July 17, 2015 — If you missed it this week Inside The Gate.com (ITG) published an ARDA Press Release that said “The U.S. timeshare industry enjoyed steady growth in 2014, according to the State of the Vacation Timeshare Industry: United States Study 2015 Edition, conducted by Ernst & Young for the ARDA International Foundation.” That is surely good news for many developers but when you consider the ‘big’ developers in our industry and the number of properties and sales centers they operate across the nation as well as their individual sales volume there may be more to the story than meets the eye.
So Here’s The Scoop: According to the press release, last year sales totaled about $7.9 Billion in the USA. The developers collectively sold about 397,000 slices (intervals) of Paradise at an average selling price equal to the 2013 dollars of $20,020. ‘If’ the average net closing ratio was 20% then in the United States developers invited about 1.98 Million sales guests to a presentation in 2014. ‘If’ that net closing ration was 25% then developers invited about 1.58 Million sales guests last year.
Of course other developers have reported higher/lower closing ratios and it seems that any net closing ratio in the USA at or above 15% net is acceptable and profitable. So I’m guessing the ‘gang’ is happy as their collective sales have increased from the industry’s low in 2007/8 of about $6.4B annually, which was down from the industry’s peak of about $10.9 Billion just before the crash. Nonetheless, in 2014 sales had increased from that low 7 years ago by about $1.5 Billion – and the crowd roars and cheers with approval, joy and delight!
And I surely want the sales to continue the upward trend because using my highly scientific guesstimating formula, since the crash about 7 + years ago I’ve ciphered that developers in the USA collectively need to get back some or all of what they lost during those years, which is likely around $20-25 Billion.
Additionally, using today’s average purchase price quoted by ARDA developers also likely lost about 1.12 Million upgrades and/or new buyers during those years and of course they lost all those associated annual maintenance fees and all that interest on all those contracts whereby the developer would have ‘toted the note’.
This all has me asking the same question once again; behind those reported numbers are we, as in industry, in the USA, operating at maximum marketing and selling efficiency & performance? Sadly, I keep coming up with the same answer. Yes, the developers are doing well as are the top 20% + – of all sales, marketing and management folks – that is, until you consider the following.
If on average, developers in the USA have collectively invited (e.g.) 1.6 Million sales guests each year to their sales centers and if we go back over the past 7 years – then about 11,200,000 consumers came to a sales presentation (somewhere) for a look-see, to kick the tires, so to speak, and of all those potential buyers it is likely that 8.9 Million of them said ‘NO Thanks’. Ouch!
As ‘the Donald’ might say, “That’s a yuuuge and colossal loss! If I were running things I would make sooooo much more money yuuu just wouldn’t believe it!”
I would agree with what ‘the Donald’ might say, at least the part about the loss being “yuuuge” and “colossal”. And being that I’m a self-confessed stickler and desire that everyone at all levels in our industry “be all you can be” (a slogan of the U.S. Army), I am 100% convinced that there are concrete reasons for all those No’s and more importantly, just from a marketing cost perspective those No’s add billions of dollars more to whatever the real total loss was, is and will continue to be well into the future.
Surely out of 8.96 Million No’s there were a couple of deals that could have or should have happened. Maybe more, maybe 100 more, a 1,000 more, 10,000 or a Million more ‘deals’. I only know the loss ain’t chump change to be sure.
When the ‘deciders’ in our industry address the cause and effect of those No’s and then take the appropriate action their sales will soar to such levels that they’ll be thoroughly amazed, and like ‘the Donald’ they’ll become wealthy beyond their wildest dreams — and their marketing and sales reps including management will be content little campers as well.
Good Luck Out There!
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Contributing sometimes extravagant, bombastic, emotional, pompous or even pretentious writings about the timeshare industry (but always spot on!), 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’.