# Are DCs really that much "riskier" than Timeshares?



## vineyarder (Jun 10, 2007)

A lot of discussion has gone on in this forum on the potential loss of the membership deposits in DCs, etc.

Some interesting figures:

Average New Timeshare Price ~ $15,000
Average Timeshare Buyers Net Worth ~ $100,000
Average Timeshare Price as % of Net Worth ~ 15%
Average re-sale price ~ 40% - 50% of initial price
Can re-sell to anyone willing to buy it, at any price you can get

Average Destinations Club Deposit ~ $200,000
Average Destination Club Member's Net Worth ~$3M
Average DC deposit as % of net worth ~ 6.7%
Average refundable portion 80%
Club will buy back at agreed upon value (usually 80 - 100% of deposit) as long as Club hasn't gone belly-up, etc.

So maybe it is just a matter of how much money someone is willing to lose, and the 'average' DC member is putting less of their net worth at risk than the 'average' timeshare buyer...

I know that when I made the decision to join a DC, I considered it a luxury purchase, not an investment, and looked at what the impact would be on my life and finances if I lost the whole deposit in a worst-case situation, vs. the expected enjoyment I'd get, then found the club that seemed the best fit in terms of homes, destinations, reservation flexibility, management style, and finances...  Personally I think that both timeshares and DC memberships should be looked upon as luxury purchases (albeit at different levels of luxury & price) and shouldn't be purchased by people unless it is a pretty small percentage of their net worth... And I agree with whomever said that people often try to justify 'purchases' as an investment (love the analogy of justifying the $10K TV as an investment based upon less money spent at the movies!).

Also, there's been some interesting discussions on profits for the 'owners' of non-equity DCs and management fees for the founders of equity-based DCs; according to Marriotts internal figures, of the sales price for the average new timeshare, 40% is the actual cost of the land, building, furnishings, etc. (i.e. the real asset); 43% is marketing & sales, and 17% is developer profit, with management fees representing 10% of annual dues on an ongoing basis.  So it makes perfect sense that a "new" timeshare purchased for $15K is 'worth' $6K (40% of $15K) as that was the value of the underlying asset.

Here's another interesting powerpoint:

http://ir.shareholder.com/mar/downloads/2007TimeshareAnalystPresentation.pdf


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## Bourne (Jun 10, 2007)

Right on the money. [pun intended]


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## BocaBum99 (Jun 10, 2007)

I completely agree.  No wonder you have a net worth of over $3M.  You are wise with your money.


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## smbrannan (Jun 10, 2007)

vineyarder said:


> Here's another interesting powerpoint:
> 
> http://ir.shareholder.com/mar/downloads/2007TimeshareAnalystPresentation.pdf



Is it just me, or does anybody else find it shocking that more than half of timeshare sales are financed at extremely high rates (13-13.5%).


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## mshatty (Jun 10, 2007)

Interesting powerpoint presentation.

I agree wholeheartedly with your approach that a timeshare or fractional purchase is a luxury purchase.  It's a matter of scale depending on your income and net worth.

I have not looked at actual contracts or paperwork concerning destination clubs.  But, unless a member has an actual perfected lien or a deeded ownership interest in the real estate, all the member has is a contract that is completely dependent on management's honesty and competence as well as the marketplace.  If either fails, the contract is not worth very much to the member.


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## puffpuff (Jun 10, 2007)

Is quite interesting how people would gladly pay $100000 for a golf course membership entrance fee without second thought and yet have so much reservation with a DC. Both are luxury items that carry no deed for the member and essentially no security . If you ask me, luxury homes are a lot easier to liquidate than a golf course. 

Personally , I rather put down $100000 with potential 80% returable to join a DC and lock in the MF fee going forward than to buy a new car with the same money knowing it will depreciate a least 50% in 5 years guaranteed. Obviously I am in the minority as there are far more $100000 cars around than DC memberships. There are also more $100000 golf club memberships around than DC memberships. Many timeshare owners are happy to give their TS away just to get out of the annual dues. Lots of them are at ebay staring at $1. 

Timeshare, country club membership ( inlcuding DC) are toys - you must be prepared to write it off.  

Rationalizing ia membership as a bonafide real investment is difficult under the current offerings because there are too many moving pieces that makes this type of "membership-investment" concpet murky at best. Numerous attempt are trying to do this, and the one that comes closest is Cresendo. 

 Count on 30% haircut in the worse case,  ( as what happen to members of T and H ), and if you can sleep with that, then consider DC if it fits your lifestyle. Otherwise, its not your cup of tea at this time, and best to sit on the side line, and even if you have to pay more later, its less stressful to the soul. 

The only real investors today are those that  shareholders of the DC itself. Ultimate, HCC, and  others are doing private offerings, and that is the way to particpate in a real way on the upside. 

In Time, DC industry is not only about real estate. Just like marriott is not about real estate. Its really a hosptality business . As a going concern, the DC business as one unit with stable  members and positive cash flow makes for compelling valuation far above and beyond what the real estate is worth. That is the business model DC operators are beting on . Real estate is just inventory,and in this unique industry, rising appreicating inventory rather than depreciating inventory. 

It does not matter how one rationalize the investment model ( by way of rising membership fee etc), there is risk with management, and management is key in every business. By the time you know something is wrong, its already too late, regardless what type or kind of club you are in. So I rate all DC ( whehter equity or not ) at this time equal in risk. 

I personally would rather join a  on a non-equity club that I think will survive and do well rather than a "equity" type club that is stagnant and eventually will be absorbed by other clubs at a discount. Maybe that ist he reason Exlcuisve is able to continue to grow and getting bigger while others are catching up .

 So far the DC industry is very healthy and customer satisfaction is very high,. In time to come the industry will only get better ,not worse. After the T and H mess, the industry has already consolidated ( from 20 clubs donw to 8)  This  year it is recovering. Many clubs are able to obtai financing and these are all good signs going foward. I think growth will continue for the next 3-5 years , after whcih time the big boys ( marriott,,etc ) will likely buy out existing players and built on it. They will have four  levels of particpation at each location - hotel, timeshare, fractional, and DC - all target at differnt price points and perhaps under differnt brands, but under one corporate umbrella.


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## NeilGoBlue (Jun 10, 2007)

puffpuff said:


> Is quite interesting how people would gladly pay $100000 for a golf course membership entrance fee without second thought and yet have so much reservation with a DC. Both are luxury items that carry no deed for the member and essentially no security . If you ask me, luxury homes are a lot easier to liquidate than a golf course.
> 
> Personally , I rather put down $100000 with potential 80% returable to join a DC and lock in the MF fee going forward than to buy a new car with the same money knowing it will depreciate a least 50% in 5 years guaranteed. Obviously I am in the minority as there are far more $100000 cars around than DC memberships. There are also more $100000 golf club memberships around than DC memberships. Many timeshare owners are happy to give their TS away just to get out of the annual dues. Lots of them are at ebay staring at $1.
> 
> ...



Well said...


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## PerryM (Jun 11, 2007)

*Wake up call...*

We have already had the first bankruptcy of a DC club.  To make things worse it was the first DC - a model for others to emulate?

I'm sure that some timeshare developer out there has gone bankrupt, I remember reading about a HOA that went asleep and got delinquent in state property taxes and it was sold.  The members got it back, thanks to the deeds they had in some part.

As an investor I get precious little information and most of that has been massaged by MBAs from Harvard.  To dismiss the pioneer DC, the founding DC, as simply a mistake that has been fixed is to ignore one of those pieces of information that years from now everyone will say "Didn't you think that was important?"


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## vineyarder (Jun 11, 2007)

> We have already had the first bankruptcy of a DC club. To make things worse it was the first DC - a model for others to emulate?
> 
> To dismiss the pioneer DC, the founding DC, as simply a mistake that has been fixed is to ignore one of those pieces of information that years from now everyone will say "Didn't you think that was important?"



I think that people who dismiss the failure of T&H as a mistake that was fixed are doing so for valid reasons; they did have significant differences that caused them to fail.  First of all, they leased roughly 80% of their properties, whereas most DC still in business lease 0 - 20%.  Secondly, they guaranteed availability, 'when you want, where you want', and if one of their leased homes wasn't available, they'd lease another for you for the week, so they ended up with a huge number of outrageous short-term leases (this cost them $5M in their last full year); I do not believe that any other DC out there  makes any such guarantee - most are very explicit that availability is limited and not guaranteed.  So T&H really provided a model of what NOT to emulate - and other clubs learned both the good aspects of their model and the flaws...


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## Elsway (Jun 11, 2007)

vineyarder said:


> I think that people who dismiss the failure of T&H as a mistake that was fixed are doing so for valid reasons; they did have significant differences that caused them to fail.  First of all, they leased roughly 80% of their properties, whereas most DC still in business lease 0 - 20%.  Secondly, they guaranteed availability, 'when you want, where you want', and if one of their leased homes wasn't available, they'd lease another for you for the week, so they ended up with a huge number of outrageous short-term leases (this cost them $5M in their last full year); I do not believe that any other DC out there  makes any such guarantee - most are very explicit that availability is limited and not guaranteed.  So T&H really provided a model of what NOT to emulate - and other clubs learned both the good aspects of their model and the flaws...



I agree!  The clubs learned valuable lessons (what not to do) and potential members have become better aware of the risks.  I view these developments favorably.  

Ultimately, the DC industry will hit on a model which provides good value to members while providing adequate protection against catastrophic financial losses.  When this time comes, we will see an inflection point in demand growth - probably in the next couple of years.

I can't disagree with those who are willing to wait until the new/better/safer model emerges - to date, this has been my approach.  I do, however, think some of the risks are being exaggerated (i.e. the obsession with the potential for management fraud) and I disagreee with the general belief that an asset purchase must have minimal downside risk in order to qualify as an investment (a "reasonable" expectation of asset appreciation is sufficient in my book).


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## PerryM (Jun 11, 2007)

Elsway said:


> I agree!  The clubs learned valuable lessons (what not to do) and potential members have become better aware of the risks.  I view these developments favorably.
> 
> Ultimately, the DC industry will hit on a model which *provides good value to members while providing adequate protection against catastrophic financial losses*.  When this time comes, we will see an inflection point in demand growth - probably in the next couple of years.
> 
> I can't disagree with those who are willing to wait until the new/better/safer model emerges - to date, this has been my approach.  I do, however, think some of the risks are being exaggerated (i.e. the obsession with the potential for management fraud) and I disagreee with the general belief that an asset purchase must have minimal downside risk in order to qualify as an investment (a "reasonable" expectation of asset appreciation is sufficient in my book).




I'm guessing that the current crop of DCs will sit around and hold off until a WalMart type of company comes in and flattens the DC landscape.  This is going to be fun to watch unfurl over the years.


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## e.bram (Jun 11, 2007)

A ponzi scheme is ponzi scheme no matter what you name it.


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## NeilGoBlue (Jun 11, 2007)

e.bram said:


> A ponzi scheme is ponzi scheme no matter what you name it.



Calling destination clubs ponzi scheme's is inaccurate and irresponsible.

Ponzi schemes are illegal.

Destination clubs are not.

Ponzi schemes swindle their investors.  Destination Clubs don't.   All the destination clubs I talked to shared their financials with me.  This is not to say that it's not possible that a Destination could be a ponzi scheme, but to call the whole industry a ponzi scheme is irresponsible.  This also doesn't mean that some DC's will go bankrupt. 

Country clubs do the same thing.  1 in 1 out.  Or 2 in 1 out. etc

Does that make country clubs ponzi schemes?


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## e.bram (Jun 11, 2007)

Members manage(volunteers) a country club. Investors(taking big profits) manage(drawing big salaries) the DC.


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## NeilGoBlue (Jun 11, 2007)

e.bram said:


> Members manage(volunteers) a country club. Investors(taking big profits) manage(drawing big salaries) the DC.



That doesn't make it a ponzi scheme, and most DC's are losing money (another reason to do due diligience).


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## e.bram (Jun 11, 2007)

Adding an ostensiby legitimate business to a ponzi scheme does not make it not a ponzi scheme. With the cash flow and expenses these operations have the chance of survival are slim. The investors will draw their cash(and your iniation fee) out as big fat salaries and club will go belly up.
For instance I got an offer to extend the warranty for my 6 year old (93000 miles) van for $1200.00 for 3 years. Think I would get aa $3000.00 engine if it blew. They pay a few claims, pay out big salaries and administratve expenses and go belly up with my $1200.00 after 3 months. Sound familiar?


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## Bourne (Jun 11, 2007)

I am amazed...


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## vineyarder (Jun 12, 2007)

Definition of a Ponzi scheme:  Offers abnormally high short-term returns in order to entice new *investors*. The high *returns* that a Ponzi scheme advertises (and pays) require an ever-increasing flow of money from investors in order to keep the scheme going.  The system is doomed to collapse because there are little or no underlying earnings from the money received by the promoter.

Definition of a Pyramid Scheme:  In the classic "pyramid" scheme, participants *attempt to make money *solely by recruiting new participants into the program. *The hallmark of these schemes is the promise of sky-high returns *in a short period of time for doing nothing other than handing over your money and getting others to do the same.  The fraudsters behind a pyramid scheme may go to great lengths to make the program look like a legitimate _multi-level marketing program_. But despite their claims to have legitimate products or services to sell, these fraudsters simply use money coming in from new recruits to pay off early stage investors. 

Clearly, from the definition of these two terms, neither can *possibly* apply to a non-equity DC, as they only apply to investments (Ponzi) or MLM/money-making schemes (Pyramid).  As many of us have pointed out, joining a DC is a luxury purchase, not an investment or an attempt to 'get rich quick', so no ROI (other than enjoyment of the services provided) is expected.  

And, of course, extended warranties, while usually a poor financial choice, have absolutely no bearing on, or relation to, the DC industry!


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## Steamboat Bill (Jun 12, 2007)

This thread is starting to give me a headache. 

We have discussed Ponzi schemes a few months ago, yet this pops up again. I feel like I am stuck on a merry go round that I can't get off. The DC industry is the next evolution of upscale travel opportunities and is NOT a Ponzi scheme...please read the Wikipedia entry on those.

The best analogy for DCs are golf club memberships and possibly leased cars. 

I loved Puf's post #6 analysis.


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## PerryM (Jun 12, 2007)

*It's not a Ponzi; we're just kidding*

I was kidding in my interest in a Ponzi Scheme – we as a society can’t admit that Social Security bears some interesting comparisons to Ponzi so I can’t really support that DCs are a Ponzi scheme.  Link to this article and it’s a real stretch to include DCs in Ponzi.  

However, little facts like this mean nothing to the mainstream press – that’s what’s so scary about DCs, they have mortgaged themselves to the hilt and any crazy article in the New York  Times or on TV could spell huge problems for their industry.

I’m not a mathematician but there must be some kind of sensitivity analysis that can start to put a hard number on the risk factor on failure for the DC industry.  Of course the inverse would be a percentage of confidence of years ahead for robust growth with little worry about failure.

Helium Report where are you?

Bill, have a great vacation.


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## grupp (Jun 12, 2007)

Steamboat Bill said:


> The best analogy for DCs are golf club memberships and possibly leased cars.



I see this comparison frequently to golf club memberships. While I am not a member of a golf club myself, I have many friends who are members at a variety of clubs. These clubs are run by the members with an elected board and each members has voting rights. So they have input into how the club is run and decisions that are made that impact the members. 

Don't see this type of members involvement with the DC, so how can you use the analogy with golf club memberships?

Gary


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## travelguy (Jun 12, 2007)

I agree that the several posters who continue to apply the "ponzi Scheme" and "pyramid" label to DCs are inaccurate and irresponsible.  By their definition, they could rationalize their loose and wide-ranging interpretation of these terms and apply them to many successful business models and even capitalism itself.  The basics of their anti-business argument are:

1. It's bad when investors make lots of money.
2. It's bad when management makes lots of money.
3. Leveraged debt is bad.
4. Paying for a service, use or amenity without receiving some type of hard ownership in return is bad.
5. Ownership is always good regardless of the liability involved.
6. Old business models are better than new business ideas.
7. If a single business fails, the entire business category is destined to fail in time.
8. Management is crooked.
9. Risk is scary.

As Bourne said, I too am amazed!


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## PerryM (Jun 12, 2007)

grupp said:


> I see this comparison frequently to golf club memberships. While I am not a member of a golf club myself, I have many friends who are members at a variety of clubs. These clubs are run by the members with an elected board and each members has voting rights. So they have input into how the club is run and decisions that are made that impact the members.
> 
> Don't see this type of members involvement with the DC, so how can you use the analogy with golf club memberships?
> 
> Gary



This I like.  This is a valid point.


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## Steamboat Bill (Jun 12, 2007)

PerryM said:


> Of course the inverse would be a percentage of confidence of years ahead for robust growth with little worry about failure.
> 
> Bill, have a great vacation.



That's the ticket I am going with....let's call this the Purple Pill. 

As I type this, the interior design team is here delivering brand new outdoor furniture for the HCC Turks and Caisos property along with some new drapery. Funny, I thought the original stuff was fine, but the new furniture is very upscale.


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## hipslo (Jun 12, 2007)

Taking HCC as an example, does anyone know what their "burn rate" is?  That is, assuming that they are still in a "loss" mode, how long would it be before they burn through reserves and are no longer able to meet expenses (especially debt service?)  At what point are they expecting to be at breakeven or "profit" mode?  How large a cushion of reserves exists, compared to the projected point in time to reach that breakeven point? What are the assumptions underlying the projected time at which breakeven is achieved?  How many new memberships do they need to sell, at what intervals, and at what membership fee?  How does the purchase of new homes factor in to the projected breakeven date? What is projected to happen to maintenance fees during that period of time?  To state the obvious, assuming that those of you who have purchased HCC memberships (or memberships in any DC) are able to answer all of these questions, and you are comfortable with the assumptions underlying the projections, then the decision to acquire your DC memberships are financially sound.  If not, well then your strategy is something along the lines of "keeping your fingers crossed" while enjoying the current benefits.


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## Elsway (Jun 12, 2007)

hipslo said:


> Taking HCC as an example, does anyone know what their "burn rate" is?  That is, assuming that they are still in a "loss" mode, how long would it be before they burn through reserves and are no longer able to meet expenses (especially debt service?)  At what point are they expecting to be at breakeven or "profit" mode?  How large a cushion of reserves exists, compared to the projected point in time to reach that breakeven point? What are the assumptions underlying the projected time at which breakeven is achieved?  How many new memberships do they need to sell, at what intervals, and at what membership fee?  How does the purchase of new homes factor in to the projected breakeven date? What is projected to happen to maintenance fees during that period of time?  To state the obvious, assuming that those of you who have purchased HCC memberships (or memberships in any DC) are able to answer all of these questions, and you are comfortable with the assumptions underlying the projections, then the decision to acquire your DC memberships are financially sound.  If not, well then your strategy is something along the lines of "keeping your fingers crossed" while enjoying the current benefits.



Lots of great questions.  I don't have specific answers - I doubt anyone here will have the numbers.

I would hope that HCC would be close to break even on an operating cash flow basis, but running a deficit ("burn") net of capital expenditures.

Assuming a target occupancy rate of 70%, HCC properties would be utilized 255 days per year.  This amounts to 10 affiliate members (25 days useage) and gross membership deposits of $400,000.  They are buying $1 million properties, so they are suffering a large cash flow deficit net of property acquisitions.

I am concerned that HCC is over promising by charging so little for so much.  They will succeed to the extent that they can raise membership dues rapidly/significantly in the future.


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## hipslo (Jun 12, 2007)

Elsway said:


> I am concerned that HCC is over promising by charging so little for so much.  They will succeed to the extent that they can raise membership dues rapidly/significantly in the future.



That is the implicit point behind my questions, I guess.  The answers to my questions would shed some light on the viability of their business plan.  To what extent the underlying assumptions are or are not realistic is likely to be the key.  (Note that, if they need to rapidly raise dues in order to meet projections, they will soon be competing with some of the big boys, and that could have an adverse impact on their ability to meet the projected pace of selling new memberships, since it seems as if, at the moment, HCC's primary distinguishing feature appears to be their price point).


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## Elsway (Jun 12, 2007)

hipslo said:


> That is the implicit point behind my questions, I guess.  The answers to my questions would shed some light on the viability of their business plan.  To what extent the underlying assumptions are or are not realistic is likely to be the key.  (Note that, if they need to rapidly raise dues in order to meet projections, they will soon be competing with some of the big boys, and that could have an adverse impact on their ability to meet the projected pace of selling new memberships, since it seems as if, at the moment, *HCC's primary distinguishing feature appears to be their price point*).



I would say that is mostly accurate.  The low price point enables some people to disregard the risk (i.e.  "I can afford to lose this amount of money, so I won't need to closely examine the club's economic viability.")  HCC offers great value, IMO, but not netted against the risks (unless one adopts the aforementioned perspective that the amount at stake is rather small).

Let me apply my same analysis (previous post) to BelleHavens:  At 70% occupancy rate (255 days per year), BH will have 8.5 members (at the Adventurer level, 30 days useage).  This membership sells for $200,00 currently which means BH raises $1.7 million per home.  Given their average home value of $2 millioin, things are pretty well balanced.  (Note:  BH raises membership to $225,000 on June 16, which raises $1.9 million per home.)

In relation to BH, HCC is offering better value - but on a risk-adjusted basis, BelleHavens exceeds, IMO.


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## PerryM (Jun 12, 2007)

Steamboat Bill said:


> That's the ticket I am going with....let's call this the Purple Pill.
> 
> As I type this, the interior design team is here delivering brand new outdoor furniture for the HCC Turks and Caisos property along with some new drapery. Funny, I thought the original stuff was fine, but the new furniture is very upscale.



I like that too, the little Purple Pill.  So far I've not have to start with them but it seems that the older you get the more the Purple Pill is something you see every morning.


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## puffpuff (Jun 12, 2007)

The best and easiest way to find out is to talk to Dan Moorhead their CFO who will be happy to walk you thru the current numbers.


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## Bourne (Jun 12, 2007)

hipslo said:


> Taking HCC as an example, does anyone know what their "burn rate" is?  That is, assuming that they are still in a "loss" mode, how long would it be before they burn through reserves and are no longer able to meet expenses (especially debt service?)  At what point are they expecting to be at breakeven or "profit" mode?  How large a cushion of reserves exists, compared to the projected point in time to reach that breakeven point? What are the assumptions underlying the projected time at which breakeven is achieved?  How many new memberships do they need to sell, at what intervals, and at what membership fee?  How does the purchase of new homes factor in to the projected breakeven date? What is projected to happen to maintenance fees during that period of time?  To state the obvious, assuming that those of you who have purchased HCC memberships (or memberships in any DC) are able to answer all of these questions, and you are comfortable with the assumptions underlying the projections, then the decision to acquire your DC memberships are financially sound.  If not, well then your strategy is something along the lines of "keeping your fingers crossed" while enjoying the current benefits.



all of the above questions are good ones. i do have answer to all the questions above but will not post them here.

point is that you need to pick up the phone, call hcc, sign a nda and find it out for yourself. 

enough of this bs about not doing enough due diligence and keeping my fingers crossed. a lot is being implied on this forum with bunch of questions asked. if you need the answers, stop typing and start calling.

not only am i amazed, i now have a headache too.


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## puffpuff (Jun 12, 2007)

1. agreed. Nothing better than from the horses mouth. Make the call !

2. All clubs , includng ER, UR, Quintess, BH factor in 300 days in their definition of a when a house is purchased. Other than pay as you go clubs like PE, the actual usage is approximately 70- 80% of what is acutally sold in the industry.

 The key to remember is that the industry sells out 300 days a year. How you break it up is company dependent. Their revenue is based on the 300 days.  The hosue is actually worth on the market about $1.7. The balance is profit to the Banyan people. In the case of BH, they generate 10 member equivalent orf 30 days usage per member to get one house. if a club offers 45 days as a full member, then they need 7 members equivalent per house purchase. ER and HCC employe this model. At the end of the day, all the clubs are pretty much similar in terms of offering in the membership fee structure once you take out the acquisiton cost out of the equation.  The difference liesin the cost of purchasinig the house which dictates the entrance fee.


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## Elsway (Jun 12, 2007)

> Nothing better than from the horses mouth. Make the call!



Personally I see nothing wrong with trying to lever off of the knowledge of  others who have completed due diligence.  If certain individuals feel bound by a confidentiality agreement, they don't have to post.  I spent almost two hours with the CEO of Ultimate Resorts and never signed a confidentiality agreement.  And when I did put down a deposit to see the imember documents, there had very very little in terms of relevant information - certainly no facts and figures which would significantly enhance my understanding of the company's solvency.

In my case, I have no interest in joining HCC.  Therefore, I have no interest in putting down a deposit, reviewing docs and speaking with management.  I do, however, feel I can learn a few things about the clubs which interest me by understanding how HCC operates.


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## hipslo (Jun 12, 2007)

Bourne said:


> enough of this bs about not doing enough due diligence and keeping my fingers crossed.



If you have the answers, and are satisfied with them, as I stated in my post, you HAVE done the due diligence, and you are NOT someone who is just keeping your fingers crossed.  Maybe that doesnt describe anyone, that would be a GOOD thing.  Not sure why you're taking any of this personally....

Since I am not interested in a non-equity based DC, I have no real need or desire, personally, to investigate HCC further.  This thread was started, I thought, to explore whether DCs are riskier than timeshares.  I thought I'd set out some specific questions, the answers to which will typically provide the answer to that question.  I'm not sure how much sense it makes to imply that I shouldnt be posting on this forum, or setting out the questions, the answers to which will be very telling about the inherent risk of any DC, unless I want to call one of those clubs and get the answers myself.

This seems to be a pretty touchy topic, for some reason.


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## pwrshift (Jun 12, 2007)

*Annual MF for DC's ... any double digits like Marriott?*

The posts on this board are coming so fast and some of them almost textbook length that I can't keep up.  So I apologize if this has been answered elsewhere.

Everyone in the Marriott timeshare family was pretty upset with surprise double digit increases in most of the annual maint/tax bills for 2007.  That's after an average of about 4% a year, well above the inflation rate.  It's anyone's guess about 2008, but I've heard rumblings that it will be another double digit for most!  If so it might be time to dump them.

The annual MF on CD's is higher - much higher - and I guess I expected that because of what they offer members.  But, what do you think will happen to these MF over the years.  Do they make any guarantees?  If they are raising membership fees by $25,000 (BH) perhaps those fees will offset 'special assessments' and double digit MF increases??

Interesting that from the Helium board I've been receiving some very impressive packages these days ... 3 today in fact (or make that only 2 as I sent one back).  The BH pkg arrived via DHL with a C.O.D. on it of about $10 so I refused it on principle.  Perhaps they are economizing already?

Brian


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## NeilGoBlue (Jun 12, 2007)

pwrshift said:


> The posts on this board are coming so fast and some of them almost textbook length that I can't keep up.  So I apologize if this has been answered elsewhere.
> 
> Everyone in the Marriott timeshare family was pretty upset with surprise double digit increases in most of the annual maint/tax bills for 2007.  That's after an average of about 4% a year, well above the inflation rate.  It's anyone's guess about 2008, but I've heard rumblings that it will be another double digit for most!  If so it might be time to dump them.
> 
> ...



MF at DC seem to be misunderstood.  All the DC's I talked to had a MF that could only go up x percent above cpi.  Usually 'x' was about 5%.  Almost all clubs said they only raised the MF as much as the CPI, nothing more.  It doesn't mean they won't raise the MF for new members.  So, it's possible a new member might be paying 18K but an old member might only be paying 12K.


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## Elsway (Jun 12, 2007)

pwrshift said:


> The posts on this board are coming so fast and some of them almost textbook length that I can't keep up.  So I apologize if this has been answered elsewhere.
> 
> Everyone in the Marriott timeshare family was pretty upset with surprise double digit increases in most of the annual maint/tax bills for 2007.  That's after an average of about 4% a year, well above the inflation rate.  It's anyone's guess about 2008, but I've heard rumblings that it will be another double digit for most!  If so it might be time to dump them.
> 
> ...



It might be best to inquire directly to the websites of the destination clubs as opposed to going through Helium Report or others.  The web addresses are easily available - we don't need an added middle man (although I respect the value added info on Helium Report and Sherpa Report).

These glossy packages from the DCs are not inexpensive to produce or to mail - so I understand their attempt to conserve on marketing expenses.  At the same time, I agree with the poster - nothing should arrive C.O.D.  You did right!


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## Elsway (Jun 12, 2007)

NeilGoBlue said:


> MF at DC seem to be misunderstood.  All the DC's I talked to had a MF that could only go up x percent above cpi.  Usually 'x' was about 5%.  Almost all clubs said they only raised the MF as much as the CPI, nothing more.  It doesn't mean they won't raise the MF for new members.  So, it's possible a new member might be paying 18K but an old member might only be paying 12K.



I believe Exclusive Resorts had a HUGE annual fee increase in the past year.  I agree, however, that most clubs have a set arrangement for fee increases based on CPI+.  In the absence of such, I would balk.


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## Bourne (Jun 12, 2007)

hipslo said:


> If you have the answers, and are satisfied with them, as I stated in my post, you HAVE done the due diligence, and you are NOT someone who is just keeping your fingers crossed.  Maybe that doesnt describe anyone, that would be a GOOD thing.  Not sure why you're taking any of this personally....
> 
> Since I am not interested in a non-equity based DC, I have no real need or desire, personally, to investigate HCC further.  This thread was started, I thought, to explore whether DCs are riskier than timeshares.  I thought I'd set out some specific questions, the answers to which will typically provide the answer to that question.  I'm not sure how much sense it makes to imply that I shouldnt be posting on this forum, or setting out the questions, the answers to which will be very telling about the inherent risk of any DC, unless I want to call one of those clubs and get the answers myself.
> 
> This seems to be a pretty touchy topic, for some reason.



My apologies to you if I sounded testy in that post. As you can see, it was all in lowercase. Try typing a whole post on your net enabled cellphone.  Me being amazed, having a headache and being compelled to type a verbose post on a cellphone resulted in a testy tone. 

That said, what I meant was that some of us should call HCC for the answers.  I also see nothing wrong with trying to lever off of the knowledge of others who have completed due diligence. However, there is an undertone in the posts of posters leaning against a DC than the one's who are members. It is similar to the one that shows up in conversations regarding buying TS from developer or in the resale market. 

I am always willing to help out but the other person should have an open mind. And a willingness to listen. Without that, I rather shut up as I have nothing to lose. If someone does or does not want to buy a membership, it's their decision. Not mine.


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## smbrannan (Jun 13, 2007)

pwrshift said:


> Interesting that from the Helium board I've been receiving some very impressive packages these days ... 3 today in fact (or make that only 2 as I sent one back). The BH pkg arrived via DHL with a C.O.D. on it of about $10 so I refused it on principle. Perhaps they are economizing already?


 
I had the same experience, but my wife had already paid for the package before I got home.

I believe that the amount due was a duty on the international shipment of goods, not a payment that BH would have received.

For some reason they said that the value of the goods in the package was US$20, so our wonderful Cdn gov't decided that duty was payable on the shipment, and that probably triggered a handling charge. 

In truth the materials have no commercial value, and so BH should have shown the value of the goods as $0, and it would have gone through just fine.


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## travelguy (Jun 15, 2007)

Bourne said:


> My apologies to you if I sounded testy in that post. As you can see, it was all in lowercase. Try typing a whole post on your net enabled cellphone.  Me being amazed, having a headache and being compelled to type a verbose post on a cellphone resulted in a testy tone.
> 
> That said, what I meant was that some of us should call HCC for the answers.  I also see nothing wrong with trying to lever off of the knowledge of others who have completed due diligence. However, there is an undertone in the posts of posters leaning against a DC than the one's who are members. It is similar to the one that shows up in conversations regarding buying TS from developer or in the resale market.
> 
> I am always willing to help out but the other person should have an open mind. And a willingness to listen. Without that, I rather shut up as I have nothing to lose. If someone does or does not want to buy a membership, it's their decision. Not mine.



I understand Bourne's frustration and share his headache. 

There are a number of High Country Club members on this board who have done extensive due diligence on HCC and other DCs prior to becoming members of HCC.  As a result, we have a pretty good handle on the HCC biz plan, current financial status and future plans.  Those of use that have been members for a period of time have seen HCC perform BEYOND their projections.

High Country Club has made a tremendous amount of financial information available to members and investors, both current and potential.  In addition, they make the corporate execs available to answer all questions potential members may have.  I personally spent hours talking to their CFO about the HCC financial status, both current and future.

The frustration we share is that we routinely see speculative postings about the basic HCC biz plan that is nowhere near the reality of how HCC operates.  We continue to post corrective information in order to set the record straight on the FACTS, not our opinions, of the HCC biz plan and financial numbers.  Many times these postings are ignored or, in the most aggravating cases, our factual responses face accusations of ignorance and/or bias. 

This is not like buying a timeshare where information issuspect and incomplete.  There is no need to speculate.  For that matter, there is no need to take the word of me or my fellow HCC members about HCC and it's financials.  Contact HCC directly and get the actual facts.  They are not like the high pressure and dishonest timeshare sales organizations that we Tuggers have come to dread and hate.  

We are not saying that our opinions are right or wrong.  We are asking those of you that are interested in understanding how HCC operates to contact them directly and get your facts from HCC.  You can have all the answers from HCC in less time than it takes to make a speculative post.


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## Elsway (Jun 15, 2007)

*My Quick and Dirty on HCC - With Public Information*

At first glance, it appears that High Country Club is leveraging their properties above industry norms:

Home Cost = 850,000
Occupancy Rate = 70%
Days of Occupancy = 255.5
Nights of Use (Affiliate Member) = 25
Members per Home 10.22
Membership Cost (Affiliate Member) = 40,000
Membership Dues per Home (10.22 X 40,000) = $408,800
Mortgage per Home (850,000 - 408,800) = $441,200
Leverage per Property ($441,200 / $850,000) = 51.9%

However: The annual dues do appear to be sufficient to service the mortgage debt:

Mortgage Rate (Interest Only) = 6%
Annual Mortgage Cost = $26,472
Annual Dues (Affiliate Membership) = $5,400
Annual Dues per Home = (10.22 X $5400) = $55,188
Net Available for Operating Expenses per Property = $28,716

Presumably:
1)  HCC has strong equity sponsorship which has enabled the company to utilize less leverage than is implied by my analysis.
2)  HCC is in a position where they can use the "excess" annual dues to reduce leverage and/or contribute to the acquisition of portfolio properties.
3)  HCC will be able to raise prices at a fairly rapid pace over the coming years.

So:
I don't think anyone who has joined HCC has much a dumb decision.

But:
I don't think it is unfair to question the company's financial model.

And:
I doubt that the HCC CEO could say anything that would materially alter my opinions.


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## jerseygirl (Jun 15, 2007)

Elsway said:
			
		

> Net Available for Operating Expenses per Property = $28,716



This seems dangerously low compared to high-end timeshares with no mortgage, examples:


Florida HGVC affiliate (relatively low level of onsite services) collects about $40000, with a significant portion going to insurance and taxes.  
Hyatt (high level of onsite services) collects over $50000
Harborside collects about twice that amount per unit (using an average of one-BR and two-BR units)

Am I missing something?


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## Bourne (Jun 16, 2007)

*Please do no post misinformation.*



Elsway said:


> And:
> I doubt that the HCC CEO could say anything that would materially alter my opinions.



 

For starters, it is misinformation that is being posted. The numbers are assumptions. *Please call to the facts straight. *

I'll be nice. You have two numbers wrong. 

According to HCC, it targets 300-320 days of use though the actual number is lower because all members do not use up their allocated days. In addition, HCC introduces a few properties at peak times to boost the availability for the short term. 

Second, HCC buys a property per 6-7 FULL memberships. i.e. memberships that are based on 45 days usage. It takes approx 7 Private, 14 affiliate or 20 associate members before they buy a property. 

Another tidbit. HCC properties are the cheapest in the industry. As a result, their fixed costs i.e. taxes, insurance, maintenance etc are lower too. As per HCC, they average about 25K in fixed costs per property. 

However, you were correct in assuming that the average property is leveraged at 45-50%. The moot point is that when they started, it was around approx 65%. 

To redo your numbers, 

Home Cost = 850,000
Occupancy Rate = 80-85%
Days of Occupancy = 300-320
Nights of Use (Affiliate Member) = 25
Members per Home 14
Membership Cost (Affiliate Member) = 40,000
Membership Dues per Home (14 X 40,000) = $560,000
Mortgage per Home (850,000 - 560,000) = $290,000
Leverage per Property ($441,200 / $850,000) = 35%
However, the earlier properties were leveraged at a higher percentage. As a resut, the cumulative leveraged amount is higher.  

However: The annual dues do appear to be sufficient to service the mortgage debt:

Mortgage Rate (Interest Only) = 6%
Annual Mortgage Cost = $25,500 ( Using this number as the total leverage is ironically around 45-50% )
Annual Dues (Affiliate Membership) = $5,400
Annual Dues per Home = (14 X $5400) = $75,500
Net Available for Operating Expenses per Property = $40,000
Actual operating expenses per property = $25,000

*
*  Please do not base calculations on assumed numbers
* I would love to know where you found the numbers used in the calculation as they are presumably public information. 
* A simple search on this board would have infact pointed you to the right direction on two of the three assumptions used. Please pull up a post by Doug  posted a.k.a travelguy six months back. 

Please do no post misinformation. *


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## Bourne (Jun 16, 2007)

jerseygirl said:


> This seems dangerously low compared to high-end timeshares with no mortgage, examples:
> 
> 
> Florida HGVC affiliate (relatively low level of onsite services) collects about $40000, with a significant portion going to insurance and taxes.
> ...




This is infact the direct result of misniformation posted. I rest my case.


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## Elsway (Jun 16, 2007)

Bourne said:


> For starters, it is misinformation that is being posted. The numbers are assumptions. *Please call to the facts straight. *
> 
> I'll be nice. You have two numbers wrong.
> 
> ...



So sensitive.... 

As I prefaced in my post:  "quick and dirty" and "at first glance"...

Thanks for the correction.  14 affiliate members at 25 days useage amounts to 350 days of useage.  I am sure those Colorado properties are in high demand during the summer.  Sounds like a great plan to me.


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## Bourne (Jun 16, 2007)

Few things that I'll quote again from my previous post...


HCC targets a usage of 300-320 days. For the longest time, its affiliate member could use 21 days. In addition, the average of all members usage rounds up to 300-320 days historically. 

At the new 25 day affiliate, they would be using approx 13 members 320/25. I did not modify the calculations because the change went into effect for the last 5-10% of the member base. 

I can preface my post to anything. Or I can add a line as a footer. That does not mean I can post irresponsibily. 

It is not being sensitive. It's just a matter to correcting information that is wrong. Like I mentioned before, what comes around goes around. If one sets a tone in the post, be ready to get it back in the same tone. 

That said, I am seriously done here. I will lurk but I am done posting in a negative tone. Too much BS flying around.

No more of thread crapping from me. Only info.


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## PerryM (Jun 16, 2007)

This is going to be hard to believe, but I'm lost in all the numbers.

What are folks saying here; I'd appreciate a concise summary.

Thanks


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## Elsway (Jun 16, 2007)

Bourne said:


> Few things that I'll quote again from my previous post...
> 
> 
> HCC targets a usage of 300-320 days. For the longest time, its affiliate member could use 21 days. In addition, the average of all members usage rounds up to 300-320 days historically.
> ...



I'll ignore your tantrum and do my best to focus on the facts.

Thanks for the info regarding planned occupancy.  





> HCC targets a usage of 300-320 days.



This works out to an occupancy rate of about 85%.

The Sherpa Report suggest that "The occupancy rate is a major criterion for evaluation of a destination club."  "Clubs usually have average occupancy rates of 40% - 70%."   "Most of the clubs plan for an occupancy rate of around 50%."  (Source: Destination Clubs, A Guide for Prospective Members, Sherpa Report, June 2007)

Exclusive Resorts has come out recently acknowledging that they need to improve property availability for their members.  Yet, ER seems to be targeting an average occupancy rate which is well below that of HCC.

I don't thnk it is unreasonable to be concerned that property availability at HCC will be disappoint members unless the club takes measures to reduce their planned occupancy rate.


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## Steamboat Bill (Jun 16, 2007)

Popular locations like Hawaii and the Carribean will probably be in the 85-90% useage year-round for all DCs while ski locations will be 100% for ski seasons and 0% for the mud season and 20% for summer.


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## puffpuff (Jun 16, 2007)

Bourne said:


> Few things that I'll quote again from my previous post...
> 
> 
> HCC targets a usage of 300-320 days. For the longest time, its affiliate member could use 21 days. In addition, the average of all members usage rounds up to 300-320 days historically.
> ...


Tugers have strong opinons, and that can sometimes be good and backfires other times. The negativeness can be a positive reminder to be caution. Some of us have been more involved than others and it is natural to be easily influennced given the already negative timeshare indusry reputation. 

I suggest all posters be more sympathetic and diplomatic to keep the board active. 

Sad to see Bourne lurk only.  Please reconsider.


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## PerryM (Jun 16, 2007)

Does a condo half empty during the year mean that it is better than a duplicate one used 90% of the year?  I’m guessing that’s a tremendous waste of an asset.  Maybe to rich folks it makes them smile a little more, I can only guess.

This is why a Point system would be far superior to the week system now being used.  Each day has a rental rate that relates to the same number of Points.  You don’t buy 4 weeks of usage you buy Points and then decide how to spend them.

We are getting back to the same old problem plaguing the timeshare world “Too many owners chasing too few holiday weeks”.  Sounds like some DCs have decided to address this problem by underutilizing their assets.  To me that makes no sense at all.


It probably isn't too late for a sharp DC to address this by simply changing to Points.  There is no voice of the members, no HOA to worry about.


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## Elsway (Jun 16, 2007)

PerryM said:


> Does a condo half empty during the year mean that it is better than a duplicate one used 90% of the year?  I’m guessing that’s a tremendous waste of an asset.  Maybe to rich folks it makes them smile a little more, I can only guess.
> 
> This is why a Point system would be far superior to the week system now being used.  Each day has a rental rate that relates to the same number of Points.  You don’t buy 4 weeks of usage you buy Points and then decide how to spend them.
> 
> ...



I just bumped into a new club that charges members two days (instead of one) for each day during peak periods (Holiday periods).  I guess this is a "crude" form of a point system.

There seems to be no limit to the amount of imagination that these clubs employ to set up and tweak their models.  I agree, it is unlikely that the present clubs will adopt a point system.  But a point system DC club might not be a bad idea for new entrants.


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## puffpuff (Jun 16, 2007)

This is how some clubs deal with Chrimstmas and New Years. The other holidays are not that bad -  

Cresendo - double the points required compare to normal booking points
PE - "lottery" by logarithm
ER - first come first serve
UR - first come first serve
Quintess - rotational
BH - line up, and they give you part back in cash ( "bellepoints") once every three years
HCC- first come first serve, the same holiday every 4 years.

It really does not matter which club. the reality is that it is all jammed during Christmas and New Years. If you can book two years out, or be a bit more flexible in terms of location, most clubs can get you into some property during Christmas and New Years. For those who are not flexible for whatever reason, they will find disappointment, and DC is not the right thing to join.

People joing DC must look at the entire vacation experience over the entire year and balance the good and the bad. 

 INterestingly, the satisfaction rate of DC members ( in the 90% ) in general  so far is way higher than TS in general  . Perhaps members are more realistic in their expectations going in. Or they are more affluent and more flexible in travel schedule which fits into a DC model well. 

Its becoming very apparant that in addition to accomodation value, ease of use / conceige service of DC, is a key benefit. This is an area less emphasied by TS.


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## travelguy (Jun 16, 2007)

I've found that availability of High Country Club properties is MUCH better than either RCI & II exchanges or HGVC reservations. This is ESPECIALLY true during Holidays except for Christmas and New Years which is difficult for all systems. This is why travelers pay a premium for "fixed" weeks in those Holiday weeks (ex: Perry with his PH purchase). 

As a HCC Private member, I have the first shot at all Holidays and have no problem getting Christmas or NY if I want. The HCC Affiliate and Associate members have second shot at Holidays. Note that if Holiday travel is important then the membership fee increase from Affiliate or Associate to Private Membership is $20 - $30K. This is about the premium paid for ONE fixed Week 51 or 52 at an upscale timeshare and allows a priority reservation for any Holiday. IN ADDITION, the Private membership also comes with an extra 3 to 4 1/2 WEEKS of travel.

High Country Club is very open with their members on discussions about anything to improve the Club's policies and procedures. I have been discussing a points based reservation system with them. One of my concerns with the points based system is that HCC cannot sell unreserved inventory due to partial week reservations allowed with systems such as HGVC. However, I agree that there are a number of reasons that a points based reservation system could work with a DC.

Here is some information that I received from HCC when I discussed reservation systems with them recently.


Hi Doug,

I understand that there may be some consumers that view our reservations policies, in particular the way we deal with holidays, as restrictive. Currently, HCC allows major holidays to be booked by Members on a long term basis once every three years. Once the holiday falls within 90 days of the time the reservation is made, all properties are available on a first come-first serve basis. Some clubs only restrict 1 or 2 major holidays and have various ways members are able to book those holidays. The initial perception by some may be that our holiday policy is more restrictive and limits our members ability to reserve peak holiday time. I strongly disagree and ask you to consider the following:

Our holiday policy was developed after endless discussion and debate and we have come to the conclusion that by restricting a member to book a holiday once every three years we are giving them a strong comfort level that they will have the ability to book that time at least once every three years. Currently, over 75% of our holidays remain open on our reservation system. In fact, 50% of Spring Break and 50% of Thanksgiving is still open and 4 homes are available for Christmas. Other holidays have even more availability. If those holiday periods were not restricted, I sincerely believe 95% of all holidays would have been booked at 12:01am the year before the holiday.
By removing restrictions on peak holiday times, a member could be presented with a situation where they were never able to reserve a property during a desired peak holiday time for the life of their membership. If, for example, a member wanted to travel over Spring Break, they would be competing with the entire membership base for that time. Once every three years is better than never.
The fact the long term restriction on holidays and the availability it creates also presents ample opportunity for people to book a peak holiday time on a more short term basis within 90 days. It is not unlikely that a member could book a specific holiday year after year within 90 days due to the fact that we are continually adding new properties that may fall within the 90 day window.
Members benefit by the growth of the club. Removing restrictions on holiday time could create a situation where, once they joined, all of the holiday periods would be booked solid. This would negatively impact members because sales drives the opportunity for them to experience a growing portfolio of destinations.
Our goal at HCC is to create the maximum flexibility to our Members without jeopardizing there long term happiness with the club. We believe our policies create realistic expectations with our members that may on the surface appear to be more restrictive. We strive daily to make our company better and if there are better ways to do things, we are open to discuss ideas and implement changes if they would benefit our members. Lively debate is what makes our company and business in general better and we appreciate the opportunity to share the reasoning behind our policies.

Thanks.

*Christian V. Kirschner*
President & CEO


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## Elsway (Jun 16, 2007)

puffpuff said:


> This is how some clubs deal with Chrimstmas and New Years. The other holidays are not that bad -
> 
> Cresendo - double the points required compare to normal booking points
> PE - "lottery" by logarithm
> ...



Actually, ER only allows "Elite" members to book Christmas and New Years.  The Elite membership costs $425,000/$29,900 for 45 days per annum.  Executive members paying $325,000/$19,900 for 25 days per annum cannot book Christmas or New Years (except on a space available basis, which seems like a remote possibility).  And the entry-level membership, 15 days for $225,000/$12,900 does not allow for any advanced reservations on any holidays.

ER also charges a rather steep fee for "friend and family" useage - an added $10,000 deposit and 20% markup on annual dues.  ER does this to help avoid having members use their full allotment of days, thus lowering overall occupancy - thus increasing property availability and reducing the wear and tear (physical depreciation) on properties and furnishings.  Clubs which ignore this (friends and family) aspect of membership, risk having higher occupancy rates than they have modeled, IMO.

I am not suprised that HCC members would be more satisfied with their purchase than timeshare owners, in general.   It really is a superior proposition - unless/until club failures persist.


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## Steamboat Bill (Jun 16, 2007)

I personally think HCC holiday reservation system is the fairest of all the systems as it prevents any one owner from "hoging" certain weeks and allows us all to cycle our holiday vacation schedule.

I "used" to think a day use system for HCC (like ER) would be better than a weeks based system (like Marriott), but I changed my mind.

A day system would cause tremendous havoc in the system as some people would always grab weekends and leave Mon-Thu unused. The weeks system simply makes us plan our schedules sat-sat for an entire week. If you want to use less, no problem, the unit will sit unoccupied.

HCC has only one property that allows a 3 or 4 night use and that is NYC and it is still fixed on what 3 or 4 nights can be used. I am sure they will continue this if they add Las Vegas or Chicago.


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## BocaBum99 (Jun 16, 2007)

> 15 days for $225,000/$12,900 does not allow for any advanced reservations on any holidays.



What a smokin' great deal.  Quarter Million bucks and you are lucky to get any holiday week.


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## smbrannan (Jun 19, 2007)

PerryM said:


> I’m not a mathematician but there must be some kind of sensitivity analysis that can start to put a hard number on the risk factor on failure for the DC industry.  Of course the inverse would be a percentage of confidence of years ahead for robust growth with little worry about failure.



 It's impossible to answer this question unless you sign a NDA and look at the financials.  But if you sign an NDA, then you certainly shouldn't post your findings about the DC here.

 My gut feel is that a DC is similar to a small hotel operator, with a more stable revenue base due to the contractual annual dues.  With 50% leverage,  a company like this might be considered to be similar to companies rated "BB" by the debt rating agencies.  If it uses more leverage it could be in the "B" range.  According to S&P, BB companies face "major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation", while for B companies [FONT=Arial, Helvetica, sans-serif][FONT=Arial, Helvetica, sans-serif]"adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation".

If you look at a 5 year horiizon then, historically, BB companies have failed about 10-12% or the time while B companies have failure rates in the 22-28% range.

This suggests that if you think your DC membership will last 5 years, the odds of losing your deposit is somewhere between 1:5 and 1:10.  

Of course, these numbers are averages - if you think the DC industry is on the verge of great things, then the odds of failure are much lower.  But if we head into a recession or economic slowdown, the odds could be worse. 
[/FONT][/FONT]


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## Elsway (Jun 20, 2007)

smbrannan said:


> It's impossible to answer this question unless you sign a NDA and look at the financials.  But if you sign an NDA, then you certainly shouldn't post your findings about the DC here.
> 
> My gut feel is that a DC is similar to a small hotel operator, with a more stable revenue base due to the contractual annual dues.  With 50% leverage,  a company like this might be considered to be similar to companies rated "BB" by the debt rating agencies.  If it uses more leverage it could be in the "B" range.  According to S&P, BB companies face "major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation", while for B companies [FONT=Arial, Helvetica, sans-serif][FONT=Arial, Helvetica, sans-serif]"adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation".
> 
> ...



Unfortunately, not all of the clubs will provide audited financial disclosures - so it is not possible to assess credit quality.

Exclusive Resorts is the leader in the industry.  ER will not provide financial disclosures - not even to current members.  There are no nondisclosure agreements, no refundable deposits - just a "trust me".

When I spoke with ER, I asked point blank:  "How do I know that you will not pay a special $100 million dividend to your investors tomorrow, and use mortgage debt to fund the dividend?"  The answer:  You don't know - we don't promise that we won't...and we don't disclose financial information.

Placing a membership deposit with ER is the equivalent of making an unsecured loan to an entity which provides no financial disclosure, no covenants against making dividends to investors, and limited operating history.  Without financial disclosure we can't know whether our loans are rated BBB or BB or B or CCC - this makes me a bit uncomfortable.

HCC may be the industry leader in terms of financial disclosure.  Many Tug members have had favorable things to say about HCCs transparency.  Although I am not sure if HCC has provided updated/audited financial statements.


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## Steamboat Bill (Jun 20, 2007)

Elsway said:


> Exclusive Resorts is the leader in the industry.  ER will not provide financial disclosures - not even to current members.  There are no nondisclosure agreements, no refundable deposits - just a "trust me".
> 
> HCC may be the industry leader in terms of financial disclosure.  Many Tug members have had favorable things to say about HCCs transparency.



That surprised me about ER.


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## BocaBum99 (Jun 20, 2007)

Steamboat Bill said:


> That surprised me about ER.



Hedge funds also work on the "trust me" approach.  Amazingly enough, it works well for them.

Just everyone once is a while you hear about a spectacular bust.


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## Steamboat Bill (Jun 20, 2007)

BocaBum99 said:


> Hedge funds also work on the "trust me" approach.  Amazingly enough, it works well for them.
> 
> Just everyone once is a while you hear about a spectacular bust.



In Boca Raton...we here this more than "once in a while"....it seems almost every week, some stock/hedge/real estate scam artist gets busted for ripping people off. I, unfortunatly, meet new people in Boca Raton with a "guilty until proven innocent" when it comes to dealing with people involved in the financial sector.

So far, my "scam artist radar" has not been alerted with any member of the DC industry.


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## Elsway (Jun 20, 2007)

BocaBum99 said:


> Hedge funds also work on the *"trust me" *approach.  Amazingly enough, it works well for them.
> 
> Just everyone once is a while you hear about a spectacular bust.



I have been involved in hedge fund management for the past 6 years - a relatively small portion of my 21 years in professional investment management (moved from mutual fund manager to to a hedge fund shortly after my World Trade Center office got blown away on 9/11/2001.)

I can say, unequivocally, that the level of due diligence which is accorded to hedge fund investments ranks far beyond that which is typical of those who invest in high-end DCs (I use the term "high-end" to distinguish the typical DC from HCC - the HCC members on this board seem to have done a pretty good job of analysis, etc...)  

As a hedge fund manager, I have my background checked on a routine basis....I spend dozens of hours with prospective investors....they make (sometimes unannounced) visits to our main office...and they travel (at their expense) to our remote offices (including India) to see first hand that we have the resources which we claim...they send in network exports to look at our equipment

The notion that the wealthy have throw away money and don't conduct proper due diligence is not supported by my experience.  We try to show them the dining room...they go as far into the kitchen as we will allow.

In other words, "trust me" doesn't get a hedge fund manager past first base...unless they have an incredible record or results...IMPO (the "P", in this case, stands for "professional").


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## BocaBum99 (Jun 20, 2007)

Elsway said:


> I have been involved in hedge fund management for the past 6 years - a relatively small portion of my 21 years in professional investment management (moved from mutual fund manager to to a hedge fund shortly after my World Trade Center office got blown away on 9/11/2001.)
> 
> I can say, unequivocally, that the level of due diligence which is accorded to hedge fund investments ranks far beyond that which is typical of those who invest in high-end DCs (I use the term "high-end" to distinguish the typical DC from HCC - the HCC members on this board seem to have done a pretty good job of analysis, etc...)
> 
> ...



If I had a spare $1M that I had to invest into a Hedge Fund and I had a choice of any Hedge Fund in the World.  I would put that money into a fund managed by Jim Cramer before spending hundreds of hours performing due diligence on dozens of other funds that had superior sounding investment strategies.  

If all of my millionaire and billionaire friends had recently put money into this fund, that would also help justify my decision to invest.

At the end of the day, such an investment is a bet on the hedge fund manager.  So, yes, Hedge Funds are "Trust Me" businesses.  Not only that, but I believe they are the penultimate "Trust Me" business.  As a fund manager yourself, I find it hard to believe that you won't acknowledge that point.

If investors merely used analysis and due diligence to pick hedge funds for investing, then their sales and marketing strategies would look more like full service brokerage firms.  They don't.  They operate on referral and networks of investors.  So, it's all about reputation and trust.


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## Steamboat Bill (Jun 20, 2007)

Elsway and BocaBum99

Let's focus on Destination Clubs, Fractionals, PRC, etc. rather than hedge funds....ok

Thanks!


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## wbtimesharer (Jun 21, 2007)

Steamboat Bill said:


> Elsway and BocaBum99
> 
> Let's focus on Destination Clubs, Fractionals, PRC, etc. rather than hedge funds....ok
> 
> Thanks!



DC weeeergin here.  I am trying to get a grip on the DC's even though I don't have a couple hundred big ones to toss at them.  I and my rowdy friends tend to hang out at the honky tonk timeshares.

I keep reading the advice of the players in DC's, Steamboat being one, that these are completely heads and shoulders a better use of a person's money than a normal timeshare.  Here are my questions:

1)  Are DC's exchangeable with all other timeshares and do they exchange in RCI,  II etc?  Does it go both ways or do DC's rule kind of like Disney properties?

2)  It appears that DC's sell for 10 - 20 times what TS sell from the developer while it appears you get access to 4 - 6 weeks more access.  Is that the case?

3)  Are the ratio of MF/Purchase Price similar to those in timesharing?

4)  I have heard that these clubs will buy back from owners.  Is that a 100% or do they give only a % of the purchase price?  Is this a constant in the DC market?

5)  Aside from staying in mansions, what type of amenities are provided that are above and beyond those of the upscale TS such as Disney, Marriot, Hilton, etc?

Thanks in advance for any and all info.

Bill


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## PerryM (Jun 21, 2007)

brennumtimesharer said:


> DC weeeergin here.  I am trying to get a grip on the DC's even though I don't have a couple hundred big ones to toss at them.  I and my rowdy friends tend to hang out at the honky tonk timeshares.
> 
> I keep reading the advice of the players in DC's, Steamboat being one, that these are completely heads and shoulders a better use of a person's money than a normal timeshare.  Here are my questions:
> 
> ...




As someone who leans towards timeshare ownership versus DC membership let me say that at some point we will be DC members.  It’s really up to two things: 1) Super cheap, introductory pricing of a new DC 2) The DC industry grows up.

I can answer several of your questions:

1)	DCs do NOT exchange with any exchange company – that is 180 degrees out of phase of what they offer.  Heck, many require the primary member to be there if the in-laws use the condo (I believe)

2)	DCs really target an audience that has disdain for timeshares.  That’s ok, just realize that there probably won’t be activities for the kiddies and no lazy river and no tennis courts for the little ones, no mini-golf for the family.  Now that is not to say that some DCs don’t have some of this but the idea of the DC is a “Step above” timeshares.  The DC really only let’s you pick out 1 or 2 holidays a year, if at all, and the rest is non-holiday usage.  Timeshares allow you to vacation at as much holiday times as you have money to spend.

3)	If you use ALL the time you can with a DC membership your MF is in-line with timeshares.  However, that’s a lot of vacation time – 30 days or so a year.  If you have just 2 weeks a year to vacation the DC MFs will make your eyes water.

4)	Marriott will act as your real estate broker and charge 40% commission to sell your Marriott week (if resort is sold out).  DC’s offer you 80% back on your original membership fee and that’s assuming that you can get out.  The industry standard is 3 new members in before you are allowed to take your 20% loss.  There are NO guarantees that you can get out and NO protection by the DC that they have the funds to repay you.

5)	I’ll leave that to DC owners

Although you might come to the conclusion that I hate DC’s I love the concept – it’s just the DC industry’s current implementation of a DC which is highly leveraged with NO consumer protection laws and NO protections for your refundable deposit that has me upset with an industry that cares so little about their customer.

Someday we will be DC members!  I have no doubt about it.  My hope is that some DC somewhere is listening to potential customers and would like to address the industry's shocking lack of respect for potential customers.


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## Elsway (Jun 21, 2007)

Steamboat Bill said:


> That surprised me about ER.



Me too.

ER has about 2700 members, 150 people on their waiting list, and they are adding new members at a rate of 60 per month - despite the fact that they have been struggling with availability of properties during peak demand periods.  

Q: What incentive does ER have to improve their financial disclosure?
A:  Virtually none at the present time.


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## NeilGoBlue (Jun 21, 2007)

PerryM said:


> 4)	Marriott will act as your real estate broker and charge 40% commission to sell your Marriott week (if resort is sold out).  DC’s offer you 80% back on your original membership fee and that’s assuming that you can get out.  The industry standard is 3 new members in before you are allowed to take your 20% loss.  There are NO guarantees that you can get out and NO protection by the DC that they have the funds to repay you.
> 
> 5)	I’ll leave that to DC owners
> 
> ...




Thanks Perry from saving me from all that typing!  

Though Perry's overall points have merit, there are some exceptions.

Bellehavens is an equity model where the members own the real estate and if you leave the club, they will return 90% (vs the industry standard of 80%)

Also, Bellehavens and Crescendo protects the member's deposits through their equity models.

Regarding 5:

Most DC's offer unbelievable conceirge sevice.  I can't speak to the high end timeshares you were referring to, but I don't think they are up to the standards below.

Here is an example of the concierge services that Most DC's offer (though I can only speak from experience regarding Bellehavens.

I talked to my destination host who will meet me at the property the day that I arrive.  Within about 5 minutes I requested the following things.

1) I want a private chef for tuesday night (my daughter is at the age where she can't sit for more than ten minutes, so instead of going out, we'll eat in)

2) I would like a Shiatsu Massage at the house at 10am on wed.

3) My father would like a local paper delivered every morning.

4) I would like two tee times on the resort course. One for Wed morning and one for thursday afternoon.

5) Please make sure there is a high chair, crib, and several baby gates in the house.

6) I fill out a grocery list and they will have the fridge and the pantry stocked  (usually in past vacations, we spend the first night going out to a store to pickup all the food for the vacation)

The response I got?  Consider it done!

The amenitites are too much to even mention.  Some DC's have houses stocked with golf clubs, jet skis, even hummers. It's a totally different world than a timeshare (and more expensive!)


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## wbtimesharer (Jun 22, 2007)

NeilGoBlue said:


> Thanks Perry from saving me from all that typing!
> 
> Though Perry's overall points have merit, there are some exceptions.
> 
> ...




So essentially DC's are timeshare's for the elite.   That seems reasonable.  While its a great dream to strive for, my guess is that 90 - 95% of Tuggers wouldn't even be able to play in that field realistically.  I will say this, over the last 2 years timesharing has been a revenue generator for me with around a 10% annual return on investment.  I wonder if that is possible within the confines of a DC ownership.  It would be interesting to get feedback from DC owners on whether they use or rent since it appears there really isn't much of an exchange market established.

Just being curious.  Good thing my name isn't George.

Bill


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## caribbeansun (Jun 22, 2007)

Since you can't resell your membership on the open market and you can't rent your time at a DC I fail to see how a rate of return can be generated on a DC in their current form.





brennumtimesharer said:


> So essentially DC's are timeshare's for the elite.   That seems reasonable.  While its a great dream to strive for, my guess is that 90 - 95% of Tuggers wouldn't even be able to play in that field realistically.  I will say this, over the last 2 years timesharing has been a revenue generator for me with around a 10% annual return on investment.  I wonder if that is possible within the confines of a DC ownership.  It would be interesting to get feedback from DC owners on whether they use or rent since it appears there really isn't much of an exchange market established.
> 
> Just being curious.  Good thing my name isn't George.
> 
> Bill


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## NeilGoBlue (Jun 22, 2007)

brennumtimesharer said:


> So essentially DC's are timeshare's for the elite.   That seems reasonable.  While its a great dream to strive for, my guess is that 90 - 95% of Tuggers wouldn't even be able to play in that field realistically.  I will say this, over the last 2 years timesharing has been a revenue generator for me with around a 10% annual return on investment.  I wonder if that is possible within the confines of a DC ownership.  It would be interesting to get feedback from DC owners on whether they use or rent since it appears there really isn't much of an exchange market established.
> 
> Just being curious.  Good thing my name isn't George.
> 
> Bill



Is it possible?  Yes, very possible... not guaranteed but very possible (tho 10% is high).  But, you'd be a fool to buy them based on a return.


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## Elsway (Jun 22, 2007)

NeilGoBlue said:


> Is it possible?  Yes, very possible... not guaranteed but very possible (tho 10% is high).  But, *you'd be a fool to buy them based on a return*.



This is also true of timeshares, in general.


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## PerryM (Jun 22, 2007)

*My little game I play...*

One thing that a timeshare can do that a DC can’t is to generate rental income.  I don’t believe there is one DC out there that allows members to use eBay and auction off their reservation.

Something I do that has great appeal to me personally is to rent reservations and then use that money to pay off the imaginary loan I made to finance that timeshare.  This year we should add 3 of our timeshares to the completely paid off list – including my 7% finance charge to myself.

Once a timeshare has paid for itself and is FREE you only need to worry about the MF.  However when you consider the rental income, in real dollars, to the MF, another couple of years and I will have totally free usage of the timeshare, including MF for about 6 future years.

So how do you put a percentage of ROI on something like that?  I don’t pretend to know.  It is just a great feeling to beat the system.

I know I can’t do that with DCs and is one of the reasons the threshold to buy a DC is so much higher in my mind – I need to put up real money and pay MFs that are real money and I can’t play my little game.

Anyway that’s how I view timeshare investments – the goal is to make their purchase FREE and annual usage FREE for as long as possible.  Would I make more money by keeping the money in the stock market - sure.  Would I get the satisfaction of snowboarding down a hill and know that I paid NOTHING for the timeshare and NOTHING for the MF and heck NOTHING for the lift tickets.  This just puts a smile on my face that I can't get rid of.

P.S.
So why not add a stipulation to the sales contract that if you want to sell your membership and the DC can't buy it back at the agreed to price that the member can sell it resale for whatever they can get for it?  Allow 3 months or so, but if the DC can't buy back the membership allow some recourse to the member.

Same with rentals - make it contingent on something.  Want out and 3 months go by - start to rent your weeks to the public and recoup your MFs at least.

Sounds like some kind of protection is available via the free markets - maybe the DC industry should lessen their grip incase they can't fulfill their own agreements.  Just a thought.


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## Steamboat Bill (Jun 22, 2007)

brennumtimesharer said:


> I keep reading the advice of the players in DC's, Steamboat being one, that these are completely heads and shoulders a better use of a person's money than a normal timeshare.  Here are my questions:
> 
> 1)  Are DC's exchangeable with all other timeshares and do they exchange in RCI,  II etc?  Does it go both ways or do DC's rule kind of like Disney properties?
> 
> ...




I don't think I ever made a blanket statement like : "Steamboat being one, that these are completely heads and shoulders a better use of a person's money than a normal timeshare."...however, I said something like this: "Joining High Country Club is a better (IMHO) than buying a similar priced or more expensive timeshare."...I have posted dozens of messages comparing cost per night, cost per week, etc. I simply think HCC offers the "best bang for the buck" and is actually CHEAPER than many upscale timeshares.

Let me set the record straight - I love my timeshares (DVC, Marriott, Westgate) and I love my DC (High Country Club) and for me, I have found a great blend for my personal family travel. So far, I have never LOST any money on purchase and have made some nice profits off DVC. I don't consider my DC a financial investemnt with portential to profit. As the old sayiong goes, buy what you like and where you want to go for a good price, not for an investment. However, the fact remains that I have PROFITED off my timehsare purchases and will take a 20% LOSS on my DC purchase. That is fine with me as the trade off is a dramatically upgraded property and locations and less hassle. My TS and DC COMPLIMENT each other!


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## Steamboat Bill (Jun 22, 2007)

PerryM said:


> One thing that a timeshare can do that a DC can’t is to generate rental income.  I don’t believe there is one DC out there that allows members to use eBay and auction off their reservation.
> 
> I know I can’t do that with DCs and is one of the reasons the threshold to buy a DC is so much higher in my mind – I need to put up real money and pay MFs that are real money and I can’t play my little game.



I think it is time for you to consider other non-timeshare and non-Destination club alternatives like a "Personal Residence Club"...This in essance is a fractional ownership that allows trading of the weeks to other locations.

I am NOT an expert on PRC's but they may offer you the timeshare style with the upgraded features of a DC.

I think MOST DCs are always going to be a club....and will not allow rentals, resales on the open market, or opportunity to make a profit......PRCs on the other hand may allow these features you seem to be seeking. They range in costs and I prefer to use the cost per night matrix and HCC is the LOWEST cost per night DC by a long shot. However, many people don't seem to mind paying $1400 per night to join Exclusive Resorts...in fact they have 180 people on their waiting list!

Examples include: Four Seasons, Fairmont, Ritz, St Regis, Starwood, Hyatt, Marriott, etc.

According to www.sherpareport.com

Destination Clubs
Usually "membership" via contract
Usually 80% refund of initial fee
Luxury homes 1,500 sqft (city), to 6,000+ sqft  
Trade within DC family

Private Residence Clubs  
"Ownership" via fee simple deed
Sell for market price...gain or loss
Luxury condos less than 2,500 sqft
Trade within PRC family and possible other exchanges

I know there are trading companies, like II for PRC, but I am not aware of who the best or largest is.


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## PerryM (Jun 22, 2007)

Bill,

You probably are right - I should spend some time looking at them.

So why do DCs forbid renting a unit out?  I understand that the exclusiveness is a key factor for a DC but what if Marriott or Wyndham broke into the DC market and had no restrictions?  

Same with resales of DC - why is the free market of secondary sales left out?  What if Marriott or Wyndham couldn't care less - go ahead and resell your membership.

Just wondering why DCs evolved this way.  I can't think of a reason why giving my reservation to someone is illegal or asking them to kick in the MF or asking them for 3 times the MF.

The resale of DCs doesn't make any sense to me either.  The only reason I can think of is that a resale for 25 cents on the dollar would impede a new sale.

One of the reasons I bought a very speculative timeshare once, one where there was doubts as to whether it might succeed ,was the ability I had to recoup my investment by renting units that the developer had already on line - ones that were not timeshares in fact.


If the renter trashes the place money is the simple solution - the member who rented the unit would pay to bring the unit back up to specs.

Oh well, I don't expect answers from the DC industry.


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## Steamboat Bill (Jun 22, 2007)

I don't disagree with Perry's desires for changes in the DC industry, I just simply accepted their limitations in favor of their benefits.

Many golf clubs, health clubs, and private spa resorts are usually restricted to members only and allow "accompianed guests" to visit WITH the member. I am not sure this rule will ever change for DCs.

I am not sold on and PRC yet as they are expensive...$200k or more and have limited trading ability...but you get a deed and can sell it on the open market and can even rent it.

I look forward to the day a company like Marriott enters the DC market, but I would assume their entry price will be in the $100,000 to $250,000 range as their new timeshares are in the $50-70k range for beach properites. I am SURE that it will NOT be cheaper.

Not to beat this issue to death, but ONLY High Country Club offers a destination Club experience at Timeshare prices....everyone else is MUCH more expensive.


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## Elsway (Jun 22, 2007)

PerryM said:


> Bill,
> 
> You probably are right - I should spend some time looking at them.
> 
> ...



Some DCs provide members the ability to gift a certain number of days to certain pre-degnated persons (usually limited to family members).  If some money were to change hands (among the club member and an extended family member) the DC would never know.

But, yes, as a DC owner you cannot rent to the general public.  A primary reason for this policy is that allowing rentals would make it virtually certain that each member would utilize all of their allotted days.  As things stand, club members, on average, use only about 80% of their days.  If utilization increased to 100%, the additional wear and tear on properties (and the added cost of consummables such as electricity, soap, salt and pepper, etc...)  would increase the company's costs.  Higher occupancy would also reduce home availability - leading to lower member satisfaction.


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## PerryM (Jun 22, 2007)

*Tenets of business...*



Elsway said:


> Some DCs provide members the ability to gift a certain number of days to certain pre-degnated persons (usually limited to family members).  If some money were to change hands (among the club member and an extended family member) the DC would never know.
> 
> But, yes, as a DC owner you cannot rent to the general public.  *A primary reason for this policy is that allowing rentals would make it virtually certain that each member would utilize all of their allotted days.*  As things stand, club members, on average, use only about 80% of their days.  If utilization increased to 100%, the additional wear and tear on properties (and the added cost of consummables such as electricity, soap, salt and pepper, etc...)  would increase the company's costs.  Higher occupancy would also reduce home availability - leading to lower member satisfaction.




Sometimes I don't see things right in front of me.  Thanks for pointing this out!

This is like being scolded since I was a kid "Eat everything on your plate".  I would never dream of leaving any days unused to the DC - I just don't think that way.  That would be wasteful and to me show a lack of respect to the money I invested.

But if this motivates the DC to keep renting out of the picture and allow wasteful usage of their DC then that seems to me to just be screwy on their part.  What other wacky business tenets do they promote and want their members to follow?


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## Steamboat Bill (Jun 22, 2007)

PerryM said:


> But if this motivates the DC to keep renting out of the picture and allow wasteful usage of their DC then that seems to me to just be screwy on their part.  What other wacky business tenets do they promote and want their members to follow?



This is not a FAULT of the DC, it is a fault of the member for NOT using all their allotment. A plain and simple fact is that the average DC member with 30-45 day membership only use about 21-30 nights. This is not a waste, just an unused allotment. Have you ever only spent 5 nights of a 7 night timeshare reservation?

However, with the "new" membership categories such as 15 night memberships or even the 1 week trial...I would expect to see the occupancy much higher for those members.

A corporate membership plan allows friends to take your place (if $ changes hands...that is up to you) and has a higher useage, thus a higher membership fee.

There is no "wizard hiding behind the curtain" in DCs....it is simply a group of smart people creating a product for people that desire nice accomidations on vacation.

The one FACT that I can say....staying in a DC property really feels like "home" and offers the closest thing to owning a second home. No other TS or fractional property I have stayed in made me feel that way.


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## PerryM (Jun 22, 2007)

Steamboat Bill said:


> This is not a FAULT of the DC, it is a fault of the member for NOT using all their allotment. A plain and simple fact is that the average DC member with 30-45 day membership only use about 21-30 nights. This is not a waste, just an unused allotment. Have you ever only spent 5 nights of a 7 night timeshare reservation?
> 
> However, with the "new" membership categories such as 15 night memberships or even the 1 week trial...I would expect to see the occupancy much higher for those members.
> 
> ...



That's why I really really want to join a DC - we now want more of a home feeling than a busy busy resort complex.


I don't want to take the monkey off the back of the member - they are grown ups and make decisions they must live with.  However, the DC controls the types of memberships and if its their intention to offer way too much vacation time and as a side effect the units are not used 100% of the time as was sold that seems to be to be disingenuous and thus one must ask what other business practices are they being disingenuous with.


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## Steamboat Bill (Jun 22, 2007)

I don;t agree that DCs are disingenuous, I would simply compare it to someone that takes out a 15,000 mile per year car lease and then only drives 12,000 miles....the car leasing company always wins.

I joined a DC as an alternative to "owning" a second home or even a fractional or timeshare. For me, it works great (for now) and the future looks bright.


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## NeilGoBlue (Jun 22, 2007)

Steamboat Bill said:


> Not to beat this issue to death, but ONLY High Country Club offers a destination Club experience at Timeshare prices....everyone else is MUCH more expensive.



I don't think this is true.  For example, I just joined Bellehavens for 100K and get 15 days.  Since this is equivalent to about 2 weeks, it averages 50K per week.  Well within the range of a high end timeshare.


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## Steamboat Bill (Jun 22, 2007)

NeilGoBlue said:


> I don't think this is true.  For example, I just joined Bellehavens for 100K and get 15 days.  Since this is equivalent to about 2 weeks, it averages 50K per week.  Well within the range of a high end timeshare.



I (happily) stand corrected....I also find Private Escapes affordable!


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## pwrshift (Jun 22, 2007)

Just today, I had a long discussion with a rep from a higher end DC who told me it's inevitable that a 'major' hotel/resort firm would enter and they are taking bets that Starwood would be first...and within the next 18 months. Bill Marriott has apparently already said that he's not interested in DC's as he sees them as a 'fad'.

The rep also said ER is having a very difficult time with members leaving due to the fact their reservation system is hurting them - members can't get the places and dates they want (sounds like II) and this could be the real reason why they have a waiting list. He said Steve Case is plowing a lot of his personal fortune into buying up new properties right now to meet the demand and reduce member resignations...but it won't happen overnight. For what it's worth... 

Do DC salesmen always tell the truth, like TS salesmen? 

Brian



Steamboat Bill said:


> ...However, many people don't seem to mind paying $1400 per night to join Exclusive Resorts...in fact they have 180 people on their waiting list!
> 
> Examples include: Four Seasons, Fairmont, Ritz, St Regis, Starwood, Hyatt, Marriott, etc.
> 
> .


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## wbtimesharer (Jun 22, 2007)

Steamboat Bill said:


> I don't think I ever made a blanket statement like : "Steamboat being one, that these are completely heads and shoulders a better use of a person's money than a normal timeshare."...however, I said something like this: "Joining High Country Club is a better (IMHO) than buying a similar priced or more expensive timeshare."...I have posted dozens of messages comparing cost per night, cost per week, etc. I simply think HCC offers the "best bang for the buck" and is actually CHEAPER than many upscale timeshares.
> 
> Let me set the record straight - I love my timeshares (DVC, Marriott, Westgate) and I love my DC (High Country Club) and for me, I have found a great blend for my personal family travel. So far, I have never LOST any money on purchase and have made some nice profits off DVC. I don't consider my DC a financial investemnt with portential to profit. As the old sayiong goes, buy what you like and where you want to go for a good price, not for an investment. However, the fact remains that I have PROFITED off my timehsare purchases and will take a 20% LOSS on my DC purchase. That is fine with me as the trade off is a dramatically upgraded property and locations and less hassle. My TS and DC COMPLIMENT each other!



Steamboat, my apologies as I didn't mean it in the negative sense.  I meant quality for the dollar.  My opinion is that to make any money in Timesharing or DC's requires takes work and for most people breaking even is a major accomplishment.  I only used your name as one that I see a lot in connection with DC's who seems to know the system.

Bill


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## pwrshift (Jun 23, 2007)

*Does your DC membership die with you?*

All my timeshares are deeded with my heirs (one on each deed) for right of survivorship and tax purposes so that each of my heirs will 'own' a Marriott week.  Pay the ever increasing MF and they've got a nice holiday every year.  Hopefully they won't just sell them, but that's their choice -- and at least they are able to sell it and get a return.

What happens with a DC membership if you meet your maker?  I assume 80% of it comes back to the estate (is that correct?) but can it be inherited without complications...or does it just fade away with you?

Same for the member as he ages and might not be able to travel anymore....what happens here?

Does anyone really know?

Brian


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## TarheelTraveler (Jun 23, 2007)

It depends on the DC.  I think some are like that.  With Crescendo, the LLC interests are transferrable to your heirs.


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## NeilGoBlue (Jun 23, 2007)

pwrshift said:


> All my timeshares are deeded with my heirs (one on each deed) for right of survivorship and tax purposes so that each of my heirs will 'own' a Marriott week.  Pay the ever increasing MF and they've got a nice holiday every year.  Hopefully they won't just sell them, but that's their choice -- and at least they are able to sell it and get a return.
> 
> What happens with a DC membership if you meet your maker?  I assume 80% of it comes back to the estate (is that correct?) but can it be inherited without complications...or does it just fade away with you?
> 
> ...




In Bellehavens, it goes to your heirs...


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## smbrannan (Jun 23, 2007)

pwrshift said:


> What happens with a DC membership if you meet your maker?  I assume 80% of it comes back to the estate (is that correct?) but can it be inherited without complications...or does it just fade away with you?



According to Heath, at HCC:

_"There is a one time right to transfer the membership to one of your kids.  The membership would be under you and your wife's name, so the transfer would go to your kids.  In the event something happened to them the refundable portion of the deposit would go to their estate."_


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