RCI repositions, but local jobs remain secure

Indianapolis Business Journal, Nov 2, 2009 by Schoettle, Anthony

Despite a swooning economy that has hammered the time-share condominium industry over the last 18 months, Resort Condominiums International continues to outperform its market.

That's not to say there hasn't been some pain at the company formerly headquartered in Carmel. RCI officials recently announced that revenue is down during the first three quarters of this year to $349 million from $370 million during the same period in 2008. Full-year revenue is likely to be off about 10 percent from $471 million in 2008, analysts said.

The company credited the 2009 decline partly to currency-exchange issues at its overseas properties. RCI officials expect business to ramp up during the first quarter of 2010 and the 1,050-employee base at the Carmel location to remain stable.

RCI allows owners of vacation time shares at RCI-affiliated resorts to trade vacation dates and locations with other time-share owners. Employees at its Carmel office man the company's North American call center and handle information technology, business development and resort services, said Richard Ruff, senior vice president and general manager of RCI's North American sales centers.

Those jobs are safe, Ruff said, even in an industry hammered by a falloff in resort construction and a credit crunch that makes it difficult for people to buy time-share units.

The company is taking steps to maintain its lofty position in the vacation-exchange sector, which was essentially invented by Jon and Christel DeHaan, the Indianapolis couple who founded RCI in 1974.

After Christel DeHaan won the company in their divorce, she sold it in 1996 to New York based Cendant Corp. for $ 825 million. Ten years later, Cendant's hospitality division - which included RCI - spun off and became a separate company under New Jersey-based Wyndham Worldwide.

Wyndham CEO Stephen P. Holmes said during an Oct. 28 conference call that RCI is being renamed Wyndham Exchange and Rentals to better align the company with other Wyndham companies - a move he thinks will play especially well with Wall Street analysts.

And in November the company will launch an expanded Web site - including a Web-based TV station and worldwide time-share search function. Holmes predicted the Web enhancements will help RCI improve its margins - presumably by allowing the company to do more business with less call-center manpower.

The move to push clients toward the Internet has some analysts wondering if the Carmel call center will be downsized. RCI's Ruff insisted that won't be the case.

"Our goal is to allow our customers to do the simplest parts of the transaction online and save time," Ruff said. "This is still a high-touch product and, to date, this [plan] hasn't affected our employment strategy."

Company officials hope the expanded Web site will make the company's timeshare exchange services more accessible to a broader customer base.

The fact that RCI has held its position as market leader in the time-share industry is a testament to its large customer base, industry analysts said. RCI officials said they have 3.8 million members along with 3,700 participating resorts worldwide.

RCI and Miami-based Interval International are the two largest worldwide time-share exchange companies and, according to industry analysts, control more than one-third of the worldwide market.

"The last year hasn't been easy on the time-share industry," said Mark Eble, a hotel consultant and Midwest regional vice president for San Francisco-based PKF Consulting Corp. "A lot of good companies have been hurt."

Eble said RCI is positioned to survive the economic downturn as well as any timeshare company, but he noted the deepest economic swoon since the Great Depression has slowed condominium construction worldwide to a snail's pace.

Resort Condominiums International

Location: Parsippany, N.J. (headquarters); Carmel (North American membership office)

Founded: 1974

Founders: Jon and Christel DeHaan

Owner: Wyndham Worldwide

Service: exchange system for people who own a time-share condominium

Members: 3.8 million

Affiliated resorts worldwide: 3,700

Employees total/local: 7,800/1,050

Revenue (2008): $471 million

Industry outlook: Sluggish economy has slowed condominium development. As a result, RCI memberships have slowed, decreasing the operation's revenue.

Sources: Wyndham Worldwide, IBJ research