# a challenge for your mental prowess



## GregGH (Apr 11, 2010)

There are a LOT of very smart people who read this section.  But there isn't that much really going on --I think you need a mental stimulation ( but then again I have been dead wrong before )

see this thread ( if you would be so kind)  ....  http://www.tugbbs.com/forums/showthread.php?t=109592

Background - this TS/Owned Unit combo  got damm lucky and picked a true spot in heaven but since then has been in an every increasing death spiral.

This doesn't have to specifically about Hanalei Bay --it could be kept general ... but when something is headed the wrong way ...at what point is it gone TOO FAR to recover.   We have seen similar issues with DC's but can we keep this question part from the existing thread on DC's.

When you have various ownership types and various ownership agreements - how does this complexity compound you plan for a turn around?   

What does this do for bankruptcy?  It would seem that the  whole is more valuable than the sum of the pieces - but do various ownerships/agreements permanently  seal the fate of this location emerging as one whole unit?

Greg


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## PerryM (Apr 11, 2010)

*Food for munching and thought...*

We own a lot of timeshares/fractionals and use them all the time for all kinds of things - the key word here is OWN.  We own deeds or own Points in a trust that owns the deeds and none of these have any mortgages attached to them.

Somewhere along the way folks forking over hundreds of thousands of dollars decided that they didn't need collateral in a villa in order to send in the cash, become a member, and vacation at it.

This killed the DC industry and I would think that this would be the all consuming thought that the surviving DCs address.

It will be interesting to watch the next 3 years of mayhem in the real estate markets and how just about everything under the sun will be tried in the DC world except ownership.  I'm looking for a real estate recovery in 1013, actually November of 1012 will be the kick-off/out.

P.S.
I'm not part of the smart group that bought a DC.  I'm just a dumb old timeshare owner


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## Kagehitokiri2 (Apr 11, 2010)

most UE members are simply hoping for it to hold out as long as possible. some are waiting for refunds, along with some members of other clubs. 

some people are waiting for current equity clubs to become larger.

some people are waiting for other certain specific offerings.


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## TarheelTraveler (Apr 12, 2010)

My two cents and gut reaction is that there are two important pieces: (1) ownership and (2) operational or governance documents that allow the owners to take control.  One without the other is not sufficient IMHO when you have problems with management.  Some DCs have both, some have neither, and some have one of the two.  I suspect timeshares and PRCs are also similar.  Obviously, the better and more stable the sponsor you have (e.g., Disney), the more likely that you won't need (2).

On PerryM's comments on DCs, I perceive a real trend towards equity ownership rather than the other way around.  As a % of sales, I suspect that the equity clubs have gone from around a 5% market share to 50% or so (albeit of a much smaller pie).  Equity clubs seem to have held steady or grown significantly.  Non-equity clubs on the other hand have not done well.  Ragatz notes:

"Non-equity destination clubs have taken the biggest hit, with just seven remaining, compared with 12 in 2008 and 21 in 2007, prompting Ragatz to observe: “There is a basic flaw with this model in times of real estate price depreciation.”"

http://www.fractionallife.com/news_ragatz_reveals_state_of_american_fractional_market1047.asp

Other signs.  UE has suggested that they are contemplating starting up an equity club.  Ritz-Carlton introduced an equity club.  Based on the rumors, the new clubs being launched all seem to be equity clubs.

While not on topic, also interesting in that link was:

"A bright note in Ragatz's figures was the observation that the average price per fraction dropped around eight per cent over the year, compared with an estimated fall in the price of whole ownership second home prices of 20 to 25 per cent for the same period. Average prices for fractional projects was $147,000, with PRC shares averaging $308,000.

Also encouraging was the revelation that the average price per week of a fractional project was $18,000 – cheaper than the average cost per week of a timeshare purchase at $21,000 to $22,000."


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