Selling Timeshares

Timeshares have become very popular in the past 10 years. More than a million families own a week at some resort where they can go for a vacation. RCI, a part of Cendant, makes a market in these timeshares; owners can deposit their timeshare week with RCI and, in return, receive a week at some other resort somewhere else in the world.

Because of RCI, some families rarely return to the timeshare that they originally purchased.

The method whereby these timeshare owners are originally acquired has become quite scientific and interesting. Most developers of timeshares sell tours as an acquisition method. A tour is a weekend vacation that is offered to a family at below market rates—at prices as low as $50 for a 3-day family vacation at a hotel that is near a timeshare property. While they are at the hotel, as part of their payment for the weekend vacation, families are asked or required to take a tour of the timeshare and hear a pitch on the value of owning a timeshare. Most tour operators report that about 10 percent of the families that take a tour end up buying a timeshare, at prices ranging from $10,000 to $25,000 for 1 week.

The process of acquiring timeshare owners, therefore, has become a process of selling tours. If you can get people to take a tour, you can be confident that one in ten will make a purchase. The methods for tour selling have become very scientific. Direct mail is used to offer households within 90 minutes’ driving distance of a timeshare resort a weekend at a nearby hotel at a fixed below-market price. The response rate to such direct-mail solicitations is about 4⁄10 of 1 percent. Telemarketing then takes over to sign the respondents up for a tour. Here, again, scientific methods are used. Those who refuse a tour in June will be called again about touring in July, or August, or some other month. “Call until they tour or die” is the basic philosophy. And it works. Timeshares are one of the most profitable industries in the United States.

Some interesting lessons have been learned in the course of acquiring timeshare customers. These lessons can be useful in other industries. For example:

• Vacation packages can be sold with a hook (a requirement that the family listen to a pitch about the timeshare) or no hook (no pitch requirement). Statistics show that no-hook recipients are more likely to buy a timeshare than hook recipients. Why should this be so? A hook family has steeled itself in advance against the timeshare pitch: “OK, we will take their vacation, but we are certainly not going to plunk down money for a timeshare.” The no-hook family’s thinking is entirely different. Without the hook, the family members arrive thinking, “Isn’t this great! A weekend in Orlando for only $69, and no responsibilities other than to have fun.” While they are there, they say to themselves, “Well, these nice people have given us this great vacation. We might as well see what they have to offer. Maybe we would like to own a place here in Orlando.”

• Tour direct mail that offers a specific date on the outside of the envelope has a better response rate than offers that say, “Come to Orlando this summer for a week on us,” with no specific date mentioned. Why should this be so? If families think that if they don’t accept this date, they will miss out on the vacation altogether, they are probably more motivated to act immediately than those who think, “Well, let’s see if we can find a week when it is convenient for all of us to go together to Orlando.” After a couple of days, they have forgotten the offer entirely. Direct mail must have some urgency about it, or it doesn’t work well.

• Ugly one-color offers pull better than beautiful four-color offers. Why? This is one of the great mysteries of direct mail. Sometimes you don’t know the reason, you just know the results.