Luxury Second Home Real Estate: Five Ingredients to Ensure A-1
Sales
It's been said that making sales in leisure resort real estate
is not rocket science. Perhaps not, but it is a discipline that
requires attentive strategies be employed to enhance sales pace
and to mitigate risk. Consider the following tenets:
1. Coordinate Marketing and Sales Activities with a Properly
Funded Budget. The marketing and sales function is the most
important component to the profitable operation of any luxury
second home real estate venture. This activity is as equally
important, if not more so, than as the quality of the product
itself - "the sticks, bricks and furnishings", if you will. The
long accepted adage of "Build it and they will come" is being
challenged daily in today's competitive real estate boom. Even
among projects of equal quality, the better marketing and sales
entity will inevitably capture a disproportionate share of the
market.
As a point of definition, Marketing covers all of the
activities required to get a qualified prospect in front of a
salesperson. The Sales function covers what happens from
that point forward. The two must obviously work hand in hand. We
believe marketing and sales efforts must be dovetailed to
achieve the common goal of cost-efficient sales that are
retained long-term, in order to generate additional downstream
revenues. It quickly becomes clear that a well-tuned and
balanced marketing and sales campaign can have a very
significant impact on the development company's financial
performance. A faster sales pace and shorter sellout reduces
both the developer's and lender's exposure time and expense.
So, how to get there? Prepare and administer a coherent and
appropriate marketing plan that is understood by all - one that
can be modified as the circumstances dictate. One requisite of
any such plan or campaign is the significant and rapid flow of
money necessary to pay for the many promotions, especially in
pre-sales start-up activities. There are always several programs
that are simultaneously used that all require quick and
significant funding.
Strategy: An adequately funded start-up budget to
accomplish any pre-sales goals prior to lender funding is
essential. Delays in paying for marketing activities can be
disastrous. Worse yet, running out of dollars before your
marketing program is launched is sheer project suicide.
2. Utilize One Sales Team to Represent All Leisure Real
Estate Products. From our experiences in the industry both
past and present, we know some simple truths about the leisure
real estate buying market. The first fact is that no one buys a
real estate product sight unseen. A second corollary is that the
bulk of the sales will be generated from prospects that are
repeat visitors to the destination resort area. And, the third
corollary is that no prospect has a clear idea of which product
is right for them until they hear of their options. No one walks
through the door wanting to buy a fractional or a condo-hotel
interest. The prospect's opening statement may be that they
simply want to hear about the condos for sale.
Relationship selling techniques are in vogue and are appropriate
for leisure real estate sales. Here, a sales representative
first builds trust with his/her prospects and then proceeds with
a discovery phase to determine their prospects' needs,
attitudes, preferences and motivations along with a finding of
how often they might use the second home product. The agent can
then present the real estate options in light of the solutions
afforded to that particular prospect and to advise each prospect
on which of the multiple products is best for them. Prospective
buyers resent being flipped to another agent after they've
vested themselves in the one agent, who has now become their
friend and trusted consultant. This overriding factor underpins
our philosophical approach that emphasizes a single sales team
approach to presenting leisure real estate product options.
Strategy: If you are a resort developer with a mixture
of residential program offerings, cross train your sales
representatives on all second home leisure real estate products.
Consider abandoning the idea of maintaining separate sales teams
that sell strictly lots, or strictly whole ownership or shared
ownership interests or strictly condo-hotel interests. You'll
find that your product options will not cannibalize one another
and the project will make more sales faster while experiencing
less rescission.
3. Get the Right People on the Team. In order to have a
successful ongoing marketing and sales operation, a team of
talented, disciplined and motivated people must be assembled and
paid well for results. We believe it is imperative to bring in a
few key people experienced in the particular product format you
plan on offering around which to build your team. It is much
more costly to get off to a slow start or not get off at all for
lack of talent or expertise.
To achieve the results projected, we believe in acquiring good
people, training them and paying them well to retain them.
Highly trained and motivated salespeople can maintain
significantly higher closing percentages than those of average
salespeople.
Strategy: Recruit, train and properly compensate a
professional sales team for your leisure real estate project.
Hold all accountable to performance standards for the project
and tie compensation to performance as much as possible. Having
the wrong people on your sales team can be very costly to the
project, both in lost sales and wasted marketing dollars. The
losses can amount to millions of dollars.
4. Deliver Well Qualified Prospects to the Sales Team An
exemplary and consistent flow of well-qualified prospects will
yield much higher closing percentages for your leisure real
estate project. Between marketing and sales, the more important
and variable of the two is marketing. All other things being
equal, the sales staff with its capabilities and closing
percentages is predictable and controllable. The overall success
of the sales offering is, more often than not, made or broken by
the marketing component.
For most properties in resort destination areas, we expect to
see real estate product sales consummated by prospective buyers
that are generated from three general sources:
A. Group One: Those guests that are physically already there
visiting the resort area.
B. Group Two: Those prospects who are planning on coming to the
resort area, but who are as yet unfamiliar with the project's
real estate product offering opportunity.
C. Group Three: Those prospects who know the resort area, but
who are not planning on visiting the destination this upcoming
year.
Interest from prospective buyers tends to be piqued when they
see a resort's new buildings coming out of the ground. And, as
that activity becomes evident and exciting, prospects will walk
into the preview center to ask "what's it all about" and
investigate whether there is a significant opportunity for them.
Until construction stages begin and during pre-sales activities,
the question remains as to how to get those guests and prospects
mentioned above to inquire about your real estate opportunity.
Strategy: The thrust of any project's marketing and
sales pre-sales plan, along with the attendant expenditure of
marketing dollars, should be strictly focused on just this
tactical approach - getting well qualified prospective buyers
who are sold on the destination resort area to visit the preview
center.
5. Get Sales Posted Quickly to Create a Project Buzz. The
thrust of any marketing campaign for an upcoming pre-sales
season should have an emphasis on "Awareness" - getting the word
out on your project's offering. For Groups One and Two, this
awareness campaign will work to ensure that prospects will stop
in the preview center to check out your opportunity while at the
resort area. For Group Three prospects, the awareness campaign
may actually serve to encourage those prospects to rearrange
their schedules to accommodate a trip to the resort area sooner
than they had planned.
All in all, the marketing campaign should direct prospects to
your resort website or sales center, where they can opt in for
more information and to set an appointment. The ability to
generate walk-in traffic will be the key to absolute sales
success. With a properly designed project that incorporates a
use plan that makes perfect sense to the consumer, people will
buy and sales will flow steadily.
Strategy: The immediate mission is to get sales on the
board quickly in order to build momentum and the sense of a
successful project. Salespeople need confidence. A sense of
urgency must be instilled in them as well as in the prospects.
Making sales steadily builds that confidence, creates a "buzz of
success" for the project and satisfies everyone involved with
the project - the consumers, the developer, his investors and
lenders and the sales representatives. Win-win for all is the
name of the game.
For more information on the sales and marketing of fractional
ownership, private residence clubs, and on condo hotels,
including listings and photos of current and past projects,
visit the Star Resort Group website at www.starresortgroup.com
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