Travel + Leisure Co. is trying to get past its traditional timeshare roots.
Michael D. Brown, president and CEO, told Skift in an interview that his team wants to evolve the group beyond pure vacation ownership toward a broader hospitality platform while also diversifying its geographic exposure.
Here are 5 key themes in the CEO’s strategy.
1. Courting Financially Resilient Customers
On the demand side, Brown’s team has been pushing upmarket.
Its customers’ average FICO (credit) scores have risen from 725 to 742 over four years.
The tactic of seeking customers with greater financial wherewithal is already producing benefits, Brown said. Transaction values are holding steady above $3,000 per guest â a 30% increase that he said has proven “sticky.”
But the more upmarket customers also help fortify the company’s consumer finance portfolio. Travel and Leisure Co. finances a little over half of purchases when selling timeshares â creating an attractive loan portfolio. Those loans then get securitized, freeing up capital to sell more timeshares.
Another side benefit is making better use of labor.
“By having each staff member generate more revenue per consumer on average, you can focus more on your higher performing associates,” Brown said. “Your recruiting and training and talent acquisition model completely changes.”
Brown has also been looking at cost-effective ways to reach new customers, such as through strategic partnerships. It recently signed a marketing partnership with Allegiant Air, for example.
2. Global Supply Expansion
Brown wants to boost Travel + Leisure Co.’s geographic diversification.
Orlando and Las Vegas each represent roughly 10% of company revenue. Both cities remain “the two capitals of vacation travel in the world,” Brown said.
Thanks to its integration of Accor Vacation Club earlier this year, the company now gets roughly 8% to 9% of total revenue from the Asia Pacific region.
And the company sees Mexico as an untapped opportunity, with only a few resorts in the country so far.
3. Tapping Into the Live Tourism Trend
Many hotel groups and other travel companies have reported surges in demand related to so-called live tourism, such as sports events and music concerts. Travel + Leisure Co. also sees opportunities.
It recently introduced a Sports Illustrated-branded resort initiative, which it believes could eventually generate “about $300 million to $400 million in sales” a year through multiple properties.
Its first location at the University of Alabama suggests a blueprint: combining cultural tie-ins with gathering spaces and fitness amenities to differentiate from traditional timeshare offerings.
Another example: A new Live Nation collaboration offers concert experiences at venues like the Sphere in Las Vegas and concert tickets to its vacation ownership customers and prospects as sales incentives.
It’s part of a multi-year partnership allowing marketing programs between each companyâs customer base. Travel + Leisure had consumer engagement booths at Live Nation music events this year.
4. Creating a Neutral Brand Family
Brown’s company used to be called Wyndham Destinations, and that was off-putting to some potential marketing license partners. In 2021, it renamed itself Travel + Leisure Co.
The neutral branding allows partnerships that might otherwise face conflicts â like the recent Accor deal â much as restaurant giant Inspire Brands houses multiple competing chains (Dunkin’, Jimmy John’s) under one corporate roof.
“We are a service provider that elevates individual brands underneath a common umbrella of Travel + Leisure Co.,” Brown said. “I don’t think people have quite twigged into the power that it offers to us.”
5. Two Pillars for Growth
Travel + Leisure Co. takes two approaches to monetizing leisure travel â timeshare sales and a membership business.
The company’s core vacation ownership business, anchored by Wyndham Destinations, aims to generate rich upfront sales from timeshare interests while building a steady stream of financing and management fees.
Meanwhile, its exchange and travel club segment acts as a capital-light tollbooth, collecting membership dues and transaction fees from 3.5 million exchange members.
With 85% retention rates and minimal capital requirements, the membership business throws off steady cash flow. Developers typically pay for customers’ initial memberships, after which the company can sell them additional services and travel bookings.
Brown said all signs point to Travel + Leisure Co. continuing to find new owners at a good pace while maintaining appealing financing spreads.
The company’s over 800,000 timeshare owners provide built-in upgrade opportunities, with 68% of last year’s sales coming from existing customers buying more points. Property management fees from owners’ associations add another reliable revenue stream.
Ultimately, Brown emphasized the value the business model provides to leisure travelers. While vacation ownership shouldn’t be viewed as an investment, he said it provides significant value to consumers.
“Think of an owner in Orlando who bought in for 2016 prices,” Brown said. “They’re getting a two-bedroom condo in Orlando for, say, $1,000 to $1,400, which is a maintenance fee, while their friend across the street is paying $600 a night for a 250-square-foot hotel room to be in the same destination with similar amenities.”
Accommodations Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200)Â combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.
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