Speaker 1: Bloomberg Audio Studios, podcasts, radio news Well, shares of Travel
Speaker 1: and Leisure reached an inter day record, rising fifteen percent.
Speaker 1: That was back on October twenty second. This was the
Speaker 1: day the company lifted the low end of its adjusted
Speaker 1: EBITDA forecast for the full year. Shares the four point
Speaker 1: one billion dollar market cap company are up around twenty
Speaker 1: nine percent so far this year.
Speaker 2: Yeah, that's quite a run. We want to bring in
Speaker 2: our next guest, Mike Brown, President and CEO of the company,
Speaker 2: which has close to twenty resort, travel, club and lifestyle
Speaker 2: brands including Margaritaville, Vacation Club, Club Windham and more. He
Speaker 2: does us from I believe a Chili Orlando on this Tuesday.
Speaker 2: It's a little chili up here as well.
Speaker 3: Mike.
Speaker 2: Great to have you back with us. You operate in
Speaker 2: a specific segment time share, So talk a little bit
Speaker 2: more about who exactly is your customer.
Speaker 4: Remind our audience, Well, ultimately we're one hundred percent leisure
Speaker 4: travel company and our demographic is around one hundred and
Speaker 4: ten thousand dollars of average income, average FICO over seven
Speaker 4: hundred and thirty average FICO score, age group upper forties,
Speaker 4: low fifties, and really what when you start to think
Speaker 4: about who likes to travel with us, no matter the brand,
Speaker 4: they want bigger accommodations, they want consistency of brands, and
Speaker 4: they want good value for their money. And that's really
Speaker 4: the space that we operate in. And if you think
Speaker 4: about these last five years, where inflation is running high
Speaker 4: and you've already locked in your vacation dollars, the value
Speaker 4: component has been really strong.
Speaker 3: It has propelled our growth here in the last five years.
Speaker 1: How much of your business is sales of new memberships
Speaker 1: versus people actually just using what they bought maybe years.
Speaker 4: Ago, right, It's actually one of the best endorsements of
Speaker 4: people's love of the product is that every year about
Speaker 4: sixty five percent of our income mental purchases are from
Speaker 4: people who already own with us and want either more
Speaker 4: space or more vacation time. The rest are from our
Speaker 4: new owner base who are dipping their toe in the
Speaker 4: water and seeing what this.
Speaker 3: Type of vacation travel is all about.
Speaker 4: So not only are we getting two thirds of our
Speaker 4: sale roughly from people who already own with us, what
Speaker 4: we also see is the people who've paid for their
Speaker 4: ownership already. There's a ninety eight percent retention rate, so
Speaker 4: two massive validations that once people own they really love
Speaker 4: the product and keep buying more.
Speaker 1: So, you know, time shares they get a bad rap.
Speaker 1: I mean they have a bad rap. I mean, if
Speaker 1: you like, just Google, get out of timeshare. There are
Speaker 1: legal companies that specialize in getting you out of time shares.
Speaker 1: Is yeah, I mean you know this. You know the industry.
Speaker 1: Is your product different than what people know as time shares?
Speaker 1: And why that?
Speaker 3: Yeah?
Speaker 4: Wrap, Look, it's interesting because I can even feel the
Speaker 4: a little bit uncomfortableness of asking the question because it
Speaker 4: has a history that predates the Great Financial Crisis. But
Speaker 4: I think the untold story here and why I love
Speaker 4: coming on shows like yours, beyond it being a great show,
Speaker 4: is that the industry has dramatically changed. Eighty five percent
Speaker 4: of the sales today are by companies that you might
Speaker 4: book your business day, whether it's Merritt, Hilton, Wyndham, Margueriteville,
Speaker 4: Holiday and Disney. All of these are the brands that
Speaker 4: have come to the forefront in the last ten years.
Speaker 4: And the value proposition, the way of vacationing with a
Speaker 4: brand you trust, is not the reputation that it gained
Speaker 4: great financial crisis where it was independent real estate developers,
Speaker 4: And I would just encourage everyone to do your own
Speaker 4: research about these type of advertisements. There's a lot of
Speaker 4: press out there that's shown some really negative stories about them.
Speaker 4: That's for your people to do that our own research.
Speaker 4: But what I will tell you is that our retention rate,
Speaker 4: as I mentioned, ninety eight percent, two thirds buy more.
Speaker 4: And this is now a massively branded industry that it
Speaker 4: wasn't when it gained that reputation you're referring to.
Speaker 2: So what's like the trickiest component of your business? Is
Speaker 2: it properties? Management, labor? I'm just curious.
Speaker 3: Yeah, it's a complicated business.
Speaker 4: We run a sales and marketing business, we run a
Speaker 4: management business. We operate the club so that we can
Speaker 4: get people from one of our two hundred and eighty
Speaker 4: resorts to another, and we access the ABS market three
Speaker 4: times a year to.
Speaker 3: Sell our notes and gain cash flow. I think it's.
Speaker 4: The management of all of that together. When you look
Speaker 4: at our company's performance, the satisfaction of our customer base,
Speaker 4: and the growth of our brands. We've been highly successful
Speaker 4: and shown growth and showed a way to grow, and
Speaker 4: it's shown through in our equity, But it's the experienced
Speaker 4: leadership to combine several very complicated businesses together to make
Speaker 4: sure that it's seamless for the consumer and that we're
Speaker 4: also ultimately fulfilling our mission, which is getting people on
Speaker 4: great vacations. So I would say it's the complexity of
Speaker 4: the management as opposed to an individual component that's really
Speaker 4: hard to operate. I would just add that one component
Speaker 4: that has become more complex is the development of real
Speaker 4: estate has become a lot more expensive ground up, so
Speaker 4: we've moved to a conversion strategy and a lot of
Speaker 4: our new resorts.
Speaker 1: So I want to talk a little bit more about
Speaker 1: the demographics here of your clientele, and certainly, you know
Speaker 1: with twenty different brands, it depends on what actual brand
Speaker 1: we're talking about. You did give us some age demographics
Speaker 1: and where people are generationally, but in terms of space
Speaker 1: and what are they spending, what do you know about
Speaker 1: where you know in terms of their other demographics like
Speaker 1: household net worth and what part of the economy you're
Speaker 1: able to get.
Speaker 4: Right, Well, what we find in our product is the
Speaker 4: vast majority, irrespective of the brands, are going to want
Speaker 4: to be in a situation where they want to know
Speaker 4: what they can expect from their vacation, and a Margaritaville
Speaker 4: guest is going to want a sand, a drink in
Speaker 4: your hand, that type of lifestyle.
Speaker 3: Whereas our newest.
Speaker 4: Brand, Eddie Bauer, these are people that want to hike
Speaker 4: in Zion National Parker or get to the great outdoors
Speaker 4: and enjoy a family reunion.
Speaker 3: Either way.
Speaker 4: Our financial demographics or what I explained earlier, but what
Speaker 4: we see as the travel trend is people want experiences
Speaker 4: that match their personal lifestyle as opposed to four walls,
Speaker 4: and then they have to go find their experience outside
Speaker 4: of the resort. So that's why we're launching Sports Illustrated
Speaker 4: brand and Eddie Bauer. We have Margaritaville Club Wyndham. You mentioned.
Speaker 4: We see an opportunity to customize your experience inside the
Speaker 4: resort and outside as opposed to over separating the financial demographics.
Speaker 4: I will say one of our big focus is to
Speaker 4: pull the average age down as we launch new brands
Speaker 4: over the upcoming years.
Speaker 2: You know, it's interesting, like I do think about like
Speaker 2: how consumers relate to a specific brand. I mean that
Speaker 2: really moves the needle, doesn't it whether it's Sports illustrated.
Speaker 2: I'm just curious, and how do you guys think about
Speaker 2: what brands you want to affiliate yourselves with?
Speaker 4: Right? If you know, I have two children that are
Speaker 4: children young men that are at a university.
Speaker 2: Always were always to us, Right, are there always kids?
Speaker 4: Yeah?
Speaker 3: They really are, They really are.
Speaker 4: But I'll tell you if I were to go go
Speaker 4: up to ann Arbor and I have the option to
Speaker 4: stay in an unbranded hotel with four walls or something
Speaker 4: that affiliates itself closer to the university, there's a natural
Speaker 4: pull to it. And I can apply that if you're
Speaker 4: going to go to a beach destination and you have
Speaker 4: a chance, and if you're a parent head and you
Speaker 4: want to be in that Margaritaville environment versus a resort.
Speaker 4: That's a brand that has thousands of resorts everywhere from
Speaker 4: the highways to the resort destinations. You're going to go
Speaker 4: to the Margaritaville location. And our club Windom has a
Speaker 4: similar type of affiliation. So we just find that people
Speaker 4: are moving more and more to the lifestyle that attracts them,
Speaker 4: and we are therefore developing brands that allow them to
Speaker 4: just do that naturally. To enjoy their lifestyle inside of
Speaker 4: the resort and outside, and it's it's already been received
Speaker 4: with a lot of great reception and we're excited about
Speaker 4: what we can do going forward.
Speaker 1: What's the brand? You have so many different brands. You
Speaker 1: mentioned Margaritaville, we talked about wind, Eddie Bauers. What are
Speaker 1: you missing?
Speaker 3: I think there's a few things that we have to consider.
Speaker 4: We don't have anything in the luxury space today, what
Speaker 4: I would say pure luxury. There's a lot of opportunities
Speaker 4: to tie our type of product.
Speaker 3: To the crew to crewise type of companies.
Speaker 4: And then, as is always the case, someone you know
Speaker 4: five years ago would have said, well, Eddie Bauer is
Speaker 4: not a hospitality name, but you immediately put that to
Speaker 4: an outdoor, outdoor living lifestyle. And I think our challenge
Speaker 4: is there's the typical hospitality verticals, which would include luxury,
Speaker 4: but there's also just niche, niche lifestyle opportunities that we
Speaker 4: will look for. But you know, if I could just
Speaker 4: step back a second, the key to our success is
Speaker 4: whatever we do, we execute against it and we deliver
Speaker 4: on what we promise the street, and that success allows
Speaker 4: us more and more access to more and more brand,
Speaker 4: So I would expect that to allow us to move
Speaker 4: into these spaces that we currently aren't in.
Speaker 2: Well, I'd love to be sitting at Margaritaville Vacation, a
Speaker 2: Margarita vacation club with the Margarita in my hand. But
Speaker 2: having said that, before we go, Mike, any signs of stress,
Speaker 2: any signs of you know, economic you know, concerns as
Speaker 2: you look at your business, or maybe what it tells
Speaker 2: you about the outlook here.
Speaker 4: Well, I would say my personal sentiment and what I'm
Speaker 4: seeing in our business is very similar to it was
Speaker 4: thirty days ago, which was they're still uncertainty out there,
Speaker 4: which causes us to be looking intently every day with
Speaker 4: any metric internally that would that would signal the economies
Speaker 4: going one way or the other. Thirty days on from
Speaker 4: our earnings call, I would say that our performance and
Speaker 4: our outlook on the economy looks very similar than it
Speaker 4: did at the end of October when we reported our
Speaker 4: leisure travel demand and is looking good for Q four.
Speaker 4: With the sound that the shutdown is coming to an end,
Speaker 4: I was starting to worry that we might start to
Speaker 4: see changes in behavior between air and drive to traffic.
Speaker 1: Are you seeing that at all, just very briefly, we have.
Speaker 4: Not, And in fact, it looks like our twenty five
Speaker 4: bookings here in Q four are at or slightly above
Speaker 4: where they were last year. And we haven't seen a
Speaker 4: dramatic change. We've seen ever so slightly that changed from
Speaker 4: fly to drive to but I'm really confident that it
Speaker 4: hadn't gone on another week or two into the Thanksgiving season,
Speaker 4: we would have saw a noticeable shift of people in
Speaker 4: New York saying, look, let me just get to a
Speaker 4: drive to destination as opposed to flying to Orlando. I
Speaker 4: don't want to deal with the hassle with my free time. Fortunately,
Speaker 4: it looks as if we will avoid that. But at
Speaker 4: this point we have not seen an indication that that
Speaker 4: has caused changing leisure travel.
Speaker 2: Mike Brown, President and CEO of Travel and Leisure Company,
Speaker 2: joining us from Orlando