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Vacation Planning

By Jan 01, 2007

Long before travelers pull their suitcases down from the top shelf, RCI Global Vacation Network has begun modeling where they will go.

Not on an individual basis, of course. Participants in RCI’s time-share programs are free to chose from more than 3,700 destinations. But the company has to control supply of its most desirable locations, and make those where the charms are somewhat subtler more alluring through discounts.

This is where analysis, and a lot of it, comes in. In recent years, RCI has been moving participants to a points-based platform vs. a straight-up “You’ve rented one week, you get one week” program.

Under the new system, a pre-purchased weeklong share is awarded a certain number of points, based on time of year and location. A late-summer stay in San Francisco, for example, would be worth more than a week in Akron, OH in the dead of winter.

But for all the city’s charms, RCI time-share participants may not want their week in San Francisco during a given year. So they have the option of using a comparable amount of points at another RCI location, provided the choice is available.

In this, the value of each location fluctuates, much like a stock exchange. Sri Raghavan, senior vice president for revenue management and analytics, sets prices to avoid a run on any particular offering.

“Before guests come in we have to forecast supply and demand for a given resort for a given week for a given year,” he says. “Once we finish that forecasting, we get into valuation, determining the value of weeks participants give us.”

Recently, Raghavan has seen some vacation spots, such as Mexico, become high growth markets, and when these weeks are turned in by owners they command a higher points level than the original purchase.

The system works in the opposite way as well. Adverse weather can dampen demand for some destinations. (Raghavan is one of the few modelers who incorporates current events and weather patterns in his demand forecasts.) A hot summer in the United Kingdom would mean fewer members who might’ve gone into continental Europe are motivated to do so.

Should demand fall for previously desirable locations, the owners who turned in these weeks aren’t penalized; they’re allowed to apply the higher level of points they were given to another destination. Raghavan then has to determine a new value for the properties turned in to reduce the risk of their standing empty.

“We do propensity models,” he says. “These are fundamentally models that allow us to know who is likely to engage in a particular transaction, such as the likelihood of buying a rental at this moment for this destination at this time and price point.”

Raghavan also uses customer needs analysis, customer segmentation and satisfaction metrics. But he has yet to work in psychographic information. “We don’t look at everything,” he says. “Data reduction is an important step.”

RCI by the Numbers

  • Nearly 3.3 million members living in 200 countries as of 2004 (the most recent year for which figures are available).
  • More than 3,700 affiliated properties in 100 countries throughout North and South America, Africa, Europe, Asia and Australia — not including cruise vacations.
  • Fifty-four million exchange vacations arranged since RCI’s founding in 1974.
  • 12.2 billion RCI points accumulated during 2004.

Source: RCI Global Vacation Network