# The Elephant in Worldmark's Living Room



## PA- (Aug 7, 2006)

One of the biggest challenges facing Worldmark and Trendwest that I see is how to continue to sell increasingly larger number of credits to continue the rate of growth. This really seems to be at the root of all issues that are ever discussed. For example, TW is afraid to give up control of the WM board, because of their need to have Worldmark support to charge their owners more than the going rate for credits (upgrade sales is a HUGE part of TW profit). They're afraid to give up the owner's list for the same reason. They can't even afford to publicize GOOs, as a current thread on the wm4m is calling for. They even have refused the Worldmark board a communications channel to the owners, all because of their fear of future sales problems.

Yet, the thing is, none of this will work in the long run for the following reasons:

1) As more information is desiminated over the internet, it's going to be harder and harder to find enough uneducated consumers, and keep them uneducated throughout the rescinsion period. They're selling credits for $1.75 when you can buy unlimited quantities on ebay for 80cents.

2) If they signed up 23,000 new owners last year, Cendant isn't going to stand for 23,000 new owners per year in 5 years, they're going to expect growth every year. 

3) As the owner base increases, they'll have to build increasingly MORE resorts, generating more credits.

Eventually, it's going to crash, if they don't change their model.

So, what's the solution? I have a couple of ideas. Please shoot holes in them, and tell me why they won't work. Understand, this is not an agenda for me, it's Trendwest's problem, not Worldmark's. However, as I noted in the first paragraph, it greatly impacts worldmark and it would be nice if it were solved.

IDEA # 1 - Pre-construction sales of credits

When Trendwest decides to bulid a new resort, they can determine how many credits will be generated by the resort, and pre-sell them to pay for construction. But here's the deal:

1 - Cendant can ONLY sell to existing Worldmark owners
2 - That Worldmark owner cannot resell it to anyone other than Cendant during the first 3 years, or maybe 4 or 5.
3 - Since Cendant no longer sells credits to new owners (non-worldmark owners), the demand/supply factor of Worldmark credits is affected. Resell prices would probably go up, especially over time
4 - Since buyers would know that they can buy from Cendant at less than the going rate, and sell for more after the 3 - 5 year period ends, there should be a line of people wanting to add credits from Cendant. That would eliminate almost entirely the obscenely high cost of sales/marketing, and Cendant could theoritically make a nice profit and still sell for less than the resale price.
5 - If necessary, in order to increase demand for the credits, the buyers could be given priority on reserving the resort they pay for. It would be non-transferrable, when they sell the next owner would have no reservation priority on that resort. This would also help determine the location to build. If TW can't find enough people willing to buy in oklahoma, because they don't want priority at that resort, then they would scrap the project.
6 - This all is contingent on not selling so many credits, then the owners at large could still get into the resort, even though they don't have priority. Of course, they could also get more units through the priority owners who use those credits at a different resort in a given year.

IDEA # 2 - Blending of RC & WM

Remember when the board told us the only way they could afford to build at certain locations was if they included Residence Club units? How about a process whereby they sell all RED weeks as fixed or rotating weeks. Then, if an owner wanted to travel elsewhere, they get the number of credits it takes to reserve that week/unit and book elsewhere, opening up their red week to other WM owners. So, Worldmark gets all the non-red weeks with NO CREDIT DILUTION. Worldmark owners also have the ability to get the red weeks on years when the owner doesn't use it. I see no downside to this at all for Worldmark. For Trendwest, it's as easy to sell, because it has all the advantages of worldmark credits, plus the advantage of ownership of a brand new unit at a brand new resort.

Don't like either of these ideas? Come up with your own, let's brainstorm.

Don't think it's necessary to change the way credits are generated and sold? Don't see a problem with the old-school way of selling timeshares? Go back to sleep.


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## taffy19 (Aug 7, 2006)

PA- said:
			
		

> Don't think it's necessary to change the way credits are generated and sold? Don't see a problem with the old-school way of selling timeshares? Go back to sleep.


I see a problem coming with all developers with their very high prices today.  People will buy at a presentation if they don't know any better but more people now go on vacation with their notebook so will search the Internet immediately after their purchase and will find out soon enough that they paid way too much.  They will rescind their contract while they are still on vacation.  

The only way around this is if developers offer many perks that re-sale buyers will not get or they have what you cannot find elsewhere.  So far most perks are not worth it unless you study how to take advantage of them like some people do here.    Most people don't have the time for that.

Marriott offers pre-construction prices so it sounds like a very good idea to have something similar in offering pre-construction points for sale at a nice discount too.


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## jimbiggs (Aug 7, 2006)

PA- said:
			
		

> They're afraid to give up the owner's list for the same reason. They can't even afford to publicize GOOs, as a current thread on the wm4m is calling for.



I was just wondering if you're refering to the wmowners 4m or the TW4m?  I haven't been to either fourm in a while, so I haven't seen that thread.  For those that may not know, I think it's important to clarify that WMtheclub does not have a 4m.


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## PA- (Aug 7, 2006)

jimbiggs said:
			
		

> I was just wondering if you're refering to the wmowners 4m or the TW4m?  I haven't been to either fourm in a while, so I haven't seen that thread.  For those that may not know, I think it's important to clarify that WMtheclub does not have a 4m.



The thread I'm referring to is on the wm4m.


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## RichM (Aug 7, 2006)

By wm4m, he means the Trendwest forum (TW4M).


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## PerryM (Aug 8, 2006)

*Mass firings*

Here’s some WAG’s of mine:

1)	TW will never change the existing timeshare sales model – the entire industry is stuck in the 1970’s – ambush marketing filled with sales gifts and lies
2)	Anything that interferes with the TW salesrep selling a single credit must be destroyed – forget the pre-construction sales
3)	TW will keep the price they sell as low as possible and increase the credits per Red week – that way the existing owners help pay for new resorts

Not to be completely negative, I have some suggestions for TW:

1)	Fire the entire sales force
2)	Cut the price of a TW credit in half and sell 90¢ direct to existing owners and over the internet

Basically change the way they sell credits from a sales force to internet sales.  I don’t know how real estate laws in the various states would react to this.

If the sales force was fired and all sales occurred via the internet 50% of the current $1.80 credit cost could be eliminated and 90¢ would be the norm.  For new sales – have them use their credit cards to charge the price.  Forget financing – let that be done on the credit card.  Heck get a TW credit card and charge 19.99% to finance those credits.

The resale market would probably remain about the same and not drop a penny.

Honestly, I don’t see TW changing anything and just more of the same – it seems to work for the stockholders.


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## PA- (Aug 8, 2006)

Interesting ideas.  There's 2 potential problems.

1)  You're a businessman, so you know there's no such thing as "it's so good, it'll sell itself".  How do you convince non-owners, who don't really know the product, to release that kind of money without a sales push.

2)  If the price drops to 90cents, the resale price will drop to 45cents, all other things staying equal.  So the problem remains the same.  The resales problem is the elephant.  And you're back to, how do you find enough prospects who aren't savvy enough to check the internet before the rescinsion ends?


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## PerryM (Aug 8, 2006)

*Credit card sales only*

PA,

We do most of our shopping at Sams, Wal-Mart, and then it’s internet shopping.  I’m not advocating the elimination of advertising – just the salesreps that give the industry a black eye.  There is no reason that the entire sales pitch can’t be put on the internet and live folks via webcams to answer questions.

It maybe that TW would have to take the sales off shore to a Caribbean island to get around real estate laws – I don’t know.


But some of the web sites now a days are just fantastic as to sell your product.  In the resort areas TW would spend the money on bill boards and the sales brochures that all the timeshare folks advertise in.  However, just the web address is given and person would be encouraged to come by and check out the resort.  Simple signs pointing the way to the sales unit would guide the folks in.  Once inside terminals would allow folks to read and ask questions of the person on the other end.

Get their eMail address and develop a long term relationship with them – not the 90 minute one.  Once that top 50% of sales is gone and a monitored sales presentation is used our potential owners could take their time to buy.

Look at how we have no problems adding credits at 80¢ all day long here.  Resales of timeshares always shows the discounting of that 50% sales and marketing – in this case it should be in the range of 10¢ and thus 80¢ resale which it is now.

Look at all the commerce that takes place via the internet now – 10 to 20 years from now it’s going to be huge.  There is no reason why a person sitting down at home and being convinced that 90¢ a credit is a fantastic bargain should not enter their credit card info and buy 10,000 WM credits for $9,000.


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## BocaBum99 (Aug 8, 2006)

PerryM said:
			
		

> PA,
> 
> We do most of our shopping at Sams, Wal-Mart, and then it’s internet shopping.  I’m not advocating the elimination of advertising – just the salesreps that give the industry a black eye.  There is no reason that the entire sales pitch can’t be put on the internet and live folks via webcams to answer questions.
> 
> ...



Perry,

I agree with you.  My solution was to outsource sales to WorldMark resellers.  Create a lightweight VIP program that gives owners of "certified" product small extra benefits like better bonus time.  And, have the resellers sell it at a premium with authorization to use the Wyndham name.


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