Why Are Redseason Prices So Low?
This is one of the most common questions that we get asked – particularly by people who have just attended a Worldmark by Wyndham or Accor Vacation Club presentation and are then comparing the prices that we offer.
The correct question to ask is actually “Why are Wyndham and AVC selling for such a high price?”
Worldmark By Wyndham
If you look at the financial statements for the club you don’t have to dig too hard to find the actual value of the club assets – for example in the 2014 Wyndham report it shows the net assets of the club are around $361 million and there are around 713 million credits in the club giving an asset value per credit of 51 cents per credit. Note that most of the club assets are property and in the accounts these are valued at their cost price so it is likely that the asset value is significantly understated so actual asset value per credit may be closer to $1.00 if assets were revalued. According to their own financials the average cost to Wyndham for new credits is less than 60 cents per credit, so why are they selling them at over $3.00 per credit? (Anyone attending a presention might like to ask that question for fun!)
On the secondhand market the credits tend to be selling close to this underlying asset value with a slight premium on memberships with lots of available credits (as the memberships being created do not come with extra credits available) so you can see that the secondhand price is reflective of the true value of the club property.
Accor Vacation Club
The same calculation can be done for AVC. At the end of 2014 the value of club assets was just over $180 million and there were just over 110 million points issued which gives a value of around $1.64 per point. The actual cost to Accor for points added in 2014 was a bit higher than the club average at around $1.95 per point. Accor sells the points at between $5.85 and $8.00 per point so they are still making a very healthy margin on each membership sold but not as much as Wyndham.
With AVC memberships things are a little more complex on the secondhand market. AVC memberships are sold in classes from Bronze to Corporate. AVC do not allow memberships to be combined together so there is effectively a different market price for each size membership. The Bronze and Silver memberships are in quite high supply but low demand as most buyers on the resale market recognise the value in purchasing a larger membership – consequently the resale price on a Bronze membership is only around $1.00 per point. On the other hand Platinum memberships are much harder to find but actually in much higher demand and therefore the market price on those is around $1.50 per point. But in all cases you are currently able to buy an AVC membership from us for under the current asset value of the club!
The question really should be why are the Developer prices so high? Both Wyndham and Accor use a high pressure presentation sales technique which is also a high cost sales process as they have expensive sales centres, staff paid on commissions, free gifts to entice you to attend the presentation, etc. Of course all those expenses have to be paid for so those costs are added to the price of each membership which is why you pay around 3-4 times what the points are worth if buying from Accor and over 5 times what the points are worth if buying from Wyndham. In fact according to documents from Wyndham’s parent company they spend more than twice as much on marketing as they do on putting new property into the club (and they get more profit from each sale than what they put into the club as well).
In contrast to the expensive and high pressure presentation sales methods of Wyndham and Accor at Redseason we use a very low overhead online sales model, our staff are on wages and not commissions, we keep our overheads and advertising costs as low as possible and pass all these savings on to our customers.
For anyone still concerned that we may be a scam we can assure you that this is not the case and to prove it we do not require any payment until the transfer process is completed and you have the opportunity to verify the details with the club before you make your payment to us. We are fully licensed with ASIC with an Australian Financial Service License (number 491352).
Still concerned? Call us for a chat on 1300 79 60 89 and we will happily answer any questions you have.