Resort Hotel Owners Cash in on Potential of Shared Ownership to Maximize Profits

DUBAI KNOWLEDGE VILLAGE, UAE - July 24, 2015 - PRLog -- If you have ever played Monopoly you might recall that there is a winning strategy to buying and holding property. Location, Location, Location are the three winning words in the real estate game.

Once that the location has been secured, the game players are then given the opportunity to create more value by developing their asset, the most profitable being a hotel, just ask Donald Trump.

The hotel industry is flourishing in many parts of the world today, segmented by business travelers in urban areas and vacationers in the sought after destinations that awaken the eyes with views of seaside serenity or mountain resorts that hold the promise of fresh clean air and a change of climate.

Location has powered the investment streams that pour into the hotel industry on a daily basis, from branded hospitality companies, boutique hotels, themed resorts and quant romantic lodges leading the pack.

Hotels are ,simply put, a profitable business. That is of course when the hospitality ethos, systems, management and staff are aligned within culture that elevates a normal hotel room into a unique experience of bliss for the guest. Experience is the essence, the fruit, the seeds that pollinate notoriety, demand, and guest loyalty.

The business model is basic, sell as many room nights as possible through multiple channels and hope for an occupancy rate that hits over 70% across the calendar year with a REVPAR, revenue average per room night that pays all costs and puts them into to the profit zone.

Many innovative hotel operators and resort developers opened up the floodgates to shared ownership, in its many forms, from creating a club whereby potential customer is offered selected benefits in trade for their payment to secure a membership in that particular property.

There are many hybrid forms of shared ownership, from loyalty programs that offer real accommodation rights per year, to timeshare programs that secure a particular type of deluxe accommodation within a pre-selected season or time of the year.

The latter, vacation timeshare or vacation ownership has changed the profit centers of many hotels to enviable results for the developer.

In the US, this segment of the business weighed in at a whopping 7.8 Billion USD in annual sales last year, a jump of nearly 5% from the year before.

It is therefore no small wonder that almost every major hospitality brand on the planet has entered and flourished by deploying this strategy led by Marriot, Hyatt, Wyndham, Accor, Anantara, Holiday Inns, Starwood,

Customer satisfaction polls indicate that over 78% of participating members are satisfied or very satisfied with this unique form of pseudo-ownership or affinity program at their resort property.

Occupancy rates are pointing to nearly 80% making it possible to enjoy an additional windfall profit on food and beverage and other in-house services available to the guests.

With these compelling numbers and profits within public companies made transparent, why then are not more and more hotels and resorts jumping on the bandwagon?

First of all in many countries, the rules and regulations in place to make such a public offering are anything but standard. The US has had a 30 year head start, and today prides itself on the highest standards of consumer protection, truth in advertising, financial lending protection, impulse purchasing to name but a few.

It is estimated that globally hotel-resort club type vacation ownership sales topped the 12 Billion dollar mark, but it’s difficult to verify, as many operators do not have to report sales transparently mandated under their own regulatory authorities.

Nevertheless, it is enough to tempt new entrants into the chase. More than 700 new entrant resort developers signed alliance agreements within the past 12 months worldwide.  No small wonder really when the hotel operators realize that after sales and marketing, refurbishment or new building costs they will still net over 24% to 30% or more on gross sales.

If you are not counting weekends, that works out to just about two hotel operators per day, everyday, in the past year, have woken up to this massive profit center.

With growth areas remaining on the shared ownership monopoly board such as the Philippines, Vietnam, China, Dubai, Africa, South America, Cuba, Thailand and other island hot spots all on the international radar of investors looking to cash in on what is now the fastest growing segment in hospitality today, it is now a clear race to see who will create the most compelling values for the consumers.

And just like in the game of monopoly, the chances are in favor of the first in, to win.