There has been no shortage of headlines about the pandemic-driven boom in the short-term rental market. However less airtime has been given to the sector’s close relative - the timeshare industry – which has similarly recovered with record-high demand.
According to Lori Gustafson, executive vice president and chief brand and digital strategy officer at Marriott Vacations Worldwide, the vacation company - which has more than 120 vacation ownership resorts and roughly 700,000 owner families in its portfolio - is currently experiencing upwards of 90% occupancy at all of its resorts.
To help capitalize on the return of leisure travel, the company recently launched Abound by Marriott Vacations, an owner benefit and exchange program that gives members access to more than 90 vacation club resorts, 8,000 Marriott Bonvoy hotels, 2,000 vacation homes and 2,000 unique experiences.
Below, Gustafson discusses the new program, as well as Marriott Vacations Worldwide’s wider digital strategy and its efforts focused on loyalty and personalization.
What trends are you seeing around consumer demand this summer?
It's actually very, very top of mind. For Marriott Vacations Worldwide, one of the real advantages of our business is we're completely leisure focused. We spent a lot of time looking at leisure travel spend and how our close to 700,000 owner families are wanting to get out and vacation. We've seen demand at an all-time high, whether that's through owners booking reservations or looking ahead through the balance of the year. We're running at over 90%-plus occupancy rates at all of our resorts. And we've seen an increase across the board on all of our digital channels for looking for vacation options and ways to get out this summer and even the back half of the year.
Some trends... I did an investor day recently, just last month, and we spent a lot of time talking about leisure travel really booming, despite some of the macroeconomic factors. Given our brand portfolio, we tend to appeal to the upper-upscale consumer base and there are some really promising larger macro trends. I think leisure travel spend is projected to reach somewhere around 1.7 trillion by 2027. If we look back, that's growing close almost a 23% CAGR between last year to 2027.
Based on our Q1 financial contract sales, we had the strongest quarter that we've had versus Q1 2021. ... We've just seen a pretty significant boom, if you will, or at least, a real resilient - I would say specifically in the U.S. - population wanting to come back and travel at large.
How have your digital solutions adapted to what consumers want now?
[Like a lot of companies, we looked at] the suite of products we all are offering, especially digitally across the ecosystem. We took a little bit of a step back, kind of assessing the landscape, given all those trends we just talked about and the relevance vacations are really playing in people's lives.
We felt like it's the right time to innovate and design what we're calling the "vacation ownership experience for the future." We just announced that we're embarking on a multi-year initiative, which we're calling Vacation Next, which includes introducing a new owner program this summer called Abound by Marriott Vacations.
What that really looks like is us holistically looking, not just at marketing or sales, but looking at marketing, sales and service of the entire ecosystem, plus our entire digital footprint, both from a web and mobile perspective, and investing significantly in a large-scale what I would consider to be business transformation effort that's really powered by digital tools.
So that includes wholesale shifts and us moving all of our different aspects of our business into Salesforce. It also includes some major investment in a much more focused web and mobile experience that is going to be much more data-driven and personalized in nature. We are really looking to connect what have been historically siloed areas of our organization, just to make sure we're leading with that consumer-first mentality.
Probably more than anything, our business, the timeshare vacation ownership business, has been a traditionally face-to-face sale, which we understand the power of. But as we think about our investment in our digital strategy over the years to come, we really are placing bets in a more digital and data-driven future and expect that you as a consumer and every owner would be able to do all searching, booking, buying and being inspired in a very meaningful way online.
Can you expand on the silos that you're connecting and what you're trying to accomplish there?
One of the key benefits about our business is our connection to key loyalty programs. That's the Marriott Bonvoy loyalty program and our relationship with Marriott International. Then we also have the our connection with the World of Hyatt loyalty programs. It's close to 30 million members and 19 brands for World of Hyatt and 160-plus million members and over 30 brands on the Marriott side. We find target customers who are loyal to our brands, and that's where it starts with that kind of golden record, if you will.
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In the past, we haven't really been able to connect the dots in a more systematic or automated way. So when you agree to come stay with us at one of our great resorts, and then decide to take a tour and want to find out more about what it looks like to own with us, that customer information hasn't necessarily passed on. So as we are learning more about you, that information is rich data to personalize your experience more. [That data] hasn't been in a singular location to go from sales, to marketing and then eventually to your online owner dashboard that's completely personalized and reiterates that we, as Marriott Vacations Worldwide, have spent a lot of time with you and know a lot about you and know ideally where you want to vacation next. That's the work that we're doing right now to clean up a variety of technical debt and looking at some of the solutions of the future.
I think we're really modernizing the way we go to market. Other companies are on similar paths, but for us, it's pretty transformational, given kind of our current state and what we have a vision for, for our future state.
What other loyalty initiatives are in play?
For us, the way we source the best customers is our connection to some of the loyalty programs, but on the vacation ownership side, we're really changing and evolving all the things that you can do from an experiential perspective with your vacation ownership. The yesteryear of timeshare is that you buy a week of vacation at one resort in Hilton Head, South Carolina, and you and your family go there for 35 years every year at the same time.
Now it's completely flexible, and there's so much more access to a world of experiences. We offer thousands of opportunities to use your vacation currency, to everything from curated tours in Italy to cruises, to being able to use your points to go on once-in-a-lifetime types of other excursions. Our product is definitely moving to this and has been. It is much more experiential in the vacation space and is more than accommodation.
Tell me about the new Abound by Marriott Vacations program and how it promotes experiences.
Abound by Marriott Vacations is a new owner program that allows our owners, whether you're an owner of Marriott Vacation Club, Westin Vacation Club or Sheraton Vacation Club, to easily interchange in between those different club options. Plus it includes access to 8,000-plus Marriott-branded hotels, 2,000-plus vacation homes and 2,000-plus unique experiences. We've just looked at a variety of new ways that we can package up options to give owners more flexibility and access within our system. We think that's a real value. It's additive to the ownership experience and one more reason to be an owner with us. No one in the category has really done the same thing in the same meaningful way to my knowledge that we're doing it.
From an experience standpoint, we obviously have incredibly high brand standards, and that branded experience, if you come to one of our properties is what you would know and trust by any one of those brands. And then online, the customer experience is really where we're doubling down both for our associates in call centers and across our organization, but also for the customer experience to make it much easier than it's been in the past to book all those options that I just outlined in a seamless and meaningful way. Our product is one where people are committing a fair amount of money in the upfront and really love the brands and love the type of vacation experiences that we offer. So of course we want to make sure we're delivering across all different channels, whether you're on vacation with us or just getting inspired to take the next one.
What are additional points to Marriott Vacations Worldwide's digital strategy?
This larger Vacation Next initiative is also bringing more digital tools to our physical sales environments in places where we interact with owners. So reiterating that we're taking into consideration the associate experience to make sure there's continuity really seamlessly between our customers and our associates. We're seeing a lot of trends related to that employee experience space and productivity that's going to require new tools to increase productivity, given the challenging labor market.
For us, it's going to be continuing to look at ways to unify our products and create simplified tools and have them be data-driven and predictive in nature. It's a really exciting time. We believe we're super well-positioned for the future and ready to attract that next-generation consumer.