January 30, 2015 — Based on several subscription-required reports and studies I’ve read recently it would appear that the travel, vacationing and overall hospitality industry has once again become the hot market it was prior to the ‘Great
Depression Recession’ that officially began in December of 2007. And it seems the holiday merry makers with annual incomes exceeding $100,000 are leading the charge down Vacationing Boulevard.
So Here’s The Scoop: Actually, one report asserts that 85% of those folks went vacationing sometime during 2014 and if that is true, according to the details, that represents another increase for that demographic over the percentage of those folks who vacationed in 2013 – which in turn was higher than their 2012 ‘STATS’.
It was also suggested in these reports that nearly 50% of those good people in lower income brackets who had hoped to travel during 2014 visited a relative for their vacationing good-times last year.
Yet another statistic and chart clearly illustrated that in both demographics and among all their 2014 expenses — including but not limited to housing, food, car payments, utilities, education, entertainment and insurance, etc. — the average amount of money they spent to vacation last year was about 3-4% of their annual gross incomes.
Translated to our industry, if a Timeshare sales guest is grossing (e.g.) $40-K per year that indicates their annual vacationing budget for everything would be about $1,400; and the annual comfy zone for some fun in the sun among those $100-K + earners would be $3,500 (+).
One last tidbit to ponder is that these reports also assert that in both groups vacationers only spend about 20-23% of their entire vacationing dollars for their accommodations and in the electronic era most scoured the wireless universe seeking ‘super saver deals’ far in advance of their travel dates.
Which brings me to the focus this week, which is that in 2014 (e.g.) a family of four with an annual household income in the $60-K – $100-K (gross) neighborhood just didn’t ‘net’ that much money to have enough left over to comfortably afford a vacation ownership plan in the $20-K + range.
In fact, I would submit that anyone who believes a $60-K – $100-K (gross) income in 2014 for a family of just 3 (or more) was ‘darn good money’ is, well, I won’t say they’re wrong; instead I’ll suggest they are sadly mistaken and their thinking is probably stuck back to a time, say the mid 1980’s (and before) when it was a pretty good chunk of change. But that wasn’t the case in 2014 let alone in 2015, 2016, 2017…
As for a family of two or more with a $40-$60-K annual gross income in 2014 who became TS sales guests? Selling many of them was often a ‘grind’, and when they were sold the contracts were usually for small dollar amounts, including all those incomplete transactions at the POS (Point of Sale) due to insufficient down payments (fondly referred to in ‘the biz’ as ‘Mickeys’), many of which cancel sooner or later, which contributes to some developers’ excessive rescission ratios.
Of course those in the trenches working their wonders on those magical little round tables have known this all along and continue to debate among themselves why some developers’ trepidation prevents them from raising the minimal annual income requirements of their sales guests; you know, so more sales, revenue, commissions and profits can be generated.
And that fear by those developers is unfounded, especially considering that every report or study they’ve all read for several decades – be it those from the developers’ own association (ARDA) or independent and objective sources – clearly and factually document that as much as those good hard working lower income sales guests would love to vacation regularly most simply can’t afford to become timeshare owners/members.
Good Luck Out There
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Contributing sometimes extravagant, bombastic, emotional, pompous or even pretentious writings about the timeshare industry, Scoop covers an array of industry related subjects each week including inside information, tips, scandals, interviews, forecasts as well as new (good or bad) products and services — and, of course, all the ‘Good’, the ‘Bad’ and the ‘Ugly’.