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