Travel + Leisure (TNL) The 2nd Annual Morgan Stanley Travel & Leisure Conference 2024 summary

Industry trends and demand outlook

• Demand for timeshare remains strong, with consumers seeking more space and flexibility in travel accommodations over the past five years, a trend expected to continue.

• Online marketplaces like Airbnb and Vrbo have supported overall demand for vacation ownership rather than acting as direct competitors.

• Branded timeshare offerings and flexibility are key differentiators, with over 80% of sales tied to hospitality brands.

• The industry is resilient during downturns due to its direct marketing model and is gradually increasing its online sales presence.

• Lowering customer acquisition costs through digital channels is a focus, aiming to expand margins in the coming years.

Strategic initiatives and brand expansion

• Shifted from a mono-brand to a multi-brand strategy, signing new partnerships (e.g., Allegiant, Sports Illustrated, Accor) to broaden reach and databases.

• Multi-brand approach prevents saturation and enables dramatic growth by accessing new customer pools.

• Recent acquisitions and launches are expected to contribute incremental EBITDA and support high single-digit growth.

• Sports Illustrated Vacation Ownership Club will open its first property in two years, with sales beginning in 2025 and more locations planned.

• New projects are increasingly located in city centers, appealing to younger demographics and evolving travel preferences.

Marketing, sales, and customer profile

• Upgraded marketing criteria post-COVID, raising minimum FICO scores and targeting higher-income households, resulting in higher conversion rates and improved customer quality.

• Tour growth guidance for 2025 is 10%, with Q1 2024 already up 15%.

• Renewed focus on package sales and call center investments to build a robust future pipeline.

• Owner base is getting younger, with the average new owner age dropping from the 50s to mid-40s over five years; two-thirds of new owners are Gen X, Gen Z, or millennials.

• Net owner growth is less critical due to natural cycling; focus is on replacing low-revenue owners with high-revenue new owners.