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Selecting a Management Company
by John E. Small
Vice President
ResortCom International
For developers of new resorts, or for resorts that are currently being operated independently, the selection of the right management organization is a pivotal decision. This selection should not be entered into without serious consideration of a short list of key variables. This decision is not one that can be made, and then left alone. It will have a lasting impression on the entire vacation product.
Given the serious nature of this decision, how does one sift through the numerous alternatives to make the right choice?
Compatibility of Values
Your interview process should start with an outline of the ideal management company. Once the key elements are identified the selection committee should probe the mission and values of the management group under consideration. The philosophy of the organization and the senior management team should be closely scrutinized and weighed against the selection criteria. Do not hesitate to ask for evidence of the platitudes that will be thrown around by the various organizations as they attempt influence your decision.
Range of Services and Programs
After compatibility and demonstrated performance have been verified, it is important to look at the range of services that the candidates offer. For instance, a developer needs a broader and more diverse range of services than a stand-alone or sold-out resort. It is important that your selection reflect the current stage of your business, and that you are not going to be paying for overheads of the management company through your fees, that you will never use.
In this regard, size of the organization is important to consider. Is the company large and diverse? Will it be able to address fully your requirements and provide you with numerous added value and programs? Will the "sales" team be a different team from the one that ultimately takes responsibility for the day-to-day aspects of your property? On the other hand, perhaps you prefer a smaller group that will offer a more personalized touch for you and your owners.
Information Technology & Telecommunications
This aspect of your management company will play a powerful role in how your resort will be managed, and the experience your owners will encounter. Therefore it is very important to understand not just that the management group has a good or even popular system, but to know how it works. Ask for a demonstration, so that you can see what your owners will experience. Does the technology provide for process and service management – so that the company's performance will translate into exemplary service? Test the system yourself, by making numerous blind calls, before and after the fact. Measure the time it takes to answer the phone, how long you are on hold, and listen to the recorded messages – because this is what your owners will encounter.
Has the management company invested in the most current technology? Keep in mind that there are very few software programs on the market supporting both timeshare and resort hotel operations. For a period of time, you need to drive both income and profitability. Therefore it is vital that your management company provides systems and programs that allow you a greater opportunity for success.
Technology drives all of your primary services – Sales and marketing, loan portfolio management, contract entry and data capture, reservations and member services, property management, financial reporting, assessments, billings and collections. To the extent that any or all of these pieces of your business are important, it is critical to have the best technology available.
Fiscal Accountability
Your company's financial performance and reporting is another key area. It does no good to have the most outstanding Sales and Marketing team, the best physical product and location for your resort, if your loan portfolio is not being handled effectively, or your delinquencies percentages are horrendous. Timely and accurate financial information is critical to making the right decisions that affect your business today, as well as tomorrow. So check out the financial aspect and performance of your management company candidate. Are the statements easy to read? And do the reports balance out each month, to the interval?
Ask your audit firm or a knowledgeable CPA to take a look as some of the sample reports. Let them ask questions of the Financial Team from the proposed company. Have them probe such areas as portfolio management, delinquency percentages, accounts receivable and payable and cash flow of resorts currently under management from your list of candidates. Probe deeply in this area, because if it becomes out of control, you will never know until it is too late!
Management Team
Take a good look at the profile and biography of the key players on the management team. Have they the requisite experience to handle your resort? It is important that the company handling your resort have the depth of background in the Timeshare Industry. It is also important that the company have demonstrated a high level of competence in related fields of Hotel and Resort Management and Financial Services Management – because these are two areas that will constantly overlap as the resorts move from their beginning stages to their more mature stages. Depending on the product sold, it is important to also note the level of commitment the company has demonstrated when it comes to managing homeowner associations, or to which they have experience in right- to-use products. How committed is your potential management company to Client Services? Will they keep the conscience of the organization clear, knowing that all of the laws, rules and regulations, bylaws of each resort is being followed to the letter? Will they assure that the fiduciary responsibility of the company is being looked after in a responsible and competent manner by a separate and independent team?
Leadership and Reputation
Possibly the most important question is – does the company have the right leadership to be able to take on, and effectively manage, your resort? It is critical for the top people of the company to get involved and to stay involved in your business. You will need to be certain that they can deliver what they promise, and that they have the necessary fire in their organization, to insure that over the long haul, they can sustain their promises – to you and to your owners.
It is also very important that the organization is involved in the industry, and that the company has been keeping current with all aspects of the business. So look for recognition awards, certification of key personnel, and evidence of this involvement and of keeping current.
Finally, does the management of the company share your vision? Can they see and add value to what you are trying to develop and accomplish? You want more than just a service provider. You want a partner, to share the load and the effort it takes to bring your resort to the highest possible level.