October 28, 2016 — Based on undeniable evidence I include myself among many others who believe our industry is at a crossroads and continues to be confronted by four (4) perilous forces that most developers, at least publicly, seem to ignore. As near as some of us can ascertain, worldwide, that is especially true among the smaller and/or independent developers that will likely continue whistling past the proverbial graveyard until such time as market conditions compel them to forever close their marketing and sales operations.
So Here’s The Scoop: The first force is that change is inevitable. The second force is that technology continues to bring about much of that change. The third one is the competition within the ‘yuuge’ rental market for vacation accommodations around the world. And the forth force, the one where the money continues to dominate all forces, is the vacationing public and their rapidly growing awareness of the nearly endless options at their disposal to rent deluxe homes, suites, villas and more for their vacations.
As such, my message this week is directed to the rank and file of our wonderful industry who work on a ‘performance-based’ pay system. And by that I mean all the hard working commission-only folks spanning the globe who bring ‘the biz’ together, folks such as the street OPC’s, in-house reps, front line sales reps, closers and F/B’ers, including those peeps holding marketing/sales management ‘gigs’ below the C-Level stage.
IMO, in terms of generating revenue these folks are the backbone of the industry and within a generation (next 20 years) they will also be the very people who will lose the most because of the inexorable forces working against them and the corner of the hospitality industry from which they earn their current livelihoods.
While most will disregard my caveat, for those who may not so quickly discard the warning signs, allow me to first offer them some examples of ‘change’ and how many once ‘bright & shiny’ must-have new gadgets or services became obsolete. The following examples are a mere scuffmark, presented in no particular order.
How about the local corner travel agency, hand-written letters, pagers, typewriters, book stores, 900 #’s, PDA’s, dial-up modems, record stores, rolls of film, calling 411, CD’s, Block Buster, the Ford Ranger PU, floppy disks, folding maps, landline phones, public phone booths, VCR’s or VHS, fax machines, the Yellow Pages, cassette players, boom boxes and answering machines?
And how about vacation rental accommodations such as the fact that even “Motel 6” has been upgrading their properties with actual in-room amenities, etc. and that they continue to develop extended stay and/or vacation properties named “Studio 6” offering suites with near full amenities including kitchenettes and more?
Then there is the worldwide explosion of other extended-stay properties offering semi-full to complete amenities that appeal to vacationers? Properties like those provided by Extended Stay America, Inc., Staybridge Suites, Candlewood Suites, Homewood Suites and many other hoteliers, including timeshare developers that offer the vacationing public discounted rental rates and other vacation packages.
And as we all know, included in the mix are the timeshare exchange companies offering attractive weekly rental rates to non-owners/members as well. Oh, and then there are all those timeshare rental weeks offered online from existing owners/members that are often advertised for less than the owners/members annual maintenance fee.
While I’m refreshing some memories also allow me to remind everyone what I recently wrote about regarding Airbnb.com, that in 8 short years from opening their doors they now have deluxe vacation rental units with, usually, all the bells and whistles in over 191 countries, 34,000 + cities and their menu includes around 1,400 castles plus their “guest count” has now, according to their website, exceeded “60,000,000” (Million).
According to the World Travel and Tourism Council leisure travel spending generated over 3.6 trillion dollars in 2015 representing nearly 77% of direct travel and tourism GDP. And that travel & tourism contributed almost 10% of the world GDP just last year. Knock-knock – 10% of the WORLDS GDP!
Yet, here we are, somewhat off the radar in our wee, nearly invisible little corner of that industry covertly hawking people off the streets; over the phone and online while the global competition for vacation rentals is anything but stealthy. Indeed, online, via social media, in print publications, over the radio waves and on TV, etc., the competition for vacationing rental dollars is nothing short of a full frontal consumer assault.
And as that rivalry continues to grab the attention of vacationers our appeal will continue to erode as will our ability, in its present form, to sell a product/service that costs the vacationer (e.g.) $10,000-$50,000 >their first 10 years, frequently with excessively high annual fees including other contractual costs & obligations often in perpetuity.
This attrition, as some insiders acknowledge, has been occurring for years now. With the advent of the wireless world and its ‘devices’ another plain and mostly unspoken truth is that often within the rescission period the new owner/member uses their personal gadgets, discover ‘content’ and – BAM; they exercise their lawful rights to cancel their newly acquired vacation plans in a matter of minutes.
All that said (and a whole bunch not said) – I’m of the belief that the current marketing and sales model including ownership/membership use and cost factors, etc, is causing, one day at a time, our slow demise via those painful little paper-cuts.
The hemorrhaging is not affecting the developers that much (yet) but surely is harming the rank and file who are working their tails off around the world daily, mostly in a commission-only environment without any benefits, no company-sponsored retirement plan and no future financial security (aka: ‘perkless’) whatsoever.
If anyone needs additional clues they ought to also consider all those legacy timeshare properties around the world. Once buzzing with marketing and sales activities; those events no longer take place and many of those ‘resorts’ eventually became economically and/or functionally obsolete. And the continuing inclusion of such properties (and TS plans) in that pool within our global industry is not dwindling.
As such, and with the exception of those few timeshare developers that will continue to change, adapt, evolve, embrace and navigate towards the future, all the working stiffs making ‘perkless’ developers even wealthier need to take the long-view and demand an immediate and significant increase in their ‘cut’ (aka: commission/percentage) as their earning days, one way or the other, are in jeopardy.
Yes, sales guests will continue to fill the sales centers and sales will be made and for those reps near their retirement years I fully acknowledge that they don’t have much to worry about as long as they’ve prepared, saved and invested for their ‘golden-years’.
But for all the others who have no base pay, no benefits and are working for pennies on the dollar (aka: low percentages) – those are the people who will find themselves, quicker than they can probably imagine, in deep kimchee, so to speak and left far behind as road kill in a dreary, filthy and lonely ditch along the timeshare memorial highway.
So for those peeps, as I’ve been cautioning for some time now, get on board and place your family’s security and financial future with the timeshare developers that are most likely to survive the tsunami of innovation and the rapidly changing marketplace because whether anyone likes it or not, whether anyone will believe it or accept it or not – that famous lady is warming up and she’ll soon be singing her lungs out loud and as clear as a bell – that I can tell you!
Good Luck Out There
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