Executive Summary C.A.R.E. Cooperative Association of Resort Exchangers Strategic Plan 2010 The Strategic Plan 2010 defines the direction of C.A.R.E. by establishing its goals and objectives relative to the position of the association within the vacation industry. It further sets forth the strengths, weaknesses, opportunities, and threats confronting C.A.R.E. as it seeks to sustain its vision and carry out its mission of providing ethical and outstanding vacation services by providing education and networking opportunities. The plan provides an overview of the vacation industry focusing primarily on the United States and includes summaries of global economic factors, demographics and social trends, and industry issues and competition. An analysis of the strengths, weaknesses, opportunities and threats facing C.A.R.E. is followed by a statement of goals, objectives, and strategies. The plan concludes with the development of an action plan which sets forth specific objectives and actions to be initiated and concluded throughout the year. Information for portions of this plan has been gleaned from various industry resources and publications such as: ARDA State of the Vacation Timeshare Industry: United States Study 2009, and Ypartnership/Yankelovich, Inc. The plan is not intended as a commentary on any individual C.A.R.E. member company, whose practices and performance may vary from the information included herein. Global Economic Factors The United States and much of the industrialized world have been undergoing a recession since December 2007. The global recession has resulted in a sharp drop in international trade, rising unemployment, and slumping commodity prices. Economists predict that recovery may not appear until 2011. While debate continues regarding the origin of the global recession, all countries have been affected, some more so than others. Of the seven largest economies of the world by GDP, only China and France avoided the recession. The US Federal Reserve stated in June 2009 that “the pace of economic contraction is slowing.” Conditions in financial markets have generally improved in recent months. Household spending has shown signs of stabilizing but remains constrained by high unemployment rates, lower housing wealth, and tight credit. Economic projections include a growth level of 2 to 3% in 2010, an unemployment plateau of 10% and typical inflation of 1-2%. Tourism is especially vulnerable to economic uncertainty and volatility as travel and tourism involves a discretionary expense. People will continue to travel although they will do so differently than they did in favorable economic times. Tourism and hospitality businesses that can adapt will not only survive but will thrive as the demand for low cost and value priced products and services will likely grow. The credit crunch has severely impacted the timeshare industry. It is predicted that sales will not pick up until credit markets thaw in mid-2010 or later. Accordingly, timeshare developers have slowed their sales efforts and increased their credit score and down payment requirements. Sales of resort intervals have decreased by 12% as compared to the auto industry (13%) and new home sales (38%). Resort occupancy was up 1.5% in 2008 while hotel occupancy declined by nearly 3%. These slight yet encouraging signs may be the result of the strength of the vacation industry. Demographics and Social Trends According to published reports 9 out of 10 active leisure travelers are familiar with the concept of timeshare and 4% are interested in purchasing a vacation in the next 2 years. Prospective vacation purchasers are typically married, between the ages of 30 and 62, and they rely heavily on the Internet for travel information and reservations. Boomers are aging, Gen-Xers are moving in to their peak earning years, and Gen-Y is entering their adult travel years. Information indicates that the emphasis of today’s demographic trends is still on the Baby Boomers, new trends are constantly emerging. As a result of these dynamic trends opportunities and threats exist for C.A.R.E. and its members. Social trends drive the vacation industry. Forty-one percent of U.S. respondents to a Trip Advisor survey said they intend to spend more on leisure travel in 2010 than they did in 2009. Ninety two percent said they plan to take or more leisure trips and 66% said the economy will not affect their travel plans for the coming year. However, leisure travel in 2010 will continue to be affected by the recession as travelers will search for great deals and bargains. Predicted top travel trends for 2010 include: value-added budget options, Eco-travel, mixing business with pleasure, Latin adventure travel, train travel, pet travel, family reunions, and senior adventure travel. The Internet continues to be the number 1 source for booking and purchasing travel. In general the current social climate dictates that 2010 will be the year of the bargain hunter and that leisure products offering relaxation, fun and value will continue to receive strong consumer support. Industry Issues and Competition The vacation industry has been positively impacted by the expansion of major, high profile companies in the timeshare industry and by the efforts of trade associations and the development of new products and programs. However, a pressing concern of the industry is the lack of available capital, primarily receivable financing. Education throughout the financial markets is paramount in order to eliminate or reduce the denial of loans. Harnessing the Internet and making use of social media, viral marketing, etc. are keys to businesses’ ability to communicate with today’s consumers. Economic challenges continue to affect consumer spending habits requiring the public to reevaluate priorities. Developers, travel clubs, and fulfillment companies are responding with increased “drive-to” vacation destinations. Declining real estate values have created long-term, cost effective opportunities for our industry to create vacation ownership and fulfillment resources from distressed properties. Developers are seeking lower price point products as possible vacation ownership options such as travel clubs. This scenario may present itself as an opportunity for many C.A.R.E. member companies. Travel club sales ensure a continued tour flow and represent an introduction to the concept of vacation ownership. With regard to industry regulation there will continue to be scrutiny of industry sales and marketing practices and related issues. Taxation authorities have begun levying taxes on rentals, wholesales, and exchanges of condo resort inventory. The entrance of resort developers in to the travel club environment could have an impact on the availability of excess inventory. Health concerns such as H1N1 virus, insecurity about the future, and a glut of inventory due to foreclosures will necessitate the development of new techniques for marketing and selling. Industry analysts state that recovery may take up to 5 years. Strengths, Weaknesses, Opportunities, Threats Strengths: quality and quantity of resort offerings available through C.A.R.E. members; knowledge base of membership; member’s ability to adapt to changing economic environment; networking and educational opportunities Weaknesses: lack of recognition of C.A.R.E. within the industry; failure to fully embrace current technologies; attrition and apathy of members; negative effects of the economy on renewals and conference participation. Opportunities: continued need for direct and 3-way exchanges; availability of excess inventory for rentals, wholesales and trades; continued expansion of travel clubs and the resulting requirements for fulfillment inventory; educational opportunities available to members; expanding international membership. Threats: stagnation of overall growth of membership; limited public relations; unethical business practices; incorrect perceptions regarding benefits of C.A.R.E. membership; lack of availability of financing of club memberships and timeshare sales; lingering negative perception among the general public and lenders; taxation and industry regulation. Goals, Objectives and Strategies To achieve its goal C.A.R.E. proposes the following: enhance exposure within the vacation industry, expand uses of technology and awareness of C.A.R.E., provide and enhance members-only benefits, raise awareness of the need to protect proprietary information, provide education on industry changes and regulatory issues. An action plan setting forth goals, timetables for completion and resources has been established. The Strategic Plan defines the direction of CARE by establishing its goals and objectives with the intention of providing high quality service to its members and maintaining the association’s proper position within the vacation industry. Fundamentally the goal of C.A.R.E. is to offer its members the tools to provide outstanding vacation services and practice effective yield management through information, education, and networking opportunities while remaining committed to the highest standards and ethics.
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