March 9, 2012 — Due to the unusually high volume of e-mails that I’ve received in response to this series (Part 1 and Part 2) I want to publicly announce and make it perfectly clear that I never said or implied that the erosion of timeshare sales and marketing reps’ earnings was the direct result of a conspiracy perpetrated by timeshare developers.
So here’s the scoop. For the record this race to the bottom in earnings of sales and marketing reps commissions knows no boundaries and has occurred in nearly all sales jobs across the board regardless of the industry, product or service being ‘marketed’ and is not exclusive to the Timeshare Industry.
In fact as reported by the mainstream media (and eliminating government employment opportunities) most pay in the private sector over the past several decades is lower today (in real dollars/purchasing power) than in previous years and has occurred in most fields whether a person is ‘selling’ retail at the Mall, a receptionist for a Dentist or Lawyer, a mechanic at the local garage and so forth.
There is, however, no doubt in my mind that over the past many years timeshare developers— say at one of their annual events such as the upcoming ARDA World 2012 Convention & Exposition (in Las Vegas, first week of April)— never held a ‘session’ with a lecture discussing (e.g.) “How To Improve Your Sales Reps’ Income”.
What did occur over many years was that not a whole lot of thought went into the reps’ career options, including their pay. Essentially the original developers decided what they thought a decent ‘cut of the action’ should be (say, 10%) to pay their reps and it has been that way since day one with the caveat that in time some developers raised the points paid while others began to lower them.
As an analogy only, reps’ pay has been treated as if in 1969 the developers of the era thought that paying their (e.g.) room hostess $1.50 per hour was sufficient and then over the next 43 years left that pay at that level. Of course that didn’t occur for those ‘hourly’ employees because the market conditions changed as did minimum wage laws (increases), etc.
Another issue that has caused the erosion of real earnings for commissioned TS reps over the decades has been that ‘interval’ prices never kept pace with inflation. For example, in 1983 at the Imperial Resort in Hawaii a very small 700 sq. ft 2-Bedroom 1-week TS Condo sold for $11,000. Today, 29 years later, that same type of unit from the Developer should be selling for $25,628.00 per week.
And yet in 2012 a much larger, modern (e.g.) 1,200 square foot 2 bedroom with all the best and newest amenities can be purchased directly from a developer in places such as Hawaii, Cancun, Florida, California etc. for around $18-K per ‘interval’; or for about 30% less than the aforementioned “$25,628”.
Added to the dilemma, and unlike those early years beginning during the late 1980’s, buyers were (are) able to purchase less expensive ‘intervals’ such as EOY (every other year) programs, short-term duration ‘plans’ (10-20 years), exit/trial deals and so forth.
Yes, in 2012 there is no shortage of more expensive ‘intervals’ but straight across the board prices are down from where they ‘could/should’ have been and those lower prices, etc. contribute to the lower ‘pay’ commissioned reps are earning. And this trend will likely continue well into the future unless something changes.
And to add (income) insult to injury there are several 3rd party entities, some of which have earned (literally) billions of dollars in revenue off the hard work of untold thousands of sales and marketing reps for the past 37 (+ -) years. Yet those entities never paid one penny in earnings (commissions) to the very reps who pitched the company, products and services.
One of those companies is RCI and for the record, about 22 years after the company was founded (in 1974) by Jon and Christel DeHaan, RCI— then under the exclusive control of Ms. DeHaan— was acquired by Hospitality Franchise Systems (which ultimately became Cendant and is today part of Wyndham Worldwide) for a reported total of $825,000,000.
In 1996 Forbes reported that in that transaction of $825 Million (+ -) some $625 Million was in cash and stocks and Ms. DeHaan reportedly collected around $500 Million (1/2 a Billion Dollars) in cash. And that is fine, to be sure; a great payout for all her (and Jon’s) initial risks plus the years of long hours, obstacles to overcome, etc. and plain hard work. Had I founded RCI I would have held out for more bucks when it came time to sell; but that’s just me!
Also keep in mind that throughout the history of RCI not only was it the individual commissioned sales reps who sold the RCI concept to would-be TS owners and then physically enrolled TS buyers as RCI members; millions of them also went on to purchase billions of dollars in other travel related products directly from RCI such as airline tickets, car rentals, hotel room rentals, cruise vacations, etc.
And yet to the best of my knowledge the TS reps were never remunerated one dime directly from RCI on those additional products/services sold, and when Ms. DeHaan collected her ½ a BILLION dollars not so much as a $20 thank you bonus or even a card was sent to all the reps who contributed to her tremendous success and wealth.
Don’t miss part IV next week because sadly, it is worse than you think!
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©2012 Inside The Gate