Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Joe Greff – JP Morgan
Joe Greff – JP Morgan
Looking at the second quarter and seeing the nice results in volume per guest can you help us understand that a little bit better, is that concentrated in a few markets, is it geography, is it a greater percentage to repeat buyers or is it just a mix shift in that you guys are going after higher quality, more credit worthy customers?
My second question if I can have a follow up on this question here, regarding the fee for service vacation ownership business model, the asset affiliation model, can you help us understand sort of what the economic are to you broadly for the resort management contract associated with that business?
Steve Holmes
On the improved volume per guest which just as a reminder we also saw in the first quarter of this year, I think there are a number of factors contributing to it. Remember we took our sales volume down intentionally when the credit markets kind of seized up and we decided to lower our sales pace. When we did that we did have to shut down unfortunately some offices which frankly were profitable offices but which in some cases didn’t have the highest productivity. I think we’ve benefited in part by removing some of the weaker offices.
Having said that the fundamental results within same store offices is also very impressive and its up. I think is really a matter of a very focused effort to make sure the consumer’s understanding this flexible point based product we have and matching it up to exactly what they’re looking for. So we did see close rate increase which is the number of tours coming in that end up buying and we saw an increase in that as well as increase in pricing.
Both of those I think are attributable to maybe a more focused effort for the sales organization and a continuation of our ability to show the consumer how this product meets their lifestyle. That’s really fundamentally it, it’s a great execution. I think that there may be some lift due to, as you pointed out, that our FICO score increased but we’re also asking people to make larger down payments. Our down payments are in the range of 20% now and that’s a significant increase from where we were a year ago or even six months ago. I think its terrific execution at the time share business.
- To read the full transcript on Seeking Alpha, click here »
