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This excerpt taken from the WYN 10-K filed Feb 27, 2009. Vacation
Exchange and Rentals Industry Overview
The estimated $44 billion global vacation exchange and
rentals industry has been a growing segment of the hospitality
industry. Industry providers offer products and services to both
leisure travelers and vacation property owners, including owners
of second homes and vacation ownership interests. The vacation
exchange and rentals industry offers leisure travelers access to
a range of fully-furnished vacation properties, which include
privately-owned vacation homes, apartments and condominiums,
vacation ownership resorts, inventory at hotels and resorts,
villas, cottages, boats and yachts. Providers offer leisure
travelers flexibility (subject to availability) as to time of
travel and a choice of lodging options in regions to which such
travelers may not typically have ease of access to such choices.
For vacation property owners, affiliations with vacation
exchange companies allow such owners to exchange their interests
in vacation properties for vacation time at other properties or
for other various products and services. Additionally,
affiliation with vacation rental companies provides property
owners the ability to have their properties marketed and rented,
as desired and, in some instances, to transfer the
responsibility of managing such properties.
The vacation exchange industry provides to owners of intervals
flexibility through vacation exchanges. Companies that offer
vacation exchange services include, among others RCI (our global
vacation exchange business and the world’s largest vacation
exchange network), Interval Leisure Group, Inc. (a third-party
exchange company), and numerous smaller companies, some of which
are solely internet based. In addition, some companies that
develop vacation ownership resorts and market vacation ownership
interests offer exchanges through internal networks of
properties. To participate in a vacation exchange, an owner
generally contributes intervals to an exchange company’s
network and then indicates the particular resort or geographic
area to which the owner would like to travel, the size of the
unit desired and the period during which the owner would like to
vacation. The exchange company then rates the owner’s
contributed intervals based upon a number of factors, including
the location and size of the unit or units, the quality of the
resort or resorts and the time period or periods during which
the intervals entitle the owner to vacation. The exchange
company then generally offers the owner a vacation with a
comparable rating to the vacation that the owner contributed.
Exchange companies generally derive revenues from owners of
intervals by charging exchange fees for facilitating exchanges
and through annual membership dues. In 2007, 78% of owners of
intervals were members of vacation exchange companies, and
approximately three-fifths of such owners exchanged their
intervals through such exchange companies.
The overall trend in the vacation exchange industry has been
growth in the number of members of vacation exchange companies.
We believe that current economic conditions will result in
slower growth in the near term, but believe that the longer term
trends will support a return to stronger growth. Longer term, we
believe one factor supporting growth in the vacation exchange
industry will be growth in the premium and luxury segments of
the vacation ownership industry through the increased sales of
vacation ownership interests at high-end luxury resorts and the
development of vacation ownership properties and products around
the world. In 2007, there were approximately 6.2 million
members industry-wide who completed approximately
3.6 million exchanges. We believe that existing trends
within the vacation exchange industry reflect that timeshare
vacation ownership developers are enrolling members in private
label clubs, whereby the members have the option to exchange
within the club or through external exchange channels. Such
trends have a positive impact on the average number of members,
but an opposite effect on the number of exchange transactions
per average member and revenue per member.
The vacation rental industry offers vacation property owners the
opportunity to rent their properties to leisure travelers for
periods of time when the properties are unoccupied. The vacation
rental industry is not as organized as the lodging industry in
that the vacation rental industry, we believe, has no vacation
rental-specific global reservation systems or brands. The global
supply of vacation rental inventory is highly fragmented with
much of it being made available by individual property owners.
Although these owners sometimes rent their properties directly,
vacation rental companies often assist in renting owners’
properties without the benefit of globally recognized brands or
international marketing and reservation systems. Typically,
vacation rental companies collect rent in advance and, after
deducting the applicable commissions, remit the net amounts due
to the property owners
and/or
property managers. In addition to commissions, vacation rental
companies earn revenues from rental customers through fees that
are incidental to the rental of the properties, such as fees for
travel services, local transportation,
on-site
services and insurance or similar types of products.
We believe that as of December 31, 2008, there were
approximately 1.3 million and 1.7 million vacation
properties available for rental in the United States and Europe,
respectively. In the United States, the vacation properties
available for rental are primarily condominiums or stand-alone
houses. In Europe, the vacation properties
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available for rental include individual homes and apartments,
campsites and vacation park bungalows. Individual owners of
vacation properties in the United States and Europe may own
their properties as investments and may sometimes use such
properties for portions of the year.
We believe that the overall demand for vacation rentals has been
growing for the following reasons: (i) the availability of
lower-cost and flexible transportation options; (ii) the
increased use of the Internet as a tool for facilitating
vacation rental transactions; (iii) the emergence of
attractive, low-cost destinations, such as Eastern Europe; and
(iv) increasing awareness of vacation rental options among
Americans. The demand per year for vacation rentals in Europe
and the United States is approximately 48 million vacation
weeks, 28 million of which are rented by leisure travelers
from Europe. Demand for vacation rental properties is often
regional in that leisure travelers who rent properties often
live relatively close to such properties. Some leisure
travelers, however, travel relatively long distances from their
homes to vacation properties in domestic or international
destinations. We believe that current economic conditions will
result in slower growth in the near term, but believe that the
longer term trends will support a return to stronger growth.
The destinations where leisure travelers from Europe, the United
States, South Africa and Australia generally rent properties
vary by country of origin of the leisure travelers. Leisure
travelers from Europe generally rent properties in European
destinations, including Spain, France, the United Kingdom, Italy
and Portugal. Demand from European leisure travelers has
recently been shifting beyond traditional Western Europe, based
on political stability across Europe, increased accessibility of
Eastern Europe and the expansion of the European Union. Demand
by leisure travelers from the United States is focused on
rentals in seaside destinations, such as Hawaii, Florida and the
Carolinas, in ski destinations such as the Rocky Mountains, and
in urban centers such as Las Vegas, Nevada; San Francisco,
California; and New York City. Demand is also growing for
destinations in Mexico and the Caribbean by leisure travelers
from the United States.
We believe that the overall supply of vacation rental properties
has grown primarily because of the increasing desire by existing
owners of second homes to gain an earnings stream evidenced by
homes not previously rented appearing on the market.
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