Timeshare’s Tipping Point: Is it near?

By David Skinner

President, Holiday Group

Recently I received an email from a gentleman that had purchased his first resale timeshare. Here is the email in its entirety:

A question: 

Do you think that resales are now on the brink of discovery by the masses, and that the time to buy is now (or near future)? 
Since purchasing my XXXXX timeshare two weeks ago, I have given a lot of thought to “why now,” and have read extensively on the resale phenomenon....

Regards, 

SN

I have asked this same question of myself countless times. Its pursuit has driven me to study economics, market theory, securities and options trading, historical events, monetary cycles, human motivation, divine plan, evolution and even Greek philosophy. Its quest has assumed evangelical proportions in my career from a rousing speech to resort developers in 2002 to a recent documentary on the trends confronting the timeshare industry. Yes, I ask myself this same question, “Why now? Are we near the tipping point?”

The phrase, ‘the tipping point’ was popularized by Malcolm Gladwell’s Y2K best seller by the same name. He describes how seemingly small events can precipitate huge social and economic phenomena. Just as a single match can, when conditions are right, set a Texas prairie ablaze, traveling at speeds approaching 50 mph, destroying mile upon mile of grasslands, farms and homes, causing millions of dollars in damage -- a catastrophe of epic proportions -- All from a single match.

Most emails I receive ask about locations, the exchange or maintenance fees. This one was different. The writer’s interest was not going to a timeshare, but the return on a timeshare; about speculation, not about some vacation. What was he really asking? Perhaps: “Is it time to get in before others discover resales and drive prices up?”

And my response? Did I encourage him to mortgage the farm, divest his pension or suggest . . . the moment was near? You may be sadly disappointed. This was my reply:

Dear SN

I think the answer to your question is not based upon supply and demand, the market vagaries or an explosion of consumer awareness. I think if you have remaining time to be still and contemplate life, care for those you love, or help those you do not; then by any measure you do not own enough.

David

That’s not to say I don’t have opinions – hours and hours of them; scientific theories and experiments -- reams of them. It is to say, that the subject is far too complicated to suggest a profit, foretell a trend or even a . . . tipping point. My advice: Stick with what you know and who you love. But there are signs; there are suggestions, some hints or precursors that Gladwell’s tipping point may be closer than we think!

Before I reveal possible signs of a tipping or divulge opinions of this self-appointed pundit, let me tell you that my new pen pal was not so easily or righteously put off. He further responded: (Edited for privacy.)

Hi David:

Having read a book’s-worth of articles on timeshares, resales, etc., and then buying two in the last few weeks, I started thinking of ' what ifs'. 

Certain phenomena just seem to erupt from nowhere, even though as we examine them in retrospect, we can usually trace their beginnings. . . . 

As I have regaled friends and colleagues (hopefully without boring them to death) about my timeshare-buying adventures, they have been keenly interested. I think this interest will be sustained, and can be tapped into. Most of our friends will need to holiday annually for at least the next 8 -10 years with children, and they are not the campground bound, economy travelers. 

So, I have a good feeling (borne out by strong indicators) that resales are on the verge of a major boom, and my fellow countrymen are looking for a way to capitalize on this way of vacationing, and dispel the negative experiences of the pitchmen that they have encountered. 

This is my idea.  

Sincerely,

SN

As one can surmise from his email, SN has indeed done his homework. He is likely well educated, if not well heeled. He’s entertaining, savvy and enjoys enclaves with friends treating them to his stories of daring-do in the uncharted world of resales. One last thing he did, he got me to thinking about Gladwell’s tipping point and what is required for such an event to happen. Permit me to digress:

Definition: TIPPING POINT-- a sociological term that refers to the moment when something unique becomes common. The book seeks to explain it as a "social epidemic" or sudden and often chaotic change from one state to another; similar in its mathematical properties to a epidemic disease. As a group, the phenomenon exhibits common fundamentals:

THE LAW OF THE FEW

There are an exceptional few people who are capable of starting epidemics; a tiny critical mass serving as messengers that can affect the majority. Their nature is important. They make things spread. In his book Gladwell describes three types of messengers as:

1. Connectors. They seem to know everybody. They are the "hubs" of the social network and have mastered the "weak tie"; a friendly, yet casual social connection. They serve as social glue: They spread the message.
   
2. Mavens. They are knowledgeable people. Once they figure out how to get that great deal, they want to tell you about it too. They have the knowledge and the social skills to start word-of-mouth epidemics. Mavens are data banks: They provide the message.
   
3. Salesmen. They are charismatic people with powerful negotiation skills. They exert "soft" influence rather than forceful power. Salesmen are empathetic persuaders: They promote the message.

THE STICKINESS FACTOR
There are some things more memorable than others; more engaging, interesting . . . you just can’t put them down. That’s stickiness. It resounds within us and others like us. It’s why we remember a jingle, Casa Blanca the movie or linger over a latté at Starbucks. It resonates. And probably . . . wherever that chord sounds, it is deep within our psyches and rang in those that walked before us. To ‘tip’ . . . the message must be sticky.

THE POWER OF CONTEXT
Epidemics are sensitive to the conditions and circumstances of the times and places in which they occur. Whether you choose to cross the street against the Don’t Walk sign may depend whether those beside you choose to do so, leaving you to stand alone. Would you break the law rather than feel silly left by yourself? Most of our actions are responses from environmental stimuli rather than from heart felt values and predispositions. On the other hand, circumstances may compliment our inner feelings and amplify our responses also.

DIFFUSION THEORY
Trends and new products spread through a predictable bell curve called the diffusion model. First the Innovators (2.5%) pick up on something, say the Apple Ipod, having heard about it from the Connectors, Salesmen and Mavens. These Innovators are visionaries, risk takers; they are ‘the first ones on their block’!

If the product has enough ‘stickiness’, Apple’s advertising campaign was after all – cool, the Early Adopters (13.5%), a slightly larger group join in. Now we have a movement, a buzz.

Hopefully the Power of Context is timely; the Ipod arrived at a juncture in the music download revolution, the Early Majority (34%), a deliberate and skeptical mass, who would never try anything until the most respected of their group do so first now get aboard.

Finally as the Innovators have begun to move on to the next trend, fad or product; the Late Majority (34%), those skeptical, traditional, ‘regular Joes’ discover a knock-off replica at Wal-Mart and this phenomenon gets featured on the nightly news.

Until at last gasp, the Laggards (16%) overcome their rhetoric and fear and purchase a music player at a garage sale for their niece or nephew.

MY LAST EMAIL RESPONSE

Dear SN

You are one of those exceptional few people who could initiate this epidemic of timeshare resales. You are a Connector, a Salesman and a Maven. You are fulfilling your own prophecy, creating the movement, making the boom. If there will be a tipping point, I think you will certainly be there to see it and perhaps profit by it.

I hope it is fueled by a set of values, sticky enough to resound in the highest places of our psyches. I hope it is all about those we love and those we don’t. That it really stands for something.

Certainly in these days of fear, terror and distrust it would be so wonderful if we could all come together over such a simple product as leisure; if it could be the context to make things better again.

And I hope we leave no one behind – from the first of us to the last. If I can be of any assistance, please feel free to call upon me.

Yours truly,

David

I have not heard back from SN since last he wrote. I hope he is doing well. Somehow I think he is. And somewhere among those around him, the space in which he touches, I think there is probably a stirring, a kindling, if not a tipping. As Gladwell concludes in his book: “What underlies successful epidemics, in the end, is a bedrock belief that change is possible, that people can radically transform their behavior or beliefs in the face of the right kind of impetus”.

Good luck my friend!

Send correspondence to David Skinner at Holiday.

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