To Sell or To Service? That is the question.
Well your budget says that you spend about 50% of your variable expenses on marketing & G&A to get a sale. Ok. So now you have a $21,000, seven year, timeshare note paying 12.49%. What do you really have? After you figure that out then you must ask, What do you really want? To Sell or to Service.
That note is worth $ 31,600 over the next seven years. Based on the above, we know it cost you $10,500 to get that note. So you make $21,100 on a $10,500 investment. Not bad. 200% return. Your shareholders or partners or bankers will be happy with those numbers. But you are not so sure. Yes, you make 200% but that’s over 7 years and the money comes back to you in $300-$400 monthly payments that you have to service the note. It’s a capital intensive game and if you make the wrong move or the economy turns against you…you could suffer. Here at Dos Mundos, our Principals have over 100 years combined experience in making these difficult decisions. Without decisions and proper planning we have seen faulty capital assumptions bring down many great developments.
So you could sell that note the day it closes and get 90 cents on the dollar or $18,900 immediately on your $10,500. Your net gain is $8,400 on a $10,500 investment. That’s 80%….not bad but you are leaving 120 percent on the table.
Or you could “pledge” that note and get 100 cents on the dollar the day of closing and get to keep 90% of the monthly interest (only) payments as they come in and give recourse to the note “holder” in cases of default or late pays. Not a bad deal but requires third party administrators, legal stuff, guarantees and administration while you are are trying to market and sell more timeshare or fractional.
So, what’s the answer? Well, it depends on your capital structure and your risk tolerance. It’s that simple and that complicated. It kinda depends. Please visit Chris Bounds’ web site for more no nonsense vacation ownership stuff.
Generally, the priority among mortgages, trust deeds, and real estate contracts is determined by the date of recording, the first recorded instrument being the first in priority. In some situations, however, the parties may desire that a later recorded instrument have priority over an earlier recorded instrument. This is particularly common (or at least has been) in construction financing. A SUBORDINATION CLAUSE states that the instrument in which it is contained will be subordinate (junior) to a construction loan lien (mortgage or deed of trust) to be recorded later.
Mexican Timeshare: Pros & Cons
OMG, they kidnapped us and locked us in a sales meeting and tricked us and gave us food that made us throw up and laughed at us and the contract we signed was not legal and they would not refund our money and THEY DID IT ALL IN SPANISH!!!.
We have heard this story so many times that it is NOT FUNNY. Mexico is a third world country. You get that right? They have different laws. You are a long way from home. You don’t speak the language and you don’t understand the culture or customs. Even in the States you can get hooked up with less than honest timeshare and fractional folks. Don’t blame it on Mexico or on “Those Mexicans”. So you got a 6 day vacation at an all inclusive, 5 Star resort right on the beach for your whole family for $199. What were you thinking? How is that possible? Are you stupid? Really, ask yourself, “Why would someone sell me a $1,700 vacation for $199? ” So then you answer yourself, “Well its because I am a SMART gringo and these dumb Mexicans are going to lose money on me because I am not buying their timeshare”.
Well you are the stupid one…admit it. Just like in the States, there are good and bad players in every industry. In Mexico, although the laws regarding timeshare and fractional ownership have come a long way in the last 20 years, you still do not have much recourse if something goes wrong. Also, if you are thinking you can go down there, sign some papers and put a down payment on your credit card, only to cancel and request a charge back when you get back to Cleveland, think again. You are now the con-artist, liar and “pinche gringo” and will find that it is not that easy. So, just be reasonable. There are many great timeshare & resort club operators in Mexico, such as Real Group, Garza Blanca and Playa Resorts as well as many large US companies selling and servicing timeshare under Mexican branded names or companies. Do your homework. If you are trying to get a ridiculously cheap vacation anywhere you should be prepared to get what you pay for.
Many large, Mexican banks and other providers, service timeshare notes and generally stick to GAAP principals and the documentation is fairly standard. You can get some absolutely great values on timeshare and vacation club memberships at truly outstanding and luxurious resorts in Mexico but you have to be smart. And if you are not smart, don’t also be naive.
For more no-nonsense timeshare stuff from Chris Bounds, visit his site.
Good Economy = Great Hospitality $$
So, based on the attached data, provided by the US Bureau of Economic Analysis, which includes the latest data related to what happens to hospitality spending after an economic downturn, shows that it far outpaces the overall growth of the economy.
We contribute this to two, main factors. #1. The Coiled Spring Effect. People like to travel. Period. So when they don’t get to or can’t, they become more desirable of a vacation etc. Then, when times are better and discretionary spending bounces back, one of the first sectors to see hyper-growth is hospitality. (letting go of the compressed spring) According to a Post from Terry Christopher Bounds, timeshare and fractional sales lead the way early given the extensive marketing budgets employed by these sales groups. #2. Travel begets more Travel. If your employer is enjoying a growing economy and needs to get various department heads together in a fun place to increase moral etc, he might pick New Orleans. The employee might decide to make a family trip of it or come back again with the family. Once the travel ball gets rolling it is hard to stop. “We all rose to the top of the food chain, over millions of years, by..traveling!”
As we enter a new, more relaxed and business minded regulatory environment and with a rapidly expanding economy, it is my belief that timeshare and related club membership programs are entering another “glory days” decade of growth. Just follow the money. Marriott, Hilton, Wyndham have all completed spins, giving their timeshare development access to their own capital. Bluegreen and Diamond may be poised to also access public funds once again, via spins of their own. Wall Street is currently rewarding such activities. Holiday Inn Club Vacations is building a new, state of the art, corporate campus in Orlando and several large, Mexican developers have completed acquisitions and strategic partnerships with branded hoteliers in an effort to push timeshare related products. Yes, it appears that we have a near perfect storm of variable lining up to make the next several years record setting in the timeshare and fractional business.
See more no non-sense timeshare stuff at terrychristopherbounds.com.
February 23, 2017 33 Comments/in Blog /by terrychristopherbounds.com
Manage your managers! Seems straight forward, right? WRONG. Its not easy. Its hard. Its time consuming. It gets complicated. It has to be done. Goals, accountability, reporting, timelines, budgets etc don’t just get done if not managed. Chris Bounds, Austin, Texas offers the following:
#1 Ethical Sales will cure most other issues. Lets be clear, its all about sales. Sure, someone has to decide when to order more copier paper and yes, it is sad that Rick’s father is dying from cancer and that the swim up bar at the adult pool has a cracked mirror; yeah those things must be dealt with BUT don’t let life’s distractions cloud your vision of what the goal is. Don’t stay busy all day doing things that don’t show up on the bottom line of the quarterly sales report. AND, don’t let your managers do it either. Is it coincidental that record setting sales figures seem to make it much easier and more pleasant to deal with life’s issues? I think not! SO & THEREFOR, never, ever let your management team get bogged down in stuff that has nothing to do with sales. NO, no excuses; just don’t let them do it. Try this for 3 months and watch what happens.
#2 Shift the focus of the time you spend with managers. With sales reps, you’d (hopefully) spend your time digging into the details of their sales production. But with your sales managers, you must dig into the details of their management. For example, in a review with an individual salesman (Bob), you might say, “Lets review your 30 day sales efficiency on X”. But with a sales manager, you would say, “How are you working with Bob given his 30 day sales efficiency report for X” Or rather than asking, “How could Bob have done Z better?” you instead should ask, “How could you have managed Bob to do Z better?” Make your managers answer these questions. Make them study and be accountable for their answers. This will bind the team and give them ownership of the process.
# 3 Know that you’ll teach by example, whether you want to or not. When you’re managing all phases of a project or development, you’re probably not real concerned that the kitchen staff sees you out of your professional dress when you snitch a cup of coffee on your day off. But when you’re managing managers, you and your behaviors, dress, habits, language etc., matter 24/7. REALLY. What they see, and so perceive of you, is what you are going to get back – and that can be good or bad. If you’re delegating effectively, providing useful and regular feedback, conducting useful check-ins, hiring wisely, and fairly holding all staff accountable, that’s what your management team will do. Conversely, if you tell one of your mangers that he can hold a pender over and close it the next month so he can get his Christmas bonus, then you just told him (and his piers) that cheating and breaking the policies is ok.
#4 Feed the tigers, ride the horses & shoot the dogs. It is very important that the sales mangers you manage, although operating fairly, for everyone, by the exact same policies and handbook of rules, understand that at the end of the day SALES is what we do. We do them ethically, straight forward and do not cut corners or skip any procedures, BUT our job is to sell. When managing a fast paced, high energy sales organization fairly and according to stated goals and budgets, your managers’ recipe must call for: #1. Feeding the tigers: give more leads, tours, and prospects to the #1 salesman/manager/team. The #1 seed in a tourney gets the #8 seed for first game. That’s just how it is. Make your rules and policies match. #2 Riding the horses: We don’t ride pigs or cows. No, we want horses and when you have a horse why would you keep a pig or cow in the stable for riding. Horses are for riding, so when your salesman/manager/team is selling well, do not quit riding. Big mistakes are made when the top team is broken up because of promotions, lateral moves or reassignments. #3 Shoot the dogs: we don’t want dogs in our stable; it creates chaos. When a team/manager/salesman is just not performing and not performing consistently, despite your focused efforts, then you must train your management team to get the dogs out of the stable.
#5 Quick, fair & public trials: Nothing quite like a public hanging to get your attention and help you understand that rules must be followed and that the results of actions will not be dealt with in secrecy or privacy. Not withstanding proper adherence to employment and privacy laws, your mangers should see, know and understand that all matters, good and bad, will be dealt with immediately and in a fair and open forum. Showing managers that it is OK to post the weekly sales reports and comment openly on efficiency numbers is a good thing. There are no secrets in sales numbers. They are exactly what they are. No excuses, no what ifs and no where to hide. If you are second place by $0.50 then you are second place. Your management team must have the confidence to openly admonish wrong behavior and reward good behavior. Actively treating managers with this same philosophy will trickle down.
For more NO BS sales management stuff, feel free to contact Chris Bounds, Austin, Texas.