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

CalGalTraveler

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It's almost never wise to buy developer. If I pay $60K for a timeshare now (I am 63, almost 64), if I use it 30 years, I am paying $2K per year for the purchase. Add in the MF's, and i am at $3,000 for a week of timeshare per year. I own a lot of timeshare, and not one of them is this expensive. This is why I won't go on a Marriott presentation, not ever again.
Good point. 20 years is too long a horizon for payback if you are approaching your 60s and beyond. Although everyone hopes to be going strong by the time they hit their 80s, there are too many variables including health and paying for retirement care. 5 - 10 years would be a safer planning horizon.

This is another reason resales make sense. Less capital = Faster payback. And if one should (er) kick the bucket, your heirs are not legally required to take it and it can be surrendered right back to the HOA for free. How's that for a guaranteed exit plan?
 
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Notice how he uses averages for all the costs associated with his Ferrari. I could make the numbers look good too if I bought a Ferrari at Chevy prices.
By your argument, I'd be justified in claiming that rents were very high so as to compare apples-to-apples with my premium product. A valuation of $220/night + taxes is fair.
 

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Can you direct us to this forum post?

I get it now. You sell to an extremely narrow high-end market. The problem is as developers increase their price points beyond $100,000 you are selling to an ever narrowing audience and the TS market is saturated.

The market is even shrinking because the industry has an image problem due to a lack of liquidity caused by a fractured "wild west" resale market, and brands refusing to guarantee deedbacks. I see exit companies every night on prime-time. Just read the comments to a Wyndham interview on The Points Guy blog (spoiler: it struck a negative nerve). This reputation must not sit well for prospective penthouse buyers with big egos who want bragging rights.

If you want to give people a big reason to buy developer, here it is:

Provide a guaranteed buyback and emergency deedback program. It could look roughly like this:
  • The buyback could be as simple as a sliding scale e.g. "if you own for 5 years you get x, 10 years we will give you y, if you own for 15 we will give you z.."
  • The emergency deedback would be like an insurance policy in which if someone could verify they lost their job, had a major health issue. spousal death etc. they could surrender their unit for free in return for taking over the maintenance fee. Proceeds from reselling the unit, and insurance proceeds cover the MF costs until it is resold.
Similar to Starwood's requalification process for StarOptions, you could even enable people to get the same guarantee for their resales if they buy back in. You make sales, people know they have an easy exit if life happens and they need out quickly. It's like an insurance policy. A new revenue stream that supports deedbacks and buybacks, without the cost of building a new resort.

If I knew that I was going to get my money back (or a good portion of it), and had an easy exit in an emergency, I would consider buying developer again. We purchased with the expectation our value would hold (but without a guarantee) and were disappointed. You can fool me once.

Developers are going to have to address supporting a robust resale and deedback market because losing $20k vs. losing $100k changes the game stakes and the house of cards will fall to earth if they choose to ignore it.

Spend some time reading TUG. Listen to the stories and share them with your management so they can take action to address the industry issues.
I'm afraid that I won't share the forum post, as it specifies my company, and I'd prefer to leave that to speculation.

One interesting thing I've discovered is that our price points aren't tremendously higher than the industry average, when pro-rated. We're even lower on certain packages, as some offer tremendous value on maintenance vs. nights received, and the retained equity value is the highest in the industry.

I agree with your solution, which seems pretty reasonable and wise to me. Unfortunately, my company isn't in the habit of consulting with me on how to run their business. Perhaps one day, as I see a lot of things which could be optimized.

I read TUG every day and have done so for months. It's a tremendously useful resource. I lack the power to make any useful changes, unfortunately, and don't care to talk business strategy with my superiors because they already perceive me as a know-it-all who dismisses their advice and does things the "wrong" way.
 

maxpot46

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And you think you are selling value? You make a sick amount of money because you are selling a $2.00 bottle of ketchup for $30.00.
Yes, I would never sell anything that rips off my customers. That's why I invested the time to create accurate spreadsheets the proves the value proposition that we offer.
 

CalGalTraveler

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By your argument, I'd be justified in claiming that rents were very high so as to compare apples-to-apples with my premium product. A valuation of $220/night + taxes is fair.
IMHO...I believe his analysis is comparing to NYC rates for premium hotel rooms and penthouse suites since that is where he sells. By that standard, that's a conservative estimate.
 

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Call me crazy but I would love to go to a presentation with the op and I NEVER go to any presentations. Even though I see it different I get what he is saying. Even though I would never buy from a developer it would be an interesting exchange.

It might be my Real Estate sales experience. There are some similarities. I sold million dollar homes. If you went down the road you could get a nicer home for 1/4 of the price but the prestige and value one perceived and the status they wanted made the sale. The difference between me and other sales people was I would do all in my power not to sell to someone who could not afford it. Always told them it’s your choice, if you want to buy I will sell to you but here is why I believe your over extending yourself. My boss heard me and I got in trouble but still did it my way and kept my job because anywhere they sent me I sold where others couldn’t.

I hate how most developers sell but it isn’t all their fault like we want to blame them. It amazes me the buyer just buys. Almost everything else people research for a good price. Common sense just leaves when on vacation. I got my first timeshare from a developer but that was before the internet and the ease of research. I shopped all the timeshare in the Atlantic City area in person doing my best comparison shopping at that time before I purchased.
Thanks, that's a very nice thing to say! We seem to have similar philosophies regarding sales.

One thing I've learned as an economist is that location and status DO have economic value that people are willing to pay for. And as long as the price offered is below what they would be willing to pay (not necessarily the market price, there are many people along the demand curve that would pay more than that), they will pull the trigger because researching for the very best price takes time and effort, which have an opportunity cost that often exceeds the value gained.
 

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When the market turned down and re taxes went up some those million dollar homes foreclosed and sold for 250k but that wasn’t my point.

Lack of liquidity and not getting back what you paid is around in many purchases. Recently I purchased a used vechicle and it was amazing how large the spread was in pricing. It was my responsibility to figure out if the price was right.

The problem with timeshares is the dishonest things buyers are told. It would take all of 5 minutes of an internet search to find out that you shouldn’t buy right now until you learn more yet most don’t do it. Doesn’t make a different there is no value, the buyer had a brain freeze not doing due research to make sure what they are buying is price well like they do for other items purchased. The prestige and value that one chooses to believe without researching is the problem. With all the time that one spends on their phones, think how easy it would to do a search while sitting at a presentation.
Interesting, 21% of first time buyers do so on their SECOND or greater presentation, and 22% with NO presentation at all. I presume they had time to research. The products DO offer value, and many people have an aversion to buying second hand.

upload_2019-2-5_18-1-2.png
 

bluehende

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By your argument, I'd be justified in claiming that rents were very high so as to compare apples-to-apples with my premium product. A valuation of $220/night + taxes is fair.
I was referring to you using the average selling price of a timeshare for all your lost opportunity costs. Me thinks you are selling timeshares for a bit more than that. Of course you could give us info and we would know. I notice you always go to the average valuation for a night. Are you not selling Ferrari's as you claim or are you selling those garbage heaps.

I will give an example

You are selling 50k timeshares (Ferrari's). Amortize that over 20 yrs with even given you could get half back (very debatable) and you get 1250 a year. Now the lost opportunity cost of that money is 5%. If your financial advisor is only averaging 5% over 20 yrs he should be fired and with it being capital gains you can ignore taxes as a lot of us have a zero rate on long term capital gains. If you want to include taxes then I will use an 8% average which is the average return on the s&p. So that is another 2500 a year. Now add 2000+ in maintenance fees. Now we are up to 5750 a year. That is one expensive week. I will note that I have given the absolute best case scenario here and ignored increases in maintenance fees. And of course the never ending fees tacked on have been ignored.

Now give your numbers.
 

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I think lately TS companies have done a better job in explaining that TS is not a financial investment, but rather an investment in future vacations. Every TS companies liteture now days has this in bold print.

Personally I have nothing against TS sales people that are ethical in how they approach sales. I have sat with ones completely ethical, I have sat with ones that don’t know there product very well, I have sat with ones who sort of miss represent things not so much because they are lying but repeating what they have heard others say without knowing their product, and finally I have sat with the complete liars which I detest. You can always spot the complete liars because they get really defensive normally in the presentation as the law of psychological reciprocity goes out the window with them.
One of the things that shocked me was how bad the training was, for such a prestigious brand. I definitely repeated things I was told at the beginning that were wrong.
 

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I would think an Ivy League Econ degree could get one a much better job than being a sales weasel!

$250/night for renting is way too high of average. I have rented Hilton Head over 4th of July, Summer Myrtle Beach, Fall Smokey Mountains, Summer Wisconsin Dells, Holiday weekend Nashville, Bonnet Creek, Las Vegas, San Fransisco, and Panama City Beach among others the last few years and I have NEVER paid $250 per night for any of those, and all were at least 2BR units, not studios.
I held a sexy consulting position at a major firm for 3 years, and the incredibly long hours for relatively low pay were terrible. Constant travel and corporate BS like facetime. Plus, if you think the product is terrible in timeshare, you don't know the consulting biz.

That seems incredible given that the average hotel ADR in the US is $140/night for a studio.
 

Panina

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Thanks, that's a very nice thing to say! We seem to have similar philosophies regarding sales.

One thing I've learned as an economist is that location and status DO have economic value that people are willing to pay for. And as long as the price offered is below what they would be willing to pay (not necessarily the market price, there are many people along the demand curve that would pay more than that), they will pull the trigger because researching for the very best price takes time and effort, which have an opportunity cost that often exceeds the value gained.
I appreciate different opinions even if mine are different. Everyone has a right to state what they believe without being called names or belittled.

I hope you stick around and learn from us. I will hope that the knowledge you learn on TUG will grow and you will use it to give presentations that a tugger would say, he is not the average timeshare salesperson, he was ok. Maybe in time you might even venture into timeshare resales and work on your own and find a niche through your creativity.
 

maxpot46

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IMHO...I believe his analysis is comparing to NYC rates for premium hotel rooms and penthouse suites since that is where he sells. By that standard, that's a conservative estimate.
I am actually comparing to nationwide averages, which show that the average price is $140/night for a studio. NYC has a very high ADR for a studio, around $350/night in Manhattan.
 

maxpot46

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I was referring to you using the average selling price of a timeshare for all your lost opportunity costs. Me thinks you are selling timeshares for a bit more than that. Of course you could give us info and we would know. I notice you always go to the average valuation for a night. Are you not selling Ferrari's as you claim or are you selling those garbage heaps.

I will give an example

You are selling 50k timeshares (Ferrari's). Amortize that over 20 yrs with even given you could get half back (very debatable) and you get 1250 a year. Now the lost opportunity cost of that money is 5%. If your financial advisor is only averaging 5% over 20 yrs he should be fired and with it being capital gains you can ignore taxes as a lot of us have a zero rate on long term capital gains. If you want to include taxes then I will use an 8% average which is the average return on the s&p. So that is another 2500 a year. Now add 2000+ in maintenance fees. Now we are up to 5750 a year. That is one expensive week. I will note that I have given the absolute best case scenario here and ignored increases in maintenance fees. And of course the never ending fees tacked on have been ignored.

Now give your numbers.
No thanks, I could be fired for listing company specifics, which is strictly prohibited. I see no need to take on risks in an internet discussion, so you'll just have to take me at my word that we have programs that prorate to approximately equal to the national average.
 

maxpot46

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I was referring to you using the average selling price of a timeshare for all your lost opportunity costs. Me thinks you are selling timeshares for a bit more than that. Of course you could give us info and we would know. I notice you always go to the average valuation for a night. Are you not selling Ferrari's as you claim or are you selling those garbage heaps.

I will give an example

You are selling 50k timeshares (Ferrari's). Amortize that over 20 yrs with even given you could get half back (very debatable) and you get 1250 a year. Now the lost opportunity cost of that money is 5%. If your financial advisor is only averaging 5% over 20 yrs he should be fired and with it being capital gains you can ignore taxes as a lot of us have a zero rate on long term capital gains. If you want to include taxes then I will use an 8% average which is the average return on the s&p. So that is another 2500 a year. Now add 2000+ in maintenance fees. Now we are up to 5750 a year. That is one expensive week. I will note that I have given the absolute best case scenario here and ignored increases in maintenance fees. And of course the never ending fees tacked on have been ignored.

Now give your numbers.
I do have a financial analysis that compares owning to investing in a vacation fund, and the latter loses. People forget certain factors, like the capital gains tax, the fact that withdrawing the interest to pay for vacations means no compounding of the investment, that the investment suffers depreciation due to inflation, and that the capital gains pay for fewer accommodations every year due to inflation.
 

CalGalTraveler

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IMO, I would like to see the big timeshare brands create robust resale divisions similar to an auto dealer that has certified resales. We have talked many times on TUG where there is a need in the industry for a CarMax or Carvana-like safe and easy resale TS sales channel.

It would be relatively simple to avoid cannibalizing new sales because we can see today how there is a significant delay between the new properties/point programs and the older resale weeks properties. This is akin to those who demand a new car (latest property) and those who buy less expensive resale cars (older resorts).

Financing by the brands would be offered too. Low risk for the brands because they already have in-house financing and if the buyer defaults, it is no big deal to take it back and resell again.
One reason TS resale prices are depressed is that the average American cannot come up with $5000+ cash to pay for a resale; financing is almost non-existent with the exception of Disney.

This would boost resale market liquidity, and provide yet another revenue stream for the brand via financing.
 
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bluehende

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I do have a financial analysis that compares owning to investing in a vacation fund, and the latter loses. People forget certain factors, like the capital gains tax, the fact that withdrawing the interest to pay for vacations means no compounding of the investment, that the investment suffers depreciation due to inflation, and that the capital gains pay for fewer accommodations every year due to inflation.
You are a good salesman. You ignored everything I said and went back to your talking points. If you want to add inflation you will see I did not compound interest in my example of opportunity costs and I did not add average MF gains. Kind of did not mention that did you. Is that in your analysis you have and will not show us.

Like I said. Now I use 8% for my gains over twenty years. That is the average and I will add my tax rate which is zero but may go to 10 as I age so we will say 5. Now your 5750 week is now 7175. Over 1000 a night. I think you will need to be selling private jets instead of ferraris to match that number.

Since I assume you show that to your customers and we are all potential customers why would you not show it to us. Your company objects to more customers????
 

bluehende

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No thanks, I could be fired for listing company specifics, which is strictly prohibited. I see no need to take on risks in an internet discussion, so you'll just have to take me at my word that we have programs that prorate to approximately equal to the national average.
nope
 

breezez

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I do have a financial analysis that compares owning to investing in a vacation fund, and the latter loses. People forget certain factors, like the capital gains tax, the fact that withdrawing the interest to pay for vacations means no compounding of the investment, that the investment suffers depreciation due to inflation, and that the capital gains pay for fewer accommodations every year due to inflation.
Let me point out that the capital gains loss you will have on the TS is disallowed by IRS as a write off. Hmmm. Does this mean IRS also knows they are basically worthless.
 

breezez

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Yes, I would never sell anything that rips off my customers. That's why I invested the time to create accurate spreadsheets the proves the value proposition that we offer.
How many of your customers have you called back a year into there ownership to see how they were doing and how the package you sold is working out for them?

I was a recruiter for years I always called back people I had placed to see how they were doing and pump for referrals.

Come to think of it even my realtor follows up with me at least once a year.

Since you seem to have a lot of stats most you say you got from ARDA, what amount of new Timeshare Sales come from referrals? I only ask because most people I know that own a Timeshare are embarrassed to admit they own one. When I tell people I got about 12-15 weeks a year worth they think I’m nuts.
 

breezez

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Interesting, 21% of first time buyers do so on their SECOND or greater presentation, and 22% with NO presentation at all. I presume they had time to research. The products DO offer value, and many people have an aversion to buying second hand.

View attachment 10268
All timeshares are used ;). Even Developer ones mostly have been stayed in.
 

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Metis is a Canadian only term I think. It denotes the group of people who were (roughly) half French-Canadian half Native-Canadian. Mostly French last names. The fur trade was largely controlled initially by the French. The Voyageurs travelled by canoe to Western Canada and traded with the local people for furs. Given how long that journey took, they often stayed over winter and traveled in the summer. Inevitably some married local women, and stayed. They formed communities generally centered around the fur-trading forts. There was also a Metis rebellion once, led by Luis Riel. Executed as a traitor but now considered a father of Confederation.

The Metis were historically considered a "problem." Not fully native (and thus not entitled to reserves or the protections of the Indian Act) but not white either, in a society that was not historically accepting of non-whites. Metis people have been fighting for various historic rights for generations. I think it is unlikely those rights will ever be granted comparably to status Indians, as the number of people who have Metis status in one way ot another is significant. And many (myself included) are not visibly from a minority group, and thus face none of the discrimination faced by those who are visibly native in Canada.
Thank you for the education.
 

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what makes me uncomfortable is the claims without any factual basis. Just like in any TS sales presentation. Now that we know you sell HGVC in New York you can certainly give us some more details, why you think it may be better to buy retail.
Yes, it's pretty clear that "Bill" attended Columbia, where he received his B.A. in Economics, and now works in sales for HGVC.

So purely for fun, maybe those more versed in HGVC developer sales can post the numbers to test his theory: product, purchase cost, MF, usual incentives, etc. vs. the same thing resale. Now, at least, we have something to chew on.
 

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I do have a financial analysis that compares owning to investing in a vacation fund, and the latter loses. People forget certain factors, like the capital gains tax, the fact that withdrawing the interest to pay for vacations means no compounding of the investment, that the investment suffers depreciation due to inflation, and that the capital gains pay for fewer accommodations every year due to inflation.
Here you go with out compounding interest. I used your numbers $22K for average initial purchase and while I don't agree at all the developer willing to buy back at 50% initial purchase price. I did not compound annual interest in the end the renter is way better off than the developer buyer. Remember the renter will still have $22K in the bank while the Buyer under your scenario would get $11K Back.
 

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DannyTS

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the 50% is just silly. Not only that it is not the average, we do not even know if that ever happens. Any analysis based on such weak foundation is ludicrous. Your spreadsheets are worth nothing IMO and, as long as they are built on sand, your selling is not ethically superior in any way to those that sell based on emotions. To the contrary.

this is the ROFR list for NY. How much is the developer list price for that last 2 bedroom platinum contract?

As I commented before, it was a mistake to start this conversation. You will not even be able to claim ignorance in the future.

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chapjim

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I was thinking of this when I wrote my previous post. How in Northern Canada the preferred terminology may be offensive to the folks living on the West coast of Alaska. Sometimes it comes down to what one local group prefers to be called.

I have never heard the term "Metis" before, but the other term would be considered an insult. Though I did know some one who called her self half Tlingit half "sneaky Coast Guard guy". She had a great sense of humour.

I'm fairly certain "Sales Weasel" is the preferred term around this local population. ;)
A little off-topic, don't you think?
 
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