What do you do when you are an Ontario hotel and hospitality brand looking to increase occupancy rates at your properties?
If you are Skyline International Development, you create a vacation club.
The Toronto-based real estate company this month launched Skyline Vacation Club which it bills as “Ontario’s first urban and drive-to, members-only, points-based vacation club.”
In theory at least, the new timeshare venture will allow Skyline to better stitch together and boost occupancy rates at its four key Ontario holdings, namely the Pantages and Cosmopolitan hotels in downtown Toronto and the Deerhurst Resort north of the GTA.
“It has the core of what I think can really work which is urban drive-to locations; we call them a tank of gas and bag of groceries vacations,” said Skyline Vacation Club president Jude Carrillo. The 25-year vacation club veteran, who was executive vice-president of sales and marketing at Club Intrawest, signed on to head up the new venture after being pitched by Gil Blutrich, Skyline International Development’s chairman and president.
While the Skyline vacation scheme may sound a tad unconventional, it is a time-tested formula, Carrillo said. “Hotel and the vacation club component is a model that has been used by Hilton, Hyatt, Marriott, Wyndham, Holiday Inn and a couple of other small brands. We are not going to do anything different than they do.”
What the vacation club idea has going for it, he added, is the potential to raise hotel occupancy from the North American average of about 65 per cent to closer to timeshare occupancy averages of 80% to 85%. “That dramatically affects occupancy in a hotel, for F&B (food and beverage), for labour, etc., and especially for a resort, especially in shoulder seasons.”
Skyline intends to capitalize on favourable demographics as U.S. statistics show people who own time shares have a higher propensity to buy whole ownership in the same area and vice versa. “It is pretty well-documented over 15 years, so the two complement each other.”
Carrillo estimates the vacation club could increase occupancy at its resorts by about 7,000 guests by 2015.
How it works
Skyline is treading familiar ground with its concept. Club members buy points under the plan while the real estate is held free and clear for the benefit of members.
Club members can use their points to stay for a single night, which is touted as a major attraction for members looking to take in a show or two in downtown Toronto. They can also opt to save points by staying at a standard hotel room rather than an upgraded condo unit. “Immediately, we have access to everything that Skyline owns and operates,” Carrillo said.
Skyline can also offer non-Ontario destinations through a partnership deal with RCI (formerly Resorts Condominiums International), which offers access to 4,000 resorts in 100 countries. “Today, a member can use their points downtown, up at Deerhurst or Horseshoe, or any hotel that is managed by Skyline,” Carrillo said. “Or they can use their points by the day, not by the week like traditional time share, in 4,000 resorts around the world.”
Canadian vacationers are prized by time share operators. “Canadians are now the most sought-after clientele in Mexico, Florida and Hawaii,” Carrillo said. “Because Canadians are better savers than Americans, their credit ratings are usually better. It is just Canadians are a little bit more conservative, like our banking system.”
A strong loonie also means that packages that were out of reach are now affordable.
Pricing varies, but Carillo said a standard vacation membership package may average $20,000, giving them between seven to 14 vacation days at Skyline properties and cost another $700 in average yearly club dues. The principal amount could be paid over a 10-year span.
The target market is more than aging boomers, he said. “Five, seven years ago I would have said just baby boomers and empty-nesters. But today, with this system and availability for one night downtown at the Pantages, I believe we will get down to the 30-year-old range, not necessarily married, all the way up to the traditional 65-, 70-year-old baby boomer.”
Skyline estimates that about 50,000 households in Ontario own time share. The annual income range of households the company is targeting is $60,000 to $100,000.
Built-in need to grow
Future plans include adding properties in Ontario and across Canada.
“This will help us justify acquisitions on the hotel side and the resort side because we have this third pillar to bring revenue and make the numbers work for investors,” Carrillo said.
“We are looking at stuff all the time, all around Ontario and across Canada and going down south as well. Our CEO (Gil Blutrich), I think that is about all he does sometimes, that he just looks at deals.”
In Canada, resort properties are characterized by “ma and pa” ownership so there are plenty of opportunities to add resorts to the base of properties.
“If it was up to Gil, we would be buying resorts every week, but you can’t do that. We are actually in the middle of a nice acquisition now,” the club president said. “I am not going to tell you what it is. If the numbers are right and it fits in the strategy, we will go for it. I would not be surprised if we added another club location within one year.”
Skyline has an obvious gap such as the Niagara area, which fits the tank of gas formula. The company is also looking at properties in Alberta and in B.C.
“We are going to try to go across before we go south. But when we have 1,000 members in a year, the members will tell us where they want to go and we will listen to them.”