# An interesting assessment of the demise of the Ritz-Carlton Club*



## WBP (Jul 20, 2013)

*prepared for members of The Ritz-Carlton Club, Bachelor Gulch:

http://www.hoabachelorgulch.com/1042.pdf

This is very insightful too:

http://www.hoabachelorgulch.com/correspondence.htm


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## FractionalTraveler (Jul 20, 2013)

WJS said:


> *prepared for members of The Ritz-Carlton Club, Bachelor Gulch:
> 
> http://www.hoabachelorgulch.com/1042.pdf
> 
> ...



I think this is only one example of what occurred to many Private Residence Clubs during the recession.  If you look at the PRC industry as a whole today, there are now 50% less players in this operating space than back in 2006-07 timeframe.

People paid for these things using Second Mortgages, speculative finance deals, and other disposable income when the economy was doing well.

The bottom fell out in 2008 and Marriott like many others in the industry was left with lots of unsold inventory of very expensive properties.  These properties were built during the cash rich days when Marriott sold timeshares for $50-75K for one week of vacations.

The RC-BC property was sold out and was fortunate enough that most of its owners didn't dump the units or get foreclosed on.  They didn't need Marriott to help them pay MF nor did they want to dilute their club by giving access to MVCI owners at a fraction of the cost they paid for exclusivity.

I hope they are happy with Timbers.

FT


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## EducatedConsumer (Jul 20, 2013)

My read of the Executive Summary of the HVS Report to the Bachelor Gulch members is that RCC/MVCI/MVW had lots of shortcomings (as identified by the consultants, board and members) in their business model and operations. That, to me, is what wasnost interesting about the Executive Summary of the HVS Report provided to BG members.

In terms of the demise of Destination Clubs, I think that's a different issue than the "assessment" that I called attention to.

I'm not certain that RCC is amongst those Destination Clubs still standing. It would seem to me that they're operating as MVW, but with different window dressing.


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## Luvtoride (Jul 20, 2013)

This will be interesting to watch as it plays out and how Marriott tries to "spin" this to its Elite DC members (like us) who added points to reach that level to have these trade options to Ritz Carlton Clubs.  I really haven't read or heard about too many MVC owners who have traded points and used the RCC, but would be interested in hearing more about them, before they are all "gone" from the program to even consider.  I understand the feelings of the RCC owners in arriving at this decision.  It is disappointing that Marriott could not have more effectively managed and dealt with the property and its owners so it didn't come to this.  I can't wait for my next discussion with a Marriott Rep to hear the company line about these developments.  Thanks for posting this info....I was listening to the replay of the May 24th conference call as well, but at over 3 hours,not sure I will get thru the whole thing.


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## bogey21 (Jul 20, 2013)

Luvtoride said:


> This will be interesting to watch as it plays out and how Marriott tries to "spin" this to its Elite DC members (like us) who added points to reach that level to have these trade options to Ritz Carlton Clubs.



You should be compensated by Marriott but don't hold your breath.

George


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## rpgriego (Jul 20, 2013)

bogey21 said:


> You should be compensated by Marriott but don't hold your breath.
> 
> George



Why should they be compensated?


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## EducatedConsumer (Jul 20, 2013)

Luvtoride said:


> This will be interesting to watch as it plays out and how Marriott tries to "spin" this to its Elite DC members (like us) who added points to reach that level to have these trade options to Ritz Carlton Clubs.



You may have unfortunately had the wool pulled over your head with the all too frequent Marriott Vacation Club spin. Don't feel lonely, though, as you have plenty of company, including members of the Ritz-Carlton Club, who too were encouraged to add points, but in their case, to gain access to the Abercrombie and Kent collection. Guess what, that (A & K) option is gone for RCC members.

Think there's a pattern here?

I wonder when MVW will realize (and admit) that they get deeper and deeper in the whole with their botched operation of the Ritz-Carlton Club. Fortunately, a growing segment of the RCC members have seen through MVW smoke. 

Don't let the litigation against MVW by the Ritz-Carlton Club, San Francisco residence owners slip your mind, and the very substantial settlement in favor of the Ritz-Carlton Club, San Francisco residence owners.

There's a clear as day pattern here.

Anyone surprised that MVW moves around some of the very employees who created this mess? In some cases they allegedly have been promoted.


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## rpgriego (Jul 20, 2013)

Luvtoride said:


> This will be interesting to watch as it plays out and how Marriott tries to "spin" this to its Elite DC members (like us) who added points to reach that level to have these trade options to Ritz Carlton Clubs.  I really haven't read or heard about too many MVC owners who have traded points and used the RCC, but would be interested in hearing more about them, before they are all "gone" from the program to even consider.  I understand the feelings of the RCC owners in arriving at this decision.  It is disappointing that Marriott could not have more effectively managed and dealt with the property and its owners so it didn't come to this.  I can't wait for my next discussion with a Marriott Rep to hear the company line about these developments.  Thanks for posting this info....I was listening to the replay of the May 24th conference call as well, but at over 3 hours,not sure I will get thru the whole thing.



Stayed at the RCC SF and LOVED it! Made me realize MVCs are at a "comfortable" level and RCC is at a "luxury" level. 

MVC doesn't need to "spin" this with MVC owners, but the the following line sums everything-up...
Each and every MVC or RCC is entitled to terminate their affiliation as their affiliation agreement outlines. Just like MVC can terminate the MVC affiliation if it deems a resort is not maintaining the MVC standard the resort agreed to.

Denver Journal
KIM MARQUIS | Fri., July 12, 2013 @ 12:23 pm
“The homeowners association has the option to not renew a contract if they so choose, and we certainly respect that,” Ritz-Carlton Destination Club Spokesman Ed Kinney said. “We would have loved to have kept the property but we understand it’s their prerogative to let the members vote.”

Parent company Marriott Vacations Worldwide Corporation last year dropped the Bahamas’ Abaco Club at Winding Bay from the Ritz-Carlton club due to deteriorating conditions, according to a company statement to club members. In January, it lost management of Kapalua Bay on Maui to the Timbers. 

BOTTOM LINE: 
Their are other Ritz-Carlton Destination Clubs, including properties in Lionshead and Aspen Highlands, as well as San Francisco, Jupiter, Fla., and St. Thomas in the U.S. Virgin Islands. 

Maybe more as the economy improves or maybe less if the price point RCC's sell at can't be economically feasible or profitable for MVW.

That said, in my opinion, each and every RCC should hit the eject button and affiliate with the Four Seasons. My question is... As MVW takes steps to consolidate unsold RCC weeks into the "Trust" does that put MWV in a controlling position?


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## rpgriego (Jul 20, 2013)

EducatedConsumer said:


> You may have unfortunately had the wool pulled over your head with the all too frequent Marriott Vacation Club spin. Don't feel lonely, though, as you have plenty of company, including members of the Ritz-Carlton Club, who too were encouraged to add points, but in their case, to gain access to the Abercrombie and Kent collection. Guess what, that (A & K) option is gone for RCC members.
> 
> Think there's a pattern here?



What is the "pattern"?



EducatedConsumer said:


> I wonder when MVW will realize (and admit) that they get deeper and deeper in the whole with their botched operation of the Ritz-Carlton Club. Fortunately, a growing segment of the RCC members have seen through MVW smoke.
> 
> Don't let the litigation against MVW by the Ritz-Carlton Club, San Francisco residence owners slip your mind, and the very substantial settlement in favor of the Ritz-Carlton Club, San Francisco residence owners.
> 
> There's a clear as day pattern here.



What is the "clear as day pattern here"?



EducatedConsumer said:


> Anyone surprised that MVW moves around some of the very employees who created this mess? In some cases they allegedly have been promoted.



Can you state names "of the very employees who created this mess"? And clearly identify the "mess"?


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## ondeadlin (Jul 20, 2013)

Huge, huge hit for MVC, IMO.

It's a tremendous property.

Great job by the BG board IMO protecting their owner's interests.


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## EducatedConsumer (Jul 20, 2013)

rpgriego said:


> What is the "pattern"?
> 
> 
> 
> ...




With all due respect, if I were seeking the level of detail that you are, I'd be in the library of a business school, with lots of time (days) on hand, doing some research. 

I think a great starting point for your research is the Correspondence Section of the Bachelor Gulch HOA website. That will probably take you several hours to get through, and yes, one can easily discern several patterns in the way RCC/MVCI/MWV did/does business.

The second place, I'd go, if I were looking to gain the level of understanding that you seemingly are, is the Executive Summary of the HVS Report to the Bachelor Gulch HOA of October 5, 2012.

Than, I'd go to a summary of the legal proceedings between the residents of the Ritz-Carlton Club and Residences, San Francisco and RCC/MVCI/MWV.

And finally, the SEC Filings for Marriott and MVW over the past few years have frequently described Marriott's challenges in the luxury vacation real estate market. You may have to be an especially attentive reader, have a high level of knowledge of the vacation ownership/private residence club industry, and to read between the lines.

As to the names of the employees, I thank you for your kind invitation to be charged (not found guilty) of defaming someone, but  I respectfully decline your kind offer. However, a search of LinkedIn for people who have had an affiliation with The Ritz-Carlton Club and Ritz-Carlton Destination Club, may be an interestng exercise.


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## EducatedConsumer (Jul 20, 2013)

ondeadlin said:


> Huge, huge hit for MVC, IMO.
> 
> It's a tremendous property.
> 
> Great job by the BG board IMO protecting their owner's interests.



Entirely agreed.


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## rpgriego (Jul 20, 2013)

EducatedConsumer said:


> With all due respect, if I were seeking the level of detail that you are, I'd be in the library of a business school, with lots of time (days) on hand, doing some research.
> 
> I think a great starting point for your research is the Correspondence Section of the Bachelor Gulch HOA website. That will probably take you several hours to get through, and yes, one can easily discern several patterns in the way RCC/MVCI/MWV did/does business.
> 
> ...



lol...

Glad to see you agree in backing our posts with clear, succinct and accurate facts. That is the best way to establish "several patterns the way RCC/MVCI/MWV did/does business." And a wise man would never risk defamation by innuendo. I can respect that!

As I work in HR, I have to wonder if LinkedIn is an accurate resource to determine every sales representative and/or sales executive having worked for or currently working for MVW or its predecessor MVCI.

Yes, a majority of BG HOA owners voted not to renew the RCC management contract.
Denver Journal / KIM MARQUIS | Fri., July 12, 2013 @ 12:23 pm
The board received 68 percent of voting member support to switch management in a vote that ended July 5.

Yes, their was a HUGE legal settlement with about 25 owners of RCC SF.
MVW FORM 8-K / November 30, 2012 / Item 8.01 Other Events
As previously disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 7, 2012, certain subsidiaries of the Company are defendants in a lawsuit in the Superior Court of California, County of San Francisco. The plaintiffs in the lawsuit, 11 residential unit owners at The Ritz-Carlton Club and Residences, San Francisco, a project within the Company’s Luxury segment, questioned the adequacy of disclosures made prior to 2008, when the Company’s business was part of Marriott International, Inc., regarding bonds issued for that project under California’s Mello-Roos Community Facilities Act of 1982 and their payment obligations with respect to such bonds. In June 2012, the trial judge issued a tentative decision on phase one of the proceedings in favor of the plaintiffs.
While the Company disagrees with the findings in the tentative decision including the theories of relief, on November 30, 2012, an agreement dated as of November 29, 2012 was entered into by the defendants and the plaintiffs to settle, without admission of liability, all claims asserted or which could have been asserted in the lawsuit. Pursuant to the settlement reached with the plaintiffs, the Company will repurchase units owned by certain of the plaintiffs at The Ritz-Carlton Club and Residences, San Francisco.
Two other lawsuits are pending in which 11 other owners at the same property assert similar claims. The two other lawsuits are distinct from the settled lawsuit, and the Company believes that it has defenses with respect to the claims asserted in such lawsuits and intends to vigorously defend against them.
As a result of the settlement, the Company expects to record a charge of $25 million to $40 million in the quarter ended December 28, 2012 with respect to the settlement and to increase the existing accrual for the two remaining lawsuits. While the Company believes that the accrual will be adequate, depending on the outcome, the Company may be required to record additional charges in connection with these matters.

But, I'm not aware of any Class Action Suits have been filed against MVW for breach of fiduciary managerial responsibility or deceptive business practices where they lost by verdict. I'm open to being corrected by a factual interpretation of the law.

I stand by my earlier statement...
The remaining RCCs should not renew their affiliation agreement with Marriott and affiliate with Four Seasons. I say that as a big MVW fan!


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## jeepie (Jul 20, 2013)

*Eject...why?*



rpgriego said:


> ...in my opinion, each and every RCC should hit the eject button and affiliate with the Four Seasons...


Just curious...why do you believe this is a good idea? Thx.


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## rpgriego (Jul 20, 2013)

jeepie said:


> Just curious...why do you believe this is a good idea? Thx.



Now... I'm a HUGE Marriott Vacation Club fan. But, as a former owner of FSRC Aviara I would of been the one saying, GET AN ATTORNEY! if the FSRC affiliated the resort with the level of a Marriott Vacation Club as a supposed benefit. 

This is where a smart man would remind me that a benefit is just that and subject to change, enhancement or termination.

Seriously, have you experienced a RCC or FSRC? A MVC doesn't even come close. Now that said, I respect everyone's individual conclusion after comparing RCC to MVC.


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## jeepie (Jul 21, 2013)

rpgriego said:


> ...a benefit is just that and subject to change, enhancement or termination...


Indeed.



rpgriego said:


> Seriously, have you experienced a RCC or FSRC? A MVC doesn't even come close. Now that said, I respect everyone's individual conclusion after comparing RCC to MVC.


 RCC, yes, FSRC, no (but I am sure you are correct). Great point.

As MVC fans, why wouldn't we prefer MVC to resolve the issue with those RCCs where possible, and make inventory available to Premier Plus members on an equitable basis? I think that's where they're heading, and that's fine with me. Cheers.


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## rpgriego (Jul 21, 2013)

jeepie said:


> As MVC fans, why wouldn't we prefer MVC to resolve the issue with those RCCs where possible, and make inventory available to Premier Plus members on an equitable basis? I think that's where they're heading, and that's fine with me. Cheers.



I concur, but I want what's best for me. And me alone! Just being honest!

Curious... How do you define "make inventory available to Premier Plus members on an equitable basis"?


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## m61376 (Jul 21, 2013)

Actually RCC inventory is being made available to both Premiere and Premiere Plus members. I think it is a great perk of the DC system.


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## Luvtoride (Jul 21, 2013)

*RCC choices...Just one*

I just checked the Marriott My Vacation Club website.  They are now only showing ONE Ritz Carlton Club, Vail, Colorado, being available to trade for members.  I guess this benefit is Going, Going....almost gone!


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## FractionalTraveler (Jul 21, 2013)

Luvtoride said:


> I just checked the Marriott My Vacation Club website.  They are now only showing ONE Ritz Carlton Club, Vail, Colorado, being available to trade for members.  I guess this benefit is Going, Going....almost gone!



There are other RC DC properties available through the Explorer collection under Luxury.

RC-Vail is the only one in the Trust at the moment.

FT


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## fluke (Jul 21, 2013)

Bachelor Gulch was never available via the explorer collection to the  premier and premier plus members. Just as the Maui site (which exited RC Club earlier) was not.  So I am not sure this really changes anything.


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## FractionalTraveler (Jul 21, 2013)

fluke said:


> Bachelor Gulch was never available via the explorer collection to the  premier and premier plus members. Just as the Maui site (which exited RC Club earlier) was not.  So I am not sure this really changes anything.



BC was never available because it was sold out long before that.  Marriott had no developer units to place in the Trust to begin with.

The Maui site was under foreclosure and RC was the management company onsite at the time.  You can't transfer units to the trust which you don't own.

Today you can still get reservations at Saint Thomas, Jupiter, SFO, Vail, Lake Tahoe, and Aspen.

FT


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## GregT (Jul 21, 2013)

FractionalTraveler said:


> Today you can still get reservations at Saint Thomas, Jupiter, SFO, Vail, Lake Tahoe, and Aspen.
> 
> FT



I know that they loaded a ton of Vail inventory into the Trust -- do we have any sense for how much inventory Marriott is holding at the other properties?

I would think that one day we will see that inventory deposited into the Trust, and it will likely spike MFs.   I believe that putting Vail into the Trust was a major factor in the increase in Trust MFs from under $0.42 per point to the almost $0.44 that I think they are now.

Would be curious about what Marriott is holding in the others...

Best,

Greg


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## FractionalTraveler (Jul 21, 2013)

I think the only one they currently have significant inventory in is Saint Thomas.  The others are limited.

I also think they would try to sell it off prior to placing it in the Trust.

FT


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## fluke (Jul 21, 2013)

They are probably keeping their options open by not introducing any additional RC  Club units in the trust.  As we know from Vail they can't restrict usage to premier and premier plus if those properties are placed in the trust.  I think trying to sell properties placed in the trust could be complicated as the trust would actually own it and the trustee should be operating it in the best interest of the trust/trust owners.


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## jeepie (Jul 21, 2013)

*Just this...*



rpgriego said:


> ...How do you define "make inventory available to Premier Plus members on an equitable basis"?


Nothing profound, just give RCC owners priority to reserve up until say, 6-9 months, then require the appropriate number of DC points befitting the superiority of the RCC location, accommodations, service, etc.
Vail example: New Years week, 2BR: Streamside 2,725 to 6,175 points; RCC 11,225 points. Equitable? Ymmv. For me, the more RCC availability, the more options to use my points.


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## SkyBlueWaters (Jul 22, 2013)

I have heard about the RCC members' consciousness about status when a friend checked in a Ritz Carlton using his DC points. I thought he was exaggerating. My friend is not poor, and neither am I, but I can sense that there is a group of society out there keen on preserving their status from the "common folk", using the words "exclusivity", "loss of experience", blah, blah, blah...I get it.

Class warfare is alive and well in the TS world, with those on top resisting invasion by the common folk on their turf. It's sad, because they paid a lot of money for that experience and they were sold that by VAC, but really, true exclusivity might mean actually building your own chateau by the slope.

Good luck to BG. I think it's bad advice. Only time would tell if this move bodes well for its members. The name Timbers doesn't ring a good tone either.


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## gblotter (Jul 24, 2013)

rpgriego said:


> I stand by my earlier statement...
> The remaining RCCs should not renew their affiliation agreement with Marriott and affiliate with Four Seasons. I say that as a big MVW fan!


Highly unlikely that will happen.

RCC Bachelor Gulch was completely sold out - thus no unsold inventory was under the control of MVW.   That situation made it possible to put the question to a vote in the first place.

At other RCC locations, MVW owns a significant chunk of unsold inventory (and controls the associated voting rights).  It would likely be impossible to get a majority of votes in that scenario to discontinue management affiliation with Marriott.

(I too wondered why RCC Bachelor Gulch did not align with Four Seasons instead of Timbers.  I'm sure they considered that option).


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## rpgriego (Jul 24, 2013)

gblotter said:


> At other RCC locations, MVW owns a significant chunk of unsold inventory (and controls the associated voting rights).  It would likely be impossible to get a majority of votes in that scenario to discontinue management affiliation with Marriott.



I mentioned this scenario/question in post 8. Based on your answer, now I have more questions...

-- How many weeks/points does RCC control and when they reach the ownership tipping point you mention, would owners be able to bail?

-- Why hasn't RCC merged the weeks into the trust at the resorts outside of Vail? I find this particular delay (and that's my opinion) very interesting.


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## GregT (Jul 24, 2013)

rpgriego said:


> Based on your answer, now I have more questions...



Perhaps you can do some outside research on your questions and then post what you learn on TUG, instead of asking more questions that you expect others to answer to your satisfaction.

I would welcome the contribution of additional knowledge.  

Best,

Greg


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## fluke (Jul 24, 2013)

rpgriego said:


> -- Why hasn't RCC merged the weeks into the trust at the resorts outside of Vail? I find this particular delay (and that's my opinion) very interesting.



This has an obvious answer - easier to unload if they can find a buyer.  The consultants report link in the OP discusses the well known effort by MVW to sell RC Club over 2 years ago. Also as I already mentioned above the properties cannot be restricted to premier or premier plus if they are in the trust - as demonstrated by Vail RC Club.


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## rpgriego (Jul 24, 2013)

GregT said:


> Perhaps you can do some outside research on your questions and then post what you learn on TUG, instead of asking more questions that you expect others to answer to your satisfaction.
> 
> I would welcome the contribution of additional knowledge.
> 
> ...



Is the normal TUG collective approach NOT the appropriate course of action for my questions?


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## rpgriego (Jul 24, 2013)

fluke said:


> This has an obvious answer - easier to unload if they can find a buyer.  The consultants report link in the OP discusses the well known effort by MVW to sell RC Club over 2 years ago. Also as I already mentioned above the properties cannot be restricted to premier or premier plus if they are in the trust - as demonstrated by Vail RC Club.



I reviewed his links, but didn't come to the conclusion it was "well known effort by MVW to sell RC Club over 2 years ago". I did review a lot of MVW corporate document and noted that a lot of RCC undeveloped land was designated for sale. I'll reread the OP's links.


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## EducatedConsumer (Jul 24, 2013)

Paging Dr. Phil.


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## fluke (Jul 24, 2013)

rpgriego said:


> I reviewed his links, but didn't come to the conclusion it was "well known effort by MVW to sell RC Club over 2 years ago". I did review a lot of MVW corporate document and noted that a lot of RCC undeveloped land was designated for sale. I'll reread the OP's links.



Reread page 8 2nd to last paragraph of the OP link to the consultant report.  References the effects of the attempted RC Club sale.


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