True cost/value of a timeshare unit.
This came from the same documents mentioned a few posts back and contain some interesting projections and numbers. A bit of enlightenment as to why timeshares are so much cheaper on the resale market as opposed to buying new at those slick presentations.
Northwynd did some projections probably based on previous sales experience but the numbers shed some light into the mark-up and true value of what we own. As you can see below, they projected revenue of $23,000 per unit for the unbuilt 8300 Riverview unit. This alone seems high, sure perhaps they might sell the gold annuals at a high end but i doubt the ski season to get anywhere near as much.
The real point here is the sales cost. 43%!!.....so there you have it, the cost of all those promos, invites out to guests, the free golf, fee spas treatments for taking a tour, but probably the biggest factor, is the sales commission. They all account for 43% of the cost of what you pay for your brand new shiny timeshare.
Thus a unit that sales for $23,000, has $9,890 of it's price associated with sales.
Now using their numbers again, cost of capital of $12,377,866 / 1632 weeks = $7,584 per unit.
Net return $9,017,644 / 1632 weeks = $5,525 per unit.
Summary, if all units sell and fully developed.
Average cost per unit of $23,000 consists of:
Cost to build $7,584
Sales costs $9,890
Profit $5,525
So in reality the $ 23,000 unit actually cost $7,584.00
So this explains why a resale is so much cheaper than buying new.
Below is the info taken from the documents
The basic pro forma components of the Fairmont Villas Building 8300 are as follows:
Fairmont Villas
Building 8300 Development
Rooms 32
Weeks 1,632
Development cost 32 roorr 9,500,000
Average revenue per week 23,000
Selling costs 43%
Net margin per week 13,110
Project revenue 37,536,000
Project margin 21,395,520
Cost of capital 12,377,866
Net return 9,017,654
