# The District - Benefits of "developer" purchase



## Azov (Jul 5, 2017)

Hello all, first post, so be gentle!

Here is my situation: my wife and I recently bought into The District in DC directly from HGVC. Here are the details:

Club points: 7,200 Platinum odd year (exchangeable to HHonors at 1:50)
One-time bonus club points: 20,000 (exchangeable to HHonors at 1:25)
Price: $27,620
Closing costs: $1,193
HOA: $1,549 EOY
Lifetime Gold VIP HHonors status

Intangibles: we are very likely to use the points often at The District, as we go to DC for vacations frequently, and would likely want to book during peak times (e.g., around 4th of July). There are also some owner's lounge food/drink benefits, and free parking ($40+/night) at the property, which I am not sure would be available to a resale owner, but for purposes of this analysis, I am ignoring those factors.

We have two days left to rescind and go the resale route instead, and I was leaning in that direction after looking exhaustively through TUG. However, I have also been thinking a lot about the bonus points and improved HHonors ratios, and I was hoping to get a sanity check on my math.

While I realize that converting club points (and especially bonus points) into HHonors points isn’t really the most efficient use, it seems like the best way to analyze, on an apples-to-apples basis, the two primary benefits of buying direct from Hilton versus what I would get in a resale: namely, the 1:50 conversion for club points and the one-time bonus points. So here is what I have calculated over a 10-year ownership period for my developer purchase:

*Developer Benefits*

10 years of club points at 1:50 HHonors points = 3600 (average per year) x 10 x 50 = 1,800,000

One-time bonus points at 1:25 HHonors points = 20,000 x 25 = 500,000

Total 10 year HHonors points: 2,300,000

Average HHonors points per year: 230,000

*Developer Costs*

Purchase price over 10 years = $27,620 / 10 years = $2,762 per year

Closing costs over 10 years = $1,193 / 10 = $119.30 per year

HOA over 10 years (assuming a 50% average increase in HOA over 10 years) = $1,162 per year

Total 10-year cost per year = $4,043.05

*Average 10-year developer cost per HHonors point: $0.0175*


I did a similar analysis for a theoretical resale purchase. (I say theoretical, because there aren’t any resales at The District yet.) For purposes of the analysis, I used a $2/point purchase price, again since The District is new and will likely sell at a premium when resales come on the market, and slightly lower closing costs (though I’m not sure why this would necessarily be the case).

*Resale Benefits*

10 years of club points at 1:25 HHonors points = 3600 (average per year) x 10 x 25 = 900,000

Average HHonors points per year: 90,000

*Resale Costs*

Purchase price over 10 years = $7,200 / 10 years = $720 per year

Closing costs over 10 years = $1,000 / 10 = $100 per year

Same HOA = $1,162 per year

Total 10-year cost per year = $1,982

*Average 10-year resale cost per HHonors point: $0.022*

Even assuming a $1/point resale purchase price, it still comes out to $0.018 per HHonors point.

So, based strictly on the basis of HHonors conversion, the developer purchase (with the bonus points and higher conversion factor) seems to be the better deal over a 10-year period. (The numbers weigh even more in favor of the developer purchase over longer time periods...) Am I missing something?

Now, I realize that I’m not likely to convert all of my points every time, and that the bonus points have to be used within two years. But those are the only assumptions I could think of that would allow me to do a reasonable side-by-side comparison. Is there any other approach that would let me do a true comparison of the “developer” benefit represented by the increased conversion factor and the bonus points? If so, I’m all ears.

I guess the bottom line is that I’m now leaning in favor of going through with the developer purchase and not rescinding. Thoughts?

Thanks in advance for your thoughts and for making this forum a great sounding board for such questions!


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## Jason245 (Jul 5, 2017)

Do not buy this timeshare if you want HH points...

Now MF only go up (~5% a year or so), and I don't think you are include club membership dues and transfer fees in your math.

Assuming you are sitting on the $30k in cash right now consider this:

If you were to spend $2k on accomodations/year it would take you 60 use years (120 years of ownership) to break even (out of pocket cash wise) same math but for $3k/year is 20 use years (or 40 years of ownership) . I don't know about you, but it seems like a bad cash flow option to me.

Math: $1500 in MF (low) +$500 in "extra cost" = $2k.  $30k/0.5k = 60 years.
$1500 in MF (Low) + $1500 in extra costs = $3k. $30k/1.5k = 20 years


Save yourself $30k and get out of the deal while you can, and do a lot more research. If you still want the deal in a few weeks, call them back and I can almost guarantee you that they will give you the same deal...


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## alwysonvac (Jul 5, 2017)

Welcome to TUG 

You'll have endless opportunities to buy from the developer but you'll only have one chance to rescind.

It's best to rescind and research so you can make an informed decision.

Timeshares are not an investment.
Timeshares will decrease in value over time as more sellers enter the resale market.
Annual maintenance fees will increase yearly.
Hotel point requirements increase regularly but Club points to Honors conversion rates rarely change.
You'll need to plan ahead and book early. Peak travel periods = high demand = high owner competition. There is only a set number of rooms. Everyone can't be accommodated, so the early bird gets the worm.
Hilton sets the rules and rules can be changed at any time.
Best of luck with your decision


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## Panina (Jul 5, 2017)

Rescind

I agree the developer deal will be there later if you want it.

Meanwhile do an extensive search to see if you can find an equivalent resale at the district at dc.  With a little work in searching and patience you probably will find a much better deal.

Using converting points is not a good marker for value as the rules for this can change.  Just today a rule has changed, saved points can't be converted, immediately, no warning.

The fact you are stating that you would often use the Dc, means it the right place.


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## Talent312 (Jul 5, 2017)

The knee-jerk reaction around these parts is to recommend rescission.
However, this property is fairly new and resale opps may be limited.

The OP changed his HGVC:HHonors ratio from 1:50 to 1:25 for retail/resale.
I'm not sure that the ratio would change - perhaps he researched that.

In any event, IMHO, its a serious mistake to evaluate a purchase with HH points.
Converting HGVC to HHonors is such a poor use of points that most here won't.
IMHO, the best way to evaluate a purchase is to compare it to a resale package.
HGVC points to HGVC points. 

.


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## Azov (Jul 5, 2017)

First of all, thanks to all who have responded so far! And please keep them coming.



Jason245 said:


> Do not buy this timeshare if you want HH points...



I'm definitely not buying the timeshare for the HH points. I'm just trying to find a way to value the bonus points and higher conversion rate for being in DC. Valuations of bonus points seem to be all over the place. I have seen posts suggesting that 20,000 bonus points might be worth anywhere between $2,500 and $15,000. Obviously, at the latter value, it significantly affects the wisdom of the developer purchase!



Panina said:


> Just today a rule has changed, saved points can't be converted, immediately, no warning.



I saw that change, and it certainly gives me pause. But the 1:50 ratio is in the contract, so I'm fairly sure that they wouldn't be able to change that. Fairly sure...



Talent312 said:


> The OP changed his HGVC:HHonors ratio from 1:50 to 1:25 for retail/resale.
> I'm not sure that the ratio would change - perhaps he researched that.



This is an interesting question, and one that I hadn't considered, actually. I had assumed that the 1:50 conversion factor would be available only for retail/developer purchase. If that's not the case, and I could get 1:50 by buying in DC in a couple of years, that would significantly change the analysis. Does anyone have experience with resale at the other 1:50 properties as resale buyer? Do you still get 1:50 for HH? I am trying to research this in past threads, but it's a little hard to find anything with such generic search terms.

Thanks again!


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## alwysonvac (Jul 6, 2017)

Also don't forget to compare your total out of pocket cost to hotel costs in the area.

The District is located within Embassy Suites. You can find rental rates at Hilton.com.

THE DISTRICT BY HILTON CLUB
1250 22nd Street NW, Washington, District of Columbia, 20037, USA
http://www3.hilton.com/en/hotels/district-of-columbia/the-district-by-hilton-club-WASVCGV/index.html

Embassy Suites by Hilton Washington DC Georgetown
1250 22nd Street NW, Washington, District of Columbia, 20037, USA
http://embassysuites3.hilton.com/en...n-washington-dc-georgetown-WASDNES/index.html


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## alwysonvac (Jul 6, 2017)

Additional information

2017 Club Rules 
http://tugbbs.com/forums/index.php?threads/updated-2017-club-rules-posted.249655/

An example of Annual Maintenance Fee increases
My Annual Maintenance Fee history for 10+ year for HGVC Orlando & Las Vegas.
Orlando - http://tugbbs.com/forums/index.php?...017-maintenance-fee-list.247165/#post-1936015
Vegas - http://tugbbs.com/forums/index.php?...017-maintenance-fee-list.247165/#post-1935774


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## CalGalTraveler (Jul 6, 2017)

1:50 club to HH conversion is baked into the contracts at West 57th so it is possible it is also in District contracts. IMHO it is only good when you deposit all of your points prior to the next year. Otherwise it falls back to 1:20 if converting within an existing year. Although I have moved a few points to fill a small gap for an award stay, we have never used this.


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## Azov (Jul 6, 2017)

I decided to rescind. 

After further research, I confirmed that the 1:50 ratio would be available on the resale market. So the bonus points were the only *real* developer benefit, other than early access to the property. And even giving the bonus points the highest possible value, I would still have been significantly over-paying. 

So I'll either be patient and buy in DC after resales hit the market or will buy somewhere else. 

Thanks to everyone for your help!


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## Panina (Jul 7, 2017)

Azov said:


> I decided to rescind.
> 
> After further research, I confirmed that the 1:50 ratio would be available on the resale market. So the bonus points were the only *real* developer benefit, other than early access to the property. And even giving the bonus points the highest possible value, I would still have been significantly over-paying.
> 
> ...



Let us know what you finally get when you purchase a resale.  Congrats on rescinding


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## vegasVIP (Jul 7, 2017)

Glad you did research and found TUGBB for sound advice.  I purchased 7k points yearly on the resale market and thoroughly enjoy it.  Welcome to HGVC.


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## alwysonvac (Jul 7, 2017)

Azov said:


> I decided to rescind.
> 
> After further research, I confirmed that the 1:50 ratio would be available on the resale market. So the bonus points were the only *real* developer benefit, other than early access to the property. And even giving the bonus points the highest possible value, I would still have been significantly over-paying.
> 
> ...



It will be a few years before we start seeing seller competition in the resale market for the District.
In the meanwhile just continue to rent from hotels in the DC area. 
_NOTE: I won't buy resale at the other HGVC locations if your goal is to primarily stay at the District. You'll want the early owner access._

We were in DC this past weekend (arrived last Wed 6/28 and left Sunday morning 7/2 before the 4th of July crowds).
My party of six stayed at the new Homewood Suites at Navy Yard. It was perfect for us since they had one bedrooms with two queen beds and were located right across the street from the Navy Yard Metro station (on the Green Line). We booked 2 one bedroom suites which gave us a little more room to stretch out after sightseeing. The Navy Yard area can get pretty busy on game night since it's close to Nationals Park stadium. And there was nearby construction noise in the morning but it wasn't too bad since we were up early most mornings. We enjoyed our stay.


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## buzglyd (Jul 7, 2017)

I'll be staying at the District for the second time this November. Booked it on Hilton website as a hotel stay for cheap. It's way less expensive than the Fairmont where our conference is held.


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## jehb2 (Jul 8, 2017)

I randomly looked up how many points per night you would need to stay at Hilton Hotel in D.C. and Hawaii.  I looked at The Hilton Garden Inn in DC, the Capital Hilton, and Hilton Hawaiian Village.  All nights were 51,000 HHonors points a night.  Based on 230,000 HHonors points a year that would get you 4.5 hotel nights a year.  

If we only use your MF/HOA fee that 51,000 HHonors points would be valued at $344 a night for the hotel room. If you paid out of pocket (cash) Hilton Hawaiian Village starts off at $280 a night. Capital Hilton starts off around $394 in the summer (but can vary quite a bit depending on the date). And likewise Hilton Garden Inn DC Downtown starts off around $340 in the Summer but varies.

Of course if you factor in the cost you paid for the timeshare+annual MF/HOA, the cost per night would be much higher.  You would be better off just paying the cash rate.

Hope this helps.


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## jehb2 (Jul 8, 2017)

Azov said:


> I decided to rescind.



I think that is a wise decision.

By the way.  We spent 4th of July week last Summer at the District and absolutely loved it.  I overheard my child tell her teacher "My mom's favorite part was free breakfast because she didn't have to cook."  I loved about a lot of things about the district but that part really was cool.


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## onenotesamba (Jul 8, 2017)

Hilton has joined the rest of the hotel and airline loyalty programs in a race to the bottom. There was a massive devaluation not long ago, and, as others have noted, the conversion rate--no matter what it is--is a poor use of HGVC points.

Hilton has great hotel properties in DC. I'd do a calculation to figure out what are your costs with HGVC, versus booking those trips as hotel stays at the Capital Hilton or Washington Hilton, or even the Hilton Garden Inn on 14th St. You could definitely get those stays for much cheaper (and if you've got the right credit cards, maybe even for free) than for the maintenance fee and pro-rated buy-in cost at developer prices..


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## Talent312 (Jul 8, 2017)

We stayed a week at Hilton Garden Inn on 14th St using HH points (b4 "the change").
We got in on a tour of the White House (in walking distance).
It was funny that we couldn't bring cameras, but cell phones were okay.
Everyone took selfies as we were leaving in front of the North Portico.

.


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## jehb2 (Jul 9, 2017)

HHonors points for D.C. Hotels vary quite a bit depending when you stay, where you stay, and when you book. Booking now for 4th of July 2018 is about 51,000.

Developer Benefits
Average HHonors points per year 230,000
HHonors Points per night required for D.C. hotel 51,000
Converts to 4.5 nights a year

Developer Costs
Total 10 year costs per year $4043.05

Costs per night if using points $898.55
4043.05 / 4.5


If you book right now for D.C. hotelS for the first week of August this year you can see nights for as low as 30,000 (and even cheaper for hotels at the airport) but I don't think you want to stay at the airport. However the cash rate for the 1st week of August 2017 is $160-$261.

Developer Benefits
Average HHonors points per year 230,000
30,000 points per night hotel
Converts to 7.66 nights a year

Cost per night if using points $527.81
4043.05 / 7.66


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## jehb2 (Jul 9, 2017)

Azov said:


> I saw that change, and it certainly gives me pause. But the 1:50 ratio is in the contract, so I'm fairly sure that they wouldn't be able to change that. Fairly sure...



BUT they can and will change the number of HHonors points required for a nights stay.  In 2000 a 6-nights stay at Hilton Hawaiian Village costs a total 100,000 HHonors points.  A few years later that 6-nights package cost 180,000 HHonors points.  Now they want 60,000 HHonors points for a single nights stay.

Research Hilton HHonors point devaluation.


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## alwysonvac (Jul 9, 2017)

jehb2 said:


> BUT they can and will change the number of HHonors points required for a nights stay.  In 2000 a 6-nights stay at Hilton Hawaiian Village costs a total 100,000 HHonors points.  A few years later that 6-nights package cost 180,000 HHonors points.  Now they want 60,000 HHonors points for a single nights stay.
> 
> Research Hilton HHonors point devaluation.



Yep and during that same timeframe, we've only seen one increase in our HGVC conversion rate from 23:1 to 25:1.


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## 1Kflyerguy (Jul 10, 2017)

jehb2 said:


> BUT they can and will change the number of HHonors points required for a nights stay.  In 2000 a 6-nights stay at Hilton Hawaiian Village costs a total 100,000 HHonors points.  A few years later that 6-nights package cost 180,000 HHonors points.  Now they want 60,000 HHonors points for a single nights stay.
> 
> Research Hilton HHonors point devaluation.



Thats correct, its a side effect of inflation.  The cash room rates at the hotels go up over time, and that means the typical honors or any hotel loyalty member earns more and more points off a room night.  Eventually the big chains have to raise the point requirements for a given room.


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## Helios (Jul 15, 2017)

Not just that, usually the selection of rooms you can get is limited or you have to pay tons of hilton pesos.


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