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Sometimes it's better to buy from the brand [says Timeshare Salesman]

Discussion in 'Buying, Selling & Renting Timeshares' started by maxpot46, Feb 2, 2019.

  1. T-Dot-Traveller

    T-Dot-Traveller TUG Member

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    The (former)Wyndham salesperson who started a thread last year mentioned a rate of 11% rescinded (I am going by memory) I believe he said that his % was lower than colleagues who were less detail meticulous .

    I believe he had worked at a warm weather beach / vacation area (as his sales) location .

    Where on the continuum are your results ?
    I understand that a higher rate could be linked to higher total sales in dollars .
    (ie) 20 contract sold at 60K with a rescind rate of 20% = $ 960,000
    vs 30 contracts sold at 25K with a rescind rate of 10%= $ 675,000
     
    Last edited: Feb 5, 2019
  2. T-Dot-Traveller

    T-Dot-Traveller TUG Member

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    The OP used the quote “ selling snow to .....
    which led to a discussion that included various community / identity terms for native peoples living in cold northern locations .
     
    Last edited: Feb 5, 2019
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  3. MOXJO7282

    MOXJO7282 Tug Review Crew: Rookie TUG Member

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    Too bad the OP wasn't in the business 15 -20 years ago when you could actually sell with honesty because buying direct, at least in the Marriott, and likely other top quality programs actually would get you more value than resale in many cases.

    That is now a bygone era where the resale market was in its infancy and before the good programs like Marriott got greedy. Back in the day many of us bought Marriotts and were given a significant amount of reward points and those reward points when used right could bring $10k in value to often times negate the higher cost of the direct purchase.

    I recall it all changed around 2005 when Marriott stopped giving the points they had always did at the point of sale and as pricing continued to go up and the resale market expanded the gap in price between direct and resale became too big and buying direct became the wrong move to make. That has only continued with the points programs so now there is no logical reason to buy direct that I can think of.

    So if the OP was truly forthright and gave the customer absolutely all the information almost all would go resale except for the very few who just have a fear of dealing with a stranger so much that they would pay big dollars for the piece of mind to deal with a company.
     
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  4. RX8

    RX8 TUG Member

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    Max Pot, I think you believe everything you are preaching. That isn't to say that I think you are right. There are many here who have been timesharing for probably as long as you have been alive (I am not one of them). They have seen timesharing at its best and at its worst. I suspect many of them will tell you timesharing today is not nearly as good as it was years ago. What you are selling now is nothing more than what has been sold before.

    This is an absolutely false reassurance to your prospect. Your proof is a single post from Redweek? While there may have been 50% buybacks out there it is assuredly a rare occasion and likely with old deeds with low retail prices. To tell your prospects that HGVC will buy back their deed at about 50% of what they are paying is done so only to cement the sale and is downright unethical. Will you be around in 5 years when your customer is desperate to get out from their timeshare and wants $40,000 for their $80,000 deed?

    If your timeshares are oozing with so much value then it would be ridiculous, stupid even, for someone to pass on the offer. If the timeshares were that great you wouldn't have to entice people with freebies to sit through the presentation. You also wouldn't need to make it a "today only" deal. If they were that great your bosses wouldn't need to fire employees who refuse to manipulate prospects.
     
    Last edited: Feb 5, 2019
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  5. chapjim

    chapjim TUG Member

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    In other words, off-topic.
     
  6. e.bram

    e.bram Guest

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    The OP has left out the effect of AIRBNB, HOTWIRE, PRICELINE etc.on so called rack rates.
     
  7. SmithOp

    SmithOp TUG Member

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    It will never happen because unlike used cars timeshares are all used products one week after the resort opens.

    Whether the developers buy back, take back by rofr, or even foreclose they are going to sell it as new. Some have been known to offer “used resale” units to people as a last ditch effort to sell, but will never undercut their product by selling used out of the gate.


    Sent from my iPad using Tapatalk Pro
     
  8. SmithOp

    SmithOp TUG Member

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    Good discussion but ultimately we will learn very little from Maxpot46, just like we are unlikely to learn much by going to the infamous “owner updates”.


    Sent from my iPad using Tapatalk Pro
     
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  9. Sapper

    Sapper Tug Review Crew: Rookie TUG Member

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    In otherwords it was part of the conversation.
     
  10. maxpot46

    maxpot46 Guest

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    Here are my spreadsheets for Rent vs. Own and Investment vs. Own at the average costs given by ARDA (believe it or not, my company has packages of similar price and lower maintenance).

    First is Rent vs. Own:

    Assumptions:

    1 week in a hotel vs. a 1 week timeshare deed

    Hotel Rents are assumed to be $220/night for a 1-bedroom luxury resort at a popular destination, which is argued to be fair in comparison to the average US hotel ADR of $140/night for a studio.

    Hotel taxes are assumed to be 15%, slightly above the national average of 13.7% to account for the popular destinations offered by timeshare resorts.

    We will use a Net Present Value analysis to account for the time value of money, and apply a 2% discount rate to all future cash flows. 2% is argued to be fair as the traditional metric for this sort of analysis is the 3-month T-bill, which is currently at 2.4% but has been close to zero for most of the last decade, as seen by the chart below.

    upload_2019-2-6_0-32-49.png

    Hotel ADR inflation is assumed to be 3.7%, the estimated rate in 2018 (I do not try to manipulate you into believe it is 7-8% as some reps do).

    Maintenance fee inflation is assumed to be 2.5%.

    Deed equity value of the timeshare deed is set at 50% of retail price, which is assumed to appreciate at 4% annually

    Initial Investment in the timeshare deed is set to depreciate in purchasing power at the discount rate

    First Day Incentive value is assumed to be equal to the discounted cost of renting 3 weeks over the next 3 years

    upload_2019-2-6_0-42-55.png

    And here is the chart for a savvy negotiator that is able to command 5 weeks worth of First Day Incentives:

    upload_2019-2-6_0-45-58.png

    And just for fun, here's a chart with 3 weeks FDI and the deed set to ZERO equity value:

    upload_2019-2-6_0-56-16.png

    Timeshare wins the numbers handily in all cases.

    Now, Investment vs. Own:

    Assumptions:

    The equivalent amount of capital to purchase a deed was placed into an Investment Fund, assumed to appreciate at 5% per year.

    We have again used an NPV analysis that discounts all future cash flows at the assumed rate of 2%

    Hotel rent was assumed to be $220/night + 15% taxes, appreciating at 3.7% annually.

    The capital gains of the investment only purchase 3.7 nights in the 1st year, and less each successive year due to inflation. Because the compared plans are for 7 days, it is assumed that additional money is spent each year to bring the number of nights up to 7.

    Maintenance fee inflation is assumed to be 2.5%

    Deed equity value of the timeshare deed is set at 50% of retail price, which is assumed to appreciate at 4% annually

    Initial Investment in the timeshare deed is set to depreciate in purchasing power at the discount rate

    First Day Incentive value is assumed to be equal to the discounted cost of renting 3 weeks over the next 3 years


    upload_2019-2-6_0-27-26.png

    Timeshare again wins the numbers vs. an investment fund.
     
  11. maxpot46

    maxpot46 Guest

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    Where did you get that? I'd be very curious to take a look at that site and check the ROFR history for my properties.
     
  12. bizaro86

    bizaro86 TUG Member

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  13. maxpot46

    maxpot46 Guest

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    Those rates sound like In-Line sales (sales to current owners). Industry standards for Front-Line sales (sales to non-owners) are closer to 30%. My rate is in the low to mid 20's.

    Interestingly, we are reprimanded both for a recission rate that is too high but also too LOW. Mine is a bit too low, I'm supposed to be pushing harder.
     
  14. maxpot46

    maxpot46 Guest

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    I absolutely believe it. That number was verified not only by that post, but by the email I have from a timeshare reseller advocating not to list my deed for only 50% or the company would exercise its ROFR, a true anecdote from one of my sales to a previous owner who reported a 50% buyback offer on his old deed from my company, and my conversations with the people in my resale department (for which I got yelled at afterwards by the head of the company because I'm apparently not supposed to know this stuff).

    The way timeshares are sold are not ideal, consuming 20-40% of revenues for marketing vs. around 10% for hotels. Companies wouldn't do it this way if it wasn't the superior option. In large part this is due to legal restrictions on advertising timeshares. In part because it's a lot of information to absorb and most people won't do it without being bribed into it (it ain't a 30-second commercial)... it's actually a lot of work to keep presentations to only 90 minutes because there is so much information to share about the products. In part because of recency bias and short time preference, where most people care more about spending less today vs. saving more tomorrow. Others are hostile because of previous bad experiences for themselves or their social circle. Others just buy into the general negative perception of timeshares. And many are legitimately not a good fit for the product (some people don't enjoy travel, some expect to die in a couple of years with no real heirs, some don't like resorts, some live paycheck to paycheck and can't afford it, etc.).
     
    Last edited: Feb 6, 2019
  15. maxpot46

    maxpot46 Guest

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    I am using AVERAGE rates, not the cheapest possible nor the most expensive possible rates.
     
  16. maxpot46

    maxpot46 Guest

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    Here is the chart set for 15% equity value instead of 50%, 2.6% hotel ADR inflation, and 3% MF inflation. Timeshare still wins the numbers.

    upload_2019-2-6_1-34-2.png
     
  17. geerlijd

    geerlijd TUG Member

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    I appreciate screen shots of your analysis, however, without the spreadsheet I can't check the formulas.

    The initial sales pitch you made was that buying direct was a better option than resale.

    Even if resale holds 50% of the value, your analysis charts will show it to be lower cost than direct. In most cases timeshare resales are 0-20% making them a much better value.
     
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  18. T-Dot-Traveller

    T-Dot-Traveller TUG Member

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    Thanks -
    He mentioned contacting a group of folks he had sold contracts to : (when Wyndham changed how the credit pool worked) to explain the change AND how it impacted usage of a specific type of contract he had been selling . So it is likely he was primarily selling existing owners
    and upgrading them. (from memory ).

    I added the example of higher dollar. sales and a higher rate of rescinding as a theoretical.
    Your management obviously has real world stats and wants the sales staff to find the sweet spot .

    Your sales style program may work better & lend itself to finding that spot vs emotional selling .
     
    Last edited: Feb 6, 2019
  19. DannyTS

    DannyTS TUG Member

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    Didn't your business school teach about the cost of money, present/future value, opportunity cost etc? If you add 5% opportunity cost (conservative) on your $13500 initial purchase price, your spreadsheet changes completely. Of course some of your clients also take a loan with more than 5% interest which makes your numbers even worse.
    I do not think you are selling Ferraries, i think you are selling Ladas to people who cannot read. Of course i am not referring to the quality of the resorts but to the quality of the products you sell.

    Others give you the benefit of the doubt. Given your education, sorry, I can't. Very hard for me to believe that you trust your own numbers.
     
    Last edited: Feb 6, 2019
  20. DannyTS

    DannyTS TUG Member

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    Why are you (not) answering with a question? My question was, how much is the list price for a 2 bedroom platinum season where you sell?

    To answer your question, ROFR.net
     
  21. jwalk03

    jwalk03 TUG Review Crew: Veteran TUG Member

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    Incredible, but true. There are lots of good deals to be had if you look.
     
  22. KarenP

    KarenP TUG Member

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    I wonder if the OP has seen the bargain deals on TUG where people are giving away timeshares? Including a Westin St. John.
     
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  23. bluehende

    bluehende TUG Review Crew: Veteran TUG Member

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    There are too many flaws in your analysis to pick them all out. I will point out the first few.

    Isn't the net present value of 22000 not spent 22000.....not 0 as your chart shows. Or your deed chart would have to start at -50% not half the deed value. It seems you have left the purchase price out. I will give you points for generating a NPV chart of a -cash flow and get positive numbers.

    You give a 4% gain per year on your deed. Name one timeshare property that has gained in value by 4% for 40 yrs. Or even 10. It is just a variation on the old lie of timeshares as an investment.

    Who out there is getting 3 to 5 weeks of incentives at prime time?

    Not hard to make numbers look good over time when you assume the value of your product goes up 4% and the cost to use that only goes up 2.5% Again show us a property that has increased in value at a higher rate than the increase in maintenance fees.

    What number did you use for MF? The chart looks to me like you used a low number....hmmmm

    What value did you use for the risk of special assessments, use fees, and stripping of perks that devalue the deed?
     
  24. davidvel

    davidvel TUG Member

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    There is a reason why Bill uses hypothetical average numbers in his fancy spreadsheet, and not actual numbers based upon the HGVC product that he sells. It's called fuzzy math or smoke and mirrors. You would think he would want to show a real calculation based on what he was selling, not hypothetical averages. Also, we are assuming his calculattions are accurate as he has not shared the spreadsheet for anyone to verify.

    Hey Bill, plug the actual numbers of a real world example into your spreadsheet and show the results.
     
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  25. Pathways

    Pathways TUG Member

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    The average income of a timeshare sale exec is six figures plus, for a relatively short day, great working conditions, great benefits, and a constant supply of 'pre-qualified' leads (any making less than that are simply not making sales and are weeded out quickly). Now timeshare products/companies vary tremendously, but the OP has clearly aligned himself with one where he can sell a premium product at a premium price, which leads me to believe his income is a multiple of the average.

    I would be willing to bet his approach using charts and spreadsheets results in a much higher than average feedback score from clients even two + years after a purchase. This approach floods the prospect with so many variables, that even if they disagree with one chart, they are at such a disadvantage in a presentation that the overwhelming evidence supports the decision to purchase. I would guess that in 50% of his presentations, the only obstacle to overcome is simply the one of financing.

    The worst part of selling timeshares for most of us would have to be the ability to sleep nights. After pressuring a couple in their 80's to spend another 30k to save $100 a month payment on a product they are not even using, and when they clearly can't afford ANY timeshare (we've all heard these stories) is not something most of us could do.

    Kudos to the OP as my guess is except for 'maybe' early on before he perfected his pitch, he has never had to sell to anyone like this example. He is like the car guy selling at over MSRP when the prospect can go down the road and find the same car for well under invoice. Some folks value their time more than money (not too many of these are tuggers), and are willing to pay a premium just to get the product they want and walk.

    The OP is well aware of where most tuggers come from, and did not come here to change anyone's opinion He is a 'perfectionist' who is utilizing the feedback he gets here to further refine and perfect his pitch to allow him to be even more successful in selling his product.

    And I for one say have at it, as we all know if he doesn't make a retail sale, there will be no resort for us to buy at resale prices, and then utilize for pennies on the dollar!
     

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