# Hilton spinning off timeshare



## johnf0614 (Feb 26, 2016)

http://abcnews.go.com/Business/wireStory/hilton-spin-off-timeshares-real-estate-business-37216995


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## Jason245 (Feb 26, 2016)

Not really surprised.

That being said, there will be some significant transparency benefits to current owners since as a separate publicly traded company, the information disclosures related to the timeshare business will be significantly more than the current information as the timeshare business is a pretty small part of HLT.

They still have 6 years of inventory, and have a pretty steady stream of management fees and growing sales activity, so they shouldn't have much difficulty as a stand alone entity. In addition, it will put them in a better position to avoid Club Intrawest situations (getting HLT to agree to try to buy another business is much harder when TS biz is so small to them, but as a stand alone, they would have been in a position to make their own proposal if they wanted to)

Possible concerns of being a public company - 

a) Management does a LBO. 
b) Private Equity group buys them.
c) Competitor buys them. 

I guess we will see what happens... only time will tell...


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## jestme (Feb 26, 2016)

I'm not sure how they can sign an "exclusive long term agreement" to run the resorts when Florida timeshare law says that the board can discharge a maintenance company after three years, and it must come up to be renewed every three years.


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## JudyS (Feb 26, 2016)

jestme said:


> I'm not sure how they can sign an "exclusive long term agreement" to run the resorts when Florida timeshare law says that the board can discharge a maintenance company after three years, and it must come up to be renewed every three years.


A lot of times, the developer of a timeshare controls the board. (Of course, the developer might not want to actually *admit* this.)


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## Beaglemom3 (Feb 26, 2016)

It was mentioned on Squawk Box this morning and briefly discussed by Cramer and Faber.

Christopher Nassetta from Hilton will be on later this morning to discuss the *new Hilton REIT.*

Note, this is on CNBC.


-


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## jestme (Feb 26, 2016)

JudyS said:


> A lot of times, the developer of a timeshare controls the board. (Of course, the developer might not want to actually *admit* this.)



Yes, but there are rules on that as well. Even if they do control the board now and feel they can renew it, signing a long term agreement would still conflict with the three year renewal process.


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## dsmrp (Feb 26, 2016)

Ahh, the spinoff would help explain the more aggressive ROFRs talked about recently in another thread 

I guess spin-off was inevitable, after Marriott's, Hyatt (sold) and Starwood's (soon).  

Hope long term they keep the affiliates on , as I own one 
I expect my current HGVC membership will be grandfathered in to new company. I'm new to HGVC, so haven't really had a chance to try out the other locations yet.


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## Weimaraner (Feb 26, 2016)

Oops posted around same time as Sandra...sounds like the same thing Marriott and Starwood did not too long ago by spinning off their timeshares from hotels. Starwood has since sold the timeshares to Interval, hotels to Marriott.


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## Jason245 (Feb 26, 2016)

jestme said:


> I'm not sure how they can sign an "exclusive long term agreement" to run the resorts when Florida timeshare law says that the board can discharge a maintenance company after three years, and it must come up to be renewed every three years.


It is a long term relationship between hilton and hgvc not hgvc and resorts.. hgvc manages the resorts not hilton.. 

The purpose of long term relationship is probably primarily related to: 

1. Exclusive use of hilton name. 
2. Continued access to HHonors. 
3. Ability to rent ts nights on hilton.com. 

In addition there is probably some marketing agreement etc..



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## presley (Feb 26, 2016)

I'm not sure if this means anything to me. Even if Hilton dumps my 3 affiliates, I bought my locations based on use. So, if they aren't Hilton anymore, I doubt I'd care.


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## dsmrp (Feb 26, 2016)

presley said:


> I'm not sure if this means anything to me. Even if Hilton dumps my 3 affiliates, I bought my locations based on use. So, if they aren't Hilton anymore, I doubt I'd care.



Yes, I own where I want to go too. But i am interested in the european locations. Others might have bought affiliates for added option of Hgvc use. 

Too many timeshares, too little time...first world problem


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## GregT (Feb 26, 2016)

I love this move -- I think being an independent company will encourage them to continue to expand, and they have a mature and well understood internal exchange system that will make that continued expansion appealing to the existing ownership.  

I see no reason that they will want to limit any of the access that existing owners/affiliates have, and that they will want us to continue to participate and support the on-going entity.

I think this is really good.   (I also speculate that they will get a Caribbean property now, because all of those New York based investment bankers and equity analysts will ask why no Aruba/St. Maarten/St. Thomas property).   

Interesting stuff....

Best,

Greg


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## johnf0614 (Feb 26, 2016)

GregT said:


> I love this move -- I think being an independent company will encourage them to continue to expand, and they have a mature and well understood internal exchange system that will make that continued expansion appealing to the existing ownership.
> 
> I see no reason that they will want to limit any of the access that existing owners/affiliates have, and that they will want us to continue to participate and support the on-going entity.
> 
> ...



Agreed!  Let's hope for further expansion as well


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## JIMinNC (Feb 26, 2016)

jestme said:


> I'm not sure how they can sign an "exclusive long term agreement" to run the resorts when Florida timeshare law says that the board can discharge a maintenance company after three years, and it must come up to be renewed every three years.





Jason245 said:


> It is a long term relationship between hilton and hgvc not hgvc and resorts.. hgvc manages the resorts not hilton..
> 
> The purpose of long term relationship is probably primarily related to:
> 
> ...



Jason is correct about what that phrase in the news release refers to. These would be the same kinds of agreements that Marriott Vacations Worldwide has with Marriott International - the new timeshare company wants to be assured they will continue to be able to leverage the use of the Hilton brand and HHonors infrastructure as well as access to hilton.com. The agreements just secure the right of the new company to operate the resorts they manage as "Hilton".

The individual resort boards would still have the ability to switch management companies, BUT if they kicked out the new HGVC company, they would almost certainly have to take the "Hilton" name off of the resort. Something like that happened with Marriott years ago when Marriott Swallowtail and Marriott Spicebush in Hilton Head left the Marriott program. In that case, I'm not quite sure who booted whom, but Spicebush and Swallowtail no longer use Marriott as their management company, so the Marriott name was taken off of the resorts.


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## ronparise (Feb 26, 2016)

the really cool thing about this spinoff and what makes it different than the Marriott deal and others like it is that it  may be a REIT
at least I read that the hotels will be spun off into a REIT

unlike regular common stock, Real Estate Investments Trusts are required to pay out at least 90% of their income to their shareholders

we dont know the numbers yet but if I was still a stockbroker Id be selling the Hotel REIT and if the timeshares will be a REIT as well, selling it   to folks that own Hilton timeshares, and Id want them to buy enough that the dividend covers their maintenance fees  

can you say free vacations


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## JIMinNC (Feb 26, 2016)

ronparise said:


> the really cool thing about this spinoff and what makes it different than the Marriott deal and others like it is that its going to be  REIT
> 
> unlike regular common stock, Real Estate Investments Trusts are required to pay out at least 90% of their income to their shareholders
> 
> ...



Ron, as I read this I think it is two separate spinoffs:

1) A group of 70 Hilton-owned hotel properties are being spun-off into a REIT
2) The timeshare business is being spun into a separate publicly traded company, NOT an REIT

The bolding below is mine.



> The lodging company said Friday that the real estate business will be *spun off into a publicly traded real estate investment trust*. It will include about 70 properties.
> 
> Hilton's timeshare business, *Hilton Grand Vacations, will become a separate publicly traded company* that's expected to manage almost 50 club resorts in the U.S. and Europe. The newly formed timeshare company will have an exclusive, long-term license agreement with Hilton Worldwide to market, sell and run resorts under the Hilton Grand Vacations brand.
> 
> *Both spinoffs* are expected to be completed by year's end. The transactions need final approval from Hilton's board, but don't require a shareholder vote.


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## ronparise (Feb 26, 2016)

JIMinNC said:


> Ron, as I read this I think it is two separate spinoffs:
> 
> 1) A group of 70 Hilton-owned hotel properties are being spun-off into a REIT
> 2) The timeshare business is being spun into a separate publicly traded company
> ...



Im sure thats right


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## archsof (Feb 26, 2016)

*Benefit changes?*

Good or bad, the exposed P&L of HGVC will potentially change services/benefits for its members.  When breaking out from a conglomerate, changes will be gradual and likely a problem for the HGVC employees.  I'm mostly concerned about the quality of the staff going forward if benefit changes to employees change; therefore changing our experiences during our stay(s).  

If HGVC is wishes to add value and profitability, they'll increase the benefits to make more enticing for Elite and beyond levels.  Difficult to do w/ surplus supply and wanting to expand.


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## GregT (Feb 26, 2016)

I believe this is the exact structure that Starwood announced - I doubt Interval has the bandwidth to buy another system, but........

Best,

Greg


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## Jason245 (Feb 26, 2016)

The TS business can not be spun off as a reit. .. hgvc is in the business of selling property and managing associations not holding and renting rooms..

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## 1Kflyerguy (Feb 26, 2016)

Jason245 said:


> The TS business can not be spun off as a reit. .. hgvc is in the business of selling property and managing associations not holding and renting rooms..
> 
> Sent from my SAMSUNG-SM-N910A using Tapatalk



Correct, I believe the REIT will include the hotels and real estate owned by Hilton...  I assume the Timeshare resorts and undeveloped land with go with the HGVC spin-off, not into the REIT.


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## Beaglemom3 (Feb 26, 2016)

WSJ:  http://www.wsj.com/articles/hilton-...o-reit-separate-timeshare-business-1456487317


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## MikeinSoCal (Feb 26, 2016)

Hmmm.  Does this mean using my Hilton credit cards at HGVC properties will no longer be treated as Hilton purchases after this goes through?


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## jsb15 (Feb 26, 2016)

Going to a TS sales talk next month in NYC.  I thought as an owner who would not buy from the developer this would be a quick session but hopefully there will be interesting developments in the next month.  I wonder if owners will get some preferred access to purchase IPO shares in this deal.


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## Uscjusto (Feb 26, 2016)

Dear Club Member,

I am pleased to share with you that Hilton Worldwide has announced its intention to begin necessary steps for Hilton Grand Vacations to become an independent, publicly traded company. This will not happen immediately, but the process is expected to be complete by the end of this year.

Overall, this decision is highly beneficial to both Hilton Grand Vacations and Hilton Worldwide as it creates dedicated management teams with the resources needed, specific to each business, to take advantage of growth opportunities. With this in mind, I’m honored to have been asked to continue to lead Hilton Grand Vacations into this next chapter as President and CEO.

Understandably, you may be wondering what this means for you.

First and foremost, we anticipate you will see no change to your Club benefits. We also have a Frequently Asked Questions (FAQ) document available on our Club Member website to help answer your questions, and for other questions please send them via email to AskHGV@hgvc.com.

Lastly, but importantly, we are not changing our Hilton Grand Vacations brand. The Hilton values and standards are cornerstones of our business and critical elements in both our historical and future successes. To ensure we maintain strong connections with the Hilton brand, our company will operate with an exclusive, long-term license agreement with Hilton Worldwide.

Thank you for your outstanding loyalty, and we look forward to continuing to bring you the best Hilton Grand Vacations has to offer!

Mark Wang


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## dioxide45 (Feb 26, 2016)

jsb15 said:


> I wonder if owners will get some preferred access to purchase IPO shares in this deal.



The will probably just issue x number of shares for every Hilton share that current shareholders hold. So, if you own Hilton shares, you will get shares in the new company. This is how Marriott spunoff their timeshare division.


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## dioxide45 (Feb 26, 2016)

MikeinSoCal said:


> Hmmm.  Does this mean using my Hilton credit cards at HGVC properties will no longer be treated as Hilton purchases after this goes through?



It shouldn't. Part of that long term agreement will mean that the timeshare company licenses the name from Hilton. They have a licencing agreement to operate their timeshare properties as Hilton. So credit card spend should be treated as Hilton spend. When you stay at all but the 170 Hilton hotels that are owned by Hilton, you are really staying at a property owned by someone else. You still get Hilton spend when you stay at the non Hilton owned properties that carry the Hilton flag.



ronparise said:


> the really cool thing about this spinoff and what makes it different than the Marriott deal and others like it is that it  may be a REIT
> at least I read that the hotels will be spun off into a REIT
> 
> unlike regular common stock, Real Estate Investments Trusts are required to pay out at least 90% of their income to their shareholders
> ...



The timeshare division really doesn't own any real estate except for unsold timeshare interests. The timeshare division can't really be transferred to a REIT since it isn't real estate. Actual real estate is what Hilton will transfer to the REIT. The timeshare division is then spun off a a separate transaction.

It was only a matter of time before Hilton followed suit of Marriott and Starwood. The companies are worth more separate than they are together.



GregT said:


> I believe this is the exact structure that Starwood announced - I doubt Interval has the bandwidth to buy another system, but........
> 
> Best,
> 
> Greg



I think ILG's issue is their ability to handle another transaction of this magnitude. They have all resources in the Starwood acquisition. They didn't really spend any money on the Starwood acquisition, just issue stock to Starwood shareholders. They could do the same with Hilton, but they don't have the man power to handle it IMO. I wonder if the DOJ would have any concerns about three major timeshare brands under one corporate umbrella. Perhaps not with all the other competition out there, but holding three of five of the hotel brands (if you count Wyndham) may not go over well.

One possibility is for HCVG to be acquired by RCI. This would lock them up with RCI and lock II out of Hilton. 

There is also the possibility of a switcharoo. The Starwood/ILG deal falls through and VAC makes a move for Starwood to keep the brands together with the Marriott brands and Hilton is acquired by ILG.

I think though it is more likely that Hilton just spins off on its own and does rather well, just as Marriott did back in 2011.


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## 1Kflyerguy (Feb 26, 2016)

GregT said:


> I love this move -- I think being an independent company will encourage them to continue to expand, and they have a mature and well understood internal exchange system that will make that continued expansion appealing to the existing ownership.
> 
> I see no reason that they will want to limit any of the access that existing owners/affiliates have, and that they will want us to continue to participate and support the on-going entity.
> 
> ...



I just listened to the recording of the investor call, one of the specific benefits he listed for the spin-off of HGVC is the independent company would have different capital allocation, and it times may find it desirable spend more on development, as well as buy back of inventory...

Think that means more resorts, which is definitely good!! 

More ROFR is bit mixed... it drives up prices, which makes resale more expensive, but in theory the units i own should hold value better, at least as long as they continue to buy back..


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## Jason245 (Feb 26, 2016)

1Kflyerguy said:


> I just listened to the recording of the investor call, one of the specific benefits he listed for the spin-off of HGVC is the independent company would have different capital allocation, and it times may find it desirable spend more on development, as well as buy back of inventory...
> 
> Think that means more resorts, which is definitely good!!
> 
> More ROFR is bit mixed... it drives up prices, which makes resale more expensive, but in theory the units i own should hold value better, at least as long as they continue to buy back..


Most of that is sales hype bs... the reality is much simpler. .. some MBA banke4 sitting somewhere sold a ball of bull to someone that by divesting they could "unlock value"... look at big conglamoetes and they are always divesting to unlock value and merging to create synergies. ..

The only ones getting rich are bankers, consultants,  and the executives getting change in ownership payout bonuses. .



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## dwojo (Feb 26, 2016)

I hope nobody like DRI tries to acquire them. That would be a disaster.


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## Jason245 (Feb 26, 2016)

dwojo said:


> I hope nobody like DRI tries to acquire them. That would be a disaster.


I don't think dri has the capital for an aquisiton that large. ..that being said..would be interesting to have dri timeshare in the hilton Hawaiian village. .

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## dioxide45 (Feb 26, 2016)

Jason245 said:


> I don't think dri has the capital for an aquisiton that large. ..that being said..would be interesting to have dri timeshare in the hilton Hawaiian village. .
> 
> Sent from my SAMSUNG-SM-N910A using Tapatalk



They don't necessarily need capital. Just issue new shares for the combined company to shareholders of each of the previous companies. Lots of non cash acquisition deals happen all the time. I believe the Vistana/ILS was this type of arrangement. Vistana was valued at $1.5 Billion. No way ILG had that much cash laying around that they were willing to spend. They are just issuing shares of the new company and previous Starwood owners will actually own 55% of the combined ILG company.


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## Jason245 (Feb 26, 2016)

dioxide45 said:


> They don't necessarily need capital. Just issue new shares for the combined company to shareholders of each of the previous companies. Lots of non cash acquisition deals happen all the time. I believe the Vistana/ILS was this type of arrangement. Vistana was valued at $1.5 Billion. No way ILG had that much cash laying around that they were willing to spend. They are just issuing shares of the new company and previous Starwood owners will actually own 55% of the combined ILG company.


They need access to the capital...and board approval. . I actually wouldn't be surprised if hilton retained some form of significant minority interest in hgvc and a board seat or two just to prevent such an eventuality  (having a property in hilton hawaiian village that wasn't under control of hilton or something with hilton name).

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## Helios (Feb 26, 2016)

GregT said:


> I believe this is the exact structure that Starwood announced - I doubt Interval has the bandwidth to buy another system, but........
> 
> Best,
> 
> Greg



The announcement follows the same theme.


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## dioxide45 (Feb 26, 2016)

Jason245 said:


> They need access to the capital...and board approval. . I actually wouldn't be surprised if hilton retained some form of significant minority interest in hgvc and a board seat or two just to prevent such an eventuality  (having a property in hilton hawaiian village that wasn't under control of hilton or something with hilton name).
> 
> Sent from my SAMSUNG-SM-N910A using Tapatalk



All companies need access to capital for cash flow purposes. There are lots of places to get that. Don't necessarily need cash on hand.

However, I do agree that there will likely be one or more current Hilton board members on the board of the new company. Not sure that Hilton will own any portion of the new company, but current Hilton shareholders will own all of it. Those shareholders would have to approve any acquisition. However, shareholders don't really care about if merging with DRI or any other company is good for the owners. The shareholders are worried about value. If the right company comes along and it returns value to the shareholders, they will approve it. The board is there to return value to the shareholders. If they don't approve the sale, there is always the chance of a hotile take over where the other company goes straight to the shareholders.


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## Jason245 (Feb 26, 2016)

dioxide45 said:


> All companies need access to capital for cash flow purposes. There are lots of places to get that. Don't necessarily need cash on hand.
> 
> However, I do agree that there will likely be one or more current Hilton board members on the board of the new company. Not sure that Hilton will own any portion of the new company, but current Hilton shareholders will own all of it. Those shareholders would have to approve any acquisition. However, shareholders don't really care about if merging with DRI or any other company is good for the owners. The shareholders are worried about value. If the right company comes along and it returns value to the shareholders, they will approve it. The board is there to return value to the shareholders. If they don't approve the sale, there is always the chance of a hotile take over where the other company goes straight to the shareholders.


Again. . I keep going back to hhv example. . They are purposely not putting that in reit. .. so would be interesting if they allowed another brand to be on property. . That is why I think that they would retain some ownership. .that is how they get a board seat... same thing goes for the reit. ... last thing they need is for someone to take that over and Jack up their rent etc...

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## dioxide45 (Feb 26, 2016)

Just because another company buys another, doesn't mean the name and brand goes away. They are going to work out a long term agreement for HGVC to continue to use the Hilton name. Even if DRI or any other company would somehow acquire HGVC, do you think they would throw the Hilton name out the window? That is the one thing that is worth so much to the spinoff company. ILG bought Hyatt and is buying Starwood, those resorts will continue to use those names.

I don't know the dynamics of HHV. Though I would think Hilton would have other ways to protect their interests there if HGVC were acquired by a separate company. It would be possible that the company that acquires HGVC would have members on its board that are current Hilton board members.


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## Talent312 (Feb 26, 2016)

We shall see...
The proof of the pudding is in the eating. -- _English proverb._
.


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## dioxide45 (Feb 26, 2016)

Talent312 said:


> We shall see...
> The proof of the pudding is in the eating. -- _English proverb._
> .



Obviously, most of what will be discussed is speculation. I would expect HGVC to be a separate entity like MVCI, though I expected the same of Starwood. Though Starwood is different because they knew they were shopping the parent hotel company.


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## Beaglemom3 (Feb 26, 2016)

Christopher Nassetta, Hilton CEO, on _Squawk on the Street _(there is a commercial to get through, first) :

http://video.cnbc.com/gallery/?video=3000497187

=


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## GregT (Feb 26, 2016)

dioxide45 said:


> They don't necessarily need capital. Just issue new shares for the combined company to shareholders of each of the previous companies. Lots of non cash acquisition deals happen all the time. I believe the Vistana/ILS was this type of arrangement. Vistana was valued at $1.5 Billion. No way ILG had that much cash laying around that they were willing to spend. They are just issuing shares of the new company and previous Starwood owners will actually own 55% of the combined ILG company.



This is exactly right.  Public companies use their stock as a currency and will issue shares to acquire other assets.  Interval issued a number of shares to Starwood to acquire the business SVO -- interestingly, "legacy Interval" are the the minority shareholders in the company post transaction.

So it's not a question of cash or liquidity, it's dilution and ownership %, and using your stock like it's cash for the acquisition.

Theoretically, there would be nothing to stop Interval from issuing even more shares to acquire HGVC, except that the integration requirements of both Hyatt and Starwood must be significant, and adding a third major integration would likely (and should) spook the Interval stockholders.    There are others (Marriott, DRI, Wyndham) that should consider acquiring HGVC, but I would much prefer to see HGVC remain independent.

It's fascinating to watch this unfold, and will be curious to see who owns what in a few years.

Best,

Greg


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## johneowens (Feb 27, 2016)

*Will this move affect HGVC members' right to convert their HGVC points to HH points?*

Dear Mr Wang

Could you please explain how, if at all, this move will affect HGVC owners' right to convert their HGVC points to Hilton Honors points?

Since we have seen devaluations of our points we are concerned whether our conversion rights might be affected.

Please advise

ManthanksQUOTE=Uscjusto;1862020]Dear Club Member,

I am pleased to share with you that Hilton Worldwide has announced its intention to begin necessary steps for Hilton Grand Vacations to become an independent, publicly traded company. This will not happen immediately, but the process is expected to be complete by the end of this year.

Overall, this decision is highly beneficial to both Hilton Grand Vacations and Hilton Worldwide as it creates dedicated management teams with the resources needed, specific to each business, to take advantage of growth opportunities. With this in mind, I’m honored to have been asked to continue to lead Hilton Grand Vacations into this next chapter as President and CEO.

Understandably, you may be wondering what this means for you.

First and foremost, we anticipate you will see no change to your Club benefits. We also have a Frequently Asked Questions (FAQ) document available on our Club Member website to help answer your questions, and for other questions please send them via email to AskHGV@hgvc.com.

Lastly, but importantly, we are not changing our Hilton Grand Vacations brand. The Hilton values and standards are cornerstones of our business and critical elements in both our historical and future successes. To ensure we maintain strong connections with the Hilton brand, our company will operate with an exclusive, long-term license agreement with Hilton Worldwide.

Thank you for your outstanding loyalty, and we look forward to continuing to bring you the best Hilton Grand Vacations has to offer!

Mark Wang[/QUOTE]


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## Talent312 (Feb 27, 2016)

johneowens said:


> Dear Mr Wang:
> Could you please explain how, if at all, this move will affect HGVC owners' right to convert their HGVC points to Hilton Honors points?



IMHO, they could do away with all H-Honors + H-Hotel connections and we wouldn't be much worse off.  Conversion is notoriously poor use of points, and ending the practice mean access by the Hotel side, and more space for HGVC members.  However, I suspect HGVC & Hilton Hotels will agree to keep it going, as it's to their mutual benefit.
.


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## Sandy VDH (Feb 27, 2016)

dwojo said:


> I hope nobody like DRI tries to acquire them. That would be a disaster.



Oh please not, that would be the worst


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## alwysonvac (Feb 28, 2016)

From the HGVC login page



> *Important Announcement from Hilton Grand Vacations*_
> 
> You may be aware that on Friday, February 26, 2016 that Hilton Worldwide announced its intention to begin necessary steps for Hilton Grand Vacations to become an independent, publicly traded company. A Frequently Asked Questions (FAQ) document is available to help answer your questions. Please copy and paste this link in to a new browser window to view the FAQ: http://www.hgvclubprogram.com/content/FAQ2-26-16.pdf_


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## Hubley (Feb 28, 2016)

*New email. Better or worse*

We've only been members for 1 year.    Is
This a positive move or negative move as are owners????? 
Really concerns us as Elite members. 
Please let me know what's happening.  Don't understand what's going on?????


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## Hubley (Feb 28, 2016)

So tell us what it means if we are n elite member.  Positive or negative ????


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## dioxide45 (Feb 28, 2016)

Hubley said:


> So tell us what it means if we are n elite member.  Positive or negative ????



Who knows? But based on what has been said from HGVC leadership, it means nothing. Nothing changes.


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## 1Kflyerguy (Feb 28, 2016)

Talent312 said:


> IMHO, they could do away with all H-Honors + H-Hotel connections and we wouldn't be much worse off.  Conversion is notoriously poor use of points, and ending the practice mean access by the Hotel side, and more space for HGVC members.  However, I suspect HGVC & Hilton Hotels will agree to keep it going, as it's to their mutual benefit.
> .



During the Q&A portion of the investor call they expressly stated the long term agreement includes access to the loyalty program.  So think that means conversion and booking of hotel rooms remains as is.

As you stated its beneficial to both, so not really a surprise.


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## Tamaradarann (Feb 28, 2016)

dioxide45 said:


> Who knows? But based on what has been said from HGVC leadership, it means nothing. Nothing changes.



I read the same thing in Mark Wang's letter.  The letter provided a question 
e-mail address so I sent this question back to HGVC.  I will post any response that I get.  However, maybe everyone that feels the same way about the Reservation Rules should send a similar e-mail so that HGVC realizes the importance to members of that benefit.

Mark Wang recently alerted owner,members that HGVC was becoming an Independent Public Traded Company.
He stated in the that the change will NOT effect the benefits.  One of the major benefits to owner members are the flexible Reservation Rules.  
Will the Reservation Rules of the HGVC continue to be the same?


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## dioxide45 (Feb 28, 2016)

Tamaradarann said:


> Will the Reservation Rules of the HGVC continue to be the same?



I don't see why it would change. The same people in charge today will be in charge of the independent HGVC. Why would they change the reservation rules just because the company becomes a publicly traded entity?


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## Ron98GT (Feb 28, 2016)

OK, here is my take.

Black Stone owns 44.7% (down from 55%) of Hilton, which owns HGVC.

Blackstone owns Wyndham, which owns RCI.

HGVC is in RCI.

When you look at places like HHV, Elara, the Flamingo, etc, the bulk of the rooms being rented out are HGVC TS's. 

I don't think HGVC is going into II, at least not as long as Blackstone has a say in it.

I don't think that Hilton would want to lose its vast inventory of (TS) rooms, which they rent out on a nightly basis.


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## colatown (Feb 28, 2016)

Ron98GT said:


> OK, here is my take.
> 
> Black Stone owns 44.7% (down from 55%) of Hilton, which owns HGVC.
> 
> ...


I don't think Blackstone owns Wyndham, they did briefly own it c. 2005.


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## colatown (Feb 28, 2016)

Ron98GT said:


> OK, here is my take.
> 
> Black Stone owns 44.7% (down from 55%) of Hilton, which owns HGVC.
> 
> ...


I don't think Blackstone owns Wyndham, they did briefly own it c. 2005.


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## Tamaradarann (Feb 28, 2016)

*More Money. Why did they change the Open Season Rates*



dioxide45 said:


> I don't see why it would change. The same people in charge today will be in charge of the independent HGVC. Why would they change the reservation rules just because the company becomes a publicly traded entity?



They could change the reservation system so that you couldn't reserve more than a week at a time in Club Season.  That would get them a reservation fees for additional nights.  

Higher reservation fee for reserving properties that you don't own during Club season.  Again more reservation fee income.


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## Talent312 (Feb 28, 2016)

colatown said:


> I don't think Blackstone owns Wyndham, they did briefly own it c. 2005.



Your are correct (2x).  From a variety of sources:

The Blackstone Group acquired Wyndham International in June 2005 for $3.24 billion. They commenced selling off its brands. Wyndham and Wyndham Garden Hotels were sold to Cendant. Cendant spun off these and other brands in August 2006 as a public company named "Wyndham Worldwide." It trades on the NYSE - Stock Symbol WYN.

RCI, which began in 1974, became part of Wyndham Worldwide in 2007.
.


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## Ty1on (Feb 28, 2016)

Ron98GT said:


> OK, here is my take.
> 
> Black Stone owns 44.7% (down from 55%) of Hilton, which owns HGVC.
> 
> ...



I don't think the bulk of Wyndham rentals (through RCI) are HGCV, based solely on sheer inventory of HGCV versus Wyndham, Worldmark, and Shell alone, plus the myriad other intervals Wyndham gets its hands on to rent out.

If Wyndham were involved with this move in any way, I'd rather think that the SVO move has put some pressure on Wyndham to take in another system, and this spin-off could be in preparation of a sale of HGCV to Wyndham.

Just thinking out loud.


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## dioxide45 (Feb 28, 2016)

Tamaradarann said:


> They could change the reservation system so that you couldn't reserve more than a week at a time in Club Season.  That would get them a reservation fees for additional nights.
> 
> Higher reservation fee for reserving properties that you don't own during Club season.  Again more reservation fee income.



They could, but if they could, why haven't they already? I don't know what impact the spinoff would have on this type of change.


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## Talent312 (Feb 28, 2016)

Even if they changed the system to make the club unpalatable, would you be satisfied with home-week + RCI bookings?  I could be.


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## GregT (Feb 28, 2016)

Tamaradarann said:


> They could change the reservation system so that you couldn't reserve more than a week at a time in Club Season.  That would get them a reservation fees for additional nights.
> 
> Higher reservation fee for reserving properties that you don't own during Club season.  Again more reservation fee income.



Yes, they could do this but we've learned with Marriott that the fee income is a drop in the bucket versus the income from selling units.  

I think New HGVC will be very focused on continued unit sale, will be interesting to see what happens.

Best,

Greg


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## elleny76 (Feb 29, 2016)

I hope so too!... I bought in grand palisades back in November (still waiting for deed :annoyed: ..long story...:annoyed   anyway just hope everything still the same and I can enjoy this HGVC for a while. 





dsmrp said:


> Ahh, the spinoff would help explain the more aggressive ROFRs talked about recently in another thread
> 
> I guess spin-off was inevitable, after Marriott's, Hyatt (sold) and Starwood's (soon).
> 
> ...


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## Tamaradarann (Mar 1, 2016)

*New Corporate Structure new approach to Profits*



dioxide45 said:


> They could, but if they could, why haven't they already? I don't know what impact the spinoff would have on this type of change.



I don't know.  However, a new Corporate Structure could bring in a new approach to profits.  I don't want anything to change in the system that I bought into.  However, we have seen changes that most of us didn't like and made HGVC more money so I wouldn't put anything past the new Corporate Structure.


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## Tamaradarann (Mar 1, 2016)

*No No No  i wouldn't be satisfied*



Talent312 said:


> Even if they changed the system to make the club unpalatable, would you be satisfied with home-week + RCI bookings?  I could be.



No I wouldn't be satisfied if they changed the system to make it unplayable.  I usually don't stay where I own and have bought what I own because of the flexible reservation rules.  If they change the rules so I can't reserve like I want  my 6 HGVC timeshares would be up for sale.


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## Tamaradarann (Mar 1, 2016)

*Fee Income, Open Season Incomes versus Sales*



GregT said:


> Yes, they could do this but we've learned with Marriott that the fee income is a drop in the bucket versus the income from selling units.
> 
> I think New HGVC will be very focused on continued unit sale, will be interesting to see what happens.
> 
> ...



The fee income maybe a drop in the bucket compared to sales.  However, the increase in Open Season Rates at the few resorts that they raised them is also a drop in the bucket compared to sales.  But they did raise them contrary to the wishes of owner/members.


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## GregT (Mar 1, 2016)

Tamaradarann said:


> The fee income maybe a drop in the bucket compared to sales.  However, the increase in Open Season Rates at the few resorts that they raised them is also a drop in the bucket compared to sales.  But they did raise them contrary to the wishes of owner/members.



I agree, but the question is whether or not HGVC might make a structural change to the point system that made it more difficult to make reservations in Club Season.  And I just don't see that happening because the internal exchange is so fundamental to the sales of new timeshare units. 

I think what restrictions we do see will be at a property by property basis, where there are additional protections given to property owners (Hokulani, Grand Islander) versus a virtual block on the ability to make the reservation.  

I do expect that properties like Maui may not be accessible to non-owners until six months out.  That doesn't bother me.  I just don't see them making a systemic change that prevents us from using points like we are familiar with, because it is such a great sales tool.   And that is where the big revenues are - new unit sales. 

Best,

Greg


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## jestme (Mar 1, 2016)

Tamaradarann said:


> The fee income maybe a drop in the bucket compared to sales.  However, the increase in Open Season Rates at the few resorts that they raised them is also a drop in the bucket compared to sales.  But they did raise them contrary to the wishes of owner/members.



The few resorts they raised them? The Open Season rates are way up in Hawaii, Florida and Las Vegas this year. In the HGVC world, that's most of their resorts.


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## mtm65 (Mar 1, 2016)

Tamaradarann said:


> No I wouldn't be satisfied if they changed the system to make it unplayable.  I usually don't stay where I own and have bought what I own because of the flexible reservation rules.  If they change the rules so I can't reserve like I want  my 6 HGVC timeshares would be up for sale.



I agree.  We would not be happy if we lost the flexibility of the system!


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## Jason245 (Mar 1, 2016)

mtm65 said:


> I agree.  We would not be happy if we lost the flexibility of the system!


That system is their "special sauce "... eliminating it isn't likely. .. changing it for new construction in high demand locations  (like hawaii ).. possible... that being said having all these reservation window exceptions makes the system more complex. . And at end of day,  they make their money selling the product(deeds) and to do that they don't need complexity when the resale market for hgvc is just a drop in bucket compared to the 1 billion in sales a year they are making retail. .

Sent from my SAMSUNG-SM-N910A using Tapatalk


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## Tamaradarann (Mar 1, 2016)

*Reservation System is a Great "Special Sauce" but...*



Jason245 said:


> That system is their "special sauce "... eliminating it isn't likely. .. changing it for new construction in high demand locations  (like hawaii ).. possible... that being said having all these reservation window exceptions makes the system more complex. . And at end of day,  they make their money selling the product(deeds) and to do that they don't need complexity when the resale market for hgvc is just a drop in bucket compared to the 1 billion in sales a year they are making retail. .
> 
> Sent from my SAMSUNG-SM-N910A using Tapatalk



I agree the Reservation System is the "Special Sauce" that made me buy additional RESALES.  However, as we know they are selling frequently to first time HGVC buyers who don't know how flexible the system is: "the Special Sauce".  I don't know what percentage of their sales are to first time buyers versus people adding additional points.  Furthermore, there are a number of owners who are happy to just use the unit(s) that they bought and own so that the flexibility of the reservation system is insignificant.


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## Jason245 (Mar 2, 2016)

Tamaradarann said:


> I agree the Reservation System is the "Special Sauce" that made me buy additional RESALES.  However, as we know they are selling frequently to first time HGVC buyers who don't know how flexible the system is: "the Special Sauce".  I don't know what percentage of their sales are to first time buyers versus people adding additional points.  Furthermore, there are a number of owners who are happy to just use the unit(s) that they bought and own so that the flexibility of the reservation system is insignificant.


Most owners I have met use the points system as intended and don't use their home week.. 

As for upgrades. . I would imagine that about a quarter of their revenue is from that route... but the reality is that those upgrades are probably not as big dollars wise as new sales.. (for 10k more we can get you a package with 2k more points bla bla bla)..  small incremental extra money compared to original 30k.. but still something. .

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## Tamaradarann (Mar 2, 2016)

*Limited Effect of "Special Sauce" on New Sales*



Jason245 said:


> Most owners I have met use the points system as intended and don't use their home week..
> 
> As for upgrades. . I would imagine that about a quarter of their revenue is from that route... but the reality is that those upgrades are probably not as big dollars wise as new sales.. (for 10k more we can get you a package with 2k more points bla bla bla)..  small incremental extra money compared to original 30k.. but still something. .
> 
> Sent from my SAMSUNG-SM-N910A using Tapatalk



Since most of their revenue is from New Sales, the effect of the "Special Sauce" (Flexible Reservation System) on Sales might not be great enough for HGVC to not change the Reservation System.  They changed the Open Season Rates at the most sought after resorts without regard to the effect on timeshare sales.


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## Jason245 (Mar 2, 2016)

Tamaradarann said:


> Since most of their revenue is from New Sales, the effect of the "Special Sauce" (Flexible Reservation System) on Sales might not be great enough for HGVC to not change the Reservation System.  They changed the Open Season Rates at the most sought after resorts without regard to the effect on timeshare sales.


They have to police each of these changes... much easier to not have to do that on a resort by resort basis. .  Open season requires zero policing. .

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## Tamaradarann (Mar 2, 2016)

*Doesn't HGVC make the Reservation Rules*



Jason245 said:


> They have to police each of these changes... much easier to not have to do that on a resort by resort basis. .  Open season requires zero policing. .
> 
> Sent from my SAMSUNG-SM-N910A using Tapatalk



Doesn't HGVC make the Reservation Rules. Please explain the comment "They have to police each of the changes"


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## Jason245 (Mar 3, 2016)

Tamaradarann said:


> Doesn't HGVC make the Reservation Rules. Please explain the comment "They have to police each of the changes"


Every reservation rule means:

1. More to train staff and sales people on.

2. More it testing to ensure reservation systems work right. 

This stuff needs to be enforced and it is much less difficult to enforce 1 rule than 3 or 4 or 5 rules when it comes to reservation windows. .. 

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## Tamaradarann (Mar 3, 2016)

*New Computer System will Take Training*



Jason245 said:


> Every reservation rule means:
> 
> 1. More to train staff and sales people on.
> 
> ...



The New Computer System will take training for all staff anyway.  The new system could program in limits of 7 consecutive days of Club Season Reservations just as there are 30 day limits of consecutive days of Club Season Reservations at present so no training would be needed at all for that rule change. 

Moreover, the new system could be programmed to not allow Club Season Reservations at a resort unless you own at that resort or in that City.  That might actually spur sales at the new resorts for people who want to go there and don't already own there but are owner/members in other locations.  As we know there are already Club Season reservation restrictions unless you own at West 57th Street.


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## Jason245 (Mar 3, 2016)

Tamaradarann said:


> The New Computer System will take training for all staff anyway.  The new system could program in limits of 7 consecutive days of Club Season Reservations just as there are 30 day limits of consecutive days of Club Season Reservations at present so no training would be needed at all for that rule change.
> 
> Moreover, the new system could be programmed to not allow Club Season Reservations at a resort unless you own at that resort or in that City.  That might actually spur sales at the new resorts for people who want to go there and don't already own there but are owner/members in other locations.  As we know there are already Club Season reservation restrictions unless you own at West 57th Street.


Have you ever been involved with it development and implementation?  I have and I can tell you that the level of effort required to do what you just said isn't worth it to them.

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## 1Kflyerguy (Mar 3, 2016)

Tamaradarann said:


> The New Computer System will take training for all staff anyway.  The new system could program in limits of 7 consecutive days of Club Season Reservations just as there are 30 day limits of consecutive days of Club Season Reservations at present so no training would be needed at all for that rule change.
> 
> Moreover, the new system could be programmed to not allow Club Season Reservations at a resort unless you own at that resort or in that City.  That might actually spur sales at the new resorts for people who want to go there and don't already own there but are owner/members in other locations.  As we know there are already Club Season reservation restrictions unless you own at West 57th Street.



Maybe i am just too optimistic, but i just don't see enough upside to HGVC for them to implement changes like that.  Even if there are lots of people that only choose to book at their home resorts, the flexibility or at least perceived flexibility of the HGVC system is a big selling point. Adding a bunch of new restrictions just make the system less desirable to potential buyers. 

I have not seen any indication that is more likely to happen now than at at any time in the past.


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## Tamaradarann (Mar 3, 2016)

*Implementing Computer Changes*



Jason245 said:


> Have you ever been involved with it development and implementation?  I have and I can tell you that the level of effort required to do what you just said isn't worth it to them.
> 
> Sent from my SAMSUNG-SM-N910A using Tapatalk



I have implemented the integration of computer program systems into 3 departments in my career and my son is a professional programmer.  While it can be challenging it can be done .  You are saying that they don't want to and I hope you are right.  What I am saying is that if they want to screw with what owners feel is a good flexible system they will do it just like they did with the Open Season Reservation Rates.  Furthermore, what I am saying that if they change it so I can't reserve vacations like I want to as I do with the current system I will sell my 6 Hilton timeshares.


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## Tamaradarann (Mar 3, 2016)

*I am Optimistic Also, but........*



1Kflyerguy said:


> Maybe i am just too optimistic, but i just don't see enough upside to HGVC for them to implement changes like that.  Even if there are lots of people that only choose to book at their home resorts, the flexibility or at least perceived flexibility of the HGVC system is a big selling point. Adding a bunch of new restrictions just make the system less desirable to potential buyers.
> 
> I have not seen any indication that is more likely to happen now than at at any time in the past.



I am optimistic also so I will continue to use my Hilton Timeshares the way I have for the last 7 years.  However, if they change the system to make it less flexible I will sell my 6 Hilton timeshares whether the name of the company is Hilton, HGVC, or whatever.


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## jestme (Mar 3, 2016)

Jason245 said:


> Have you ever been involved with it development and implementation?  I have and I can tell you that the level of effort required to do what you just said isn't worth it to them.
> 
> Sent from my SAMSUNG-SM-N910A using Tapatalk



I also have been part of IT development for long time now (over 40 years), and it is no longer a question of value, but a question of cost. If you put it in the requirements, the programmers in India will do it. Really, it is about 10-40 lines of code over code that already exists, so the cost would be minimal. 
Having seen the complexities they have introduced for resort location, seasonality, location and season pricing for Open Season, differing point values for certain resorts, etc. nothing would surprise me. That is why I bought where I want to use. HGVC member perks, including exchanges, are subject to their (or whoever owns HGVC at any time) own rules, but ownership is not.
There is nothing stopping them from closing HGVC exchanges altogether, and doing all the exchange options through RCI. There is also nothing stopping them from charging more points for exchanges into the "higher demand" properties. They have already done that with Open Season. It might be a slightly harder sell to sell Orlando or Vegas, but retail buyers would hear "Exchanging to Hawaii through RCI is simple" and that problem would be gone.


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## Jason245 (Mar 3, 2016)

jestme said:


> I also have been part of IT development for long time now (over 40 years), and it is no longer a question of value, but a question of cost. If you put it in the requirements, the programmers in India will do it. Really, it is about 10-40 lines of code over code that already exists, so the cost would be minimal.
> Having seen the complexities they have introduced for resort location, seasonality, location and season pricing for Open Season, differing point values for certain resorts, etc. nothing would surprise me. That is why I bought where I want to use. HGVC member perks, including exchanges, are subject to their (or whoever owns HGVC at any time) own rules, but ownership is not.
> There is nothing stopping them from closing HGVC exchanges altogether, and doing all the exchange options through RCI. There is also nothing stopping them from charging more points for exchanges into the "higher demand" properties. They have already done that with Open Season. It might be a slightly harder sell to sell Orlando or Vegas, but retail buyers would hear "Exchanging to Hawaii through RCI is simple" and that problem would be gone.


I can guarantee that usually the down stream effects of that is more costly then necessary. .remember,  they are investing in Making a new simpler reservation system. .their money is going to the user interface over complex reservation requirements. 

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## dioxide45 (Mar 3, 2016)

Added complexities and rules may not cost so much to program, the costs really come in with UAT and QA testing. That is where the costs really add up. the more rules that you add in to any system, the more you have to test and the more test scenarios you have to run. In some cases the costs of testing can be as much or more than the cost to test it all.


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## Jason245 (Mar 4, 2016)

dioxide45 said:


> Added complexities and rules may not cost so much to program, the costs really come in with UAT and QA testing. That is where the costs really add up. the more rules that you add in to any system, the more you have to test and the more test scenarios you have to run. In some cases the costs of testing can be as much or more than the cost to test it all.


This was the area where I believed the costs would exceed the benefit. . I just didn't want to get technical in this board (given that I don't know audience background ).

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## Tamaradarann (Mar 4, 2016)

*Jestme and I Seem to be on the Same Page*



jestme said:


> I also have been part of IT development for long time now (over 40 years), and it is no longer a question of value, but a question of cost. If you put it in the requirements, the programmers in India will do it. Really, it is about 10-40 lines of code over code that already exists, so the cost would be minimal.
> Having seen the complexities they have introduced for resort location, seasonality, location and season pricing for Open Season, differing point values for certain resorts, etc. nothing would surprise me. That is why I bought where I want to use. HGVC member perks, including exchanges, are subject to their (or whoever owns HGVC at any time) own rules, but ownership is not.
> There is nothing stopping them from closing HGVC exchanges altogether, and doing all the exchange options through RCI. There is also nothing stopping them from charging more points for exchanges into the "higher demand" properties. They have already done that with Open Season. It might be a slightly harder sell to sell Orlando or Vegas, but retail buyers would hear "Exchanging to Hawaii through RCI is simple" and that problem would be gone.



After reading your post I believe that we are on the same page and agree that they could change the exchange rules if they want.  If they will or not remains to be seen.  You point out that you have bought where you want to use.  We didn't for a number of reasons including that we wanted to take advantage of the flexible trading system which was a major selling point for us after we learned the system.  My whole point in exploring this issue is to get people alerted to the possibility that the exchange system might change with the change of ownership type. We as owner/members should be vocal about our thoughts on this issue and make clear how important the flexible exchange system is to us.  The resistance that I have been getting from some others on this thread is not helpful in this regard.  If my fears never get realized I will be one happy owner.  If they do I will sell my timeshares as quickly as possible.


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## Tamaradarann (Mar 8, 2016)

*HGVC Reply to my Input Question on Spinning off Timeshare Division*

I said that I would post any response that I received from HGVC concerning my question about the effect on Club Benefits.  For what it is worth this was the response.

"We anticipate you will see no change to your Club benefits."


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## 1Kflyerguy (Mar 9, 2016)

Tamaradarann said:


> I said that I would post any response that I received from HGVC concerning my question about the effect on Club Benefits.  For what it is worth this was the response.
> 
> "We anticipate you will see no change to your Club benefits."



Thanks for the follow-up.  That's in alignment with what they said at the Earnings call, but good to confirm independently.


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## jestme (Mar 9, 2016)

"We anticipate you will see no change to your Club benefits."[/QUOTE said:
			
		

> That doesn't say there won't be a change. It just says HGVC currently hasn't any anticipation of any. (What else would they say at this point anyhow.) Once they are an independently publicly traded company however, Blackstone has no say as to what happens, who could buy HGVC out, and what rules that company could impose. Blackstone are in it for the profit, so any offer that makes them a lot of quick money is a done deal.
> As we all know timeshare companies have never had a great reputation for their business practices. I felt a lot more secure in my when Hilton owned 100% of HGVC. They had a quality reputation, and a name and brand to uphold. I felt less secure when Blackstone bought them, they were in it strictly from a profit, growth  and share value, and resale standpoint. I feel less secure now. To me, HGVC is now just another publicly traded commodity, now three steps removed from the Hilton name.
> All this for an accounting tax flaw.


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## Jason245 (Mar 10, 2016)

jestme said:


> That doesn't say there won't be a change. It just says HGVC currently hasn't any anticipation of any. (What else would they say at this point anyhow.) Once they are an independently publicly traded company however, Blackstone has no say as to what happens, who could buy HGVC out, and what rules that company could impose. Blackstone are in it for the profit, so any offer that makes them a lot of quick money is a done deal.
> As we all know timeshare companies have never had a great reputation for their business practices. I felt a lot more secure in my when Hilton owned 100% of HGVC. They had a quality reputation, and a name and brand to uphold. I felt less secure when Blackstone bought them, they were in it strictly from a profit, growth  and share value, and resale standpoint. I feel less secure now. To me, HGVC is now just another publicly traded commodity, now three steps removed from the Hilton name.
> All this for an accounting tax flaw.


To be clear. . The spin off of hgvc doesn't appear to have anything to do with taxes. 

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## tdietvorst (Mar 11, 2016)

I wrote the following to AskHGV:
"Will we continue to be able to convert HGVC points to Hilton Honors points?"
Here is the reply:
"Yes. You will continue to be able to convert your ClubPoints into HHonors points."


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## chickensoop (Mar 26, 2016)

If HGVC makes any negative changes, it could potentially put them in breach of contract with current owners and that would really create bad news and greatly influence all future business growth.  I expect no changes with the new owners if they intent on growing the company.  Disgruntled current owners will be bad news.


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