WYNDHAM GROWTH HEADS INTO TROPICAL TERRITORY

Written on the 14 May 2012

WYNDHAM GROWTH HEADS INTO TROPICAL TERRITORY

WYNDHAM Vacation Resorts Asia Pacific is on an acquisition drive, this time in North Queensland, where it has purchased 194 rooms at the Tree Tops Resort in Port Douglas.

The timeshare giant recorded a $55 million profit in 2011 and also recently settled on a resort property at Torquay. Both buys were for undisclosed amounts.

The Gold Coast-based arm of Wyndham Worldwide group also entered New Zealand, opened new sales sites in Auckland and Perth and announced the construction of stage three of its WorldMark Resort Denarau Island, Fiji.

The company’s acquisition of what is now the Wyndham Hotel Surfers Paradise in 2010 kick-started the buying spree.

Chief executive Barry Robinson (pictured) says there’s another key acquisition next month, but could not release details. He says the Port Douglas buy is a good bolt-on asset for the company.

“That will be a nice property and while the market is still soft up there, we see great potential for us. We have got some ownership in Cairns and that property continues to run at 90 per cent occupancy and that is while many others in the tourism industry up there are running at around the 40 per cent occupancy mark,” says Robinson.

“We also had a good acquisition down in Torquay. It’s a good destination for us and filled a gap we had in our offering. A passion of mine is surfing and when we get to buy something near a good surf break, it is a positive.”

During 2011, Vacation ownership sales were up 55 per cent to $205 million and Wyndham’s resorts ran at an 86 per cent occupancy rate. Robinson says growth has continued since 2008, when it downsized on the back of the GFC, but the company has maintained an average 10 per cent growth rate since 2000.

“We laid off some people just before Christmas (in 2008) and restructured the business because everyone was unsure what would happen in 2009,” he says.

“Fortunately, we came out of that and we doubled our margins and doubled our profitability in 2009 and we have just continued to grow since then.

“In 2008, we reported $200 million in revenue, producing about $29 million in profit. The next year did $44m and this year finished on $55 million in profit.”

The company has been totally restructured in the past three years and the Wyndham Worldwide share price has gone from less than US$3 to US$44 in that time. As a result, the banks are happy to lend the company funds and it has access to a $1 billion line of credit.

While the tourism industry is battling what Robinson calls a ‘perfect storm’ with uncertainty in Europe and a high Australian dollar, it has showcased the resilience of the timeshare industry – one that was all but wiped out in the 1980s.

“The good thing was that people had always spoken about the timeshare industry being recession proof, or recession resilient and up until 2008 we had never had to really test that and never wanted to. It seems a stable product in a sense that people that own the product enjoy it and at the clubs typically the occupancy stays the same,” he says.

“They feel obligated they should go on holiday because it was prepaid, which is good for the domestic environment around them, because when people are on holiday in vacation apartments they spend money.

“Occupancy on the Gold Coast is struggling outside peak periods, but we haven’t moved. Timeshare industry in total has not slipped under 85 per cent occupancy.”

Wyndham Asia Pacific is one of the Gold Coast’s biggest corporate employers, with 1300 staff in total and about 660 at its Bundall headquarters.

The company’s move to its new six-star Green Rated Bundall premises mid last year has proved a successful transition and includes a café and gym for employees


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