Entertaining runs in the Welk family. While most hotel companies have a chief financial officer, Welk Resorts has taken profit-making a step further by adding a second CFO—a chief fun officer. The family tasks that manager with creating innovative resort activities and programs for guests, such as team-building beach games and blindfolded remote control car races.
The driving force behind Welk Resorts’ focus on fun is President and CEO Jon Fredricks, the grandson of accordion-playing bandleader Lawrence Welk, whose 1960s-era musical variety show still airs on PBS. Welk ventured into the hospitality business in 1964, when he purchased a nine-hole golf course, restaurant, and four-room motel near Escondido, Calif., about 40 miles north of San Diego. “His initial vision was to own a golf course and develop a property that could appeal to his fans,” Fredricks says of his grandfather, who was a regular at the Sunday dinner table when Fredricks was growing up in Los Angeles.
The four-room motel has since been transformed into office space at the Welk Resort San Diego, which currently spans 450 acres with 714 villas, five recreation centers, and eight pools. And the company has grown to include properties in Branson, Mo.; Cabo San Lucas, Mexico; and Palm Springs (Cathedral City) and Lake Tahoe, Calif., with a total of 1,100 units. Another 1,365 keys will be available when new developments open in Escondido; Breckenridge, Colo.; and Poipu, Hawaii. While much of the focus of Welk Resorts is on selling vacation rentals, rooms by the night are also available. All locations are marketed as upscale four- or five-star resorts.
Lawrence Welk first entered the timeshare marketplace in 1985 when he built 286 two-bedroom villas on his land in southern California. Thirty years later, the growth of Welk Resorts continues, but at a deliberately slow pace. His grandson credits two strategies. The first is a conservative approach to business, whether it’s the company’s balance sheet or inventory management.
“We don’t want to over-leverage our balance sheet. We want to make sure we have a sustainable business mode. We’re constantly developing phases at resorts that match our sales that year, so we’re never too far out in front of ourselves in terms of inventory.”
Second, the brand emphasizes quality. “My grandfather always wanted to make sure he was providing great value to his television viewers. He never skimped on costumes, sets, and the overall look and feel of the show. That same type of belief has driven Larry Welk (Fredricks’ uncle and board chair) and myself in management of the company. We’re not willing to compromise on the quality of what we’re delivering.”
Having “sufficient equity” is also important, Fredricks adds. “As we need to go back into a resort that was built in 1985 and put in granite countertops, new plumbing fixtures, new roofs, etcetera, we’ve got the funds to do it,” he says. “That is why we have among the highest ratings in the vacation ownership industry in terms of our overall vacation experience rating and also our net promoter score.”
While The Lawrence Welk Show tended to attract older Americans, Fredricks says Welk Resorts properties have broad appeal. “We have a very typical demographic,” he explains. “We have activity programs that cater to all ages. We’ve got splash pads and water slides and footgolf and all kinds of activities that kids and families enjoy.”
It’s the role of the chief fun officer, Patrick Dolan, to provide those enjoyable activities. Current innovations include making tie-dye T-shirts and producing short films. Future concepts include ziplines and helicopter rides that are designed not only to engage guests, but to also keep the bottom line exceedingly healthy.
Despite having a small number of locations, the company has vastly evolved from when Lawrence Welk bought his little four-room motel and restaurant. From 2013 to 2014, the timeshare business grew more than 40 percent, Fredricks says. “Given that millennials really have little awareness of Lawrence Welk, over time it’s likely that knowledge of the man will fade,” Fredricks says. “But our belief is, if we do a good job managing our brand, the knowledge of Welk Resorts should continue to grow.”