| Westgate Resorts: The Last Lap of Luxury |
| Featured Spotlights | |
| Written by Amanda Gaines | |
| Friday, 01 May 2009 | |
 Record sales for this timeshare developer prove the industry is the answer to a luxury vacationer's needs in a down economy. David Siegel, CEO of this billion-dollar company, said the timeshare market has survived worse periods of economic turmoil. The only thing different about this recession is that it’s touching the financing piece of the business platform. “The timeshare industry has survived oil embargos, 21% interest rates, and wars, and it’s always grown,” he said. “The one thing we’re unable to deal with is no credit.”  David Siegel, CEO “We’ve grown by more than 20% a year since the beginning, but in October 2008, the credit markets froze, and we had to downsize,” said Siegel. “We’re currently doing half of the sales volume we were doing a year ago, but we’re no longer borrowing money.” Survival mode As a whole, Siegel said the timeshare industry is in survival mode. The timeshare business model has always been dependent on financing. Typically, a company would sell a timeshare for $20,000, for example, get a 10% down payment, and then take back an $18,000 mortgage from the customer. The mortgage would then be taken to a lender, which would then give the company an advance against the mortgage that would pay for the sales and marketing, construction, and administrative costs. From there, once a year, the company would securitize and sell bonds backed by those mortgages. But no one is buying bonds now, and the credit lines are frozen. As a result, Westgate Resorts downsized 50%, is making 50% fewer sales, and is using its own money and the money coming in from the mortgages to survive. Rather than panicking, the company has focused on making itself lean and mean. Since October, Westgate Resorts has laid off 5,000 employees, mostly in its sales and marketing departments, and has closed down its call centers. Department managers have also been challenged to make cost-effective changes in their departments. Additionally, the company looked at its top 10 profit centers and cut off the bottom five. Siegel said the changes have been frustrating because the company has the infrastructure, management, and employees to handle twice the amount of volume it currently has, but adaptation is key to survival. And although it could continue indefinitely at the level it’s currently operating based entirely on its sales, that’s not where Siegel wants the company to be. “We want to continue growing the company, increasing our sales, and hiring more people, but that’s going to have to wait until funding is available,” he said. “We can provide mortgages to our purchasers, but we cannot find funding for our mortgages. That’s the problem, but it’s only a problem for the moment,” he continued. “Once the credit markets open up again, we will start borrowing money again, and we’ll increase our sales back to their normal range.” Strong on service One aspect of Westgate Resorts’ business that hasn’t been impacted by the economy is customer service. Because employee layoffs were primarily in sales and marketing, the operations side of the company’s business has continued at a normal level, meaning owners are getting the same high-quality vacation they’ve come to expect. “Owners pay a fee that covers the housekeeping, maintenance, insurance, taxes, utilities, and the replacement of furniture or facility improvements,” said Siegel. “Our owners have seen no difference in their timeshare experience, but they probably appreciate the financial benefits of investing in a timeshare now more than ever.” Over a period of time, timeshare owners actually save money on their vacations but have twice the luxury. Rather than renting a hotel room, Westgate Resorts owners stay in units that are more than 1,400 square feet and come with full kitchens, large Jacuzzis, and discounts on Westgate Resorts-sponsored amenities. Westgate Resorts runs world-class health spas; publishes magazines such as I Love Las Vegas or I Love Orlando at each of its resort locations; and has top-rated restaurants. Its Westgate Grille in Park City, Utah, for example, was named the number one restaurant in Utah. Each resort is themed to match its location. In the Smoky Mountains of Gatlinburg, Tenn., guests stay in log cabins, and all employees are dressed like forest or park rangers. At Colonial Williamsburg, Va., the resort looks like it was built 200 years ago, and employees are dressed to match the décor. “We give our owners a unique experience no matter where they stay,” said Siegel. “It’s not just about the lodging; owners also sample the ambiance of the area they’re staying in.” To the moon One of Westgate Resorts’ newest ventures is PH Towers by Westgate, a 52-story glass tower on the Las Vegas Strip. The building has 2,850 vacation villas and 32 penthouse suites. Altogether, there are 3.2 million square feet of living space, and the resort’s proximity to the Planet Hollywood Resort and Casino will give vacationers a complete Vegas experience. PH Towers suites and villas will be the first in the Westgate Resorts family with individual media rooms, and Siegel said the kitchens, lighting, and designs could best any luxury condo across the country. The facility’s customer service management program brings a futuristic feel to the development. If owners don’t want to be disturbed, rather than hanging a sign outside of their door, they can push a button, and a lighted sign will send the message instead. “If owners want maid service or someone from maintenance to come up and change a light bulb, all they have to do is push a button, and the department will be alerted,” said Siegel. In addition, owners will have access to a tropical pool, a fitness facility, the new Planet Hollywood Casino, 12 premium restaurants, and a mall with more than 140 shops. Sales for timeshares at PH Towers have broken company records despite the economic downturn. Siegel said it’s a testament to the strength of the timeshare business platform and Westgate Resorts’ ability to give its owners what they’re looking for in a luxurious vacation. |
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