# ROFR exercised



## bosco0633 (Feb 10, 2011)

I cant believe it.  A friend of mine lost a 11,500.00 bid on a Las Vegas Strip resale.  I was sure that it would pass ROFR.  

I contacted Judi Kozlowski and she informed me that 7 units that she sold in the past 2 weeks have been exercised upon.  Her latest was a 12,000.00 deal for a 7000 point Vegas strip.  

Looks like the days of crazy deals are officially over.


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## jrc (Feb 10, 2011)

*Exercised*

I had an identical one at 12k exercised last week.


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## fillde (Feb 10, 2011)

I' m curious. Aren't there any Flamingo's for sale. They don't exercise ROFR. Or are you looking to stay away from that property.


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## bosco0633 (Feb 10, 2011)

i own at the flamingo now.  It has always been a strong resell, even last year when the market was low, 7000 point flamingos were selling for 8500 to 9500, when you could get florida properties for under 6000.00.

There is this misconception that no ROFR with Flamingo equates to great deals, not true at all from my expierences.  The flamingo units seem to self regulate themselves.


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## thare (Feb 14, 2011)

Yeah, hilton took their ROFR option on a 4800 point unit we tried buying for $5K (Vegas).


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## Tcherniaev (Feb 27, 2011)

*ROFR in Orlando*



thare said:


> Yeah, hilton took their ROFR option on a 4800 point unit we tried buying for $5K (Vegas).



Interesting... I closed on 7,000 for $5,000 in December (Orlando property). Passed ROFR with no problem, seller paid all closing costs, included 2010 points.


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## rgong (Feb 27, 2011)

Tcherniaev said:


> Interesting... I closed on 7,000 for $5,000 in December (Orlando property). Passed ROFR with no problem, seller paid all closing costs, included 2010 points.



Sounds like things have changed in the last 2-3 months. Was told by a realtor on Friday that Hilton just excercised ROFR on a 2BR gold (5000 pts) at Seaworld that sold for $4K. May now take $5K to get the 5000 pt packages past Hilton.


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## kool_kat (Feb 27, 2011)

Wow this is a big change.  Definitely looks like the days of a super cheap HGVC are behind us.  Glad I got my second one when I did (even if it was just an EOY one).


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## pianodinosaur (Feb 28, 2011)

I am still under the impression that HGVC Flamingo does not have ROFR and that you have a pretty good chance of passing ROFR at The Bay Club.


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## BocaBum99 (Feb 28, 2011)

This will happen in more resort groups where the following is true:

1) Developer works off overbuilt inventory from 2005-2008

2) Developer properly transitions bad debt from subprime loans offered from 2005-2008 which is resulting in foreclosed inventory and higher maintenance fees.

It could manifest itself in ROFR exercise or direct buybacks.  As long as the developer is still selling successfully their product, the biggest return will be buying back cheap inventory for next to nothing and selling it at full retail.

That may or may not result in significantly firming up prices.  But, there will be a market for resales in those resorts.


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## UKPRLE (Mar 3, 2011)

*I think I know why?*

When you think about it, Hilton is not actively building timeshares (a lot are on hold to build more). They are looking at this as another revenue stream.  Think about it.  They offer to sell West 57th NY or Hawaii.  If someone buys it, great ... they get to offset the builder cost and gain revenue.  However, if most people can't afford the $50,000 to $75,000 and are about to walk away ..... well, we just got a great deal on a resale that just came in.  You get all of the same benefits, but it is only $25,000.  Basically, Hilton is buying them up resale for $9,000 to $13,000 at a pop and turning around and flipping them for double the price.  This is another great Hilton revenue stream.

When you look at it like this, Hilton should continue to buy back almost every single property (other than Flamingo) and flip them.  Eventually, people will realize that the only way to get in is to buy it from Hilton directly resale.  

When you think about it, this is a great way to keep our investment and resales values up and Hilton gets to make a profit.  I wouldn't actually call it a win -win for all (as newbies or those that want to purchase additional points have to pay more), but in the big picture, I think this works.  The price may get back to $15,000 to $18,000 (for 7,000 point Plat) and Hilton may stop buying them because they won't make as much of a profit and the new price has been established, which is great for our investment.

Do others see this as well?
Ray


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## Talent312 (Mar 3, 2011)

UKPRLE said:


> ... When you think about it, this is a great way to keep our investment and resales values up and Hilton gets to make a profit.  I wouldn't actually call it a win -win for all (as newbies or those that want to purchase additional points have to pay more), but in the big picture, I think this works.  The price may get back to $15,000 to $18,000 (for 7,000 point Plat) and Hilton may stop buying them because they won't make as much of a profit and the new price has been established, which is great for our investment.



There has been a lot of debate about the pros and cons of ROFR on this BBS over the years. Yes, it props up resales prices, but it also makes 'em less competitive with other TS resorts, and sometimes, the absence of a ROFR is actually a drawing card which increases demand. How else can you explain the prices at Flamingo, which has no ROFR? IOW, its not quite so simple.


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## kool_kat (Mar 9, 2011)

*Hilton bought a 3,500 silver unit*

Just talked with a lady I work with who recently bought a 3,500 silver unit for $1.00 on ebay at either Seaworld or Tuscany.  She just found out that Hilton was exercising ROFR on it.  So I guess they are buying anything if the price is right.  She was having some buyers remorse over this unit, so wasn't too upset Hilton bought it.  She also purchased a 5,000 EOY unit at one of the Orlando locations for 800 and is still waiting to hear back from Hilton.


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## phil1ben (Mar 10, 2011)

I agree to some extent with UKPRLE's comment but it is not entirely a win-win. The exercise of ROFR will certainly keep resale prices up. However, if Hilton keeps exercising ROFR then they will lose the stream of maintenance fee payments to fund operating expenses and taxes. Now, if they were able to immediately flip the units this would not be an issue -- but we all know this is not the case; particularly at the HGVC price. So the only way to replace the income stream is to open the units to their hotel guests. If so, won't this have the effect of decreasing availability to all HGVC owners? Won't the result be that I will have more difficulty getting the unit I want on the days I want it because Hilton may have already booked the unit to a hotel guest?


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## ocdb8r (Mar 10, 2011)

phil1ben said:


> I agree to some extent with UKPRLE's comment but it is not entirely a win-win. The exercise of ROFR will certainly keep resale prices up. However, if Hilton keeps exercising ROFR then they will lose the stream of maintenance fee payments to fund operating expenses and taxes. Now, if they were able to immediately flip the units this would not be an issue -- but we all know this is not the case; particularly at the HGVC price. So the only way to replace the income stream is to open the units to their hotel guests. If so, won't this have the effect of decreasing availability to all HGVC owners? Won't the result be that I will have more difficulty getting the unit I want on the days I want it because Hilton may have already booked the unit to a hotel guest?



First, keep in mind that Hilton does not collect and pocket maintenance fees, the HOA for each resort does.  So Hilton's gain or loss on any unit should not affect any individual resort.

Second, Hilton is on the hook for the maintenance fees for the units it owns so the HOA should be getting the same revenue to fund operating expenses and taxes regardless of who owns.  

Third, I don't know why you'd be at any more of a disadvantage reservation wise than if John Doe off the street owned the unit and was making a reservation.  Hilton is bound by the same reservation policies as a private owner.


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## jestme (Mar 10, 2011)

ocdb8r said:


> First, keep in mind that Hilton does not collect and pocket maintenance fees, the HOA for each resort does.  So Hilton's gain or loss on any unit should not affect any individual resort.
> 
> Second, Hilton is on the hook for the maintenance fees for the units it owns so the HOA should be getting the same revenue to fund operating expenses and taxes regardless of who owns.
> 
> Third, I don't know why you'd be at any more of a disadvantage reservation wise than if John Doe off the street owned the unit and was making a reservation.  Hilton is bound by the same reservation policies as a private owner.


A few things:
If Hilton owns a significant number of units in a location, you can bet they won't be doing any special assessments in that location. They will sell off the units first, plan the renovations, then go the special assessment route. That could mean a degrading facility until they sell them.

Also, I don't believe Hilton is bound by the HGVC reservation policies on units they own.


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## ocdb8r (Mar 10, 2011)

jestme said:


> A few things:
> If Hilton owns a significant number of units in a location, you can bet they won't be doing any special assessments in that location. They will sell off the units first, plan the renovations, then go the special assessment route. That could mean a degrading facility until they sell them.
> 
> Also, I don't believe Hilton is bound by the HGVC reservation policies on units they own.



First, there should never be a need for a special assesment.  Reserves collected each year should be sufficient to cover a normal renovation cycle.  Second, why would Hilton let facilities deteriorate at resorts where they own a substantial amount of inventory?  They've got to keep things looking decent to people to get them to buy.  Further, once they don't own any inventory at a location, what's to prevent them from just milking the maintenance fee cow as much as possible?

Hilton is indeed bound by the same reservations policies on units they own.

I'm not trying to say there is NO downside to ROFR.  While they are technically bound by the reservation policies, they are the ones who push all the buttons and could certainly be gaming the system behind the scenes.  However, based on what I have read here, Hilton owners seem to squeeze the most flexibility out of the system compared to the other big hotel managed timeshares.

Overall, I just think on balance, Hilton maintaining an ownership interest in these resorts is better than not.  Plus owners get the added benefit of propped up resale prices.

I am sure there are a multitude of other


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## rjp123 (Mar 10, 2011)

ocdb8r said:


> First, there should never be a need for a special assesment.  Reserves collected each year should be sufficient to cover a normal renovation cycle.



This is not the case for all properties.

My location has decided to forego the statutory reserve payments for the last few years.  I assume the statutory amounts would be too high for most of the owners to accept so they have (as a group) decided to contribute less than the statutory amounts.

Obviously this will result is some sort of assessment at some point.  I'd rather pay now than later but convincing other owners is a different story.


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## SmithOp (Mar 10, 2011)

ocdb8r said:


> First, there should never be a need for a special assesment.  Reserves collected each year should be sufficient to cover a normal renovation cycle.  Second, why would Hilton let facilities deteriorate at resorts where they own a substantial amount of inventory?  They've got to keep things looking decent to people to get them to buy.
> 
> 
> Hilton is indeed bound by the same reservations policies on units they own.



HGVC Sales will sell you a unit sight unseen just to add points, some owners have never stayed at their deeded property, it's all about points. 

There is a difference between Hilton and HGVC policies, that is the reservation distinction pointed out, do you have any evidence to support your statement that they are bound for units they own?  Evidence here from using the reservation system indicates they use them to their best advantage.


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## PortableTech (Mar 11, 2011)

From what I understand, Hilton is bound byt he same reservation restrictions as normal owners, but consider the fact that even in the normal owner group, there are several tiers, and the top tier has greatly reduced fees.  We can assume Hilton operates under that tier, or perhaps even some super-ultra-epic-eliet 10M+plus pounts tier that we just do not know about.  

In my mind, their biggest advantage is that unlike normal owners, they can operate their ownership intrest for commercial purposes, which is restricted to the average owner.  

Also, in regards to the maintance fees, it is my understanding part of the money that Hilton makes for providing management services to the HOA is based on a percentage of the maintance fees.  So there is at least a partial direct relationship between the two.


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## jestme (Mar 11, 2011)

I highly doubt Hilton pays itself reservation cancellation fees, or reservation change fees. That alone gives it a different set of reservation rules. It can move inventory around without penalty to try to rent for the most money. It isn't illegal for an owner to rent his home unit, it's just that most of us don't have a hotel reservation system available to us to help.


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## PortableTech (Mar 11, 2011)

jestme said:


> I highly doubt Hilton pays itself reservation cancellation fees, or reservation change fees. That alone gives it a different set of reservation rules. It can move inventory around without penalty to try to rent for the most money. It isn't illegal for an owner to rent his home unit, it's just that most of us don't have a hotel reservation system available to us to help.



Illegal no...  Aginst the TOS yes...  Here is the quote directly from the 2011 Guide.

*Commercial Use.* Accommodations available
through the Club are for the personal use
and enjoyment of Members, the Members’
immediate family, and guests personally known
and acquainted with Members. The Club strictly
forbids the use of the Club for commercial
purposes of Members or their guests including
the use of a confirmed reservation in an Affiliated
Resort for any rental, resale or other commercial
use (other than an owner’s Home Week). Any
lease or rental agreement for a Home Week shall
be deemed to contain a provision requiring that
any sums due to the Club as annual Club Dues or
due to the Association as assessments must be
deducted from the gross rentals and paid directly
to the party for which such sums are owed.


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