By Linnea Gandhi (TGG Group)
I have a rather embarrassing confession to make. My husband and I own a timeshare.
It all happened one festive evening at his firm’s holiday charity auction. A few big-ticket items were up for bid: front row tickets to the Bulls, a weekend getaway at someone’s Michigan lake cottage, first-class plane tickets to a destination of your choice, and a one-week timeshare our friend had put up for a ridiculously low starting bid. With the timeshare such a steal, how could we not bid on it?
Rational “Econs” that we were, we wrote down our reservation price inside our auction booklet to hold ourselves accountable. Well, sort of. After a heated back-and-forth with another bidder, we won the timeshare, paying a bit above the reservation price we had agreed on earlier. But who could blame us? It was still less than half its secondary market value!* (What can I say? I’m a sucker for transaction utility.)
We woke up the next day as slightly sheepish owners of a timeshare in Cabo San Lucas, Mexico. (At least it was for charity!)
Trick us once, shame on you. Trick us twice…?
We stepped off the plane into a whoosh of warm, tropical air: we were in Cabo, baby! Time for bathing suits, beaches, and blending in with spring breakers many years our junior.
But first we had to get out of the airport. Lucky (or not) for us, as we stepped out of Customs, we were welcomed by a line of a dozen locals all energetically offering to get us to our resort. Sensing our hesitancy to respond – this felt suspiciously like non-authorized offers for taxi rides, prohibited in US airports – they assured us they were in fact there on behalf of the resorts, to help out tired travelers such as ourselves. We mentioned our resort’s name, and one man eagerly jumped out of line and ushered us to a nearby desk where his friend could help direct us to the right shuttlebus.
Enter “Eduardo”, a charismatic 20-something with the gift of gab and every sales trick up his sleeve. He chatted us up about our trip from Chicago, whether we had any fun Cabo activities booked yet, what we did for a living to take so little time off from work, and how long we had been so happily married (to each other – a phrase he laughingly stressed), all the while pointing out the best beaches, charming ocean vistas, and party spots on a map that we could take with us.
Turns out, in his own charming way Eduardo was “qualifying” us, a sales practice that entails making sure we were a viable prospect for the deal he was about to offer. The back of that deal, as we later saw and signed against (see below), literally called out all these qualifications, which notably included being married to each other.
What was this deal? Well, in addition to all the help he had already provided orienting us to Cabo, Eduardo was prepared to hook us up with free transport to and from the airport, a snorkel outing any day we wanted, and a free buffet breakfast. All “at no cost”, as he cleverly emphasized on the form, below. All we had to do was spend 75 minutes at a competing resort – for which Eduardo worked – listening to a presentation on the properties there. For security purposes, we had to give $84 cash up front that would be returned – “100% cash back” – after the presentation. And to make it more of an adventure, we would have to take a taxi out of our resort, pick up our friend Eduardo at the side of the road by the resort entrance, and then drive to the presentation.
Looking Eduardo in the eyes, we handed over the $84 cash and agreed we wouldn’t let him down. We would be there tomorrow, with credit cards and IDs in hand, as the qualifications required. Who wouldn’t follow through for such a great guy? Basic reciprocity required it. **
Trick us thrice…are you kidding me?
When we arrived at the competing resort promptly at 9AM, our friend Eduardo handed us off to a new friend, Jose, who reiterated all the great gifts – which he bluntly termed “incentives” – that Eduardo had promised, so as to reassure us that none would be missing.
While munching on a free, albeit mediocre, Mexican-style breakfast buffet, Jose interviewed us about our general background, what we didn’t like about our current timeshare (after only one day of staying there), and vacation history and habits. Ironically, we realized in that discussion that we both really valued flexibility in our vacations – not being locked down to one location, timing, or experience. (Whoops.)
Next, it was time for the presentation. En route to the main building, Jose took us on a detour past an attractive beachfront and pool lounge – although he was in fact trying to sell us on a sister resort a few blocks down the beach – taking a picture of us on our phone, so we could envision ourselves in the resort (talk about the endowment effect!).
We then stopped momentarily in front of well-placed posters naming the resort in the same class as Hilton, Starwood, Marriot, and other well-known quality hotel chains; this was, no doubt, branding by association in the hopes of triggering some sort of quasi-halo effect. Next came a series of giant touchscreen tablets on which he calculated the expected cost of our next thirty years of vacations using assumptions we fed him; unsurprisingly, the number was way past $100K, a conveniently high anchor. At long last we reached the presentation room, already occupied by tables of couples like us sitting across Joses of their own. Clapping and cheering erupted now and then, which Jose claimed was a signal of a deal being closed. (We later found out that birthdays, anniversaries and other celebrations were artificially inflating the clap rate. Smart manipulation of perceived social norms!)
We took a seat, and Jose got down to business. Writing out a customized, initial term sheet, he wove in all that he had heard during breakfast and took care to repeatedly point out features of his resort which dominated our current resort. For instance, he flipped through the thick book of network resorts and reassured us that we could switch between them with a mere click of an online button, unlike booking within our current timeshare’s network, which required precious hours on the phone during business hours. He took care to note that the new resort was on the only remaining beachfront space in the (arbitrarily defined) area and, furthermore, that time shares in it were rapidly disappearing, with only “30%” left and sure to be gone in only a few weeks. With such scarcity, we would be stupid not to act now, right?
“But that’s not all!” Jose brought out a brand new term sheet, sliced the price, added three free “getaways” (free trips to a few destinations anytime in the next year or two), and improved the financing terms. He even offered to sell our equity in our current resort, cutting the price down to half of what it had been. The only catch? Scarcity again. It was a one-time-only offer: To get the immense transaction utility of these new terms, we had to sign today, before we left the premises.
Now, he told us, was the moment of truth: what did each of us think, independently, on a scale of 1 to 10?
To find out what we said, check back next week for part two of our Cabo adventure.
* Of course, I should note that the secondary market for timeshares is highly illiquid. The price we were anchored on was that for which a unit almost identical to ours had sold…after almost two years of sitting on the market.
**At this point I must admit to readers that both the raising of the paddle past our reservation price and the enthusiasm to go along with Eduardo’s offer were overwhelmingly my idea, and not my husband’s. It is a rare day when I catch him misbehaving, falling for such cognitive tricks.