The
Bandwagon
“It is the mark of
the successful businessman that they face the inevitable and then take credit for it. Jumping on the bandwagon
can be made to look like leadership if the move is made dexterously enough.” - Charles McCabe -
It is possible that the Timeshare Industry is the result of a theory commonly known as
the ‘bandwagon effect’. I once ran across the following explanation of that effect. Imagine a bandwagon that
is rolling forward at a quickened pace. Music that is very pleasing to the ear is being played from speakers on
each side of this bandwagon, and a few people currently on the back of the wagon are partying, having the time
of their lives. The music, loud and clear, starts to attract many other onlookers that happen to be idly standing
on the sidelines. These onlookers, unable to resist the sweet sounds being played, run to join the party that seems
to be going on.
A more technical explanation is the observation that people often do (or believe) things because many other
people do (or believe) the same. Without examining the merits of the particular thing, people tend to "follow
the crowd".
The timeshare industry in the USA evolved out of the real estate crash of the early 70’s when developers were
faced with a common problem; Real Estate developments (especially condominiums) that they were unable to sell for
their intended purpose. One or two developers were successful in converting their products into a new concept that
became known as timesharing and soon several others were jumping on the ‘bandwagon’. The essence of this
new concept was that consumers could purchase shares of time at vacation destinations rather than renting accommodations
on a per-night basis, that these shares of time were in 7-day ‘intervals’ and that once those consumers became
owners, they could exchange their intervals for similar accommodations in other prime vacation destinations. Not
only did the industry play ‘follow the leader’ with respect to converting their failed developments into a timeshare
product, they played the same music with respect to the methods of marketing and selling. As the industry matured
the same thing happened in the evolution from right-to-use to fixed weeks then floating time, from conversions
to purpose built. New ideas, improved bandwagon, jump on!
As it were, many of the onlookers (consumers) were disenchanted with the limits which
had been placed on them with respect to travel and adventure. They really wanted that condo on Ft. Myers Beach,
Myrtle Beach, near Disney World, in Breckenridge or on Waikiki but could not see a way to purchase it. They had
disposable income but already had one house mortgage. They had been exposed to the world's travel destinations
on TV and dreamed of vacationing in Europe, the Caribbean, Mexico or Australia/new Zealand and vowed to do so one
day. The purchase of a timeshare opened up that door well before any of them could have imagined. They began to
follow the bandwagon and joined the party.
For the most part, that early timeshare industry was made up of independent developers.
As the industry matured and proved to be more than a temporary solution to a real estate crisis, other entities
became attracted to the timeshare bandwagon. For the most part these new potential riders were hospitality entities
that had observed the conversion of whole condominiums and then older resorts or hotels into vacation accommodations
and believed that they could add this new concept to some of their existing facilities. Early on these new entities
simply got on the existing bandwagon, however they soon became discontented with the music being played (methods
of marketing and selling techniques) because many of the onlookers (consumers) were turned off by it. These entities
created their own bandwagon with different music. This new wagon and music had as a theme; Vacation Ownership (rather
than timesharing) and Clubs & Points (used as currency). This theme fit with their brand loyalty frequency
programs and had the potential of reducing marketing cost and increasing hotel/resort occupancy via a mini-vacation
cert. Some of the independent developers on the original bandwagon began to like the new music being played on
the hospitality entity wagon and wanted to switch wagons, however this was not possible; they didn’t have the same
facilities or the brand identity, thus they began to search for ways to get the new music onto their bandwagon.
Part of that answer came when one of the two major exchange entities that had been early
riders on the original independent developers ‘bandwagon’ decided to construct a new bandwagon called GPN and began
to play music that was similar to the Hospitality wagon. This new bandwagon had a theme that represented Flexibility/Points
and when it entered the parade, many of the independent developers rushed to get on board.
Both the Hospitality and the Club/Points wagons were bigger and louder than the original
Timeshare wagon. As they paraded, they made a special effort to attract those riding the original ‘bandwagon’ to
jump from one to the other and just because of the size and volume many were enticed to do so. Those along the
way were observant of what was going on and many of them were swayed as well. It was at this point that the ‘bandwagon
fallacy’ began to exert itself. To clarify this I offer the following:
In order to understand what a fallacy is, one must understand what an argument is. Very
briefly, an argument consists of one or more premises and one conclusion. A premise is a statement offered in support
of the claim being made, which is the conclusion. There are two main types of arguments: deductive and inductive.
A deductive argument is an argument such that the premises provide complete support for the conclusion. An inductive
argument is an argument such that the premises provide some degree of (but less than complete) support for the
conclusion.
As an example take the Appeal to Authority fallacy. This fallacy must have the following form:
1. Person A is (claimed to be) an authority on subject S.
2. Person A makes claim C about subject S.
3. Therefore, C is true.
President Jimmy Carter’s Transportation Secretary, Brock Adams, appointed Joan Claybrook to head
the NHTSA an announced in 1977 that new cars, beginning with 84 models, must have front air bags or so-called
passive seat belts that fasten without action by the driver or passengers, In support of this announcement Ms.
Claybrook proclaimed that once all cars had the air bags over 9,000 lives would be saved each year. The rule
actually began phasing in during 1982-84. According to Smart Motorist, as of 1999 over 90 million cars had airbags,
however the end of 1999 had saved only 4,758 lives by these air bags even though (as of the end of 1998) air bags
had inflated in over 3.3 million vehicles in crashes. Meanwhile, over the same period, air bags themselves were
determined to be the cause of death for 146 people (84 children and 62 adults). A study by Transport Canada
revealed in 2002 that air bags reduce the risk of injury to men by 11 percent, while increasing by 9 percent the
risk of injury to women, for an overall risk reduction of only 2 percent for adults who wear seatbelts.
Joan Claybrook of the NHTSA claimed to be an authority on Auto Air Bags. Joan Claybrook
claimed that Air Bags would save 9,000 lives per year. Therefore, her claim was true… And now over 100 million
USA cars have air bags and as of 1/1/03 only 10,271 lives have been saved.
Now let’s apply that same fallacy form to Timesharing rather than Auto Air Bags.
Taken from RCI.com
RCI is a leading global provider of innovative products and services to the global
travel and leisure industry. Founded in 1974 as an exchange service for condominium owners called Resort Condominiums
International, RCI quickly became a driving force for growth within timeshare, and has been at the forefront of
the vacation ownership industry ever since.
From the RCI Guide to Timesharing
Introduction
to timeshare
Timeshare, or vacation ownership
as it is sometimes known, enables owners to have quality vacations year after year with guaranteed standards for
accommodation and guaranteed availability of facilities. Timeshare owners have the security of knowing a large
part of future vacations is already paid for at today's prices - and very often for life! According to research,
80 percent of timeshare owners list the option of exchanging into vacation resorts around the world as a primary
benefit of timeshare ownership. As members of one of the global exchange organizations such as RCI, they are offered
an expanding range of choice resorts, benefits and other services such as air travel, car rental, and other travel
products.
The
new points based system
Many industry leaders have recognized that points are at
the vanguard of timeshare development in the 21st century.
Points systems have evolved
to meet the need for more flexible vacations. Consumers purchase points or convert a traditional timeshare week
into points, allowing them to choose not only their vacation destination but also the length of stay, time of year,
how many vacations a year to take and the size of condominium they need for each individual vacation. From the
consumer's perspective, this gives greater freedom of choice.
Points represent a currency normally related to a vacation club or timeshare ownership,
used to establish a value for seasons, unit sizes and resort locations. They represent the latest concept in flexible
vacations. Instead of purchasing intervals, owners and potential buyers are now able to buy the right to an annual
allocation of points. These are then traded for flexible vacations in any resort that is part of a designated points
network. Points can also be used for exchange into regular timeshare intervals. In recent years the traditional
timeshare product of weekly intervals has undergone a transformation. At the vanguard of change are points that
will play a major role in the industry's evolution well into the 21st century. This exciting new product encourages
current owners to convert existing intervals and tempts new clients into their first purchase. The reason: flexibility,
flexibility in choice of destinations, shorter vacations,
longer vacations, more vacations, different vacations. Conversion to points opens up new horizons and may tempt
owners to buy more.
From
Shari Levitin of The
Shari Levitin Group
In the past 40 years, we've gone from black and white televisions with three local channels to surround-sound
with satellite capabilities of over 250 stations. We've grown from research through World Book Encyclopedias to
the seemingly endless flow of information on the worldwide web. Likewise, the vacation ownership industry has a
new program offering the customer more choices than ever before.
Vacation clubs and points programs are emerging as the hottest new topic of the millennium. It's a program
of choices. Rather than being locked down, tied in, or limited, the consumer will decide not only where he's going,
but for how long, in what size, and how often. Each year the customer chooses a vacation plan commensurate with
his changing habits and lifestyle.
Also, in an industry where the approval rating of timesharing is still only 32%, the emergence or resurgence
of points programs is strategic. By informing the skeptical consumer that this is not a timeshare of old but rather
a new and improved concept made possible only through advanced technology, we can gain the approval of the other
68%.
From John J, Russell Jr. former president and chief executive officer of Resort Condominiums International.
Today's consumers want almost total flexibility and one-stop shopping. Many timeshare owners are dual-income
families, and their time is extremely important. They want more flexible vacations and a timeshare point systems,
with points they can use as global currency for anything they desire, including airline tickets, car rentals, river
rafting, or a hot-air balloon ride.”
People recognized as authorities on the subject of timesharing.
These people are making claims about the future of timesharing.
Therefore those claims must be true.
Fact – over 68% of the Timeshares acquired during 2002 were not Points Based
Plans.
Timeshare Bandwagon Fallacy -Consumers are demanding Points based Timeshare
Plans
Fact – Most Developers are selling only Points based plans.
Timeshare Bandwagon Fallacy- Consumers are demanding Points based Timeshare
Plans
Fact - If developers are selling only Points based plans, the consumer has
no choice but to buy Points based plans if they are going to buy from developers.
Timeshare Bandwagon Fallacy- Consumers are demanding Points based Timeshare
Plans
Fact – The majority of consumers that purchased timeshares in 2002 did not
purchase a Points based plan.
Final Thought
The industry has not totally convinced the consumer to jump on the bandwagon. The following statement by a timeshare
consumer appeared in December of 2002 in the Street Talk section of the Beat:
"My question is just exactly why is there ANY cost to switch to points (other than
perhaps a modest administrative fee, say $25 - $50)? We have already paid big dollars to purchase our properties.
It's the same property whether used on a points or weeks basis. The exchange value should be exactly the same either
way. Now, if we choose to purchase additional points, that's a different matter. But today's trading value in points
should buy the same value as if it were used as a week. And there should be no charge for that-- we've already
paid.
The tactics used by the sales staff is that `soon everything will be points and we won't be able to trade' and
`we need to do this in order to maintain our value'. I'm sorry, but it sure looks like a scam to me!!! Is the timeshare
market drying up with new buyers and this is the only way the companies can maintain the huge profit margins, by
going back and dipping into the pockets of existing owners? And what happens in a couple years when the points
conversions have dried up? What's the next scheme to get back into our pockets `because if you don't spend this
additional (fill in the blank) thousand dollars you won't be able to trade for anything or anyplace you want to
go'?
We have been pretty satisfied up until recently. Now we are beginning to believe
that the timeshare industry is a pretty sleazy operation, run by a bunch of con artists, at least from the buyer's
point of view.”
I know that there will be those who will say that the above is only one example and others
that will just laugh at the whole premise of this article. However, few will contest that the overwhelming number
of those who purchased a timeshare/vacation ownership plan does not own a points based plan and the majority of
those purchasing a timeshare/vacation ownership plan in 2004 will not have purchased a points based plan, even
though upward of 70% will be purchasing from a developer and the majority of the developers are offering nothing
but a points based plan.
Those who are decision makers in the development arena will not contest that one of the
key factors in current industry marketing and sales programs is the reliance on the Bandwagon effect and that the
primary basis of that effect is the use of the Bandwagon fallacy that consumers are demanding the flexibility that
is only available with their firms version of a Points based plan.
Every Developer that is currently selling a Timeshare Plan of any kind will have noted the
growing importance of owner reloads and referrals. In fact owners may well create their own bandwagon and do so
without the accompanying bandwagon fallacy. If this occurs, I am sure that their wagon will accommodate well over
4 million and the music will be louder than anything developers have ever heard.
JS 12/04
