5 Days & 4 Nights at an all inclusive, 4 Star resort, for two adults and two children for $499 – Total!! WOW?  As the developer or resort owner, that is in business to sell club memberships, resort packages,  resort memberships, timeshare, weddings, corporate retreats etc, why would you want to sell this $1,200 package at such a loss?  Well lets study this.

1.  Yeah you lost some revenue: You could sell that package for $1,200 and net about 10% directly off the sale.  The guests would buy a few things from the gift shop and maybe book a snorkeling tour and so you make a grand total of $250 off the unit.  And so if you keep that suite sold 80% of the year, (292 nights) which is 73, 4 night packages, you net $18,250.  Not bad for an Inn keeper.

2.  So lets say you sell that package at the discounted rate of $499….but part of the deal is that your qualified guests will attend a promotional presentation about your Vacation Club or timeshare interests or your points program.  Assuming the industry average sales rate of 12% with an average ticket of $14,900, you will take in $130,500 in gross revenue from that same unit.  These guests will still buy something at the gift shop and will still book snorkeling tours adding another $9,000+….but also, you still got the $499…So you are at $176,000 vs $18,000.  Of course you have costs associated with your organized sales process but even if costs were as high as 75%, (which they should not be) you still more than double your revenue vs a straight rental program.

3.  Now lets not forget that those membership sales bring with them some annual maintenance fees or assessments.  Even if using the low side of the industry average of $650/year per member, that’s another $12,000 to help operate the resort.  Many software packages and aps exist that can easily, efficiently and cost effectively manage this entire process.

4.  Fly In only destinations have proven to be the best performing examples of this type of pricing for discounted promotional packages…hence Fly Buys.  Numbers have shown that guests driving to a discounted lodging package buy at a slightly less percentage than those flying in.

So, if you own or are involved in a large or even small, boutique type resort property up in the mountains or at a beach or in a resort area, which counts strictly on short term rental income, consider the economic advantages that exist in the Club, Membership or timeshare sales programs.   Some developers do both from the same property.

Chris Bounds Austin Texas