Travel and Leisure Co President, Chief Executive Officer and Director, Michael Brown, spoke exclusively to James Wilkinson about leisure travel demand, vacation ownership and future business growth.
Mike, we’re here at the New York Stock Exchange, which just a few years ago was a very exciting place to be when Wyndham Destinations first spun off, and now it’s Travel and Leisure. What a journey in four years that has been. How have you seen it all?
Well, it’s been a robust four years, to say the least. When you put in a spin-off of a company, a rebranding, and then throw COVID in the middle of all that – a lot has happened. But it’s good to say that we’re in leisure travel and it’s a great time to be in this space.
It’s great for you guys being in that leisure space because that really has gone gangbusters across the world, hasn’t it?
Well, I think at the very beginning of COVID, everyone wondered how it would all play out, but COVID didn’t affect people’s desire to get on the road, be with people they love, and that’s what leisure travel is. As a result, we’ve seen a really strong recovery in ‘21, it continued in ‘22 and, despite the macro news that’s out there about where the economy is going, no matter the uncertainty, we’re really confident ‘23 is going to be a very good leisure year.
There’s a lot of demand in upper upscale and luxury leisure as well. For you guys, with the Travel and Leisure brand, what does that mean for the company?
Well, it means opportunity in the most simple way. We have a great relationship with the Wyndham Hotel Group. We became a public company as Wyndham Destinations, the vacation ownership and exchange side of the business. By acquiring Travel and Leisure and really opening up the opportunity for us, we’re now able to participate in the entire leisure travel space – one hundred million households in North America, and we want to play in that. As a result, it’s opened both opportunities to launch new businesses – our travel subscription business for example – as well as start to brand expand in our existing core businesses like vacation ownership.
When we look at vacation ownership and Asia Pacific, which Barry [Robinson] looks after, there has been huge growth for the company and for so long. How exciting is Asia Pacific for you going forward?
When you look at markets beyond the US – 90% of our business is in North America – in the South Pacific, there’s no one that’s bigger than us. And that’s before we’ve really begun to tap into the Asia market. Markets like Japan, Thailand, Indonesia, those are great for us. We’d love to be more expansive in China as well but with all the restrictions, we’re just going to have to wait and see there.
What we’ve seen through the pandemic is a lot of travellers want to travel closer to home and so for your biggest market, the United States, there’s plenty of opportunity still to keep growing, isn’t there?
In times of uncertainty, people want to control their environment, which means our drive-to arrivals went from 72% to over 90% in the depths of COVID. It’s back to normalised rates, around 75%. Booking windows are now back to where we’ve always historically been, which is 120 days. It’s fair to say international travel is lagging. But I think one of the biggest trends we’re seeing coming out of COVID for the leisure traveller is that length of stay is expanding – for us, it’s up about 10%. I think that’s a combination of pent-up demand but also this new hybrid work environment, so we’ll see if that continues to play out in 2023.
Are there any brands in the company that you’re finding that are really in demand at the moment that you can see just exponential growth for?
Absolutely. This business, which we’ve been in for 50 years on the vacation ownership side, is proving to be extremely resilient. I think you’re going to see our vacation ownership brands – Club Wyndham, Margaritaville, World Mark – all continue to grow and take advantage of not only the leisure travel recovery, but also, with our type of product, getting pre-paid vacations. The value we’re seeing in a high inflationary environment is really supportive of our business model. As we begin to ramp up our travel subscription business, I think we’re going to see those green shoots we’ve been waiting for on the subscription side of the business.