Michael J. Butler Taught Timeshare Industry Sophisticated Marketing Techniques
Michael J. Butler, saver of failed timeshare resorts, is a marketing and sales pioneer whose techniques helped the industry learn to achieve sales success through statistical techniques and demographic segmentation.
Butler, president and CEO of Midlan International in Sarasota, FL, entered timesharing in 1979 when most of its participants came from a real-estate background. With graduate studies in marketing and finance, and consumer-oriented experience in marketing books and phonograph records, he brought to timesharing an approach that was revolutionary at the time.
To stay efficient, Butler says, requires constant market research, including consumer surveys and test-marketing programs, to fine-tune a projects lead-generation techniques. "Marketing money is wasted reaching unqualified people," he emphasizes. "Thats why, on average, only one in ten people seen by a timeshare salesperson ends up purchasing a timeshare."
Michael J. Butler
To reach qualified consumers who are predisposed to purchase, marketers also must track changes in society that influence demand for their product. "In years past, the typical timesharing customer was thirtyish, with young children," Butler notes. "Today the average age of timeshare customers has changed dramatically. The baby boomers children are going off to college, and people in their forties are becoming the biggest buyers of timeshares. They travel frequently without their grown children.
"Also, because of the theory of rising expectations, we are seeing renewed consumer interest in luxury vacations. In the past, parents traveling with their children stayed at luxury accommodations, and now those children are adults who want something even better."
Statistics Are Essential
Statistics, Butler believes, are essential to develop marketing programs and budgets and to compete in the ever-changing marketplace. "If the competitors do something unusual or different, it may affect what you do and how you react to their new efforts," he says. "For instance, if competitors increase what they pay to get more leads from off-premises contacts, I can match their increase and badly damage my cost controls, or I can change to an alternative form of lead generation.
"I must be prepared, however, that changing lead-generation sources may reduce the number of leads and result in less sales volume. How, then, do I maintain the same volume of sales while identifying alternative sources of economical lead generations? Statistics help resorts to plan and make those decisions. If OPCs have generated 20 percent of my sales volume, then I need to spend the money formerly offered to OPCs in telemarketing or direct-mail programs to keep up the sales volume." To generate these statistics, Butler created his own marketing program analysis (MPA) to track everything that happens at a timeshare property, project the risk factors for each kind of marketing program, and identify potential problems. These reports show whether their previous estimates are off, by how much, and the effect of these variances on bottom-line profits. Then Butler and his senior executive staff meet weekly for a post-mortem of sales activities at each resort, to discuss what worked and what went wrong, and how to fix any problems.
Butler believes that timesharing, like other industries, will increasingly undergo segmentation based on buyers interests. Houseboat timesharing already exists, and he foresees specialized clubs emerging exclusively for sailers, skiers, and scuba-divers. He also thinks that resorts targeting a gay clientele will become increasingly popular, and ecological resorts are a possibility.
An Eclectic Education
A U.S. citizen since 1980, Butler was born in 1944 in Bristol, England, an ancient port and commercial city. As a child, he watched with interest the restoration of historic buildings damaged in World War II. "Appreciation and understanding of history always has been important to me," he says.
Butlers father, Burt, 84, who still lives in Bristol, served during World War II as a flying firefighter for the national fire service. "My father flew where the bombs fell and worked to stop fires all over the United Kingdom," Michael Butler says. "After the war, he worked as a firefighter for Bristol Aircraft Corporation, which later became British Aerospace Company, manufacturer of the supersonic Concorde airplane."
As a youth, Butler dealt with his intellectual curiosity by studying extra subjects while attending the United Kingdoms equivalent of high school. Instead of the standard four or five O-level subjects, he undertook seven -- English language and literature, French, geography, German, history, and math.
Rather than enroll directly in college for his A-level education, Butler joined the Royal Air Force in 1960 and received his commission as an air-crew officer just short of his 18th birthday, on January 12, 1962 . At the time he was the youngest graduate ever of the Royal Air Forces officer candidate school. In 1964, he left the Royal Air Force with a private pilot's license, and he continues to fly today.
After completing military service, he applied to the University of Sussex in Brighton. "I wanted something different from a traditional single-subject English university education," he says. "I was interested in all of the social sciences, not just one area such as sociology or psychology, and Sussex offered a broader liberal-arts program similar to that of U.S. universities." However, the Sussex program retained the British tradition of seminars and tutorials, in which students wrote two papers a week and worked in small groups with the faculty to learn the use of analytical skills. In 1967, Butler graduated from the University of Sussex, having earned a Bachelors of Arts degree with honors in international relations.
Butler then decided to go to business school, but at that time no business schools existed in the United Kingdom or Europe, and many European business students attended established American business schools. Butler spent a year visiting U.S. business-school campuses and reading their literature before selecting Columbia University in New York, where he received a Master of Business Administration degree in finance and marketing in 1970.
Time-Life and CBS
Butler's first job after graduation was with the overseas book-publishing division of Time-Life Books, Inc., which then published just English-language books, in American, British, and Australian versions with slightly different weights and measures. "Time-Life wanted someone with an international or multi-cultural background to expand into European and Asian markets in the French, German, Italian, Japanese, and Spanish languages. As assistant business manager of the books division, I was responsible for development of the international side of Time-Life's business operation."
Fortunately Butler liked to travel, because his work took him to Amsterdam, London, Mexico City, and Tokyo. "An important part of my work was planning how to make a book series profitable and deciding when to stop publishing an unprofitable series. We determined how often to market a series before the market was saturated and response fell off. We were successful both nationally and internationally."
In 1973, an executive recruiter approached Butler -- by then a permanent U.S. resident -- offering a two-year contract with CBS Records in London. "CBS needed someone to run its London distribution and production efforts," he says. In the early 1970s, Butler says, a music group that did well in London automatically did well in the United States. "London was an exciting place to live in 1973 because of the international oil embargo compounded by the English coal strike. Offices and factories were ordered to shut down two days a week. We had to produce a weeks worth of work in three days of office work, distribution, and record and tape production. Everyone expended extra effort, with production and office staff working 12 to 14 hours a day and senior executives working 16 to 18 hours a day -- an exercise in crisis management. Working flat out, we were even able in three days to improve our five-day production."
After London, Butler returned to New York in 1975 to work in the CBS corporate office as director of profit evaluation -- a trouble-shooting position. "I went wherever there was a management problem," he says, "to Philadelphia to resolve problems in CBSs educational books division, back to the United Kingdom for six months to work with the management of CBS's Columbia House direct-mail subsidiary, and back to New York to analyze the acquisition of Fawcett Publishing Company, a paperback-book publisher with a Maryland printing press."
In 1979, Butler tired of living in New York City, founded Midlan International, and moved to Florida. "I had already decided to leave CBS to set up my own company and move out of Manhattan when Bill Cowie, a University of Sussex classmate, asked me to help set up a direct-marketing program for a mixed-use project in Cold Springs, NH, where he was the project director. The property had condominiums, a golf course, single-family homes, and timesharing," says Butler.
Later Butler helped to sell out two resorts south of Tampa Bay on Floridas Gulf Coast -- the Calini Beach Club on Siesta Key near Sarasota, and Smuggler's Cove Resort on Bradenton Beach. These projects brought him regularly to Sarasota. "Why should I fly back and forth to Florida from the northeast when I could live in Florida?" he reasoned, and moved to Sarasota. "Soon," he says, "we were working with other resorts on Florida's east and west coasts and in the Keys."
Later Butler and Cowie collaborated on other consulting projects. One was the Driftwood Inn Resort in Vero Beach, FL, a 100-unit timeshare property that an Indiana plow salesman, Waldo Sexton, had built of driftwood in the 1930s as a beachfront inn and restaurant. The two also worked together to assist Shawnee Resorts (now Shawnee Group, Inc.) in the Pocono Mountains of Pennsylvania, and Western Southern Life Insurance Company in Cincinnati, OH.
In 1981, banks and financial institutions started hiring Midlan International to manage and sell out foreclosed timeshare projects. "A lot of money was spent on sales programs for these workout projects," Butler says, "but some of the bankers never shared profit margins or breakeven points, so we never could judge the overall success of the sales ventures." In 1985, Midlan added its first west-coast resort, and by the end of the decade Midlans staff was supervising 1,500 sales and marketing employees at 13 time share projects from California and Arizona to Cape Cod, MA, and overseas in Australia, the Canary Islands, Spain, and the United Kingdom. Most of these resorts now are sold out and operating.
The Resolution Trust Corporation (RTC) used Midlans sales and marketing skills to sell out several resorts acquired from failed banks. "Some regional RTC officials understood timesharing, and others did not," says Butler. "In the northeast, without looking at the sales numbers, they refused any further product sales financing at a profitable timeshare resort on Cape Cod, so the sales office closed. The bank failed because of other bad loans; that resort had brought in $4,000 net per unit-week sold. The RTC held the property dormant for three years and then bulk-sold the units for $700 a unit-week.
"In the west, the RTC officials were smarter at Tahoe Seasons Resort in Lake Tahoe, CA, which sold out before the resort sales and marketing efforts were closed. At Scottsdale Camelback Resort and Spa in Scottsdale, AZ, the RTC allowed us to sell out about 90 percent of the resort before it closed down." Workouts no longer are a significant part of Midlans business, Butler says. "Timesharing has been a very entrepreneurial business with fast growth, rapid expansion, and too many inexperienced people in the field. A period of shakeout and consolidation occurred.
"Today the independent developer is still the important bread and butter of the timesharing industry, but the larger hospital developers are vitally important because they lend credibility to the timesharing industry. With the presence of these major players, we now should see a period of steady growth."
Midlan International has a small core of permanent employees and adds resort sales and marketing staff as needed. "We pay our salespeople well," says Michael J. Butler, Midlans president and chief executive officer, "because we know that when a resort sells out it may take staff three to six months to find new jobs."
The timeshare industry suffers from a lack of middle-management talent, Butler complains. "No one teaches timesharing or vacation ownership in college or business school," he says, "so timeshare employees have to learn about the industry on the job."
Butler is proud of his former employees. One alumna, Antoine Dagot, is now vice president of marketing and sales for Hilton Grand Vacations Club in Orlando. Among current staff, several have worked their way up through a variety of progressively responsible positions. Deborah A. Moore, for instance, started with Midlan as a secretary, became a resort project director in 1989, and now is Midlan's vice president-administration, responsible for the firms computer and financial systems, resorts, and operating systems. Christine P. Starker was one of Sarasota Countys top residential real-estate brokers when she joined Midlan in 1989 as vice president of new business development. "I wanted to do something new," says Starker. "I started to learn the timesharing business and to travel, visiting prospective clients all over the world." Starkers responsibilities include seeking out and identifying developers with properties suited for vacation ownership. Then she advises them on all aspects of new-product development, including acquisition of financing. She also works with other industry leaders to encourage the entry of new developers into the timeshare industry and helps developers of existing troubled properties to identify problems and find and implement solutions.
When East Meets West
One of Midlan Internationals best-known projects, Blue Tree Resort in Orlando, FL, is owned by Aoki Corporation and managed by a subsidiary of Westin Hotels & Resorts. After almost three years of marketing and sales activity, Aoki Corporation bought out Midlans contract in 1994.
"Blue Tree was a turnkey project to teach the Japanese owners how to run a timesharing project," explains Christine Starker, Midlans vice president of new business development. "We build in our own demise when we do well and teach developers the industry. Ultimately they want to do it themselves. Its not a question of performance or non-performance, or a falling out, but a question of the developers maturing knowledge and experience."
One reason Aoki selected Midlan in the first place was the Oriental business experience of its president and chief executive officer, Michael J. Butler. In a previous career niche with Time-Life Books, he traveled to Tokyo and worked extensively with Japanese businessmen. He knows that communication problems can arise. "In dealing with the Japanese, never assume that you have been understood," he advises. "Always put everything in writing."
To market and sell timeshares across cultures introduces new elements of complexity to the industry. "Some Asians find the principles of timeshare sales and ownership confusing, and the sales process intrusive," Butler notes.
"One significant difference between Japanese and Western societies is that our individualistic Western society produces aggressive individuals who take the lead in making decisions, while in Japanese society a groups members make decisions by consensus. Western societies are entrepreneurial, very skillful at initiating and organizing new business. The Japanese are best at a process type of industry that reflects a group effort. Historically, some Japanese have had problems in dealing with individuals different from themselves, and more recently they have had trouble dealing with western businesswomen. Some members of Japanese society are trying to change, but underneath, little about Japanese society has changed."
Butler says new sales and marketing techniques need to be developed to overcome the clash of Japanese and Western cultures during the sales process. "A salespersons screening request for a statement of annual income is commonly accepted by Americans, but is considered outrageously rude by the Japanese. Similarly, in Japan it is considered inappropriate to ask people about their holiday and travel patterns. Some Japanese are offended when asked to write a check to make a timeshare purchase. Many Japanese believe people should buy solely because the product is good, not because they are asked to make the purchase."
Rosalie E. Leposky is managing partner of Ampersand Communications, a news-features syndicate based in Miami, Florida.
© Copyright 1996 Ampersand Communications
All Rights Reserved
Published in The Resort Trades, March.1996