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The City's top value gives SF
Exchange the edge
By Mark Silverman /San Francisco Examiner
There is Coke and there is Pepsi,
but some people just love
RC Cola. Or C&C. Or even Shasta. Go figure. In any industry,
no matter how big
the big boys are, there is always an opportunity
for a smaller, more agile
niche player. Such is the case in timeshare. RCI
and Interval International are unquestionably the behemoths of the industry,
with more than 98% of timeshare owners belonging to one or the other. Most
think of them as exchange companies, allowing somebody owning a condo in
Orlando to trade for a ski chalet in Vermont; in reality they are much more.
In
many cases, they provide “backbone” services to individual developers, managing
their individual inventory and owner maintenance. This can include software for
managing maintenance fees, procurement and a variety of other issues involved
with efficient resort management to enhance the owner’s vacation experience.
There are other exchanges out
there. Many of these “mom & pops” are only posing as exchanges, when there
main purpose is to resell timeshare, or rent individual weeks. But there are
success stories.
The San Francisco Exchange Company
(SFX) is one such story. Ten years ago company founder Mel Grant
had an idea for a different kind of exchange company “with true snob appeal,
available only to the top 2% of resort-owners”.
Mel would design a network with
one guiding philosophy, “If you were exchanging out of a top resort there was
no reason to trade into anything less”.
The British born San Francisco
transplant quickly realized that 2% would not offer a “critical mass of owners
for him to make that work” so he quickly refined the concept. His adopted
hometown, San Francisco, he saw was a prime place for timeshare; meeting the
two most important qualifications “very high demand – very low supply”. He
figured controlling the limited inventory of San Francisco exchange weeks would
provide leverage to get virtually anything for his membership.
Grant went about contacting the
5,000 owners of San Francisco-based timeshare weeks. Both exchange companies
rank San Francisco as a high demand “red week” 52 weeks of the year. He never
suggests that anyone not be affiliated with one of the major exchange
companies, but suggested that SFX would be a good addition to their RCI or
Interval membership.
He even suggests that folks
considering a purchase, whether their first weeks, or additional time, vet the
properties through his company. If they meet the SFX standards, they are likely
to provide strong exchange leverage regardless of the exchange company.
SFX, in fact, needs the biggies.
Grants lean and mean organization does not have the resources to individually
inspect the thousands of resorts out there. They depend on the Interval and RCI
rankings, working only with those that have achieved either Gold Crown or
Resort of International Distinction ranking; or Interval’s Five Star rating. In
fact, what many consider a shortcoming – there is not even an SFX Resort
Directory. Mel defends this by claiming it would be redundant and costly to
print a book when all of his members already have at least one or the other
exchange books.
SFX is widely considered to be the
number three-exchange company. In fact, Hilton Grand Vacation club lists it as
one of its resources. Hilton manages all exchanges for its membership,
according to spokesperson Elena Norman; they probe the inventory of RCI, SFX
and others in order to find the best possible match for the owner’s request.
Illinois based Shell group, with
three resorts located in San Francisco, also has a formal affiliation with the
upstart exchange company, in order to address client needs. Grant’s company
benefits by not having formal arrangements with many resort developers. It
protects him from “having to take the fleas with the dog”, only accepting prime
weeks at top resorts.
A unique service Grant is able to
offer his clientele is “proactive procurement”. Exploiting relationships with
developers, other exchanges and management companies, SFX’s staff goes into the
marketplace, bartering the valuable San Francisco weeks in his inventory to
meet client requests. Paraphrasing George Orwell, “In a world where all red
weeks are created equal, some are more equal than others.”
Ten years after creating this
“bumble bee that could not possibly fly”, SFX lists more than 21,000 active
members, and has grown far beyond its San Francisco roots. Almost nine thousand
have upgraded from the free Gold status, to the $59/year Platinum membership.
The premium membership allows for search without deposit, ability to reserve
bonus weeks as much as a year in advance, and eligibility to exchange timeshare
for space in select wine country bed and breakfasts. Gold members pay an exchange
fee of $125, international or domestic, Platinum members pay $99.
Grant is optimistic about the
growth potential for SFX. An understanding of technology and the market has his
company where it is today. “Time is a perishable commodity”. His new venture,
Bonusweeks.com provide an outlet for developers and owners associations to sell
unused weeks at their resorts. “Because time is a perishable commodity” the
program has a built-in mathematical algorithm built in that automatically
lowers the price of unused weeks as the date approaches. Mel likens this to a
reverse auction.
The timeshare industry continues
to evolve; Mel Grant is confidant that SFX will evolve with it.