Investor presentation on HGV

[Jason245]

https://www.sec.gov/Archives/edgar/data/1674168/000119312517108628/d361821dex991.htm

Has some interesting information on their business model.

Some highlights to me are:

"customer lifecycle" slide
The "key business drivers" slide is also interesting (They make on average $531/member on club/resort management fees)

A lot of fluff, but at least this can help you understand what they are trying to accomplish.

While we don't buy points from them, they still make a hefty profit from us resale buyers.

 

[GT75]

Has some interesting information on their business model.

This was a very interesting read. I see where HGVC membership has increased from ~170K in 2011 to 269K in 2016.

I couldn't figure out slide 19, Scale and Distribution Locations. Is that the predicted sales from each location?

 

[Jason245]

This was a very interesting read. I see where HGVC membership has increased from ~170K in 2011 to 269K in 2016.

I couldn't figure out slide 19, Scale and Distribution Locations. Is that the predicted sales from each location?

That is the list of "potential" buyers based on as far as I can guess the tourists that go to that area in a year. the Japan one is the entire population of Japan.

 

[GT75]

That is the list of "potential" buyers based on as far as I can guess the tourists that go to that area in a year. the Japan one is the entire population of Japan.

That is what I was figuring but you answered my next question which was Japan.

 

[CalGalTraveler]

Thanks for sharing. Very interesting to understand their business model. Also fascinating to see status on growth and market share relative to the timeshare industry. Wondering why the rest of the industry is stagnating in terms of growth.

It also appears that Japan is a growth segment for HGV. BTW, there was an HGVC booth airside at Narita Airport when I passed thru there in March.

 

[buzglyd]

Well, are they supposed to make nothing from us resale buyers?

 

[GregT]

https://www.sec.gov/Archives/edgar/data/1674168/000119312517108628/d361821dex991.htm

Thank you for posting this and it was interesting to review. I wish I could hear the Voice Over on the slides because otherwise it's hard to interpret. Everything looks rosy (it always does) and it's hard to synthesize what HGVC has done so well.

But as an owner (and modest stockholder), I'm happy and will keep owning both.

Best,

Greg

 

[1Kflyerguy]

HGV reported yesterday, and the audio for their Q1 presentation and Q&A is available until May 11th from their investor site.

http://investors.hgv.com/financial-reporting/quarterly-results/2017

The biggest "news" to me was:

They are looking at both Mexico and the Caribbean for expansion. They mentioned both Cabo and Cancun in Mexico, nothing specific for the Caribbean. They continue to list urban expansion in the US, as well as Japan and China for new resorts over time.

Maui - They said they have pulled this out of their forward projections... They still think its viable, but not enough to include in their projections.. disappointing but certainly no surprise..

 

[GT75]

I suspect that if HGV expands into Cabo and Cancun, they will also cut affiliation with Fiesta Americana. I also think that adding somewhere in the Caribbean would be a huge plus for all of the current owners. I like that HGV is thinking about adding inventory to places besides Orlando, Las Vegas, Oahu & Waikoloa.

 

[buzglyd]

Cabo and Cancun are so heavily over built it seems like it would be a steep climb but as long as they did something without AI I would be happy.

The Pueblo Bonito Blanco's plan terminates in 2020. Maybe they make an offer they can't refuse for that property. Although I think the Coppel family has a lot more money than HGVC.

 

[Sandy VDH]

One of the slides in the presentation mentioned that their strategy was to build out multiple resorts in a single geographic location to obtain some economies of scale in managing/supplying the resorts.

So if they stick to that, what Island in the Caribbean or what other tropical location could meet that requirement and support a final build out of 2 or more resorts. Cancun and Cabo could still be an option given their focus on markets that could support multiples, like Vegas, Orlando, Oahu, Big Island, etc etc, you get the idea. I don't think the market being overbuilt is a consideration of HGVC, as there should be enough internal demand, and the Brand name should help sell.

That is unless someone decided to fund the development, then maybe they will build anywhere. Which is what is holding up the Maui offering. The 3rd party funding pulled out. Which is why we have an Italian location.

Any thoughts or suggestions of where HGVC could support multiple resorts based on demand.

 

[GregT]

Any thoughts or suggestions of where HGVC could support multiple resorts based on demand.

I'm not sure about the multiple resorts question, but I once did a google search looking for a Hilton hotel in the Caribbean and noted they have a property in Barbados that has a fair amount of vacant land/parking lot next to it. So in the interests of -------> baseless speculation <-------- I will toss out there that HGVC Barbados has a nice ring to it!

There is also a Hilton in Aruba and one in Curacao, but neither one has adjacent vacant property and I am going with the theory that they may want to leverage an adjacent hotel.

Best,

Greg

 

[1Kflyerguy]

I'm not sure about the multiple resorts question, but I once did a google search looking for a Hilton hotel in the Caribbean and noted they have a property in Barbados that has a fair amount of vacant land/parking lot next to it. So in the interests of -------> baseless speculation <-------- I will toss out there that HGVC Barbados has a nice ring to it!

There is also a Hilton in Aruba and one in Curacao, but neither one has adjacent vacant property and I am going with the theory that they may want to leverage an adjacent hotel.

Best,

Greg

I agree there would be synergy to leveraging adjacent hotels similar to what they have done in Hawaii.. of course they might also convert rooms or floors at an established resort, and that would not need any vacant land. Not sure which, if any of the Caribbean resorts are owned by Hilton or Park Hotels and resorts... That might be easier than aligning with a property with short term management contract.

 

[buzglyd]

As far as Mexico goes, it seems inventory is loaded for 2018 and can be seen with the slider. For 2017 it appeared the Cancun property had very sparse inventory even in slow season.

I've got Playa del Carmen booked for March but at some point I would like to book some time at the FA Cancun and pop over to Isla Mujeres and Holbox for a few days.

 

[thare]

I'm not surprised on the fee front. I think the timeshare developers need to adapt though, that nickle and diming through high fees means that they may be caught flat footed because they offer little value besides ripping off captured customers. RCI will especially be vulnerable to this, since its service should technically only cost pennies on the dollar, but prints money for Wyndham. Personally I think timeshares in general could be a great business model if they can move away from the "pump and dump" selling model and massive fees.

Probably one of the hotel companies will end up developing a timeshare-lite model to absorb vacancies at their hotels. Or an AirBnB timeshare model, or more sophisticated VRBO. Just a theory though, with no basis in reality right now.