March 7, 2021

cruciforme

travel, Always a step ahead

Welk Resorts will be sold to Marriott for $430M after 57 years of family ownership

4 min read

After more than a half-century of family ownership, the Welk Resorts portfolio, including the original Escondido location, is being sold to Marriott Vacations Worldwide Corporation for $430 million.

Once the still pending sale is finalized — by early in the second quarter — Marriott says it plans to rebrand the Welk vacation resorts in California, Colorado, Missouri, New Mexico and Cabo San Lucas as Hyatt Residence Club properties. The purchase price includes roughly 1.4 million Marriott Vacations common shares.

The acquisition represents a major milestone for a company started 57 years ago by the late television bandleader Lawrence Welk, whose hospitality empire took root in 1964 when he was driving through rural Escondido and noticed a 100-space mobile home park and an adjacent nine-hole golf course with a clubhouse, 60-seat restaurant and a four-room motel.

Famous television bandleader Lawrence Welk

Famous television bandleader Lawrence Welk was host of The Lawrence Welk Show from 1951 to 1982.

(Courtesy of Welk Resorts/Welk Resorts)

In 1984, Welk, who died in 1992, made his foray into the vacation ownership industry. Under his son Larry Welk’s leadership, the Escondido property was converted to a timeshare.

Since then, the Welk portfolio has grown exponentially to include eight timeshare resorts, including Escondido, as well as locations in Cathedral City near Palm Springs; Lake Tahoe where there are two properties; Branson, Mo.; Breckenridge, Colo.; Santa Fe, New Mexico; and Cabo San Lucas.

Welk Resorts opened The Ranahan in Breckenridge early last year, and four years earlier, the company debuted its Experiences Collection by Welk Resorts. The Collection includes more than a dozen vacation properties like the Four Seasons Residence Club that Welk company owns inventory in and makes available to its platinum owners.

For our team and family it’s definitely bittersweet because after working 57 years through four generations and utilizing the Welk name, I think our team has an affinity for the name as do our owners,” said CEO and Welk grandson, Jon Fredricks, who has led the San Marcos-based company since 1999. “It’s a well-known name in the vacation ownership industry but all of us who’ve grown up in the business definitely see the opportunity to rebrand. The Hyatt Residence Club is a very close match to the quality of the projects we have, and they want to use our team to continue to grow their Residence Club business.”

Fredricks said he expects the rebranding process to take about nine months, but the vast majority of Welk’s existing employees would continue working at the properties. Marriott’s intent, he said, is to have Welk continue to sell its points-based club product until 2022 and by 2023 look at integrating that into one club system.

“We appreciate that Welk Resorts’ leadership has entrusted MVW (Marriott Vacations Worldwide) to build on the solid foundation laid by generations of the Welk family and the company’s team members,” Marriott Vacations CEO Stephen Weisz said in a statement. “We have been in the vacation ownership industry for decades and have deep respect for the strength of the Welk name, operation and legacy.”

The Welk timeshare portfolio is actually much larger than Hyatt’s, with 52,000 owners compared to Hyatt’s 33,000, Fredricks said. In 2019, Hyatt generated $50 million in timeshare sales, while Welk’s volume was $130 million, he noted.

While Welk resorts are widely known within the timeshare industry, it makes sense for them to now be under the Hyatt umbrella, which will allow the properties to attract a wider demographic of customers, said hospitality expert Alan Reay.

“I think it is an old-time name and it appeals to a much older demographic,” said Reay, president of the Atlas Hospitality Group. “I’d say most young people don’t have a clue who Lawrence Welk was so getting the Hyatt Residence Club name opens up a lot more marketing opportunities and to a wider audience, so I think it’s a very smart move. You also have the benefit of their loyalty guest members and the economies of scale and buying power of Hyatt, which can negotiate much better rates with online travel agencies like Expedia.”

From the beginning, the Welk resort operation has remained a family affair, with Larry Welk serving as chairman of the Welk Resorts’ board and his great-grandson, Robert Segall, operating as sales and marketing director for the business. The majority of the company is family-owned — more than 20 family members make up the ownership. A former company executive holds a small percentage of stock, and 12 percent of the company is held by an employee stock ownership plan.

Mountain Villas unit at the Welk Resorts property in Escondido.

Seen here is a Mountain Villas unit at the Welk Resorts property in Escondido.

(Hand-out/Welk Resorts)

The original Escondido resort location has grown over the years, encompassing 450 acres where there are two 18-hole golf courses, seven swimming pools, a fitness center, five recreation centers, two waterslides, two escape rooms, a spa, theater and restaurants. It has been upgraded and expanded over the years, the most recent addition being the Mountain Villas, with the mountains as a backdrop. So far, about half of the entitled 148 units have been built, Fredricks said.

In all, Welk Resorts has 714 units. Fredricks said that while the theater has been closed because of the pandemic, he expects that Marriott will continue operating it in the same fashion as Welk Resorts has in recent years when it began downsizing the number of performances.

Excluded from the sale to Marriott are a number of properties that Welk Resorts owns and are not a fit for the Residence Club plans. Among them is a still undeveloped 22-acre site near Poipu beach in Kauai that is entitled for 168 timeshare units or condominiums. It also owns some land near the Escondido resort and also real estate in Branson near that timeshare property.

Also family-owned is the Los Angeles-based Welk Group Inc. that owns a number of commercial properties, as well as an entertainment division. Larry Welk is chairman of that company.

Source Article

Copyright © All rights reserved. | Newsphere by AF themes.