How Travel + Leisure Will Supercharge its new buy Accor Vacation Club
Above, Barry Robinson. Right, Novotel Bali Nusa Dua, one of 24 resorts in Accor Vacation Club
By Raini Hamdi, 20 Feb 2024
Accor Vacation Club started in APAC 24 years ago but its growth is unremarkable compared to Accor’s superb rise as a hotel company in the region in the past two decades. Either timeshare was in the back seat of Accor, or a lack of awareness of vacation ownership among developers and consumers persisted in the region, stunting growth in the sector, or both.
Accor is now offloading the club to Travel + Leisure Co. for $48.4 million. The transaction is probably the first time that a ‘pure’ vacation ownership company has bought a global chain’s club. Happening in APAC, it may give players in the space ideas for more of such M&As in the region.
But first, here are the key aspects of the acquisition:
– Accor Vacation Club currently comprises 24 resorts in Australia, New Zealand and Indonesia under Accor brands Peppers, MGallery, Grand Mercure, The Sebel, Novotel, Mantra and Mercure; this grows T+L club resort count in APAC to 77
– It has 30,000 members, boosting Travel + Leisure international membership to more than 100,000 in APAC
– Travel + Leisure has exclusive rights to develop new vacation ownership clubs and products using the Accor Vacation Club brand across Asia-Pacific, Middle East, Africa and Turkey
– Accor will receive a percentage of vacation ownership sales revenue as a licensing fee under the exclusive licensing agreement
– Deal is expected to close in 1Q24
Barry Robinson shares with Hotels-Asia how he intends to supercharge Accor Vacation Club:
Why is multi-brand strategy important for Travel + Leisure?
Expanding our brand portfolio allows us to tap into new markets, demographics and geographic regions, thereby strengthening our position as a leader in the industry. Additionally, with a wide array of brands and experiences, we can enhance customer loyalty and satisfaction.
Brands are powerful drivers of consumer behavior. People want to affiliate with brands that they personally connect with. By creating vacation clubs aligned with powerful brands, we can provide unique travel experiences which connect with today’s travelers.
Your president & CEO Michael Brown said in a recent interview with Hotel Investment Today that the acquisition of Accor Vacation Club stems from “a desire to bust a myth that a multi-brand business won’t work in vacation ownership.” Take us through that skepticism and why Travel +Leisure thinks otherwise.
After a period of consolidation, many timeshare clubs today are associated with hotel companies, leading to the assumption that these entities possess an inherent understanding of their brands and are best equipped to maximize their potential.
Every hotel company with a vacation ownership component approaches the business differently. While branded chains may have different priorities and strategies regarding vacation ownership, we firmly believe that vacation clubs are best managed by dedicated players who specialize in the sector. This is reflected in the strategic decision to spin off the Wyndham Hotels and Resorts business in 2018. By focusing our efforts and expertise solely on vacation ownership, we can provide a tailored and exceptional experience for our members, while also maximizing the growth potential of our brands.
We have recognized the importance of adapting our sales methods to evolving regulatory landscapes, particularly in regions like Australia where legislation around timeshare has become more stringent. Despite these challenges, we’ve remained agile and innovative, finding new ways to connect with prospective members and communicate the value of vacation ownership.
As a result, we’ve seen continued growth in our Club Wyndham South Pacific and Club Wyndham Asia memberships. Our ability to thrive in dynamic environments positions us well to leverage our expertise for managing Accor Vacation Club.
We believe we can apply our expertise and global platform to help grow the Accor Vacation Club business. Ultimately that will benefit our business and provide new recurring license revenue for Accor.
Travel + Leisure is buying Accor Vacation Club for the brand value of Accor in APAC, where the club originates, the exclusive rights to develop with Accor brands and the membership addition. But in growing Accor Vacation Club, won’t it compete with the Club Wyndham?
We don’t perceive [the acquisition] as directly competing with Club Wyndham. Both brands have been operating in the same market independently for more than 20 years. Their target demographics, offerings and market positioning vary, allowing us to effectively manage and differentiate between them.
In some regions, the Accor Vacation Club brand may enjoy greater recognition, while in others the Club Wyndham brand may hold stronger appeal. This flexibility allows us to leverage the strengths of each brand and maximize market penetration accordingly.
We’re proud to be reshaping the industry, and a key aspect that sets us apart is our ability to individually curate brands and preserve their distinctive offerings for travelers, such as we’re able to do with Club Wyndham, Margaritaville and Sports Illustrated. We have consistently demonstrated our capacity to enhance and preserve the identity of the brands within the portfolio.
Accor Vacation Club hasn’t grown in number of properties and footprint: 24 hotels in 24 years, largely in Australasia and Indonesia. How do you intend to grow it?
Expanding our geographic footprint and member base for the club is a key priority. We are constantly evaluating locations in both existing and emerging markets. Asia presents an important growth opportunity for us due to its sizeable market and the strong recognition of the Accor brand in the region.
We are open to various approaches, including acquisitions, partnerships and new projects. When we acquire resorts, we favor a mixed-use model in this market, which provides hotel owners with unique opportunities designed to maximize yield and minimize risk. When vacation club apartments and hotel inventory operate within the same property, all parties benefit. The model enables the vacation club to secure prime locations, while hotel owners benefit through cost-sharing and multiple revenue streams.
Depending on the country, we can provide a cash injection through acquiring freehold or long leasehold of individual units, provided the balance of units are under a longterm management agreement. This approach to property management is proven to deliver operational advantages, strong yields, optimization of assets and a leading edge for our developer partners.
The diverse portfolio of Accor brands provides us with flexibility and allows us to tailor our offerings to different segments and demographics. We will be opening sales preview centres for Accor Vacation Club around Australia and Indonesia to begin with.
Why is APAC a huge growth area for timeshare in general and for Accor Vacation Club?
Unlike more mature markets such as North America, Asia-Pacific is still in the early stages of embracing vacation ownership. Accor enjoys a strong brand presence, with more than 1,600 hotels in Asia-Pacific. This gives Accor Vacation Club a distinct advantage in brand recognition within this burgeoning market.
Are Asian owners/developers more attuned to vacation ownership model?
Asian hotel owners and developers are increasingly recognizing the value of the model, thanks to ongoing dialogue and engagement with vacation club developers like us. Amid a landscape where developers and owners seek secure avenues to raise capital and mitigate risks, vacation ownership presents an attractive solution. By integrating mixed-use developments, developers can diversify their portfolios and ensure stability. Vacation ownership offers longterm benefits by providing a reliable source of revenue to cover property operating costs and maintaining high occupancy rates consistently.
What is the biggest challenge to grow Accor Vacation Club?
A paramount challenge is establishing robust infrastructure within target markets. This entails not only physical structures but also logistical frameworks and support systems to facilitate seamless operations.
Additionally, navigating the legislative landscape is crucial to safeguarding both our interests and those of consumers. Implementing effective legislation ensures that rogue traders are deterred, and that the integrity of Accor Vacation Club remains intact, thereby establishing trust and sustainable growth.
Finally, establishing and maintaining alignment between Accor Vacation Club and us, and building upon our existing relationship will be key.
What does it take to be a successful vacation ownership company; what are the common pitfalls hotel companies and new players to vacation ownership tend to do?
To be successful, a key factor is recognizing the long-lasting implications of decisions made today. Every choice, from property acquisitions to membership structures, has the potential to shape the trajectory of the club for decades to come.
A pitfall would be not understanding the logistics and capital required to start in certain markets. Another would be overpaying for properties during acquisitions. This can lead to inflated credit values and financial burdens that persist throughout the lifespan of the vacation club. It is crucial for companies to conduct thorough due diligence and strategic analysis to ensure that acquisitions are made at the right price and align with the overall business objectives.
Additionally, maintaining a strong focus on customer satisfaction and retention is paramount. Neglecting to prioritize the needs and preferences of members can result in dissatisfaction, high turnover rates and damage to the company’s reputation. Successful companies understand the importance of building longterm relationships with members, providing exceptional experiences and continually innovating to meet evolving expectations. Creating a point of difference and a unique value proposition around being a member of the club is essential.
Companies must also strike a balance between investing in property maintenance, amenities and services to enhance the value proposition for members, while also managing overhead expenses and debt obligations.
Do you foresee more of such M&As in the future in APAC?
We’re always evaluating opportunities. The most important priority for us in the short term for Asia Pacific is focusing on the integration of Accor Vacation Club and executing on the growth plan for that business.