Timbers Company develops and operates private residence clubs and luxury hotels, offering fractional ownership of vacation homes. Timbers CEO Greg Spencer explains that their owners tend to be the top 0.1% to 0.5% of the "socioeconomic wealth in the US," and that only expands to about the top 2% for other guests. While many Americans are starting to feel the pinch of inflation and higher interest rates, Timbers' guests are "still vacationing the way they always did." Spencer says the company has built a "resilient model" that focuses on the "multi-generational traveler" and selling the idea of creating memories at their locations. The focus on high net worth vacationers also means that Timbers hasn't had to worry about the pressure from higher interest rates on the business, with Spencer saying about 99% of their transactions are cash. That being said, Spencer says though they haven't seen a slowdown in sales, buyers have been more thoughtful about their purchases.

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Video Transcript

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JULIE HYMAN: We are coming off a record weekend for Thanksgiving travel. And some estimates show the consumer spending on trips is not expected to slow down. Our next guest runs a business at the intersection of travel and real estate, Timbers Resorts. It offers the ability for people to buy fractions of a vacation home. Joining us now Timbers CEO Greg Spencer.

Greg, thanks for being here. So talk to us about what you guys are seeing in terms of demand.

GREG SPENCER: Thank you. Glad to be here. We're seeing great demand. Really, we saw demand accelerate through COVID. We were a safe haven during COVID. And frankly, that hasn't stopped. It hasn't slowed down one bit. And we see that trend continuing.

Even though the world has opened up, we are the world. We have properties from Tuscany to Kauai. So we're seeing the benefit. Where Italy was closed during COVID, it's open now. And we're seeing the demand pick back up. And frankly, for the peak holiday seasons, we haven't seen any demand let off within the continental United States.

JOSH LIPTON: So that's interesting, Greg, because you have, obviously, good unique insight into the health of the consumer. And the consumer has proven resilient, Greg. But there's some caution creeping in here. And you've heard this, too, higher rates, dwindling savings. But so some caution, we've heard from some executives across all kinds of industries. But for you right now, you're saying you don't see that softening.

GREG SPENCER: We don't. We cater to a higher-end of the market anyway. Our average net worth for our owners really-- we're in that 0.1% to 0.5% socioeconomic for our physical owners. And even for our travel guests, we only dip down to about 1 and 1/2%, 2% socioeconomic wealth in the US. So you know, frankly, those folks are-- they're still vacationing the way they always did.

And I think the difference between some consumables and what we offer, we sell memories, right? And it's easy to put off a purchase if it's just you individually or you and your wife. But we really focus on the multigenerational traveler. And people don't want to put off for years, making memories with their grandkids or with their kids. And so we've always had a resilient model. Even during the global financial crisis, we're pretty resilient because of the end of the market that we service as well as the fact that we really are selling those memories, if you will.

JULIE HYMAN: Greg, at the same time, do people finance their purchases that they make through Timbers? And have you seen any pressure from higher interest rates as a result?

GREG SPENCER: We, 99% of our transactions are cash. That doesn't mean that they're not financing, but they're financing through a line of credit or through some other debt mechanism. But for us, it's predominantly a cash purchase. You know, I think what we've seen is we haven't really seen a slowdown in sales. As a matter of fact, last year was one of our top sales years.

What we have seen is a little bit more deliberation. We really don't sell price per square foot. We know what it is. But again, I come back to the fact that we're selling memories, right? And I think as long as we're delivering the experience, people are willing to pay for that experience. And so we haven't really seen it slow down.

Our owners during the financial crisis were more impacted by liquidity. And since you haven't seen any liquidity events happening with even the rates, we really haven't seen a slowdown.

JOSH LIPTON: And Greg, I'm interested, as we head into the holidays here, what's in demand? You have a portfolio of properties. Where's demand strongest? Where do people want to head?

GREG SPENCER: The skis still very strong. So Aspen, Vail, Steamboat Springs, those are still high-demand locations. And Hawaii, you know, Hawaii actually had a little bit of a dip at the beginning of '23. But Hawaii is definitely a market that people are very interested in. I was in Kuaui earlier this week. And we haven't seen the slowdown as far as the demand for the peak holiday seasons.

And it gets so busy. We actually close our corporate offices over the two weeks of the holiday, because, frankly, our properties are not only 100% occupied, every single room is occupied. So we really try to give the properties a break. So our corporate team isn't pestering them, if you will, over the peak holiday season. So we actually do kind of staff down corporately, just to kind of keep the eye on the ball for the peak holiday season.

JULIE HYMAN: Greg Spencer, Timbers CEO, thanks for joining us. Appreciate it.