Marriott Vacations Worldwide Launches Experience-Driven Ownership: Inner Circle

Glenn: [00:00:00] Here we go. Everybody, it’s your hospitality friend Glenn here. And I’m excited because I’ve got Mike Flasky, president and COO of Marriott Vacations Worldwide. We’re going to be talking all about timeshare, how it’s different, Marriott’s role in it. And by the way, this guy’s new in his job. But first, I want to thank our friends over at Actabl. Actabl, they give you the power to profit. Please check out actabl.com. Great to talk to you, man. What’s happening? Glenn, bro, you just got this job a few months ago. Congratulations. How awesome is that?

Mike: [00:00:30] It’s really amazing. It’s it’s so much fun to be back in the business again. I, you know, I’ve spent really 30 years, I hate to say it, but in and out of the business, but the majority of it in and to be back at Marriott vacations worldwide as the president and chief operating officer is like a dream come true.

Glenn: [00:00:47] Again, congratulations on that. And man, you’re old 30 years in this business. That’s really, really old. By the way, I celebrated 30 years last month, which is why I said that.

Mike: [00:00:56] I almost didn’t do your show because they told me it’s video too, and I got a face for radio.

Glenn: [00:01:00] Yeah. That’s true. And the last time we did an interview somewhere around 2018, give or take, I was only audio only. So, you know, we didn’t have to look at each other, which was.

Mike: [00:01:09] But here we.

Glenn: [00:01:09] Are. Yeah. All right. But now that you’re adjusting to the way we look, let’s talk a little bit about the world of timeshare. What really attracted you to this position other than having an amazing title at Marriott Vacation Club?

Mike: [00:01:21] Well, look, I mean, when you think about it, I mean, there’s not a more iconic brand on the planet than Marriott, right? And under the Marriott Vacations Worldwide umbrella, when you think about it, you’ve got the Ritz-Carlton brand, the Saint Regis brand, you’ve got the Westin brand, you’ve got the Sheraton brand, you’ve got the Marriott brand.

Glenn: [00:01:37] You have that yacht under your.

Mike: [00:01:38] We don’t have the Ritz-Carlton yacht. That’s not us. And then we also, believe it or not, which is, you know, kind of a little separate on the brand bar, but we’ve got the Hyatt Vacation Club. So amazing. We’ve got 700,000 families that own their vacations at one of our brands.

Glenn: [00:01:53] So what’s the state of vacation ownership and timeshare today as you see it?

Mike: [00:01:59] Never been better. Only, you know, 6% of the eligible households in North America actually own the product. And as the product has skewed to a younger demographic because of the experiences it has really begun, the flywheel has really begun to take off, and it’s really never been better.

Glenn: [00:02:17] So I’ve been doing a number of interviews here at the heart of Spring Conference, and I keeps coming back to millennials seem to be the number one group followed by Gen Z. Why is it not us? Gen X is the number one group. What’s going on here?

Mike: [00:02:32] Well, what’s happening is, is that in the early days of our industry, it was all about the physical real estate product, right? And what’s happened is, is the industry has migrated to experiences. And like in our case, we’re launching our brand new experiential platform franchise, whatever you want to call it, called Inner Circle on June 22nd. And it’s going to be focused on headline music entertainment. It’s going to be focused on culinary, it’s going to be focused on sports and entertainment, and it’s going to be focused on television, right? So these are the kinds of things when our 100,000 members are on vacation, right? They have the opportunity, while they’re there, to participate in something that they didn’t have to pay for and something they didn’t bargain for when they bought. So really, it comes down to enhancing the customer journey. It comes down to giving them more than they bargained for. And then what? Of course, we want is to extend the lifetime value, and we’re seeing it, and we’re seeing a younger demographic come in.

Glenn: [00:03:27] Fascinating. And as we already know, in the traditional hospitality industry and the way particularly American culture works is that everyone is much more experience focused. That’s why we’ve seen such a rise in music festivals, for example, and people traveling to those things. So that music angle is one that really connects with me because I love live music and I travel for live music. So if you are able to create experiences that your members can’t get anywhere else, that pretty much locks you in as their favorite place to invest in vacations.

Mike: [00:03:55] Well, I’ll give you a perfect example. I mean, on June 22nd, we’re going to kick off with country music superstar Lee Brice in Orlando, right? You could go see Lee and buy a ticket and be one of 18,000 people at whatever arena, in whatever city you want. Or in our case, you can actually come with 300 owners and you can see this intimate show just with our members. So that’s an idea. And that’s, that’s moving the needle.

Glenn: [00:04:19] That’s. And if you like that particular musician who I think about my favorite bands, and if I had access in that type of way, there’s nothing that could keep me away from something like that.

Mike: [00:04:30] And we have all different genres. That was just the one that came off the top.

Glenn: [00:04:32] Yeah. No, no, totally. Yeah, yeah. So those Gen Z people, they don’t necessarily have those kids, but they’re really, it’s more about their own experiences where maybe millennials are more about family experiences.

Mike: [00:04:44] I would agree. Yeah. And it’s interesting because the millennials, you know, didn’t necessarily want our product ten years ago. And now all of a sudden when they have families, right, and they’re looking around and they’re going, you know what? This hotel room doesn’t really give me any privacy. We’ve got the kids. Now all of a sudden, you look at one of our villas and you’ve got 12, 1300ft², you got a full kitchen, you put the kids in the bedroom over there, and mom and dad can actually have a little quality time on vacation, too.

Glenn: [00:05:09] Yeah. And that’s. And bring Grandma and Grandpa along. So you know that someone’s got to pay for dinner. After all, if you go out of the room, you know.

Mike: [00:05:16] Some things never.

Glenn: [00:05:17] Change. That’s what I’ll be doing for my kids. Yeah, that’s for sure. So you know, I keep hearing about how broke Gen Z is. So we’re so you’re not seeing that though, because they’re investing in your product.

Mike: [00:05:27] Well, yeah, because they are all about experiences, right? Right. And they’re all about the future and where they’re headed. And, you know, they’re, they’re focused on, you know, being able to do, you know, things that will last a lifetime in the way of memories, not just a trip that you go do and stay in a cool accommodation.

Glenn: [00:05:44] Yeah. So talk a little bit about how the business model works. I want to hit both what the customers are thinking and what real estate investment community would be thinking about as well.

Mike: [00:05:52] Okay, so our product is an investment in your vacation future. A customer decides to get involved in our product because they want to lock in at today’s prices and they want to hedge against inflation, right? And then they’re going to have a lifetime of vacations at today’s prices. So it’s a use product. It’s a product that the more you use, the more value you get out of it. And as we said earlier, the accommodations are significantly larger than your traditional hotels. So that’s what the customer sees. That’s the value proposition that they originally made the purchase on. And then you overlay the experiences and it goes next level.

Glenn: [00:06:30] And then all of that kind of immunizes you against the fluctuations and the downturns of the, the market, which I’m still fully convinced we’re going into as we speak right now. That’s a really great observation, though, because Gen Z is always spending their money on experiences. So instead of maybe going ahead and doing that one thing this year, they put that money away and then they put a down payment on and then invest in their vacations for the next 30 years.

Mike: [00:06:53] That’s it. Yeah, 100%.

Glenn: [00:06:54] How is the how is the how is the product changing in itself? What you know, what are, how, how are you changing it from those days where you were locked in from one week in one specific resort to now, where you have a panoply of choices?

Mike: [00:07:09] Sure. Well, the points product has changed the industry. It’s a fungible currency that to give you the greatest example in the world, you have an annual allocation of points. Okay? It’s backed up by a deed. So it is real estate. And you spend those points the way that you want to spend those points. Case in point, if you want a one bedroom this trip, then you only spend the points for a one bedroom. Or if you need a larger. Then you spend the points for a larger. Let’s say you only want to go for 3 or 4 nights. You don’t want to go for the full week. Well, you get your change back and you can turn around and use those points for airline tickets. You can use those points for cruises. You can convert your points into the Marriott Bonvoy program, and you can go around the world at the thousands and thousands of Marriott hotels that are on their brand bar. So the ultimate flexibility.

Glenn: [00:07:56] Yeah, so it sounds like that things are endless. All right. So let’s talk about developers for a little bit. What’s the development community thinking? What are the opportunities they have and they’re seeking out how does that all work these days?

Mike: [00:08:06] Well, the development side of the business is, is really still there. It’s still thriving. There was a time that as developers, what we looked for was we looked for places to put another flag on the map so that it made for the owners to have a greater number of choices and diversity. And in our case, I mean, we already have 120 resorts in multiple countries around the world. We’ve kind of done that. What we look at now, when we go out and think about investing in a new property, is really two things. We look for a great flag, yes, but we also look for a large distribution channel. We’re looking for a market that is a market that we like. Nashville, Tennessee is a market we have our eye on.

Glenn: [00:08:47] Nashville, Tennessee is just ridiculous. You all know I talk about this because I kept thinking like, how much bigger can it be? How much bigger can it get? Yet it keeps getting bigger and bigger and bigger as lots of population flows in there to live there and vacation there.

Mike: [00:08:59] No question. And so Nashville, of course, is on our radar. We think Nashville can be a massive distribution on an annual basis. But also when you think about the experiences in my relationships, in particular in the music industry and how many people live there, the things that we’re going to be able to curate and do for our members in Nashville is going to be second to none.

Glenn: [00:09:17] What are you most excited about in this new position?

Mike: [00:09:20] I’m most excited about doing and giving back to the customer that’s already spent their money with us. I think that, you know, a lot of my history around experiences and around product development and innovation, it all ultimately goes back to the owner, and we’re going to move the needle for the owner. And my goal is, is for the owner to sit down at the end of the year and look back and say, you know, that was one of the greatest things I’ve ever done. And now that Marriott’s moving more towards experiences, the kids are loving it. The grandkids even want to come with us now on vacation. This was really good. We did a good thing for our family.

Glenn: [00:09:56] So professionally speaking for you, your first few days in this new position, how do you win over everybody and make them feel comfortable that this new direction is going to be the right direction?

Mike: [00:10:06] Well, you have to earn the right, and it’s not something that you do overnight. And I’m still working hard to do that. Right? It’s certainly not assumed and it’s not given. It’s earned. And I’ll tell you, I went out on the road. I’ve I’ve had the opportunity to spend at least five weeks of my first 90 days in the field meeting with our associates and our team members. I’ve been to Hawaii, I’ve been to Southern California. I’ve been here in Las Vegas three times. I’ve been all over Florida. I’m looking forward to going and seeing our international folks. You know, we’ve got some amazing stuff in Singapore, Thailand, Spain on the Costa del Sol region, Australia, London. So I’m really looking forward to getting over there and seeing those folks.

Glenn: [00:10:45] Yeah, you’re really destroying my business at the Houseman Resort Pool Club and Smokehouse. I haven’t I haven’t sold out my tent in the backyard in months, so. Well, what do you do? Like, this has been awesome. Any final words before we wrap up?

Mike: [00:10:56] Well, I just appreciate you having me. You know, I always love being asked to come on your show. You do a great job. You move the needle and, you know, it’s an honor to have the opportunity to share our story with your your audience.

Glenn: [00:11:08] Well, thank you, man, and thank you. Like, share, subscribe, all that kind of good stuff. Mike Pulaski. I’m still Glenn. See you all later. Love you.

Mike: [00:11:15] Man. Right here.