Timeshare Salesmen Compensation

We've sat through a few timeshare sales presentations at different resorts and have been amazed as to how many salespeope and the number of prospective buyers that many resorts have. We've never bought anything from them and all of our TS's were resales. One thing we've wondered, is how much do these timeshare salespeople make (like what % commission would they get if they sell you one) and how often would the average salesperson make a sale. The last one we sat through was at the Marriott Timber Lodge in Tahoe which probably sell for $15K and up and I was guessing that those salespeople might only sell one or two a week. Anyone has any information or thoughts on this?

Well I do know what the entire sales fleet costs with marketing expenses:

50% of the sales price of a new timeshare. That is according to the industry's group, the American Resort Developers Association.

Those free tickets and discounted vacation packages are paid for by the next victim to buy from the developer.

The very top producers - the upper 1% or so - probably consistently take home well over $100,000. A few probably clear over $200,000. I believe he person we did our first timeshare tour with (at the Marriott in Kaua'i) typically closed at least one sale per day, and often two (at about $25,000 per sale).

That's the elite, and it drops off quickly. I recall reading that the median (not average) sales person makes about $40,000 to $50,000. There's also a lot of turnover in that group that is below the median.

That would be incredible if the guy closed one sale per day. What do you think he made on each sale? I was guessing that the salesman made about 10% of the selling price of each one he/she sold. That would be $2,500 per day if they were doing one a day.

I think I read that 1 in every 9 sales presentations buys. Does that sound accurate?

Robert D said:

That would be incredible if the guy closed one sale per day. What do you think he made on each sale? I was guessing that the salesman made about 10% of the selling price of each one he/she sold. That would be $2,500 per day if they were doing one a day.

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In any sales business such as that, there are usually a handful of people that blow away everyone else's performance. Timeshare sales isn't any different.

I'm pretty sure the commission rates are on a sliding scale, so that as a person's sales volume goes up the percentage drops.

The guy we did the tour with was VERY good - one of the best sales people I've met in my life.

Based on what we observed and some added bits of information we gleaned during the tour, I'm pretty sure that his compensation was well over $100k per year.

You are right on target, Steve. The top Marriott salespeople make over $200,000; in few cases, well over $200,000.

Shell Vacation Attorney

At a sales presentation, I ran into a salesperson who recognized me from a legal seminar I did in New York. She was with a NY City law firm and moved to Hawaii and said goodbye to the law. She told me she makes much more than she did practicing law. My wife said, "Yea, right."

janapur said:

I think I read that 1 in every 9 sales presentations buys. Does that sound accurate?

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That's might be about right on average. If you were to convert at that rate you might be able to survive, but you would probably be asking yourself why you are working so hard for so little money and so little time off.

Less than that and there's a very descriptive adjective that describes you - unemployed. The best sales people probably close one out of four (or more). Based on the time we spent, our sales person above probably did three to four presentations per day. I'm sure that he had the ability to tell right away if he had a good prospect or not. If not, he would try to end the presentation quickly and move on to someone else. If he was closing a deal he could spend up to three hours.

During our presentation it became obvious when he was ready to move us out so he could get started on another tour. Instead of 90 minutes, he had close to three hours invested with us, and that was as much as he felt he could do. We still had some residual questions, and he just left us with a bunch of materials and said to contact him if we had questions. I know a lot of people might get put off by that, but for me that was exactly right. I really wanted to get the program documents and find a quiet place where I could look them over and know what I was getting into while I was still within the rescission period.

All I know is that they don't make a fixed percentage. Once they pass various thresholds the amount they make per sale goes up, and it might go up retroactively. That's why the top people make so much. They end up making much more per sale then the people on the bottom of the ladder.

That's part of the reason why there's so much incentive for the salespeople to close a deal. They make nothing if they don't make the sale. They make much more if they can pass the thresholds. The top producers end up making the most money because of the volume they produce and the incentives they receive when they pass the thresholds.

-David

Those types of sliding selling commissions are called par commissions.

I know that at some home improvement shows they supposely do not allow companies to be in their shows who use par selling.

Par selling can be tied to both both the discount percentage and volume, but mostly to the percentage of the discount. As another poster mentioned it is a type of sliding scale commission.

Normally the lower the selling price the percent of the commission of the sale price. I have put several examples below.

Examples of par selling commisions on a item list priced at $20,000 like a timeshare, etc.

Sell at list price of $20,000 = a 20% commission = $4,000

Sell that same item at $17,000 = a 10% commission = $1,700

Sell that same item at $14,000 = only a 3% commission = $420

Any extra spiffs thrown in on deals most times would slightly lower the commission rates.

Bruce

Icarus said:

All I know is that they don't make a fixed percentage. Once they pass various thresholds the amount they make per sale goes up, and it might go up retroactively. That's why the top people make so much. They end up making much more per sale then the people on the bottom of the ladder.

That's part of the reason why there's so much incentive for the salespeople to close a deal. They make nothing if they don't make the sale. They make much more if they can pass the thresholds. The top producers end up making the most money because of the volume they produce and the incentives they receive when they pass the thresholds.

-David

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It's not quite the same thing.

Let's say a salesman makes a base of 10% commission. However, if he sells more than $100,000 worth of product in a quarter, his commission amount on all his sales (even previous ones in the same quarter) goes up to 12%. If he sells $200,000 in the same quarter, then the commission goes up to 15% and so on.

Timeshares are not usually discounted when you buy from the developer. They may offer more incentives, but they usually won't cut the price, so the sale is always at full price.

-David

edited to add that this is just an illustration of how it works. I don't know what the real numbers, percentages or thresholds are. And I'm specifically talking about Marriott and similar properties where price is non-negotiable.

Icarus said:

It's not quite the same thing.

Let's say a salesman makes a base of 10% commission. However, if he sells more than $100,000 worth of product in a quarter, his commission amount on all his sales (even previous ones in the same quarter) goes up to 12%. If he sells $200,000 in the same quarter, then the commission goes up to 15% and so on.

Timeshares are not usually discounted when you buy from the developer. They may offer more incentives, but they usually won't cut the price, so the sale is always at full price.

-David

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I respectfully disagree about commission rates.

First, almost no buys at the first developer timeshare quoted list price. There are very few customer roll over for first price offers and buy at list price. That is why if you go through a presentation sit you will most likely get 3 or 4 prices and 3 or 4 sales type people coming at you on the same sit and the price drops can be dramatic.

Some discounts are up to 50% but 30% price drop in our experiance 20 % to 30% is closer to the average. We are talking about non Marriott type sales presentations.

In regards to commissions sorry, but I know for a fact commission rates from reliable sourses and the commissions can be as low as 3% on a sale that has the max discount on a single sale in buy today selling situations similar to timeshaing like some home improvement companies using par selling.

Most commissions are based on the percentage of the discount and not just monthly volume for several very important economic reasons.

The percentages can vary slightly from company to company. but not by much because of the basic similar cost economics of lead generation and sales price discounts in regard to overall developer profit margins.

Here is a example how the profit and commissions may be affected by discounts. We are going to use the widely accepted 50% average mark up on a developer timeshare.
That 50% markup for developers has been used on Tug many times.

Examples of par selling commissions on a item list priced at $20,000 like a timeshare with a 50% profit margin.

Remember after the salesman commission there has to be enough money to pay for the body snatchers at about $100 per sit (which may be on the low side) or more per sit. Also the cost of the salesman, a closer and his commission based pay if they are needed, the sales manager’s commission, override and bonus, etc and the cost of the gifting.

The cost of the gift per presentation say of $100 per sit and if there is a average of 1 sale per 10 sits then the gifting cost per sale (10 sits) is $1,000. (Double, triple or higher for gifting cost for Mexican timeshares) Those can be charge backs per sit to the sales person and the cost per sit. Don't forget the clerical staff , ads and presentation site overhead costs, etc.

Below IMHO would be fairly representative of selling 1 out of 10 sits.

Sell at list price of $20,000 = a 20% commission = $4,000 for the salesman + $1,000 gifting costs (for 10 sits), + 1,000 body snatcher costs leaves the developer about $4000 out of the $10,000 mark up margin. But now out of that $4,000 the developer has to pay all the others not listed in this paragraph that were listed above. The developer may or may not be doing some type of charge backs to the salesman to recover those other related selling expenses.

Below represents a only 30% discount off of the list price which is the reason why some get suckered in as the "Only good for today buy it now discount".

Below again is representative of selling 1 out of 10 sits.

Sell that same item at $14,000 = only a 3% commission = $420 commission for the salesperson and leaves the developer only $3,580 to pay all of the other similar sale costs as listed above. They are $1,000 gifting costs, + 1,000 body snatcher costs leaves the developer about $1,580 out of the $4,000 sales Profit margin. But now out of that $1,580 the developer has to pay all the costs of the closer and his commission based pay (if closer is needed) the sales manager’s commission, override and bonus, etc, clerical support, ads and presentation site overhead costs, etc.

If you figure a 20% saleclosing rate then the support costs for the Body snatchers, the gifts, the clerical support, etc costs are about cut in about half for the developer and that developer profit margin increases dramatically. The related sales commissions percentage costs would be fairly close to the prior examples for the salesperson, the closer(if needed) and the sale managers commission, override and bonus, etc

The 2 key things for the developer and their sale force is selling as close to list and the closing percentages rates in Developer priced par based commission timeshare sales. That is why there is very little flat rate commission selling in developer timeshare sales.

Bruce

brucecz said:

The 2 key things for the developer and their sale force isselling as close to list and the closing percentages rates in Developer priced par based commission timeshare sales. That is why there is very little flat rate commission selling in developer timeshare sales.

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It also puts context on all of the commets at StreetTalk from timeshare sales people about how relentlessly they are squeezed by developers and their sales managers on chargebacks.

This was in the Orlando Sentinel on October 8, from one person, but may be typical in such dense TS area:

Q: I am a commissioned salesperson for a time-share company, working in an office at least seven hours a day — often a lot longer than that. We are paid every Friday based on the sales we made the prior week. If we have registered no sales for the week, we receive a "loan" of $225, which is later deducted in weeks when we do receive sales commissions.

Since there are many weeks when my commissions amount to $1,000 and occasionally even $2,000, my pay is pretty good when averaged out over a month or so. But there have been a number of weeks when I've received only $225, including some six-day work weeks in which I put in more than 40 hours. And since the $225 was later deducted, I figure I received nothing for those weeks. Is this pay practice legal?

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gsturtz said:

This was in the Orlando Sentinel on October 8, from one person, but may be typical in such dense TS area:

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I am sure that the sales organization keeps a red and black balance for their sales for charge backs.

If the developer or can meet the fairly stringent guidelines to show that the sales person is a subcontrator, then the sales person does not enjoy some of the protection as a employee does.

If they are a subcontractor does not meet his sales quotas then it is easier leggally to dump him in comparison to a employee that would enjoy more legal protection.

I think Dave M can give a definative answer based on his accounting experianances.

Bruce

brucecz said:

I am sure that the sales organization keeps a red and black balance for their sales for charge backs.

If the developer or can meet the fairly stringent guidelines to show that the sales person is a subcontrator, then the sales person does not enjoy some of the protection as a employee does.

If they are a subcontractor does not meet his sales quotas then it is easier leggally to dump him in comparison to a employee that would enjoy more legal protection.

I think Dave M can give a definative answer based on his accounting experianances.

Bruce

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I believe that the ladies who work in Nevada brothels are classed as independent subcontractors. So apparently getting screwed and being an independent subcontractor fit together like .... like ...

well, maybe that's a simile to avoid.

:rofl: :

T_R_Oglodyte said:

well, maybe that's a simile to avoid.

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Simile, yes. Smile, no!:hysterical:

Thanks Steve!

The average salesperson gets between 7% and 8% with the ability to make more based on bonuses. A good resort will consistently be closing 1 out of 4 customers.

Cindy

What was described above makes sense, the worse they skin you the more they make. But I find it hard to believe that a resort would close 1 out of 4, the 1 out of 9-10 rate seems lot more realistic to me, but I don't know.

brucecz said:

We are talking about non Marriott type sales presentations.

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ok. I was explaining how Marriott (and probably Starwood, Hilton, and other high-end developers) work, where price discounts are never given. Incentives are adjusted when sales slow down. I added an edit to my post to make that clear.

I have no idea how the lower end works where the sales office is permitted to negotiate on price. I should have said that.

I guess I didn't realize that this thread was only about salesmen compensation at non-Marriott type properties.

I don't really think we're disagreeing on anything Bruce. There's clearly more than one model.

-David

David, I agree with you as there are as you say various models.

I was talking about the majority of timeshares developer sales and to make that clear that is why I put in Quote "non-Marriott type properties."unquote.

People need to remember that the resort developer has to approve of the sales tactics used and the salespeople have to meet a sales quota set by the developer.

I will agree that up to this point the 2 Marriot presentations were the best presentations done professionlly with class.


But when we did the Regina Westin in Puerto Vallarta about 3 years ago the salesman:annoyed: lied and when I asked him to prove that RCI Points could trade into Ocho Casadas by showing it the RCI book he knew he had been busted. They did some prices drops but of course we did not buy.

We have not done a Hilton but maybe look to do one in Las Vegas when we go out there for a week stating on this Sunday.

Bruce

Icarus said:

ok. I was explaining how Marriott (and probably Starwood, Hilton, and other high-end developers) work, where price discounts are never given. Incentives are adjusted when sales slow down. I added an edit to my post to make that clear.

I have no idea how the lower end works where the sales office is permitted to negotiate on price. I should have said that.

I guess I didn't realize that this thread was only about salesmen compensation at non-Marriott type properties.

I don't really think we're disagreeing on anything Bruce. There's clearly more than one model.

-David

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Commissions

When we stayed at the Westin in Maui (August) the salesman told us they were closing one for every two presentations. I realize now that most of what was told to us by Westin and Marriott should have been taken with a grain of salt (maybe a pile of salt). Regardless, both resorts had an impressive number of customers being shuffled into the salesrooms. When we signed our contracts with Marriott (probably my most foolish moment in my life), all of the tables were full of people buying units, many were getting additional weeks. I think I should have given up the practice of law when I was younger, and gone off to sell TS (the ethics of the professions are about the same - whoops, can't believe I said that).
Larry

Hey Steve.....

" independent subcontractor fit together like .... like ..."

I think I know... A pea in a pod ?

I also thought I remember going to the very first Marriott sales presentations, and was told that the sales staff was on salary....not exactly commissions...

But maybe that was those salesfolk lips moving again.....

T_R_Oglodyte said:

In any sales business such as that, there are usually a handful of people that blow away everyone else's performance. Timeshare sales isn't any different.

I'm pretty sure the commission rates are on a sliding scale, so that as a person's sales volume goes up the percentage drops.

The guy we did the tour with was VERY good - one of the best sales people I've met in my life.

Based on what we observed and some added bits of information we gleaned during the tour, I'm pretty sure that his compensation was well over $100k per year.

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I have heard as the number of sales goes up, the percentage they take home follows up as well. Its based on a tier system so they are motivated to sell more