Hypothetical Timeshare Reservation Odds?

Let's start with two hypothetical timeshares resorts, next door to each other and identical in almost all regards. Except, let's say timeshare ABC has 100 total units, while timeshare XYZ has 1,000.

1. Each unit has 50 one week 1-52 float owners. ABC = 5,000 owners & XYZ = 50,000 owners.
2. The other two weeks for each unit are reserved for off peak maintenance... to simplify the math.
3. Owners can call exactly 12 rotating months in advance to reserve the week of their choice, on a first-come, first-serve basis.
4. 10 weeks are peak, 20 weeks are average & the remaining 20 are low demand.

Your ownership usage intent is to call ASAP every year to try to secure one of the 10 peak weeks. So, which resort would you rather own at to increase your chances and why?

At first glance, with simple math, you have a 1/5 chance of landing a peak week reservation if you own at either location. Either 100*10/5,000 or 1,000*10/50,000 = 1/5... So, I expect many folks may insist that it doesn't really matter. I'm trying not to bias the answers with my current opinion, which may very well be totally wrong. I really want to know what others think.

I think I'd rather own a fixed unit / fixed week

With your scenario, I think the only thing that matters mathematically is that there are 10/50 peak weeks, so there's a 1/5 chance at either place. If everyone wants a peak week, and everyone calls at 12:01 AM on the first possible day, then everyone has the same 1/5 chance (assuming there are sufficient phone lines, operators, and so forth).

pjrose said:

I think I'd rather own a fixed unit / fixed week

Click to expand...

Yes, if only owning a fixed unit / fixed week were allowable. Lesson learned. Unfortunately, everything floats under this hypothetical scenario, which is actually based on some real world examples.

Rightly or wrongly, my current choice does not completely align with the simple math answer.

Tomorrow, I will reveal my choice and try to explain why. I'm having trouble succinctly and clearly explaining my choice. That is the reason for this open question. I need help to better explain the nuances of my position. Or, I need to see some alternate opinions to better understand what elements I am missing beyond the simple math argument.

Any other takers before I do?

Ok, no takers so far, here goes my opinion:
If the reservation system were random, like a roll of the dice, I would not care. It would be simple 1/5 chance. Just like gambling, actual results may vary greatly in the short term. However, in the long term, with many personal tries, one would get close to the 1/5 odds, regardless of the size of the resort. In looking into this question, I found this website about gambling, which I thought was interesting: http://wizardofodds.com/
........
However, the reservation system is NOT a random roll of the dice. It is highly dependent on the 'human factor', especially as it relates to the timeshare industry. This introduces an unknown variable into the equation. Your results may vary greatly above or below the 1/5 odds, depending upon the level of competition from fellow owners. It is my assumption that the larger the resort, the more likely the level of owner competition will reflect the average traits and habits of all timeshare owners in the larger general population. At a smaller resort, the mix of competition could vary greatly, above or below, this average. In some respects I liken this to the old analogy 'big fish in a small pond versus small fish in a big pond'. Except, of course, the proportional availability of the desired week is the same: 1/5

It is common industry practice for developers to use 'old school' timeshare presentation sales tactics. These tactics more often cater to and rely upon an uninformed buyer making an impulsive decision to spend lots of money and get the immediate gratification 'promise' of a lifetime of luxurious, affordable and limitless vacation choices. These same tactics often weed out potential buyers who want to analyze the programs and plan before making a commitment to buy. Resale buyers are more likely to have researched their purchase first. My big assumption here is that a person who buys new from the developer is less likely than someone who buys resale to wake up early 12 months ahead of time to try to book their vacation at 6 AM. If someone already paid tens of thousands of dollars to buy a timeshare after a 90 minute pitch, one may wonder: "Why the heck should they have to do that?"

Renting does not require this level of commitment and planning. It is my big assumption that someone who is prepared to commit $20k+ the same day towards lifetime vacations with no prior research would be much happier if they didn't have to then be stuck planning out so far in advance. I'm not saying there aren't numerous exceptions to these generalizations, so please don't take offense. I'm just saying that it takes time to learn how to use it or decide to cut your losses and sell it. Then, it takes time for the ratios of owner types to adjust to timeshare industry averages. The failure of other owners to plan so far in advance is of great advantage in this scenario.

In this hypothetical scenario, I would rather be up against a random average sampling of typical timeshare owners than fellow Tuggers any day of the week. For this reason, I choose timeshare XYZ. I would not want to take the risk that the competitive owner base at a smaller resort, ABC, might deviate greatly from industry averages. Yes, ABC might be better or worse competitively than XYZ. I will even go out on a limb to say I think it more likely to be worse competition at ABC, as owner education and turnover success percentage-wise may happen more rapidly. IMHO, either way, it is not worth the risk.
........
Yes, this hypothetical scenario is based on real world more complicated issues, but let's please keep this hypothetical. Let's not get into a discussion of creating a more 'fair' system. The rules are in contracts and the contracts are the rules, fair or unfair as they may seem.

I'd like to know what others think of my choice. Is there a better, simpler way to justify it or am I missing something? I wish I knew how to explain this more succinctly and clearly. Do you agree or am I wrong and why?
.........
Some extra comments about it:
- Imagine another resort DEF, same as before, except with only one unit & 50 owners. Remind me never to buy at DEF. Competition there may turn downright fierce!
- Let's say I choose XYZ resale for the larger owner/unit floating base. Then, XYZ developer later segregates the units between retail & resale owners. I would be pissed and consider it an owner's rights violation.

I agree that with a resort with lots more owners, that the % of owners which are "on top of their vacations plans" would likely be lower the more owners you have.

I agree with your choice. Your analysis makes sense to me. Also, in small resort, the owners are likely to quickly realize and share with each other how critical it is to call 12 months out.

Politico

On a personal note "how deep is the snow?" The news says it is bad in the DC area.

Your analysis is good.
In my earlier response I was going to add in the human factor, figuring that a percent of people would rather vacation during down time, and with the larger resort there'd be more trouble getting through on the phone, and so forth, but I decided it would probably all even out. There are just so many extraneous variables!

I agreee with resort XYZ. Your example presumes that every single owner is going to be on the phone at the exact moment they are first able to call. Not likely.

I have one factor to throw in. When there are weeks with peak, average and low demand, usually not all owners own peak demand time so that everyone would not be able to reserve peak time. While the odds would stay the same, the actual number would not be 5,000 or 50,000. That being said, I agree and would go for the XYZ resort.

Forget the arithmetic. If somebody has an inside track(like tipping the maitre dee) where do you stand especially if points are involved where the developer and points manager are the same and control the reservation system.(conflict of interest by the person whose fingers are on the keyboard of the reservation computer)

Bill4728 said:

Politico

On a personal note "how deep is the snow?" The news says it is bad in the DC area.

Click to expand...

It IS BAD. I cleaned up snow 3 times yesterday and again this morning. It is at least 40 inches I think. Still my DH and 3 DS are cleaning up the snow on driveway.

timesharejunkie4 said:

I have one factor to throw in. When there are weeks with peak, average and low demand, usually not all owners own peak demand time so that everyone would not be able to reserve peak time. While the odds would stay the same, the actual number would not be 5,000 or 50,000. That being said, I agree and would go for the XYZ resort.

Click to expand...

Great points! Hypothetical resorts ABC & XYZ are located in a place where there are HUGE seasonal variances in Travel Demand, similar to the II Arizona, Desert Travel Demand Index chart.

You are correct. This competition dilemma would not be so bad if the ownership weeks were sold in seasons. Unfortunately, perhaps the original developer lacked such foresight. Or, perhaps, as I think, they knew exactly what they were doing. At the time, I imagine it was easier for this developer to dump weeks branded with the really low season numbers by saying: "Ignore all the week numbers. That is for deed purposes only. You will own a 1-52 week float and can book ANY available week of the year, up to 12 months in advance."

Outside this extreme example, we know there are plenty of other examples where developers created floating seasons, maybe intending to avoid such demand imbalance issues, but they still got their dates wrong. One example I can think of is a platinum season which extends from summer (super peak) and all the way through fall (really low). I've heard first hand from owners at that resort, how difficult the competition has become to get those high demand summer week reservations. It is much easier for the public to rent it from the lucky owners who succeed. Additionally, travel demand seasons can change over time.

But again, in this extreme example, all owners may choose ANY week.

My resort has a 23 month (1 unit owner) or 24 month (2 unit owner) reservation window and you can fax or mail your reservation 90 days ahead of that. The problem I find is that anything can happen to the faxed/mailed reservations before they are input into the system. It's all up to the reservations department. What if the management company wants all the Christmas weeks? They can just slip the reservations onto the top of the pile at the last second?

Andy.

e.bram said:

Forget the arithmetic. If somebody has an inside track(like tipping the maitre dee) where do you stand especially if points are involved where the developer and points manager are the same and control the reservation system.(conflict of interest by the person whose fingers are on the keyboard of the reservation computer)

Click to expand...

Yes, you are one step ahead of me here.

We've seen timeshare programs evolve from fixed weeks to anytime floating to seasonal floats to a myriad of point systems.


It is reassuring to see people agree with my XYZ resort choice.

Now, I'd like to take my hypothetical scenario question to the next level:
Imagine if the resort management company (RMC) creates a new point program for XYZ, which is only open to original deeded owners and does not transfer with sale. The new fixed seasonal point system values are created on top of the floating, deeded, 12-month reservation rules. Point conversions are established as the 'average' of all possible weeks, low to peak.

Surprisingly (to the RMC, that is), XYZ owners denied entry to this point system tend to plan their reservations far sooner than those XYZ owners who have the option to convert to points at the last minute. Usually, the point conversions occur long after all the peak weeks are gone. Furthermore, it is far less likely (than RMC expected) for an owner converting to points to need to cancel a peak week reservation in order to do so. In fact, often times, that owner had not bothered to make any reservation at all. Consequently, the average value, in practice, tends to skew towards the value of the lowest demand weeks. As such, the middle of the road internal formulas, upon which the point system is based, are delivering far poorer financial results to the RMC than the RMC intended.

To address the point system imbalances, RMC establishes numerous inventory management techniques, but still, these can apply only to owners who opted-in to the point program and implicitly consent by doing so. The 'take your time' options the point system allows some XYZ owners are in direct conflict with the 'plan early' competitive requirements of the original 12 month floating rules which apply to all XYZ owners. Frustrated with that, RMC devises creative strategies that infringe on the usage rights of all XYZ owners. An RMC versus XYZ owner versus point system battle brews...

Inviting all owners to freely opt-in or opt-out of the point system, without penalty, is not on the table yet. Both parties, RMC & XYZ non-point owners, currently view that solution as a lose-lose proposition. RMC is struggling to squeeze maximum returns on the point system. Many XYZ owners feel, rightly so, that they could do far better than the mediocre point values by planning far in advance. Nor do many XYZ owners want to pay additional fees to join this points based exchange program for the mediocre point values they would be allotted.

Meanwhile, RMC formulates yet another possible inventory management change to thwart potential, looming legal challenges: Completely segregate non-point system XYZ owners who still remain in-eligible to participate in the full point program, under the same cost, terms & conditions. These non-point XYZ owners will find themselves unilaterally switched, without an owner vote, from an XYZ to an ABC type situation. RMC justifies this move as legal and fair, citing the simplistic 1/5 math answer in the original scenario.

Is that reasonable? I say no. If not, how do you simply and clearly state your case that RMC is wrong to do this? I say all owners chose to buy their deed at the larger XYZ floating reservation situation. We have a right to maintain the larger pool of units and owner diversity of decision making that XYZ allows.

Please chime in with better stated arguments than mine.

Ok, I'll bite. I think what you're alluding to with the segregation of owners is the splitting of resort inventory into two separate pools. One problem with this approach is that it results in reduced usage opportunities for both groups of owners. As such, this approach most likely infringes on deeded property rights. Floating weeks are typically deeded as undivided interests. Splitting the inventory creates a division where none is permitted.

Pit,
Thank you! This is exactly the kind of arguments I am trying to get at. RMC created an exclusive club membership program that does NOT protect the equality of deeded reservation rights for ALL XYZ owners. For the club membership to remain exclusive to certain types of owners at XYZ means that it needs to be run completely separate from the ENTIRE inventory management responsibilities of RMC. It is not good enough to segregate units/owners, which is to offer opt-in or opt-out. The first-come, first-serve deeds/CC&Rs for all XYZ owners are at odds with the last minute conversion values guaranteed by the club point program which was designed later. To stay legal and remain financially viable, the RMC club membership will need to change their membership rules & point values to align with the higher probability of lower demand weeks being all that remains when the club owners decide to convert later or last minute (and fail to secure a great reservation beforehand). Doing so would likely limit (eliminate) the competitive edge that the RMC network club membership would have against the larger, better established external trading companies.

Hypothetically speaking:
1. Is RMC stuck between a rock and a hard place when the lawsuits begin?
2. RMC's larger resort competitor, MCR, is rumored to be considering similar club program changes next June. Would MCR be wise to step back and learn from RMC's, yet to be legally challenged, mistakes?

Anyone else care to help me out here with these hypothetical legal arguments?

Thanks in advance,
l2trade

If I'm correctly guessing at your hypothetical resort, I would think the management company would be required to divide the inventory into the following pools:

Pool 1 .... Weeks 1-52 / Not eligible for club conversion so inventory must be "held/protected" for owner reservations pursuant to original deed/CCRs and state statutes (generally must be held until the 60-day mark)

Pool 2 .... Weeks 1-52 / Unreserved weeks eligible for club conversion at the 8-month mark

Pool 3 ..... Weeks 1-21, 50-52 (24 weeks total) / Not eligible for club conversion so inventory must be "held/protected" for owner reservations pursuant to original deed/CCRs and state statutes (generally must be held until the 60-day mark)

Pool 4 ...... Weeks 1-21, 50-52 (24 weeks total) / Unreserved weeks eligible for club conversion at the 8-month mark

Pool 5 ..... Weeks 22-27, 36-49 (20 weeks total) / Not eligible for club conversion so inventory must be "held/protected" for owner reservations pursuant to original deed/CCRs and state statutes (generally must be held until the 60-day mark)

Pool 6 ..... Weeks 22-27, 36-49 (20 weeks total) / Unreserved weeks eligible for club conversion at the 8-month mark

Pool 7 ..... Weeks 28 - 35 (8 weeks total) / Not eligible for club conversion so inventory must be "held/protected" for owner reservations pursuant to original deed/CCRs and state statutes (generally must be held until the 60-day mark)

Pool 8 ..... Weeks 28 - 35 (8 weeks total) / Unreserved weeks eligible for club conversion at the 8-month mark

If the managing entity is not maintaining separate inventory for each ownership pool, I would think they are violating state statutes.

Let's assume that ownership is represented as follows:

25% Pool One
25% Pool Two
3% Pool Three
20% Pool Four
1% Pool Five
18% Pool Six
1% Pool Seven
7% Pool Eight

I can come up with a bunch of different scenarios ... but the question becomes how do we assign sophistication levels/trading patterns to the various pools? If I understand the original thought process, those in pools one and three are more likely to request the best weeks as they are not eligible for club conversion and therefore will get the most value from a prime week (whether they intend to use, rent, trade).

An original buyer had the old "1 in 5" shot at obtaining a prime week ... but the chances for the early bird were, of course, much greater than 20%. Now that the inventory pools are reduced, does this decrease the availability of prime weeks for Pool One to 2.5% (25% of 20%)?