Raintree Company Analysis

Nov 13, 2021 | 0 comments

Nov 13, 2021 | Writing Guide | 0 comments

*TABLE OF CONTENTS*
* TITLE PAGE NUMBER*
1.1 EXECUTIVE SUMMARY.. 4
2.0 INTRODUCTION.. 4
2.1 Mission, vision and goals of the company. 4
2.2 History. 5
2.3 Industry Overview.. 6
3.0 CRITICAL ANALYSIS OF RAINTREE RESORT COMPANY.. 6
3.1 PESTEL ANALYSIS. 7
3.11 Political and Legal Factors. 8
3.12 Economic Factors. 8
3.13 Social Factors. 8
3.14 Technological Factors. 9
3.15 Environmental Factors. 9
3.2 SWOT ANALYSIS. 10
4.0 THE KEY ISSUE IN THE CASE STUDY.. 12
5.0 ALTERNATIVES AVAILABLE.. 13
5.1 Alternative I. 13
5.2Alternative II. 14
5.3 Alternative III. 14
6.0 RECOMMENDED SOLUTION.. 15
7.0 IMPLEMENTATION.. 15
8.0 CONCLUSION.. 16
Work Cited. 17

1.1 EXECUTIVE SUMMARY
This report is about the analysis of the Raintree Resort Case study. The purpose of this report is the identification of the key issue in the case study, provide alternatives and recommend a solution and its implementation. The main problem in this study is the decision made by the managers including the CEO. For example the decisions made to acquire distressed property and the locations of the properties. These decisions have resulted to a decrease in the revenue for several consecutive years. The alternatives to be considered are; 1) gather adequate information and assessing the situation using technology before making a decision 2) conduct a training and development program for all employees and lastly, apply the rationale decision making model for effective decisions. The third alternative is recommended because it helps in effective decision making process. 2.0 INTRODUCTION 2.1 Mission, vision and goals of the company
The main mission of Raintree is to support its customers and making sure the needs of their customers are met. They go to extra lengths in making sure that they create extra ordinary experiences for their customers. “Making vacations memorable” was the company’s goal since 1997. Having different resort in different destination for customers’ satisfaction made it the leading industry in the timeshare sector. Their vision was being attained simply because of their collection of properties that created a unique blend that accommodated a variety of vacationers. 2.2 History
1997 is the year when Raintree Company acquired its tourism division. It is the same year that the company expanded its business into Mexico, Acapulco, whistler, British Columbia and Canada. The initial strategy of the CEO, Douglas Bech was to develop and expand the company’s portfolio into high quality properties that will impress the customers. The period between the year 2002 and 2006 the company focused much in restructuring and rationalizing as well as building its portfolio. This was due to ill timing of going public for equity funding for enabling the company makes smart acquisitions. It is during this period that the CEO acquired property in Washington and Colorado as he maintains his strategy.
From 2006 to 2009 the Raintree Company faces revenue challenges due to global recession. This was mostly resulted by the collapse of the credit market which made capital inaccessible. 2010- 2014; during this period Bech main focus was to improve operations by investing in renovation as he sold other properties in Arizona to settle the Company’s debt. He was doing this to from a financial productive perspective whereby he opened some restaurants in Mexico and renovating others. The year 2015 to 2016 the company experienced positive returns from the areas where there was a huge financial risk. This made Bech turn his focus this environment and rebuilt some of the restaurants such as the Los Carbos properties in Mexico. From 2017 onwards the company grew to another level starting from using technology to generate new ideas to expansion of different markets with new customer preferences. 2.3 Industry Overview
Timeshare industry involves the vacation ownership of a property. Initially the properties were sold on weekly basis during prime season depending on the location. The business has continued to grow over the years. Since all the financial aspects on the sales were being financed by the buyers, the developers had major debts to their consumers as a result of the collapsed credits markets. After this major challenge the profits margin became higher as they lowered their interests. By the year 2014 the industry returned to growth mode.
The business contributed approximately $79.5 billion to the national economy in 2015 including the provision of up to 511000 jobs. Going forward the timeshare companies should apply the new technology more to reach customers and move into new directions. Furthermore the companies should more considerate on the on the environment and the social set up that they take the vacationers by the use of technology. They should also find ways of offering services to the millennial who are considered impulse buyers and vacation time to them is as important as buying a house. 3.0 CRITICAL ANALYSIS OF RAINTREE RESORT COMPANY
· The purpose of business analysis
Business analysis creates a clear understanding of the revenue generation for the company which in turn help in coming up with an effective strategic plan. It also helps a company in working towards achieving its vision after being offered a guide for further development. The key purpose is to identify problem and come up with the solutions to be implemented.
· The use of SWOT analysis for Raintree Company
It is important to use SWOT analysis for Raintree Company because it is a useful for a strategic planning and as we have read from the case study the company CEO operates with strategies. It is also very beneficial when it comes to responding to new trends and dealing with the changes in the competitors operations such as Uber. SWOT analysis comes in handy in the identification of the underlying problems and improves or change the ways of handling issues. In addition it is also beneficial for the company in handling or addressing individual issues such as operational efficiency.
· The use of PESTEL analysis
This tool is important for the analysis of Raintree Company because it thoroughly evaluates the effects of the decisions made, its advantages and disadvantages before they are implemented. This is important because by evaluating the impact of a decision the company will be prepared for the outcome and the involved risks. It also gives a clear understanding of the changes that can take place due to amended decision. Once the managers of raintree properties go through these factors research and brainstorm them the chances of making mistakes in their decisions will be slim.
3.1 PESTEL ANALYSIS
Marketing is a very important department in every organization. The PESTEL analysis is a helpful tool to analyze the external forces that can impact the business. By assessing the factors that surround the business and having a direct impact on the business it will be easy to make potential changes to avoid repetition of mistakes. From this analysis it is easy to identify the issues that need to be assessed and solutions provided. PESTEL is an acronym for Political, Economical, Social, Technological, Environmental and Legal factors. 3.11 Political and Legal Factors
Politics can be internal and external. Internal politics involves cohesiveness and working as a team on a company. By working together, sharing ideas and coming up with suggestion as a team contribute greatly to the company’s growth. Issues like personal interests and blame game in a company can bring the company down. External policies involve issues such as government tax policies, trade laws and regulations for the environment. Raintree Company should understand the policies of the countries they operate business in to avoid any irregularities. For example the beach fees required to be paid to the government of Mexico for club Regina Cancun. 3.12 Economic Factors
The economy of a country in general can directly impact on the profits of the company. Economic factor is very important when it comes to ensuring how viable an investment is. Economic events such as inflation rate, exchange rate, interest taxes and the company’s financial status need to be evaluated in detail. This is fully being experienced in the Raintree Timeshare Company whereby the economy stability of other countries that they have business poses a risk on its revenues. The interest rates are also different in other countries compared to the United States. The years between 2010 and 2014 some properties in Arizona and Acapulco were forced to close because they were not productive enough and the company needed money to reduce its debt. When critical analysis is conducted, it will be discovered that this might have been caused by poor or lack of evaluation of the economy stability of the area. 3.13 Social Factors
In the PESTEL analysis when considering the sociological factors, a company should pay a close attention to the needs and expectation of the people of that area. This includes how the services are going to be customized to meet the population’s needs. When Raintree is marketing its services to different countries they should consider the culture, changes in lifestyle and provide services that suit different age groups. A good example for the different age groups is the millennial generation. The company should offer specific services according to their need that is different from other generations. Exhibit 9 has outlined the services that the millennial would expect and the different responses from the company.
*Exhibit 9*
*Millennial Approach*
*Raintree Response*
Needs personalized unique and interesting experiences to be shared with friends on social.
Work with Xplora to source experiences and post reviews on social media (e.g. www.exploracancun.com).
Booking travel through smart phones
Responsive design for booking; full website overhaul
Spontaneous/ last minute travel
Emphasize drive to destination
Travel in groups
Emphasize larger unit availability in promotional material
Learning something new while on vacation
Offer special regional experiences
Technologically astute
Provide technological connectedness throughout the vacation
Travel more spend less
Ensure membership provides more value than competitors
3.14 Technological Factors
The company should be aware that technology needs to be updated after every few months to keep up with the latest and updated systems. This requires funds but it is worth every penny because it is the modern way of marketing businesses and communicating with stake holders. For growth to occur innovation is necessary. From the case study it is stated that the CEO uses the traditional strategy models to move his company forward but as much as these models might have worked it is important to infuse technology in order to be at par with competitors. 3.15 Environmental Factors
This is an important factor to be considered when Raintree Company is acquiring property. The sustainability of the surrounding environment and the climate are issues to be given attention. Issues such as natural calamities, temperature, and the nearby water bodies should be thoroughly researched and evaluated before they set up a business. This factor has direct implications on the business. This will help avoid disasters such as the hurricane in Mexico. 3.2 SWOT ANALYSIS
A SWOT Analysis was conducted on the case study of the company to identify the key problems present. This analysis helps in assessing the strengths and weaknesses which are internal as well as opportunities and threats which are external. As much as there are problems in the Raintree Timeshare Company, there are also strengths which have made it overcome the faced challenges through the time.
There are several factors that have contributed to the success of the company despite the challenges; these factors are referred to as the strengths in the SWOT Analysis. The company was a premier provider of multi resort time share services hence gathering a good numbers of members. The company’s has as well been successful through its mission of putting the customers’ needs first. Raintree services are found in different destinations of the world including Canada, Mexico Arizona U.S and other locations. The management of the company is also structured to provide quality services to the consumers. This is further elaborated in exhibit 2 of the study.
DY Bech Holdings
ARD Holdings LLC
Raintree Hospitality LLC
RVC Members Trust
ARD Inventory LLC
Raintree Sales and Marketing LLC

Customer can acquire interests that provide them with free services through accumulation of points. This information can also be found in exhibit 3.
*EXHIBIT 3: ARD INVENTORY BY LEVEL*

*Points*
*Price US$*
*Annual fee$*
*Annual use example*
*Gold *
50,000
24,750
I,250
1 bedroom in prime season
*Platinum*
80,000
34,499
1,421
1 bedroom in high season or 2 bedroom in prime season
*Sapphire *
130,000
52,999
2,111
2 bedrooms in high season or 3 bedrooms.
*Emerald *
160,000
62,599
2,562
2 weeks in a 2 bedroom in high season.
*Ruby *
240,000
89,999
3,619
2 weeks in a 2 bedroom in a fractional resort
*Diamond *
320,000
121,999
4,699
4 weeks in 2 bedroom in a fractional resort

There are also several weaknesses in the company that contributed to the existence of the key issues in the company. The company’s decision to acquire properties from different destinations without considering the economy stability of such countries resulted to a drop in the annual sales.

*Exhibit 4: Raintree Resort Sales by year (in U.S $ MILLION)*
*Year*
*Sales*
2009
44
2010
27
2011
12
2012
5
2013
5
2014
3.5
2015
8.0
2016
12.0

There is also fluctuation in the prices for the products they offer to their customers. In addition the company faces currency risk due o its operation in different countries. Another visible weakness is the number of people declining membership every year, it seems to be constant this means that the company is not doing much to reduce it. The company is clearly not prepared for any disaster that may hit the company financial wise. This was evident when the company was greatly affected by the hurricane which struck the resort in Los Cabos. This was also seen when marketing programs were terminated due to the collapse of credit market.
The Raintree Company has a number of opportunities in turning its weaknesses to strengths and move the company to great heights. The company should major its marketing on the new technology such as through social media because from this platform it is more likely to meet potential customers from the Millennial generation. The company can gain more customers by venturing into different destinations such as Africa and Asia. In addition the company can develop new products that will meet the customers’ needs such as travel package to different destinations.
There are possible threats for Raintree Company, just like any other company. In recent years the company has been disrupted by competitors that are more advanced in terms of technology. These include the Airbnb, Uber, Gilt, Spotify and Udacity. The unstable economy situation from different parts of the world poses a great risk to the company’s revenues. The loss of members every year can have a negative effect on the company and becomes difficult for the company to acquire new customers. Natural disasters in the areas where the company properties are located can be a great risk. 4.0 THE KEY ISSUE IN THE CASE STUDY
The major problem in the Raintree Company case study is the nature of making decisions by the management. Decisions that are solely made and without taking advantage of the information available can shake the company’s stability. An in-depth research should be done on the matter at hand before an idea is implemented. Bech main goal was to build a portfolio of a high quality property through acquisition. He made decisions of acquiring these properties through reports without gathering information or keenly consider other alternatives. His main interest was destination and making good business deals. This did not involve the risks and the impacts on the company’s financial state. Some of these decisions left the company in depths forcing it to sell some of the property to reduce the debts.
Due to the company’s financial state the global recession left the company without capital for financing the consumer aspect or even money for marketing the company services. From exhibit 4 it is clear that the company’s sales dropped significantly and has not yet recovered back to where it was in 2009. The managerial issues stretch to the property managers in different destinations on how to reduce the number of members declining membership. For this number to be consistent each year (5%) shows that little is being done to reduce it. 5.0 ALTERNATIVES AVAILABLE 5.1 Alternative I
The CEO should take advantage of the available technology and gather information about the property at hand asses the risks and involve people on the ground for consultation. This alternative is very realistic because with the current trend of business operation, there is no better option than embracing new technology. The main advantage of this approach is the detailed report on the outcome and expectations. The use of technology will help in the analysis of the reports brought to him for assessment. On the other hand the disadvantage is the time taken to implement, it takes a lot of time to come to conclusion that may lead to many missed opportunities in case of competition. 5.2Alternative II
Another realistic option in approaching this problem is by conducting a high impact training an development program for the management team and other staff. Training programs help in profit growth and retention. Most important benefit of a training program is helping the CEO and other managers employ the principles of management in improving competence and productivity. In page 3 of the case study, it states that “….the managers at each property needed to understand the business model as noted”. From this statement it is clear that the managers from different Raintree properties require training so as to as to update themselves on the current business model to be able to achieve the company’s goal. Once the staff of Raintree Company from the CEO makes informed decisions the company will be on its way back to the top in terms of revenue generation. The main advantage is that the training can be customized to meet the company’s needs. This will benefit the company more because it will meet the company’s goal. Its disadvantage is that it might be expensive for the company to conduct an in house training depending on the number of staff available. 5.3 Alternative III
The CEO should use the rationale decision making model to avoid making impulse decision without much information that will have a negative outcome on the company. The advantage of this approach is that the leader has alternatives to chose from and is much aware of the consequences of each. The chances of making an effective decision are high because there is wide range of criteria and alternatives to choose from. The main disadvantage is that it makes unrealistic assumptions such as how people understand the decision to be made. It is also time consuming. 6.0 RECOMMENDED SOLUTION
The best alternative for the key issues in the organization is the third alternative (the application of rational decision making model). This option is suitable because according to the CEO’s strategy to build a portfolio of high quality property by acquisition, this can only be attainable if he focuses on the quality and the effect of his decisions. Rationale decision – making model is a tool that will help in coming up with effective and reliable decisions. Alternative I is not recommended because it for CEO who is used to do handle issue the traditional way it will take time for him to embrace the new technology and use it for his own benefit. Alternative II is also not sitable for this issue because it is not guaranteed that once they acquire knowledge from the training they are going to utilize it for the company’s operations. 7.0 IMPLEMENTATION
Rationale decision making model has eight steps that have to be followed to arrive at an effective decision. The first step is identification of the problem; in the case of Raintree Company the problem is how to acquire property. The next step is establishing decision criteria; this is where certain considerations are made such as the location of the property, the effects of the different factors to the company, the position of the company financially, is the company able to acquire the property without accumulating any debt? Step 3 is weighing the criteria; are the reasons worth acquiring the property. Is it best for the business? After weighing the criteria the next step is generating alternatives; this is when you look for other options (step 5) evaluate and compare them then choose the best alternative (step 6). Step 7 is implementing the decision by acquiring the property. The final step is evaluating the outcomes of the decision made. 8.0 CONCLUSION
Being the premier providers of timeshare and private residence accommodation services, the Raintree Company has many opportunities to take the company to a higher level. This is possible because the company has already earned the trust of members. The main task however that the management has is to maintain the stability of the company by assuring its customers that they are in control of every operation. The company should also move with the trend to be at par with their competitors who operate in the modern way of offering services by the use of technology.
Work Cited
Carini, Gary R, and Douglas Y Bech. *Raintree Resort International: Envisioning Unique Aventures*. Ivey Publishing, 2017, pp. 1-10, Accessed 12 June 2018.