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Even Rolls Royce Sells Used Cars…
by Thom Davis
Director of Marketing
Online Resort Network
What does that statement have to do with timeshare? Read on because this article covers the fact that our industry has blatantly ignored the secondary timeshare market. Many who purchased a timeshare desire to sell it for one reason or another. Research I’ve done shows a big percentage of secondary market timeshares are listed with resellers because someone died. The family member who now owns it thinks they inherited a dead horse because of the annual maintenance fee. They simply don’t understand what was inherited so they look for a way to sell it. Other owners have aged; some have retired and now on fixed incomes or maybe not in good health and are looking for a way to rid themselves of the obligation of the annual maintenance fee. A few want to sell because they used it for a year or two and somehow convinced themselves that they don’t like it. We in the business must recognize this and accept the fact that a secondary market for “pre-owned” timeshare exists and is getting bigger and stronger every year. If you don’t believe this, go to the Internet and type in the words “Timeshare Resales”.
THE SECONDARY MARKET EMERGES
When automobiles were first manufactured, sellers discovered that for whatever reason, some people wanted to rid themselves of an older vehicle. Maybe because they purchased a new one – maybe not. At any rate the new car dealers didn’t want any pre-owned vehicles – they only sold “brand new” cars but not everyone could afford a new vehicle. This created a secondary market for pre-owned automobiles and pretty soon the used car dealer emerged. Originally new car sellers had no love any love for the used car dealers – they were of the opinion that if a pre-owned car was purchased a new car sale was missed and they had lost money. What they were not thinking about was the money making possibilities of/and after the used car sale. They simply were not in the marketing mode when it came to used or pre-owned vehicles.
IF YOU CAN’T BEAT THEM – JOIN THEM!
In bygone days used car sellers had no provisions to “service” what they bought and sold. Their customers would usually end up at the new car dealer for parts or service. Once the new car dealer realized this their opinions changed. The next innovation arrived when new car dealers began accepting trade-ins of pre-owned vehicles. They woke up! Marketing modes finally kicked in and they set aside a portion of their property for used car sales. Inventory was now available for persons who couldn’t afford a brand new car. Then came “Certified” pre-owned vehicles. The new car dealer would put the used vehicle through a 20-point mechanical check and stick a gold framed certificate in the window showing it was safe to purchase and drive. Auto auctions emerged. More marketing methods evolved – sales doubled, even tripled and profits soared. Are you beginning to get the picture – there is a definite similarity between what happened early-on in the automobile business and what is happening (or not happening) in timeshare – the timeshare industry just hasn’t woken up yet!
OUR INVENTORY – ON THEIR SHELVES!
Lets suppose you are a PD, Sales Manager or a top sales person at one of those High-Rise Resorts located on a beach. You know the type – a single 15 story building sitting on the beachfront with a parking garage, tennis court and an indoor/outdoor swimming pool. The resort has been opened for sales now for nine (9) years. Business is good bit one day you discover that you only have a couple of 2-bedroom units left in inventory. You also take note that the only 1-bedroom oceanfront units you have are off-season weeks in December through February – oops! You are running out of inventory – what happens now? Do you close the doors and shut down the sales department? Your meeting with the owner/developer uncovers the fact that there are no plans to build onto the resort because construction costs have risen drastically and it just isn’t feasible to purchase more oceanfront property. An intelligent developer will look to the secondary market. Why? Because the timeshare resale companies have all the listings of properties that owners want to sell. I’m not advocating setting up a “Used Timeshare” sales division at your resort but I do believe 100% whole heartedly that resorts should consider doing business with and at the very least rubbing shoulders with legitimate resellers of timeshare. It can and will increase your timeshare sales business. Here’s how!
TIMESHARE RESELLERS
Put the timeshare resellers to work for you. Set up a schedule for them to follow with prices your resort is willing to pay for each week. With a resale company acting as your agent, your resort remains anonymous and you have a shot at repurchasing the weeks that you sold in the past. Not just the top season weeks. Buy back any/all weeks – you sold them once before and you can sell them again. Look at the possibilities; suppose a 1-bedroom oceanfront week that sold for $10K or 12K seven years ago can be repurchased for around $2K or $3K? Today’s selling prices are almost double what they were seven years ago – do the math. Put your marketing hat on…your profits will soar through the roof. The developer doesn’t have to build anything, doesn’t have to purchase more beachfront property and sales can virtually go on forever.
INDUSTRY EXAMPLE
Recently I was speaking with the CEO of a well-known resort company headquartered in Texas. Wishing to remain anonymous I will refer to them here as XYZ Resorts. He informed me that two of their resorts were almost completely sold out of inventory and in the process of making plans to close down timeshare sales. After my brief lecture on the merits of re-purchasing timeshare weeks I referred him to a resale company that I knew had more than 1000 of his company’s timeshare weeks listed for sale. Many of these owners had purchased their timeshares from XYZ Resorts 15 to 20 years ago at a very low cost and were now asking from $3K to $6K depending on the season and size of unit. He requested the resale company make a blanket offer of $1,500 to the owners for each week. Top-season, mid-season or off-season didn’t matter. Not everyone accepted but XYZ Resorts was able to buy back more than 750 weeks over a period of several months. This indicates to me that there are some real bargains to be had from the timeshare resellers if you utilize them wisely. XYZ Resorts can now continue to sell timeshare and make future profit in two of their resorts they assumed were completely sold out.
A WORD OF CAUTION!
Many of the timeshare resellers doing business on the Internet don’t care if anyone ever purchases the property they have listed for sale because they collected an upfront fee from the owner. Their attempt to commoditize the timeshare industry has failed because they actually make no effort to sell anything. These type companies probably won’t even want to talk with you or take the time to deliver your offer to an owner. If you have trouble finding a timeshare reseller to work with, call me and I’ll recommend one or two that are in business to sell their customers timeshares for them. Make sure you do business with a reputable reseller who is willing to accept and deliver your offers, set up a bulk discount closing agent for you and act as your agent in repurchasing your resorts inventory. It makes good sense; its smart business and it will make your resort more profitable than ever.