Veras Group Jim

I love it. Great response, thank you. I will start using that, I think!

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

Veras Group Jim

DCTraveler, I couldn't agree more that these are excellent due diligence questions. It's a great part of the DCA, I think, that requires member clubs to publish these data points in the membership documents.

Unfortunately, we can't make clubs divulge this information, or any information, if they don't want to. Just as our clients control all of their decisions while working with us, so each destination club controls all the information released about their firm. Whether or not information is provided to you, we would certainly recommend weighing in your decision whatever answers we received.

We do have leverage, though, that individuals may not necessarily have. If we have 5-6-7 clients join a particular club in a year or quarter or month, that club is going to be less likely to want to disrupt that new business. We can use this leverage to ask for additional information that clubs may not otherwise provide. Rest assured that we would be very diligent in trying to find any information you were looking for, and we have multiple venues for doing so.

Also, DCTraveler, I should note that some destination clubs do voluntarily provide us with information that is not necessarily publicly available, or easy to find. We are finding that clubs are very eager to have us know them well, so we can best represent their offering. This has led to some being very generous with information, provided that we use it and distribute it responsibly.

Hope that helps--thank you again for the good thoughts and question.

Jim

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

TarheelTraveler

Thanks for the clarification, Jim. Sounds like you guys have really focused on these potential issues.

Veras Group Jim

You bet, Tarheel. We're as concerned about parity as our clients are. Thank you for the questions and kind words! Please feel free to call us anytime if you have more detailed questions.

Jim

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

pwrshift

You mention marketing costs to sell DC's ... yet I rarely see much advertising from any of them in reputable magazines that are dominated by the likes of Westin, Four Seasons, etc. ER recently announced a $1 million ad budget and called for tenders from ad agencies. None of the big ones were interested in an annual budget that wouldn't buy a 1 minute ad on the Super Bowl. Small thinking for the biggest DC?

Sales Rep Incomes: Marketing costs to sell one timeshare unit at Marriott is approximately 40% including a very healthy amount to their salespeople, some of whom I know earned more than $400,000 a year ... back when they cost $20,000 a week. When Marriott Maui was a new TS, their top sales rep sold 1000 units in the first year. They recently sold 300 units in one week at the newly announced Marriott Grande Lakes in Orlando no less. Apples to crabapples perhaps, but a good percentage of Marriott's 800,000 'owners' could be prime prospects for DC memberships at some time.

How are DC salesmen compensated, and do they earn more than those selling timeshares? Do some DC's pay more (percentages) than others - which ones pay the best? Are DC sales reps paupers or princes?

97% failure rate: You mention that only 3% of DC prospects end up buying a membership. Marriott sells 10% of their leads at pretty slick one-on-one presentations. Do you think the 97% failure rate for DC sales has anything to do with the fact they are private companies asking for upwards of $500,000 or more to invest in properties the members don't own?

New Directions: The hot rumor right now is that Ritz Carlton is getting ready to jump into the DC market. I personally would feel more secure in buying from a public company than some no-name. Do you think RC could run over ER if they did, and what DC's do you think would fail as a result. Even without RC there are a few tippy DC's right now, it seems.

I think you have a great opportunity to provide a very valuable service to the member side of the DC industry. It is a very confusing market - everyone has different benefits and rules - and research takes so long you miss out on lower prices because of their 6 month price increases. If your income comes from prospective members I would deal with you, but not if it came from the DC's.

caribbeansun

I'm curious about something - the most difficult part of the DC review process is to find people that you think you can trust to some degree (is there enough hedging in that statement?). In other words, there seems to be sales spin on so much of what is said that trust is hard to come by. By inserting yourself into the middle doesn't that mean the client has to establish that trust level twice - first with yourself and all of your potential conflicts of interest and then again with whatever club they decide to join. I'd find it difficult to believe that you can elevate yourself into the role of the Trusted Advisor (ala David Maister) in the absence of a prior relationship with the client.

What is your experience?

Veras Group Jim

Interesting point, pwrshift. To clarify, is your point that DCs should spend more money in big publications, if they want to play in a bigger market? Part of the likely aversion to big (read:expensive) publications is that many destination clubs grow at least 20-50% of their new members through referrals. Much more fun to pay a member a "thank you" referral fee, than a publication...

Wow! Maybe we should become a timeshare sales group I agree, though. Many timeshare owners are great prospects for DC memberships.

It really depends on the club re salespeople. It's all over the board. Some are owners/investors in the business, others are timeshare folks on commission only rates. Some have salaries--we are talking about over 30 companies, so there are lots of models.


Good question. To answer your question, I don't think so--just my opinion. Although I haven't reviewed any data re the 10% close rates you're mentioning--BTW, are you saying Marriott has a 10% closing rate at their one-on-ones, or that 10% of their leads get "sold to" (but not necessarily closed) at such presentations?--I should mention that DCs have much higher conversion rates with in-person presentations as well. Much of the new member enrollment right now is done over the phone.

If there are differences between "closing" rates in these two industries, I think it has to do with a matter of education. The Destination Club industry is simply a new industry. Many people don't want to own properties (thus the popularity of auto leasing, vacation home rental, etc.), so I don't think that's a barrier. Many timeshare and fractional ownership companies are private companies as well, so I don't think that's it either. And, I know the price isn't the obstacle. Personally, I've known more people selling their Marriott timeshare to buy a DC membership, than the other way around, but that's anecdotal too...

I think RC would be a great new options for clients, but no, I don't think they would run over ER. I think both would be very popular!

Thank you, pwrshift! We always appreciate kind words like yours. Regarding taking payment. We will be happy to sign an agreement to work with you, with you paying our fees. The agreement will also state that we will not accept any fees from a destination club for your membership, should you buy one. If you PM me with your email address, I will send you the agreement to return to us.

To us, it's really six of one and half dozen of another. It costs destination clubs (and any fractional ownership offering, really) money to attract and enroll new members/owners. Clubs are happy to pay our fees because our fees are less than what it costs them outside our services. If the club doesn't have any sales and marketing costs for your membership, I'm sure they will be happy to have you! But, really, it will cost you more--you pay our fees, as well as all the club's costs.

It is important to understand: we offer the same services, advice, and guidance regardless of who pays our fees. We have had many questions about how we can remain unbiased in this environment, but really, we can't afford not to be. Our services are only valuable because they are free from bias and comprehensive.

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

Veras Group Jim

Great questions, Caribbeansun. My experience is that trust is earned through consistency between your word and your actions. Many, many, many people trusted me with their membership dollars and their time when I worked within the very biased position of representing a single destination club. I genuinely believe this is because I am a trustworthy person, and that quality came through in the way I worked with my clients.

In The Veras Group, though, we can represent a client's best interests without even the bias of representing a single product. We don't care, in fact, if you never buy a destination club membership, as our client. Lots of people don't, and we know there are many people we will advise not to pursue this industry. The damage to our business' reputation of enrolling a poorly fitted member is too great for us to risk this. We even state in our guarantee that this is the case.

Our bias--because everyone is biased--is that the destination club industry offers a LOT of great products, for different people. We love this industry, and believe in its offerings. Some might say that the disparity between offerings is a turn-off. Our opinion is that disparity offers an even greater opportunity for an interested client to make a good decision for their unique needs.

Ultimately, though, our response from the market has been very positive! Does that answer your question? Please let me know if you have other questions.

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

fcclax

Which DC's do you actually have deals in place with

Veras Group Jim

Hi fcclax,

Interesting question--thank you for asking. We have agreements in place with most clubs, and expect to wrap up the remaining agreements over the next few weeks. As a matter of fact, a few destination clubs called us to begin these discussions before we had their contact scheduled! In short, though, we are delighted and more than a little humbled by the enthusiastic response from the industry clubs. We have also begun working with our first clients, much much sooner than expected.

One side note: we have turned down several organizations that are not actually destination clubs, who were eager to have us represent them. There are some great travel options out there, but rather than be all things to all people, we are very interested in being a focused, intelligent source for interested potential members of destination clubs.

Standing by should you have additional questions, fcclax. Can I ask what your acronymn stands for, or is it a secret? No worries, if so, just curious.

Take care,

Jim

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

fcclax

well neither of the two clubs i have spoken to have a deal in place and they are two of the bigger clubs?

if you have deals, why won't you name the club

(lax might be a clue as to where i am)

Kagehitokiri

jim said they simply charge a consulting fee, either to DC or client...

Veras Group Jim

Fcclax,

Now you really have piqued my curiosity! Happy to answer your questions, but first, let me ask one of my own: is there a reason why these clubs would provide you with details about their vendor arrangements? You obviously have more clout than I do . Maybe you will tell us your secrets...

Let me answer both your questions directly. I haven't told you the clubs that have signed our agreement, the clubs who have given us verbal commitments to sign (pending legal review and other very appropriate vetting), and the clubs we have not yet contacted because you are not a client of The Veras Group.

After signing our Client Agreement (which carries no financial burden to you, nor requirement to buy anything), we are more than happy to disclose any of these details to you. Please send me a PM if you would like to review this short (one page) agreement.

Here are some facts to directly address your other point/question. Please note that my prior post specifically noted that our agreements are not finalized with every destination club. We have nothing to hide on this point--setting up agreements of this scope, with proprietary information transfers, data management systems, club personnel liasons... and much more... simply takes time. Regarding the largest destination clubs, specifically, we currently have agreements in place with nearly half of them and verbal agreements with most of the rest. Not all, but most. We have had overwhelmingly positive responses from them, though, and I expect this process will be completed fairly soon.

As an interested party in the DC industry, Fcclax, you must understand the scope of information to be exchanged between The Veras Group and destination clubs. We would love to tell you more, and there is no obligation (other than confidentiality) to signing our client agreement.

Hope that helps--please feel free to ask any other questions you may have. And, thanks for the clue on your name. Good one!

Jim

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

Veras Group Jim

That's right, thank you Kage. Our model is principally set up to charge the club, since they already have a budget allocated for new member attraction and enrollment.

I'm certain we wouldn't care if a client paid our fees--it is really six of one, half-dozen of the other for us. For the client, it costs them much more than buying the membership alone, since they have to pay us and the club in question--and they will receive the same services. For that reason, we don't anticipate it happening, but you never know.

Thank you again!

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

caribbeansun

But doesn't your compensation model at its very core create a conflict of interest?

You are supposed to be working for the benefit of the client but you're paid by the club. I fail to see the difference between what you are doing and what people that sell other products do (ie. insurance, mutual funds, cars, appliances, real estate). Client doesn't buy = $0, client buys anything = >$0. There's little doubt that these people want to sell you something.

I know the argument that you don't care if they buy or don't and you'd be out of business if you were found to be selling things to people that weren't suitable BUT everyone says that and not everyone really means it.

Why wouldn't you use a business model that has the client pay you an upfront fee of $x?

In the event they buy through you then you agree to pass through any referral $'s received from the DC to the client. You get paid either way, the client remains whole, the club gets a new member and your independence isn't questioned?

In the event the client doesn't buy then they've paid you a legitimate fee for service rendered - you reviewed the clubs with them and determined there wasn't a fit. Given the price point of so many of these clubs I'd think that would be a fair trade off.

So why choose the other more (IMO) questionable route of being compensated by the clubs which brings into question your independence and motivations?