ILX Resorts (ILX)

• Article
• Discussion
• Edit
• History
• Bookmark

Bulls: Reasons To Buy Feeling Bullish? Be the first to explain why this would make a good investment Bears: Reasons To Sell Feeling Bearish? Be the first to explain why this would make a poor investment Send the authors a comment or suggestion Be the first to make a suggestion See All Suggestions

Top Contributors Francis D'Hondt Related Articles Airline Travel Fractional Ownership and Timeshares Hospitality Marriott International (MAR) Net income

[edit] Business Overview

[edit] Business Segments

2007 Revenue by Segments: Year ending Dec. 31

[edit] Sales of Vacation Ownership Interests (52% of 2007 Revenue)

[edit] Resort Operating Revenue (43% of 2007 Revenue)

[edit] Interest and Finance Income (7% of 2007 Revenue)

[edit] Estimated Uncollectible Revenue (-2% of 2007 Revenue)

[edit] Business and Financial Analysis

[edit] Key Trends and Forces

Domestic Crude Oil Prices per Barrel: Inflation adjusted for 2007 prices^[2]

[edit] Rising oil prices are negatively affecting airline travel, which in turn negatively affects the hospitality industry

Resort operators such as ILX depend heavily on overall economic strength for its revenue, as people tend to travel only when they feel they have enough disposable income to afford such vacations. In the first half of 2008, however, the price of crude oil rose to $98.66/barrel, up 76.8% from the year before.^[2] With this increase came the obvious increase in the price of jet fuel, as prices rose from $850/metric ton at the beginning of 2008 to $1300/ton by June.^[3] As a result of these increasing prices, the International Air Transport Association drastically lowered their profit forecasts for the industry in June of 2008. The IATA now expects global airlines to collectively lose $2.3 billion if oil averages $107/barrel for 2008, and up to $6.1 billion if the price averages $135/barrel for the last six months of the year.^[4]

The increasing fuel costs lead to spikes in airline prices, which in turn drastically lower the numbers of people who can afford travel costs. This in turn takes business away from hotels, as it lowers the number of tourists in need of lodging.^[5]

[edit] Competition

• Walt Disney Company (DIS) is a media and entertainment conglomerate that operates in four segments: Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products. Disney competes with ILX through its Parks and Resorts segment, which consists of revenue from Disney's amusement parks and vacation resorts around the world. In 2007, Disney obtained 30% of total revenue from this segment, approximately $10.65 billion. Disney's wildly popular theme parks and world famous name provide a serious threat to ILX for the business of tourists around the world.^[6]
• Marriott International (MAR) is a worldwide operator and franchiser of hotels and related lodging facilities. The company's revenue is divided into five segments, all of which (such as International Lodging and Timeshare Lodging) compete with ILX Resorts. Another internationally respected name, and thus a popular choice for vacation lodging, Mariott's 2007 was $13 billion.^[7]
• Wyndham Worldwide (WYN) is the largest hotel franchiser, vacation exchange network, and vacation ownership company in the world, owning properties in four continents. In 2007, Wyndham made $3.84 billion in total revenue, with 78% (about $3 billion) coming from North American operations. This large influence on the North American market makes Wyndham another large competitor for ILX, whose entire revenue comes from North America.^[8]
• Starwood Hotels & Resorts Worldwide (HOT) is the hotel and leisure company behind such famous brand names as Westin Hotels and Resorts, Sheraton Hotels & Resorts, and W Hotels.^[9] Starwood operates in 5 continents, with $2.45 billion (39.8% of total revenue) coming from the United States in 2007.^[10] Starwood is a threat to ILX because of its brand strength, with several well-known and respected hotel chains under its ownership.^[11]

[edit] References

1. ↑ ^{1.0 1.1} Google Finance: ILX
2. ↑ ^{2.0 2.1} Inflation Data: Historical Oil Prices
3. ↑ Wall Street Journal: More Fuel Surcharges Could Curb Air Travel
4. ↑ New York Times: Airlines Face ‘Desperate’ Situation, Official Says
5. ↑ ILX 2007 10-K, Item 1A: Risk Factors, page 6
6. ↑ Wikinvest: DIS
7. ↑ ^{7.0 7.1} Google Finance: LVS
8. ↑ Wikinvest: WYN
9. ↑ ^{9.0 9.1} Google Finance: HOT
10. ↑ HOT 2007 10-K, Item 2: Properties, page 18
11. ↑ HOT 2007 10-K, Item 1: Business, page 3
12. ↑ Google Finance: ILX
13. ↑ Google Finance: DIS
14. ↑ Google Finance: WYN