# Steve Holmes (Wyndhan CEO) on Ovation



## ronparise (Apr 28, 2015)

This is from the 1st quarter earnings call

_We are working to improve customer engagement in other ways as well. For example, in what I believe is the first in the timeshare industry, we are proactively enabling longtime owners to gracefully exit their ownership, while allowing us to efficiently acquire inventory. We broadly call this program Ovation by Wyndham. It is how we applaud owners who have experienced years of great travel memories but whose needs and circumstance have changed.

Ovation provides owners who have fulfilled their loan obligation with options that include referral to a verified seller. In certain instances, we will offer to acquire their inventory. Owners who have participated thus far have been highly satisfied. We receive low cost inventory but more importantly, help ensure we have a highly satisfied former owner to spread the word about the benefits of Wyndham Vacation Ownership._


I havent seen it published anywhere  but Ive been told the "verified sellers" are RPMI , Jeff Fudge and Angel England;  Judi Kozlowski of ReMax;  and TLS, Mike Murphy


and how about this

_This trial program is another capital like concept, which could be our best model yet. I am especially excited that it involves all of our business units. We are selling a 10-year to 15-year term product using inventory that we're leasing from current or future Wyndham flag mixed use projects_


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## comicbookman (Apr 28, 2015)

Redweek as short article on Ovation that has smidge more information:

http://www.redweek.com/resources/ask-redweek


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## Beefnot (Apr 28, 2015)

ronparise said:


> _This trial program is another *capital like* concept, which could be our best model yet. I am especially excited that it involves all of our business units. We are selling a 10-year to 15-year term product using inventory that we're leasing from current or future Wyndham flag mixed use projects_


 
Should that be "capital *lite*"?


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## ronparise (Apr 28, 2015)

Beefnot said:


> Should that be "capital *lite*"?



probably, I just copied and pasted a transcript of a phone call


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## vacationhopeful (Apr 28, 2015)

So let me get the concept ...

Buy from the developer at $200 per 1 thousand points for 15 years ... give back to Wyndham for 3 years worth of usable point for no MFs. Annual MFs paid to Wyndham at $6.50 per 1k.

That makes a MF per 1,000 points equal to $16.52 per 1,000 points every one of the 18 years....

Over 20 years plus the 3 free of MF years, begets 14.35 per 1,000 points every one of the 23 years of usage.

So, a 203,000 point reservation's true cost is $3353.56 each time (using the 15/18 year ownership plan). Renting is going to be so much CHEAPER!

PS Remember, with those 3 years of "free usage of" points ... no VIP discounts or upgrades ...


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## comicbookman (Apr 28, 2015)

vacationhopeful said:


> So let me get the concept ...
> 
> Buy from the developer at $200 per 1 thousand points for 15 years ... give back to Wyndham for 3 years worth of usable point for no MFs. Annual MFs paid to Wyndham at $6.50 per 1k.
> 
> ...



203,000 points would never have vip discounts or upgrades.  also someone who bought 15 years ago, even from Wyndham, did not pay $200 per 1k.  

so if we have a cost of say $100 per 1k, still using 6.5 per 1k for MF, then over the 18 years we get get a cost of $10.97 for a vacation cost of $2227.36.

I think your 6.5 as an average over the last 15 years is little high as well.


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## vacationhopeful (Apr 28, 2015)

I was using the current costs ... after all, the time value of money computation would have taken more time than it was worth ... so, the difference between TODAY's vacation week is your $2227 and my $3353  ...

Still makes renting MUCH cheaper at $1500 ... plus the non-owner would still have either their purchase dollars of $20,300 or $40,600....


My MF cost of $6.50 is today's cost of MFs .. the dollars of the developer purchase are sunk costs and not operational costs (the electric generator 's cost is depreciated over its life; the gas & maintenance are cost factors during each operational year.


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## vacationhopeful (Apr 28, 2015)

Basicly, renting is still cheaper as there is NO RESIDUAL and was never in the calculation of the original high dollar purchase.

Car leases are much cheaper than a car purchase.


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## ronparise (Apr 28, 2015)

vacationhopeful said:


> Basicly, renting is still cheaper as there is NO RESIDUAL and was never in the calculation of the original high dollar purchase.
> 
> Car leases are much cheaper than a car purchase.



so whats your point Linda..Is Wyndham doing a bad thing giving folks a way out?

Im not making any excuses for the timeshare sales model, which is to take  a $300000 condo, furnish it  and sell it for $1,500,000. and then finance the purchase at 18%,   There is no way that can work to the financial advantage of the buyer... i

To add insult to injury, when our buyer wanted to sell, until now his only real option was to deal with the PCCs.  and pay them 3 years of maintenance fees. 

Ovation is not designed to fix the problem of overpriced timeshares financed with high interest rate loans Ovation is designed to do two things 1) provide owners an easy way out and 2) Provide Wyndham with another Capital light source of inventory to sell at $200/1000 points

As a side benefit,  inventory on the secondary market is drying up and prices going through the roof. If the pricing trend continues there will be no more mega renters. Folks like me will sell out for the big bucks, and new guys will find it way too expensive to get in.


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## vacationhopeful (Apr 28, 2015)

ronparise said:


> so whats your point Linda..Is Wyndham doing a bad thing giving folks a way out?
> 
> .....As a side benefit,  inventory on the secondary market is drying up and prices going through the roof. It the pricing trend continues there will be no more mega renters. Folks like me will sell out for the big bucks, and new guys will find it way too expensive to get in.



Ron,
I was just brain-storming the favorable business model Wyndham has created for themselves with Ovation. And was wondering if this will make buying direct even MORE unfavorable in the future. Pay $150,000 and give it back 15 years later .... 

As for your "side benefit" analysis ... yes, inventory on the secondary market is drying up. But I think you might be giving Ovation a bit too much of the credit. I think TRAVEL and vacationing is up ... as is new home buying, car sales and dining out. If Ovation can effect the pipeline THIS quickly ... time wise ... the pipeline was either much shallower or turnover was far, far FAST than I thought.

Yes, I have looked at resale prices and am thinking HOW to maximize my position ... what to sell and how. The market of yesterday (the buying model) would have me just liquidating contracts ... I am reviewing HOW to give the product MORE value via packaging some aspects. And how to sell the "lesser" units. Selling the PRIME weeks, views, and resorts is easy .... but selling the lower demand place is the key to good (exit) plan.

As for continuing my current activities ... I don't live in Florida; I vacation there. Selling everything is NOT going to pay for a full share ocean view condo - for my personal use during the winter season (nor the ongoing costs). Getting Prime inventory is now more expensive as is liquidating it ... my VRI resort manager informed me the resale prices he was watching on the newly recorded deeds were HIGHER (much higher) than he ever expected ... 4-6 months ago.

And as many of us ... I would like to do less work and less running. And if the market sectors which I am vested in improve that I work in (real world included) ... I will be "taking cash" out (a polite way of saying, selling some of my position).

Ron, we have been enjoying the "timeshare game"...it continues to change and we both will continue to modify the things we do.


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## traveldaddy (Apr 28, 2015)

ronparise said:


> ........
> 
> Im not making any excuses for the timeshare sales model, which is to take  a $300000 condo, furnish it  and sell it for $1,500,000. and then finance the purchase at 18%,   There is no way that can work to the financial advantage of the buyer... i
> ....................................
> Ovation is not designed to fix the problem of overpriced timeshares financed with high interest rate loans Ovation is designed to do two things 1) provide owners an easy way out and 2) Provide Wyndham with another Capital light source of inventory to sell at $200/1000 points



Can I re-phrase this?

1) Provide a public relations win and marketing tool for Wyndham, that just happens to let some of the indentured servants,...uh hosts...., uh, I mean,  previous customers an easy, and I MUST add 'graceful' way to exit Wyndham ownership. 

2) Inventory that is close to free that we can recycle. Why 'Develop' a $300K condo and furnish it and sell it for $1.5 Mil? too much capital invested and risk. Why not get the furnished unit for under $2K and flip it for the same price/revenue?

I think I may be stating the obvious but from a business model perspective, this is brilliant. However, customer benefits seem to just be happenstance, not planned per se.


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## comicbookman (Apr 28, 2015)

vacationhopeful said:


> I was using the current costs ... after all, the time value of money computation would have taken more time than it was worth ... so, the difference between TODAY's vacation week is your $2227 and my $3353 ...
> 
> Still makes renting MUCH cheaper at $1500 ... plus the non-owner would still have either their purchase dollars of $20,300 or $40,600....
> 
> ...



Linda,
 my point was that this makes the original purchase mistake less of a loss.  It is clearly not a reason to buy at current Dev. prices.  Also, it provides a smooth way out.  Your math, while valid for someone buying today, was just a little too much like sales presentation math for me.


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## vacationhopeful (Apr 29, 2015)

comicbookman said:


> Linda,
> my point was that this makes the original purchase mistake less of a loss.  It is clearly not a reason to buy at current Dev. prices.  Also, it provides a smooth way out.  Your math, while valid for someone buying today, was just a little too much like sales presentation math for me.



Was a Math major with an Accounting minor.... ...


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## uscav8r (Apr 29, 2015)

vacationhopeful said:


> Was a Math major with an Accounting minor.... ...



That must have driven you batty when you made the move from hard math to soft GAAP accounting, which allows you to report almost anything you want (within some vague and fungible "accepted" principles)... 

An old saying: "Figures lie and liars figure." 

Sent from my iPad using Tapatalk


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## joestein (Apr 29, 2015)

uscav8r said:


> That must have driven you batty when you made the move from hard math to soft GAAP accounting, which allows you to report almost anything you want (within some vague and fungible "accepted" principles)...
> 
> An old saying: "Figures lie and liars figure."
> 
> Sent from my iPad using Tapatalk




Lets show some love and respect to the accountants out there.

Joe


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## ronparise (Apr 29, 2015)

old accountants dont die, they just loose their balance

right Paco?


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## uscav8r (Apr 29, 2015)

joestein said:


> Lets show some love and respect to the accountants out there.
> 
> 
> 
> Joe




Heck, I didn't even throw in statisticians...

"There are lies, d@mn lies, and statistics." 

As I deal with data/statistics and have accounting exposure via an MBA, I am essentially indicting myself! 


Sent from my iPhone using Tapatalk


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## pacodemountainside (Apr 29, 2015)

ronparise said:


> old accountants dont die, they just loose their balance
> 
> right Paco?



I am living proof!  Just observe me trying to get in  my SUV.


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## CO skier (Apr 29, 2015)

uscav8r said:


> That must have driven you batty when you made the move from hard math to soft GAAP accounting, which allows you to report almost anything you want (within some vague and fungible "accepted" principles)...
> 
> An old saying: "Figures lie and liars figure."
> 
> Sent from my iPad using Tapatalk



Client:  "What do the numbers say?"

Accountant:  "What do you want the numbers to say?"


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## CO skier (Apr 30, 2015)

vacationhopeful said:


> So let me get the concept ...
> 
> Buy from the developer at $200 per 1 thousand points for 15 years ... give back to Wyndham for 3 years worth of usable point for no MFs. Annual MFs paid to Wyndham at $6.50 per 1k.
> 
> ...


Developer purchases are a bad deal is a given.

This analysis is meaningless for the current owner who wants out -- the target audience for Ovation.

Three years of free usage versus paying a PCC thousands of $$$ to dispose of the timeshare is a no-brainer.  Win-win for the owner, soon to be ex-owner, and Wyndham.  The ex-owner does not care what Wyndham does with the ex-owned timeshare.


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## Joe33426 (Apr 30, 2015)

It seems like a no brainer for Wyndham to obtain inventory on the resale market and sell that inventory at the full developer price.  I wonder why not take these ownerships via ROFR rather than Ovation.  HGVC, MVC, and DVC regularly exercise ROFR if the resale price is too low.  Is there just too much resale inventory that the MF burden for Wyndham would be excessive.  Or do the original trust documents or HOA document not give Wyndham ROFR.


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## comicbookman (Apr 30, 2015)

Joe33426 said:


> It seems like a no brainer for Wyndham to obtain inventory on the resale market and sell that inventory at the full developer price.  I wonder why not take these ownerships via ROFR rather than Ovation.  HGVC, MVC, and DVC regularly exercise ROFR if the resale price is too low.  Is there just too much resale inventory that the MF burden for Wyndham would be excessive.  Or do the original trust documents or HOA document not give Wyndham ROFR.



I don't think Wyndham has the ROFR option.  Their contracts don't have it.


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## ronparise (Apr 30, 2015)

Joe33426 said:


> It seems like a no brainer for Wyndham to obtain inventory on the resale market and sell that inventory at the full developer price.  I wonder why not take these ownerships via ROFR rather than Ovation.  HGVC, MVC, and DVC regularly exercise ROFR if the resale price is too low.  Is there just too much resale inventory that the MF burden for Wyndham would be excessive.  Or do the original trust documents or HOA document not give Wyndham ROFR.



Only Club Wyndham Access contracts have the ROFR provision


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## ronparise (Apr 30, 2015)

This is a good deal for Wyndham and we here on TUG have wondered for  long time why they watched the resale value drop to nothing and not jump in to pick up free inventory to resell. After all Wyndhams growth strategy is "asset light"
And whats lighter than free, which is where the market was for several years

I think the explanation is that Wyndham is a growth company,  And to grow the timeshare part of their business they need new resorts and more of us owners. Buying points on the secondary market and re selling them provides Wyndham with a new profit center, but not the exponential growth the stockholders are looking for.  for that its "build baby build"


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## jebloomquist (Apr 30, 2015)

ronparise said:


> Only Club Wyndham Access contracts have the ROFR provision



The very first contract that I purchased, a converted week to points at Bali Hai Villas has ROFR written into it. The sales person used that as a positive selling point, stressing that regardless of how high the resale price was, Wyndham would probably want to buy it back. LOL. Ya, right.

Little did we know back then.

Jim


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## massvacationer (May 1, 2015)

Obviously this is going to have an affect on the number of resale contracts that are available....which should further push up the price of resale contracts.


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