The US vacation ownership market is poised for remarkable growth in the coming years, reaching a value of $15.32 billion by 2028, driven by factors such as high occupancy rates, the integration of virtual reality and augmented reality, and the increasing popularity of point-based vacation ownership.
However, despite growing at a CAGR of 7.2 per cent, challenges like high maintenance costs need to be addressed to fully leverage the market’s potential.
In this article, we delve into the key trends, challenges, and segmentation insights of the US vacation ownership market highlighted in data from Research and Markets.
The vacation ownership market in the United States is extremely fragmented, and this is likely to increase during the forecast period. The region is home to a large number of global and regional vendors like Wyndham, Marriott Vacations Worldwide, Hilton, InterContinental Hotels Group, Disney, and Bluegreen Vacations Holding Corporation.
These companies are seeking to expand their market presence through profitable partnerships, whereas domestic vendors capitalize with product and service portfolios tailored to domestic needs. Key market participants’ strategies include launches, mergers and acquisitions, and collaborations.
High Occupancy Rates:
The U.S. hotel industry witnessed robust occupancy gains in 2022, with an occupancy rate of 82.6 per cent surpassing the pre-pandemic levels of 80.8 per cent. This increase in occupancy was fueled by the recovery of health and leisure travel demand. Moreover, the revenue per available room (RevPAR) experienced growth compared to 2019 levels.
These positive occupancy trends indicate a thriving market and present an excellent opportunity for vacation ownership properties to cater to the increasing demand for unique and personalized experiences.
Virtual Reality & Augmented Reality:
Virtual reality (VR) and augmented reality (AR) have emerged as game-changers in the vacation ownership industry. AR enhances the physical environment by overlaying virtual elements, making it valuable for hotels that sell experiences. With millennials dominating the consumer generation, the adoption of VR and AR devices has gained momentum, offering new growth opportunities for the U.S. vacation ownership market.
These technologies enable properties to provide immersive virtual tours, showcase amenities, and enhance the booking process, ultimately enriching the guest experience.
Point-Based Vacation Ownership:
Point-based timeshares have become increasingly popular due to their flexibility and convenience. Unlike traditional fixed-week ownership, point-based timeshares allow owners to plan vacations according to their preferences.
In addition to flexibility, point-based ownership includes exceptional customer service, personalized concierge services, and access to a wide range of hotel and dining options, maximizing vacationers’ enjoyment. This segment enables members to explore destinations globally, adding to the allure of vacation ownership.
High Maintenance Costs One of the significant challenges facing the U.S. vacation ownership market is the high maintenance costs associated with timeshare ownership. Annual maintenance fees cover various expenses such as repairs, amenity maintenance, insurance, and administrative tasks.
Over the years, these fees have shown an average annual increase of approximately 4 per cent. Additionally, properties may impose extra assessment fees to cover unforeseen costs. Addressing these high maintenance costs is crucial to ensure market growth and maintain affordability for owners.
Timeshare ownership is the largest contributor to the U.S. vacation ownership market. This ownership type offers shared ownership of vacation properties, with options such as fixed week, floating week, or point-based systems. The flexibility provided by point-based timeshares has gained popularity among consumers, allowing them to tailor their vacations to their preferences.
In terms of occupancy, owners make up the largest segment of the market, accounting for over 43 per cent of the market share in 2022. Owners have the right to occupy a real estate unit for a specific time frame, and this segment is expected to generate additional revenue of $2.33 billion during the forecast period.
Among different owner types, Generation X holds the largest market share. Gen Xers prioritize flexibility and unique experiences, making timeshares an appealing choice. With significant travel spending and a preference for family-friendly resorts, Gen Xers are driving the demand for vacation ownership.
The Southern U.S. region dominates the U.S. vacation ownership market, representing over 46 per cent of the market share in 2022. This dominance can be attributed to factors such as a large population base, domestic travel demand, and robust growth in the real estate, tourism, and hospitality sectors. The region encompasses states like Florida, Texas, and Virginia, known for their thriving tourism industries and diverse vacation ownership offerings.
The U.S. vacation ownership market is witnessing significant growth, propelled by factors such as high occupancy rates, the integration of virtual reality and augmented reality, and the appeal of point-based vacation ownership.
However, challenges like high maintenance costs need to be addressed to ensure sustained growth and customer satisfaction. By leveraging these trends and addressing challenges, the vacation ownership industry can continue to provide exceptional experiences for travelers and thrive in a dynamic market landscape.
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