56 LESSONS FROM TIMESHARE
60 | FRACTIONAL FOCUS Sales
What can
whole ownership developers learn from timeshare to generate better sales and revenues?
Visit a non- competing active timeshare resort developer to see fi rst hand the pace and throughput of the on and off site sales systems in place. Timeshare staff training programmes are in place in virtually every resort I know; how many new fractional developers have a training programme dedicated to selling fractions? Timeshare opera- tors hold onto their best sales people off ering handsome rewards. In this challenging market, fractional opera- tors should do the same. Timeshare is renowned for the upsell on resort, be that extra weeks sold or simply increased revenues in the restaurant. This is what whole ownership opera- tors with a fractional product need to get under the skin of and adapt to their own resort. By developing a fractional off ering this allows the resort owner to attract a completely diff erent audience and while the owner is there sell, sell, sell.”
Piers Brown, Owner, Fractional Life
What
mistakes from the timeshare industry can the fractional industry learn from?
Fractional developers should focus on selling their main product. Some timeshare developers have created unstable customer bases by stretching to make sales, with many selling biennial or tri- ennial memberships to cash-strapped buyers. Having the right customer for the product goes a long way in creat- ing long-term stability for a project. What’s more, the recent credit crisis is a result of not focusing on the sale of a main product. Prior to the credit freeze, many timeshare developers were making more money off com- moditizing the paper than from the actual product sales. Now, some of those developers are severely hurting for revenue despite sales not being too far down. Timeshare developers are now less reliant on income from ancillary products, instead viewing them as a bonus – a characteristic that fractional developers should eschew.
Paul Mattimoe, Owner, Perspective International
It was a little disappointing to still hear delegates and speakers
agonising over how they can either diff erentiate or totally disassociate the fractional product from timeshare.
Paul Gardner-Bougaard, FSOTA/RDO
that developers include a clause
stating that if, in the opinion of the trustee, the real estate market conditions at the end of the period are not favourable that it can opt to hold it for two years,” she adds. “This safety clause adds to the transparency that developers should be focusing on to sell.” Paul Mattimoe, owner of shared
ownership title Perspective International, agrees that a clear exit strategy is vitally important for a new consumer who wants instant gratifi cation rather than something to bequeath to their children. He also urges fractional developers to establish an effi cient means of collecting annual maintenance fees
from the outset. “Buyers who don’t pay their dues or fees can endanger an entire project, and taking these owners to court to retrieve unpaid fees is a process that may take years,” he explains. “It’s best to structure the product so that non-paying members can be ousted.”
Positive model
There is an emerging view that if the consumer was educated about the positive elements of timeshare, it would be much easier to sell fractional as an upgrade to people who understand shared ownership. Leslie McCann, Group Marketing Director of Seasons Holidays, points out that sales practices in timeshare are
How was
Seasons able to convert so many fractional sales last year?
We have developed approaches within the last 5 years to avoid strategies that rely on generating large numbers of customers to attend sales presentations, in favour of those relying on consumer opt-in. The best mid-market fractional plans are those with a simple use calendar, competitive pricing, 100% consumer fi nance, and a very clear exit plan, to avoid the many resale issues faced by timeshare owners who have purchased something that is 100% lifestyle and not asset based real estate investment. Our portfolio of fractions has been marketed on an eighth and quarter share basis with a guaranteed exit strategy whereby the whole apartment sold in fractions is resold after a pre-determined period of time, and proceeds divided pro-rata amongst the fractional owners. The use plan then becomes a very easy lifestyle plan, rather than a complex rotating calendar.
Leslie McCann, Group Marketing Director, Seasons Holidays
actually more robust than those in whole ownership. “The timeshare
industry has been used to selling to consumers with a cooling off period of 14 days within the UK and 10 days elsewhere within the EU, and it is a criminal off ence to ask for any kind of deposit for the sale of any property where rights of occupancy are split between multiple unconnected purchasers for a period of 3 years or more,” McCann explains. “The fractional industry can learn lessons from responsible developers who have set up their schemes in this way and be wary of the chaos caused by a few rogue developers who set up non-asset based schemes to get around the legislation which continue
www.opp.org.uk | APRIL 2010
Why are
your timeshare clients turning to fractional ownership?
Our existing Absolute Vacation Club owners are very open to look at the Absolute Fractional product off erings as an intelligent upgrade to their existing timeshare product. These clients fully understand the concept of shared ownership and are happy to own a fraction of a beautiful apartment as a second (or third) home and, knowing they won’t use this more than a month or two each year, see no reason in investing more than is actually necessary. The sale is more of a business deal than the typical vacation club sale, where there is perhaps more emotional reasoning than just pure logic. More referrals will come from fractional owners. Often fractional owners will not tell their friends they have bought a fraction of a penthouse apartment and a speedboat but merely say they have bought a penthouse apartment and a speedboat, omitting some of the details, why not.
Bryan Lunt, Chairman & CEO, Abso- lute World Group of Companies
to give the shared ownership industry a unjustifi ably bad name.” There will always be players who
prefer the path of least resistance for short-term gains but, unlike whole ownership, there is very specifi c legislation in place to govern the types of shared ownership product sold and how it’s sold. Ultimately, timeshare may have lessons that the entire overseas homes industry can learn from.
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