2.5
Internet
At this time, the use of the internet and the world wide web for timesharing is developing. RCI and II make
information about resorts available to internet users. Owner-to-owner direct exchanges, rentals, sales and
purchases can be facilitated via a growing army of independent world wide web sites. The study of the Internet,
as a medium of effectiveness for sales conversions from internet advertising, has been difficult to measure
within the time-scale of this project. In the UK only an estimated 15% of the population in the UK have ever
used the Internet and then mostly for e-mail facilities. This means that internet advertising of timeshare in
the European market is certainly no more effective than existing paper mediums.2.6 Cooling-off
period
The biggest single cause of unrest about timeshare ownership has been the hard-sell techniques used by some
developers. The Timeshare Act of October 1992 gave purchasers in the United Kingdom 14 days to call off a
purchase agreement. A 10-day cooling off period was introduced 29th April 1997 to most European countries, but
unscrupulous marketers still find loopholes to outwit the legislation to the disadvantage of the consumer.
In a study into insurance agents, Howe, Hoffman, Hardigree, and Donald (1995) carried out research which found
that customer-oriented sales were found to engage in less unethical behaviour than their sales-oriented
counterparts. Unethical practices undoubtedly do contribute to giving timeshare the negative image that it does
not want.
Since the 1992 Act, the author of this report has visited and had first-hand experience of one Scottish resort,
one Cornish resort, one Welsh resort and one English Lakes resort. No untoward interaction took place which
alerted the author to any unethical practice. Prior to the Act, the author had one London resort bad
experience. The sales technique at that English resort had involved the enticement of "a free holiday abroad,
or smaller prizes," for attending a presentation. Intensive pressure selling for 4 hours took place at the
resort, rounded off by a salesperson insisting that he accompany the author to his home by train in order to
obtain a visa card number.
The entry to the market by major hospitality groups such as Airtours, Disney, Hyatt and Marriot lends
respectability to timesharing.
2.7
Ignorance
Despite 950,000 Britons taking timeshare holidays in 1996, there is a great public ignorance about timeshare.
For example, in a poll for Mintel, to the statement, "In most cases, you can exchange/swap timeshare
accommodation to another location or country" only 29% agreed.
2.8
Demographics
Club X, in Spain, can be classed as a beach/resort location, in an area best appreciated by the use of a car.
According to Mintel (1996) regardless of lifestage, beach/resort holidays are the most popular type being the
choice of 35% of all adults. 4.2% of all adults stay in a holiday home or timeshare, with 1.7% of adults hiring
a self-drive car abroad. 4.7% of all adults took holidays in Spain (TGI, 1997). Mr Y’s owned timeshare
weeks, in December, are at a time of year when just 1% of all people in the UK start their main holiday (TPR
Associates,).
2.9
Buyer Profile
According to middleton (1994, p48), there is a high propensity to engage in travel and tourism among people who
have/are: 1) a high income per household, 2) two employed parents, 3) large city dwellers, 4) a high level of
qualifications, 5) younger people, 6) two or more cars in the household, 7)six or more weeks’ paid
holiday. Based on these and demographic findings, the profile of the best prospect for a second-hand timeshare
at Club X, is someone who is: A car driver, aged 30 to 50, is a manager, employer or professionally qualified
person, lives in the Greater London area of England. The prospect is likely to buy the timeshare for the
purposes of exchanging rather than taking annual holidays beginning in December.
2.10
Resale Price
Resale companies advise that a price of between £400 and £1,000 per week might be achievable for the
2-bedroom accommodation owned by Mr Y. This represents a fall in value of between 50%-75% over the developer
price in 1989.
2.11
Benefits and Disadvantages of Club X Timeshare
The main benefits of Club X timeshare ownership are,
The nature of being able to exchange to over 4,550 other resorts in over 89 countries at any
time of the year. The size of the apartment, which is larger than many other resorts in Spain.
The main disadvantages are summarised as,
Poor opportunities of resale. Low resale price achievable as compared to price paid if bought
through a developer and its agents. The obligation to pay annual maintenance charges whatever an
individual’s financial circumstances are, failure of which may cause the ownership entitlement to be
revoked. The payment of membership fees to an exchange organisation without credit for years when an exchange
is not required. The necessity to pay fees to facilitate any exchange.
3. Literature
Extensive research for academic work which looks specifically at timeshare, in the vacation sense, has revealed
very little. This is surprising because timeshare has existed for nearly thirty years now, with significant
growth in the past ten years. Timeshare can be analysed by consumer behaviour motivation theory, sales theory,
and marketing communications theories to name but a few.
Goodall (1998, Chapter 1) postulates that growth in real income has contributed to a holiday being one of the
family’s most desirable consumable products. The prospect of a holiday motivates an individual to "escape
from work, escape from a routine, or respite from everyday worries" (ibid. p3). Murphy (1985) classifies these
motivations as physical or physiological (health, sport, challenge), cultural, social or prestigious, and
fantasy. It can be postulated that timeshare holiday makers do not need to be motivated. As owners, they have
paid in advance for holidays in capital payments and maintenance charges. They are committed to the concept of
taking a timeshare holiday, whether it is at their own resort or at another resort for which additional
exchange fees are payable. Consequently, the need to be motivated for a holiday, is removed, and the annual
holiday is assumed to be part of the routine.
Goodall offers a complex chart showing the annual holiday search process of a potential tourist. He admits that
for some tourists the selection choice is more straight forward. For many, the process is complicated by a wide
choice of factors demanding meticulous planning of almost every detail. The timeshare tourist is not included
in his analysis. The selection process for a timeshare owner is more complex. Choices exist in the world at
large, as well as in the arena of timeshare.
Goodall uses the generic term "Search Process" in consideration of the typical tourist search process. To
include timeshare, the diagramatic representation of the search process needs to be updated. The result is
shown in Figure 2. The updated version complicates the choice for the timeshare owner, who can
explore the wider holiday market, use the holiday weeks owned, exchange, store the weeks owned
for a holiday at a future time.
Figure 2.The Complex Timeshare Annual Search Process (Winter, A. 1997, adapted
from The Tourist’s Annual Search Process, Goodall, 1988.)
Mill and Morrison (1985) hold that the difference between a need and a want is one of awareness. Marketers have
the task of transforming needs into wants by making the individual aware of his or her need deficiencies. The
marketing task is to convince an individual that the purchase is the best, if not the only way of satisfying
that need.
Figure 3.
Marketing and the relationship between needs and wants, Mill and Morrison, 1985
The tourist industry tries to create the most favourable images of particular destinations (Goodall 1988).
Lifestyle scenarios, within niche and wide-appeal brochures, attempt to woo potential clients to book with
them. Here is an area of dynamic dissonance for timeshare owners. Package holiday brochures are available to
the public, and in the natural search for information on a destination, the timeshare owner may see something
which seems to hold more appeal than the choice which has already been committed to. Here is a possible cause
of negative thoughts about timeshare, which may provoke an attempt to sell.
Illustrating the last point, in ‘Project S’ Thompson sought "to deliver a product that would
differentiate Thompson … increase brand loyalty, moving the purchase decision to value and
quality…" (Astles, ed. middleton, 1994). The project examined the needs and wants of customers,
particularly looking at the four key accommodation attributes. These were fixtures and fittings, food, service,
and entertainment. The implications for timeshare resorts, sold as ‘quality’ or
‘luxury’ holidays, is that they should have at least some of the attributes of the Thompson Sun
Hotel brochure proclamation.
3.2 Sales Promotion
Blomberg (1995) argues that the key to success in sales involves the combination of marketing plans and
specific formalised selling approaches, driven by the results of market research and a direct-mail campaign.
The extent to which professionals, that is timeshare developers, their agents, and second-hand agents, use a
mix of methods to sell timeshare units is an important piece of information to the private seller.
Blomberg’s assertion, if true in timeshare, means that a private vendor cannot expect things to happen
just by taking one single action such as placing an advertisement in newspaper column.
Bass (1997) concluded that
"selling will be more effective when salespersons are both emotionally and intellectually appealing as well as
considerate of their customers’ needs… Effective salespersons arrange to keep up-to-date with the
customers’ problems and needs".
The implication is that vendors, need to show a knowledgeable enthusiasm for the timeshare product. Further,
the inquirers’ needs should be assessed in order to appeal to their needs. Finally, after sending
information to an inquirer, the vendor should follow-up and try to understand what any problem or delay in
replying is.
A study by Nicholls (1996) recommends that,
"Real estate managers should consider crafting a sales assistance program to enhance the relationship with both
the owner and purchaser and to clarify the manager’s role and liabilities".
Two implications arise. Firstly, some timeshare resorts do operate a resale scheme, but those that do not,
could conceivably benefit in the long run. The offer of clear guidelines to those who are selling could improve
credibility of the resort management. Secondly, the exchange element in the transaction may also be better
portrayed if the exchange organisations were to offer literature particularly designed for a private seller to
pass to the sales prospect. The trade-off would be a new member.
3.3 Auction
Wesling (1992) concluded that surplus real estate is increasingly being sold through auctions. According to
Gwent Group, a consulting firm that tracks the industry, from 1980 through 1991, the number of real estate
auction sales has risen 13% annually. In the UK timeshare auctions are operated by Trinity Factors for
example.
3.4
Demarketing
In 1971, Kotler and Levy raised the theory of demarketing,
"that aspect of marketing that deals with discouraging customers in general or a certain class of customer in
particular on either a temporary or permanent basis."
Lowther, Hastings and Lowry (1997) reconsidered this theory. Their extensive research uncovered little academic
work in the intervening years. The theory warrants discussion. Reducing the number of timeshares for sale,
increases scarcity, and improves the price obtainable. However, there are many suppliers of timeshare, unbound
by a professional body, to commit to stop development which might reduce the quantity supplied.
The common denominators are the exchange companies RCI and II, operating in a virtual duopoly. If they were to
desist from issuing exchange rights to anyone unless they bought from a private seller, theoretically there
would be more emphasis on purchasing second hand.
3.5
Five Forces Analysis
The theory of the last paragraph falls down, even through a rudimentary five forces analysis (Porter, 1979).
For exchange companies, there exist many business threats.
- Other smaller exchange companies already exist (competitive force);
- holiday tour organisations could move into the exchange business (threat of entry);
- Internet growth and with it the threat of alternatively arranged do-it-yourself exchanges (threat from
alternatives);
- Developers, being customers of RCI and II, big enough to forge links with one another to create their own
effective exchange groups (supply threat);
- Existing timeshare owners may move to other exchange organisations (customer threat).
In assessing how successful salespeople are, Lancaster and Jobber (1994, p304) argue the importance of
establishing precise information. They define the information required as finding out:
- Precisely who will be responsible for authorising the purchase,
- Exactly when they will be in a position to buy,
- Where he or she will be when the decision to buy is made,
- Why they want to buy from us, rather than someone else,
- Uncover how the purchase will be paid for.
Applying these concepts to timeshare, "Who?" helps the timeshare vendor to know whom they are dealing with.
Others involved in the buying process may also need to be provided with information. Whoever makes the initial
enquiry, there may be other members of the enquiring family or friends that need also to be persuaded that the
one timeshare is the one to purchase.
Consumer behaviour theory is well established, in that the buying decision process can consist of many
role-players (for example see, Kotler, Armstrong, Saunders, and Wong, 1996, p. 275-6). Kotler et al list, (1)
an initiator (perhaps a neighbour who mentions their timeshare); someone who influences (maybe a friend in a
bar who says he has seen timeshare advertised cheap in "Loot"); (2) a decider (perhaps the wife who
needs to counter sign a cheque); (3) a buyer (perhaps the senior male in the household who signs the cheque and
some legal papers to make the purchase); (4) and the users ( perhaps the children, who actually might be more
keen on a beach/resort holiday than anyone else in the household). To uncover in the course of telephone
conversation, who it is that is involved in the purchase will therefore assist any sale. The decider, perhaps
the wife of the buyer, might be influenced by calling back at another time of day. With an idea of the
users, the vendor could make play of relevant facilities and activities that might appeal.
Knowing when the buyers will be able to buy could ease the anxiety of waiting beyond a certain time for future
response to initial enquiries. Knowledge of "when" will give the vendor an idea of how quickly he/she needs to
act to provide information.
Knowledge of where the decision will be made can be crucial. Perhaps the potential buyer would like to stay at
the resort to experience it before making the purchase? This means the vendor may need to be prepared to make
that offer, if necessary, to further encourage a purchase.
Uncovering the reason for choosing the timeshare against all others puts the vendor in a better position to
make a more profitable sale. A timeshare has a marketing mix of purchase price, physical location, time of
year, size of unit, exchange facilitator. The vendor cannot assume that because someone has replied to their
private advertising that, for example, it was the price that attracted the enquirer. Knowing which factor drew
the applicant to approach the seller places the vendor in a better position to encourage a sale by talking
about the key factor.
Finally, "How will the purchase be funded?" may be of use. If a loan has to be arranged, the vendor may be
aware of where to get a low rate of interest. Offering this knowledge could speed up the sale.
Sales promotion has been covered many times in academic marketing literature, but little has covered timeshare
and, so far as can be ascertained, none has considered the second-hand market for timeshare. Additional study
is required. Do private vendors use the who, what, why, when, how methodology Lancaster and Jobber enthuse
over? Do vendors hold negative views of timeshare and therefore put potential buyers off? The remainder of this
work focuses on study areas which could be enlarged upon in their own right to bring about a fuller
understanding of the nature of marketing a second-hand timeshare.
4. Hypotheses
H 1. UK Resort developers hold successful selling knowledge that a secondary vendor can utilise.
H 2. Resale agents discourage sales, yet maximise their own income by encouraging resale
registrations.
H 3. Second-hand sellers portray a negative image of timeshare, making it difficult for developers,
resale agents, and other owners to make a sale. A telephone interview of timeshare vendors will be undertaken
to examine this hypothesis.
H 4 Second-hand vendors do not use successful sales techniques.
 5. Study Of UK Timeshare Developers, 1997.
Some suggestions which a vendor could use to market the timeshare arise from studying timeshare developers
methodologies,
- Adopt a professional approach,
- Run a small direct mail campaign,
- Follow-up any lead,
- Use knowledge gained about low-cost flights to advise a potential purchaser,
- Consider adjusting the offer price, so that the first year’s maintenance fees will be paid.
5.2 Background
In a 1996 study Mintel found that half of their sample would not consider buying a timeshare, one third of them
believing "that timeshare companies used dubious selling methods". To achieve a positive press would be helpful
to owners trying to sell their timeshares.
The UK has had a Timeshare Act since 1992 which allows buyers a 14 day cooling off period (see 2.6). The resort
developers in the UK have had the longest period in Europe to adjust to marketing under the buyer's
"freedom-to-reconsider" environment. Their selling methods ought not be similar to the practices which still go
on in some areas of the world, notably Canary Islands, where a tout still might ‘cajole and bully’
a holiday maker for 4 to 5 hours into saying "yes". (TCA, 1997, and writer’s own experience).
The hypothesis to be queried is "Resort developers hold successful marketing and selling
knowledge that a second-hand vendor can utilise".
5.3 Methodology Options
The data sample decided on was whole population of 86 timeshare sites identified within England, Scotland and
Wales, that affiliate to RCI and/or UKRE. Language problems, and the need to arrange postal returns from many
countries, to a small budget, negated the opportunity of selecting a sample of resorts across the globe. Time
to gather in responses was also limited and this is why the design was restricted to the 86 resorts mentioned.
Questionnaire design took into account many findings of marketing research writers (ABI abstracts)
particularly, (1) to be clear in meaning, (2) avoid ambiguity, (3) mix up response format to avoid boredom put
on correspondents, (4)put questions in a sensible order, (5) be short and simple, (6)follow the unique
objectives of the study, (7) printing questionnaire on two single sides to improve response rate.
5.4
Pilot and Full Survey
A pilot questionnaire was sent to ten randomly selected resorts from the survey population on 21 August 1997.
Respondents were enticed to make a swift return by being invited to take part in a National Lottery Draw
(sample letter and questionnaire in appendices). A 40% return of this pilot was received inside a week, the
replies received representing nine resorts. Amendments were made to improve the questionnaire, for example, it
had not been anticipated that replies would be sent back representing more than one site.
5.5
Response
In all, replies representing 27 resorts were received of which 20 were usable, and qualified for the National
Lottery Draw. Five were no longer marketing weeks, and two reported a policy of not replying to surveys of this
kind. The author speculates that many more responses may have been possible, had the mailing of the full
questionnaire not coincided with the death of Diana, Princess of Wales which brought about a week of unofficial
national mourning.
5.6 Data
Analysis of Promotion Methods
All results are reported out of 20 replies.
5.6.1 Promotion: country
11 resorts do no advertising anywhere, 7 advertise in England/Scotland/Wales, 1 did not reply.
5.6.2 Promotion: media
Promotion media of the resorts takes place in a variety of locations. See next page. None of the promotion
methods was mentioned in replies to the qualitative question "Which marketing technique works especially well
for you?"
5.6.3 Promotion: feeding awareness
Customer awareness is particularly fed via direct mailing of prospects (13), and offering discounted
mini-breaks (11). Two reported mailing out free of charge videos to prospects. Customer awareness is also
improved in the UK by people "coming in off the street" to look around, of their own curiosity.
5.6.4 Promotion: incentives
Incentives to own include: free RCI or II membership (13); low cost flights (8); discount cards to use in local
shops (7); and payment of management fees (6).
To the question, "do you actively encourage owners to be involved in sales promotion?" 15 replied "yes", 5
replied "no". To the question "how do you involve owners?", 10 offered bounties for successful introductions; 5
asked for prospect lists; 4 'giving their friends accommodation paid holidays at the resort'; 1 gave
professional videos to pass onto friends; 1 'holding home-parties at the marketing companies expense; 3
'involved in some other way'
5.6.5 Promotion: follow-up
11 thought it "very important", and 5 "important" to follow up prospects that do not buy at a certain time.
Ragatz (in Hawkins 1985, p261) showed that 45% of non-buyers were "maybe interested" in buying holiday
property. This survey finding shows that marketers in the UK believe in the importance of follow-up. In the
next survey into private vendors, evidence of follow-up will be looked for, to see if private vendors follow
this 'rule'.
A cross tabulation of ‘Promotion inducements and Owner involvement in promotion’
shows a significant relationship between ‘offering bounties for successful introductions’ and
‘offering discounted mini-breaks or renting unsold weeks’ and ‘sending direct mail to
selected households.’
5.6.6. Professional Approach
Hawkins (1985, p261), suggested improvements to marketing timeshare would be
"Professionalize the sales staff; devote at least half of 1% in sales revenue to sales and management training;
develop a core of full-time sales staff using a salary-bonus compensation plan…"
The anticipated quantified responses were not always quantified making analysis difficult.
However, a trend can be recognised. Not surprisingly, resorts with most units to sell have many more sales
staff than those who do not. Importantly, UK timeshare marketers responding to this survey do train their staff
where there is substantial number of units for sale. Secondly, there is strong indication of a "salary- bonus
compensation plan" being paid to retain important staff.
table 1. How many of your representatives have received at least 2 hours training
in the last six months?"
|
© Alan D Winter. 1998.
submitted in partial completion for the award of BSc (Hons) Marketing and Business Systems, Luton University,
April 1998.
