being formalized with Buttice as the central point of contact.

She adds, “I believe Fee-for-Services takes consulting to a different level. Typically consultants evaluate a business, offer recommendations and move on, leaving the client to implement their suggestions. After we are contracted to provide a certain service, we become an extension of that company, with our collaborative efforts resulting in dynamic ongoing relationships. It has been a win-win situation with everyone involved and we plan to expand it even further.”

And in Carlsbad, California, Grand Pacific Resorts, Inc. is one of the largest and most established independent timeshare companies based in Southern California, having developed and managed 14 vacation ownership resorts and hotels in the past two decades with over 45,000 owners.

Nigel Lobo, VP Operations Grand Pacific Resorts, explains his company’s entry into the Fee-for-Services arena about a year ago: “Initially we managed only the resorts we developed. But after 20 years of management expertise and success, we began to realize we had built up a valuable infrastructure that we could deliver to others, such as outstanding best practices to drive Gold Crown standards. We offer a wide range of services such as Resort Strategy and Operations Review, Budgeting Oversight, Design and Purchasing expertise, Reserve Analysis, Contract Compliance Review, Collections and Delinquency Assistance, as well as Cash Flow Projections. Sharing of key best practices and strategies that leverage our depth of experience is the hallmark of this offering, and we will assist Home Owner Associations (HOAs)/Boards maneuver through these tough economic times.”

Grand Pacific Resorts Management, www.gprmgt.com, was recently awarded a management contract for the 31-unit Mountain Retreat Resort in Arnold, California, and believes there are many similar opportunities to share their expertise. While their concentration is the west coast, Nigel says, ”We are ready to expand our horizons.”

Publicly traded Bluegreen Corporation (BXG) with its 54 owned or managed resorts crafted its initial Fee-for-Services concepts in consultation with two resort condominium developers in 2007.

“Since we had already been working on this model, when the credit crunch hit in 2008, we quickly dusted it off and structured our corporation to better leverage our breadth of expertise,” explained industry veteran David Pontius, President of Bluegreen Services. “We were simultaneously shrinking our core business to fit our capital constraints while growing these new fee-based relationships with financing attached.“

Headquartered in Boca Raton, Florida, Bluegreen (www.bluegreencorp.com) officially launched its fee-based services business in 2009 at resorts in Arizona, the Bahamas, Massachusetts, New Hampshire and Virginia.

The Bluegreen Services division has expanded rapidly to include resort operations and property management functions, design and development, mortgage servicing and sales and marketing, – adding new resorts to the Bluegreen Vacation Club and selling them through existing distribution systems. In 2010, Bluegreen further expanded their offering to include hotel management services, announcing contracts in New Hampshire and Hutchinson Island, Florida.

For the year ended December 31, 2009, Bluegreen generated first year fee-based services revenues of $20.1 million. Results from the first quarter of 2010 accelerated to $10 million in attributable sales revenue and seven fee-based relationships, four active in sales.

Concluded Pontius, “We are pleased we made the decision to go down this new path and will continue to focus on similar opportunities to expand our business. It has enabled the growth of our business in a capital-light way that benefits our Bluegreen team, a multitude of new clients and our 200,000-plus loyal owners.”



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