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One of the biggest challenges facing Worldmark and Trendwest that I see is how to continue to sell increasingly larger number of credits to continue the rate of growth. This really seems to be at the root of all issues that are ever discussed. For example, TW is afraid to give up control of the WM board, because of their need to have Worldmark support to charge their owners more than the going rate for credits (upgrade sales is a HUGE part of TW profit). They're afraid to give up the owner's list for the same reason. They can't even afford to publicize GOOs, as a current thread on the wm4m is calling for. They even have refused the Worldmark board a communications channel to the owners, all because of their fear of future sales problems.
Yet, the thing is, none of this will work in the long run for the following reasons:
1) As more information is desiminated over the internet, it's going to be harder and harder to find enough uneducated consumers, and keep them uneducated throughout the rescinsion period. They're selling credits for $1.75 when you can buy unlimited quantities on ebay for 80cents.
2) If they signed up 23,000 new owners last year, Cendant isn't going to stand for 23,000 new owners per year in 5 years, they're going to expect growth every year.
3) As the owner base increases, they'll have to build increasingly MORE resorts, generating more credits.
Eventually, it's going to crash, if they don't change their model.
So, what's the solution? I have a couple of ideas. Please shoot holes in them, and tell me why they won't work. Understand, this is not an agenda for me, it's Trendwest's problem, not Worldmark's. However, as I noted in the first paragraph, it greatly impacts worldmark and it would be nice if it were solved.
IDEA # 1 - Pre-construction sales of credits
When Trendwest decides to bulid a new resort, they can determine how many credits will be generated by the resort, and pre-sell them to pay for construction. But here's the deal:
1 - Cendant can ONLY sell to existing Worldmark owners
2 - That Worldmark owner cannot resell it to anyone other than Cendant during the first 3 years, or maybe 4 or 5.
3 - Since Cendant no longer sells credits to new owners (non-worldmark owners), the demand/supply factor of Worldmark credits is affected. Resell prices would probably go up, especially over time
4 - Since buyers would know that they can buy from Cendant at less than the going rate, and sell for more after the 3 - 5 year period ends, there should be a line of people wanting to add credits from Cendant. That would eliminate almost entirely the obscenely high cost of sales/marketing, and Cendant could theoritically make a nice profit and still sell for less than the resale price.
5 - If necessary, in order to increase demand for the credits, the buyers could be given priority on reserving the resort they pay for. It would be non-transferrable, when they sell the next owner would have no reservation priority on that resort. This would also help determine the location to build. If TW can't find enough people willing to buy in oklahoma, because they don't want priority at that resort, then they would scrap the project.
6 - This all is contingent on not selling so many credits, then the owners at large could still get into the resort, even though they don't have priority. Of course, they could also get more units through the priority owners who use those credits at a different resort in a given year.
IDEA # 2 - Blending of RC & WM
Remember when the board told us the only way they could afford to build at certain locations was if they included Residence Club units? How about a process whereby they sell all RED weeks as fixed or rotating weeks. Then, if an owner wanted to travel elsewhere, they get the number of credits it takes to reserve that week/unit and book elsewhere, opening up their red week to other WM owners. So, Worldmark gets all the non-red weeks with NO CREDIT DILUTION. Worldmark owners also have the ability to get the red weeks on years when the owner doesn't use it. I see no downside to this at all for Worldmark. For Trendwest, it's as easy to sell, because it has all the advantages of worldmark credits, plus the advantage of ownership of a brand new unit at a brand new resort.
Don't like either of these ideas? Come up with your own, let's brainstorm.
Don't think it's necessary to change the way credits are generated and sold? Don't see a problem with the old-school way of selling timeshares? Go back to sleep.
Yet, the thing is, none of this will work in the long run for the following reasons:
1) As more information is desiminated over the internet, it's going to be harder and harder to find enough uneducated consumers, and keep them uneducated throughout the rescinsion period. They're selling credits for $1.75 when you can buy unlimited quantities on ebay for 80cents.
2) If they signed up 23,000 new owners last year, Cendant isn't going to stand for 23,000 new owners per year in 5 years, they're going to expect growth every year.
3) As the owner base increases, they'll have to build increasingly MORE resorts, generating more credits.
Eventually, it's going to crash, if they don't change their model.
So, what's the solution? I have a couple of ideas. Please shoot holes in them, and tell me why they won't work. Understand, this is not an agenda for me, it's Trendwest's problem, not Worldmark's. However, as I noted in the first paragraph, it greatly impacts worldmark and it would be nice if it were solved.
IDEA # 1 - Pre-construction sales of credits
When Trendwest decides to bulid a new resort, they can determine how many credits will be generated by the resort, and pre-sell them to pay for construction. But here's the deal:
1 - Cendant can ONLY sell to existing Worldmark owners
2 - That Worldmark owner cannot resell it to anyone other than Cendant during the first 3 years, or maybe 4 or 5.
3 - Since Cendant no longer sells credits to new owners (non-worldmark owners), the demand/supply factor of Worldmark credits is affected. Resell prices would probably go up, especially over time
4 - Since buyers would know that they can buy from Cendant at less than the going rate, and sell for more after the 3 - 5 year period ends, there should be a line of people wanting to add credits from Cendant. That would eliminate almost entirely the obscenely high cost of sales/marketing, and Cendant could theoritically make a nice profit and still sell for less than the resale price.
5 - If necessary, in order to increase demand for the credits, the buyers could be given priority on reserving the resort they pay for. It would be non-transferrable, when they sell the next owner would have no reservation priority on that resort. This would also help determine the location to build. If TW can't find enough people willing to buy in oklahoma, because they don't want priority at that resort, then they would scrap the project.
6 - This all is contingent on not selling so many credits, then the owners at large could still get into the resort, even though they don't have priority. Of course, they could also get more units through the priority owners who use those credits at a different resort in a given year.
IDEA # 2 - Blending of RC & WM
Remember when the board told us the only way they could afford to build at certain locations was if they included Residence Club units? How about a process whereby they sell all RED weeks as fixed or rotating weeks. Then, if an owner wanted to travel elsewhere, they get the number of credits it takes to reserve that week/unit and book elsewhere, opening up their red week to other WM owners. So, Worldmark gets all the non-red weeks with NO CREDIT DILUTION. Worldmark owners also have the ability to get the red weeks on years when the owner doesn't use it. I see no downside to this at all for Worldmark. For Trendwest, it's as easy to sell, because it has all the advantages of worldmark credits, plus the advantage of ownership of a brand new unit at a brand new resort.
Don't like either of these ideas? Come up with your own, let's brainstorm.
Don't think it's necessary to change the way credits are generated and sold? Don't see a problem with the old-school way of selling timeshares? Go back to sleep.
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