JEWELS OF WISDOM, INC.

Lighthouse Cove Resort
Licensed Real Estate Co. - Phyllis Greenberg-Broker
1406 North Ocean Boulevard
Pompano Beach, Fl. 33062
Tel. (954) 786-0088 Fax (954) 786-4732

DEVELOPER SALES VS. TIMESHARE RESALES

Many people do not understand the difference in trying to market timeshare resales as opposed to the sales techniques and lead generation methods of developers, as performed years past at Lighthouse Cove.

Many times. I hear from owners, "Why don't you spend money to bring in prospects like the developer used to do?" These comments evidence the fact that people have not taken the time to educate themselves about marketing timeshare weeks and the problems and limitations of timeshare resales.

The timeshare product itself has proved to not only be more than a passing fad, as many doomsayers predicted, but has exhibited signs of legitimacy and longevity as evidenced by the introduction of such companies like Hilton, Marriott and Disney into the timeshare market. However, this rejuvenation comes only because of the tremendous financial potential to such large conglomerates in new or "developer" sales.

The timeshare industry, which has finally emerged from its infancy, is first coming to grips with the fact that there is a void in the industry, namely a lack of a viable approach to the secondary market. This is due to the political position of developers refusing to allow and/or their stifling on site resale programs. Aside from the con artists and opportunists preying upon the naiveté of timeshare owners trying to resell, owners in resorts without an on site resale program have very little choice with whom to list their units.

To demonstrate the differences between developer sales and resales one only has to think back to when most of you originally purchased your units. You will recall that you were "invited" in by a nice person on the beach who told you that you could get a cordless telephone, dinner for two or a cruise to the Bahamas, etc., just for looking around. With very few exceptions, NOBODY came in to buy timesharing. Miraculously, at the end of your presentation you wound up buying because you got a "foreclosure" or the deal was simply too good to pass up.

YOU MUST UNDERSTAND THAT THIS FORM OF CREATING PROSPECTS WAS POSSIBLE BECAUSE THE UNITS THAT WERE BEING SOLD BELONGED TO A DEVELOPER. Developers build timeshare projects from scratch. Including purchase and renovations, the cost per apartment is approximately $50,000 or $1,000 per unit week. If the average developer sales price per week is $14,000 compared to the cost of $1,000 to build, you can see the enormous profit developers make, even if you consider the costs of doing business especially in creating prospects.

Did you know that the nice kid on the beach that invites you in receives approximately $100 for you showing up, whether you buy or not? The gift you receive in return for taking a tour ranges from $100 to $150 and the company that hires that nice kid on the beach also gets $50 to $100 per couple. If we add all of the money spent to generate one prospect, we are at $250 to $350 and guess what? ONLY 1 OUT OF 7 OF THOSE PROSPECTS WILL BUY A TIMESHARE WEEK AFTER VIEWING THE RESORT!!

One can now see that the average cost for a developer selling one timeshare week, aside from the construction cost, is 7 X $300 =$2100. But wait a minute, what about salespersons' commissions, managers' overrides, secretaries, office expense, financing, etc. All in all, about 45% of the sale price goes into marketing the sale of that week. That still is a nice profit.

Now we come to the problems of generating a prospect for a timeshare resale. Using the same numbers, we run into a big, big problem. Since timeshare resale brokers are not developers and therefore have neither built nor accumulated their own inventory, they have nothing of their own to sell. Timeshare resales, when done legitimately, are done on a percentage of sales, traditionally between 25% and 50% (we charge 25%). Most companies charge up front fee in the 100's or 1,000's range.

Simple mathematics reveals that a timeshare resale company cannot spend over $2,000 to generate 7 leads in order to sell one timeshare week for a commission of $1,000 and then pay a salesperson a commission plus all office and administrative expenses.

Even if the numbers did fit, what about the endless parade of prospect and sales personnel invading your property and intruding upon the owners' vacation experience?

Unless some program is created on a large or national level to address the issues of resales, most resale program are relegated to solicitations of only those prospects already on site, or voluntarily walk in. Attempts to provide inexpensive premiums to entice prospects to tour our resort have proven to be counterproductive and cheapen our property.

The one thing that has proven to be effective in aiding sales is insuring that the on site prospect has a good experience during his/her stay at Lighthouse Cove. That starts and ends with the cooperation and friendliness of the entire staff and resident guests.

Email: agreenb900@aol.com

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