June 10, 2011 — Some industry insiders been always been cynical about the sales numbers that respected entities such as ARDA (American Resort Developments Association) have reported for decades, including the sales stats released just prior to the crash of 2008 asserting the proud milestone when the timeshare industry had collectively reached a $10 Billion zenith in annual sales!
Most recently the new numbers suggest the industry is now in the $6 Billion (annual) range, reflecting a significant drop. But whether either number is correct or near accurate, the one unreported and irrefutable ‘sales stat’ is that the worldwide timeshare industry loses more sales volume/revenue (‘Billions’) each year than are achieved and that trend is predicted by many to continue.
Take for example a report released during the ARDA 2011 annual convention in Orlando depicting that the net industry average sales closing ratio is 15%. Or to put that in another perspective, for every 10,000 qualified prospects who visit a sales center, 8,500 refused to purchase a timeshare interest during the presentation Vs the 1,500 who did acquire a shared interest.
And even if the reported 15% net is not correct and the real net average sales closing ratio is (e.g.) 35%, that still translates into the fact that for every 10,000 sales guests attending a sales presentation 6,500 very costly prospects refused to purchase anything!
Somewhere in between those two numbers (15%-35%) lies the truth. Using an average annual 20% (net) closing ratio and an average sales price of (e.g.) $18,000 (per contract) that would indicate that for every 1 Billion dollars in net sales volume approximately 55,556 ‘contracts’ are written but that 222,224 of a total of 277,780 prospects attending a presentation said ‘no-thanks’!
To extrapolate that number (222,224) over a ten-year period, approximately 22.2 Million costly prospects (qualified tours) who visit a sales center and hear the entire presentation won’t purchase a timeshare interest.
And although fortunes were (and are) made, the bottom line over the past four (plus) decades is that because of timeshare developers’ often antiquated thinking, specifically regarding their approach to marketing and sales, they have individually and collectively lost more sales than they ever generated and with the challenging times ahead the scenario will only worsen.
Of course the individual developer no longer willing to follow the ‘pack’ can improve their sales performance significantly by making the appropriate adjustments to their marketing and sales techniques. But if they are looking to the ‘industry’ for guidance or leadership they might as well take one of those ‘Endless Vacations’ themselves!
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©2011 Inside The Gate