# Royal Caribbean will be bought by an affiliate of Royal Resorts!



## tselios (Jun 4, 2018)

Royal Caribbean


Dear The Royal Caribbean Member:
We would like to share some important information about The Royal Caribbean and the termination of the membership program.

As you know, the final interval is week 43 and the resort will close on November 3, 2018.

The membership agreement stipulates that The Royal Caribbean must be sold in a public or private sale and the net proceeds of the sale, after deducting taxes, commissions and other appropriate charges and expenses, divided among the members in good standing and the Company, with members having first priority.

Rombec S.A. de C.V., the company that owns The Royal Caribbean property, hired three valuation and appraisal firms to carry out independent market valuations of the property. HVS Consulting and Valuation, CBRE Valuation and Advisory Services, and JLL Hotels & Hospitality Group are all leading international valuation companies with years of experience in the hotel and real estate sector.

Each firm presented a valuation of The Royal Caribbean based on the best use of the property and current market conditions in Cancun and they are as follows:

HVS US$56,000,000.00
CBRE US$51,800,000.00
JLL US$54,800,000.00

After reviewing the appraisals, Royal Resorts decided to buy The Royal Caribbean and keep it in the Royal Resorts family.

An affiliate company in the Royal Resorts group will purchase The Royal Caribbean and will pay the highest appraised market value (the HVS valuation), a purchase price of $56 million dollars.

Advertising a resort property for public sale entails marketing costs, broker commissions and legal fees. This decision means The Royal Caribbean will be sold at the best market price and the fees and expenses associated with the sale will be kept to a minimum.

There will be no marketing expenses or broker commissions to pay which results in fewer deductions from the net proceeds available for Residual Rights distribution.

The fact that The Royal Caribbean will be remaining in the Royal Resorts group means that members at the other clubs will still have access to the facilities.

The company has obtained a loan to purchase The Royal Caribbean and will be formalizing the credit agreement in the coming months. The sale will happen on November 5, 2018, right after the last occupancy date. As a result, there will be no additional expenses associated with the upkeep of the resort to pay after the sale takes place.

Once the sale of the resort is formalized and the final report of resort operations and other expenses is available, we will be sharing additional information relating to the Residual Rights distribution, the payment process and timeline.

Residual Rights will only be paid to Members that have these rights stipulated in their membership agreement and are in good standing in accordance with the terms of said agreement. The amount they will receive would be distributed from the net proceeds resulting from the sale of the resort and its assets, after the deduction of expenses such as staff severance payments, debts, taxes and any legal and administrative fees associated with the sale. Any remaining cash reserves available at termination will also form part of the proceeds to be distributed; this includes the club cash reserve and hurricane cash reserve.

We estimate that Residual Rights payments will be sent in the first quarter of 2019.

In order to be eligible to receive their Residual Rights, members must be current with their annual Club Service Fee payments or any other debt on the date of the termination of the Membership program. Members who are currently in arrears are urged to settle their financial obligations now by contacting Interval Servicing.

We know that many members have concerns about The Royal Caribbean employees. They will receive severance payments when the resort closes, in accordance with the Mexican labor laws in effect in November 2018. It is likely that some of them will decide to retire or pursue their own business interests. The purchasing company also intends to hire many of the current employees in the future.

On May 24, Royal Resorts management representatives met with The Royal Caribbean Advisory Council members to brief them on actions taken to date and to present the plan for the sale of the resort. Click here to read their letter endorsing the decision to keep The Royal Caribbean in the Royal Resorts family.

We hope that this information is useful. We have prepared a FAQ section to answer any questions that you may have about the sale of the resort and the Residual Rights distribution. We will also be sharing additional details with you in the months to come.



Warm regards,
Grand Caribbean Company, Ltd.




Sent from my iPad using Tapatalk


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## BoaterMike (Jun 4, 2018)

Yep.  It's been a good ride.  Out with the fixed weeks and in with the points.  

ML


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## bizaro86 (Jun 4, 2018)

How big is the Royal Carribean (ie, how many units?) I went to their website and counted and got 207, does that sound right? Are the numbers listed all lockoffs? IE is D612 actually two units?

The best comparable transaction I could find was the sale of the Fiesta Americana Cancun. It sold to a Mexican Fibra (a type of public company) that I happen to own stock in. The reported sales price in that transaction was $2,892 MM MXP, or about $145 MM USD. It is operated as an all-inclusive and has 507 rooms. That would make the price for the Fiesta Americana $286,000 USD per room. 

Using that price per room and 207 rooms I get $59 MM for the Royal's property, or about the actual sale price. 

If that unit count includes every room in the place that is probably a fair price. If that unit count includes lockoffs as only one unit, then owners are getting screwed, because the valuation firms used that comparable and valued every lockoff unit at the same value as a hotel room.


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## WLEE100919 (Jun 4, 2018)

Using your example D612, it includes 1 villa (with 1 bedroom and 1 living room) and 1 lockoff (with 1 bedroom only). And all units have the same configuration.

Do your math and tell us whether we are getting screwed.  I would start with the presumption that we would get screwed in a situation such as this.  But this being Royal Resort, it may be different.  

Would the current owner be offered an opportunity to buy into new RC at a discount?


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## ilene13 (Jun 4, 2018)

Why do you think you will be screwed?  Most timeshares do not pay residuals!  Haven’t you had 30 years of vacations and wonderful memories?  Sounds like a deal regardless of what you get back.  We are owners at the RS and RH.


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## bizaro86 (Jun 4, 2018)

WLEE100919 said:


> Using your example D612, it includes 1 villa (with 1 bedroom and 1 living room) and 1 lockoff (with 1 bedroom only). And all units have the same configuration.
> 
> Do your math and tell us whether we are getting screwed.  I would start with the presumption that we would get screwed in a situation such as this.  But this being Royal Resort, it may be different.
> 
> Would the current owner be offered an opportunity to buy into new RC at a discount?



In that case my opinion (not rendered in my professional capacity fwiw) is that the valuation firms used the market price for a hotel room to do the valuation work. Since the units at RC are more comparable to 2 hotel rooms, I think it's probably worth about twice the price being paid.

There is probably a bit of a premium deserved for an operating hotel, as it comes with bookings, etc. Still, this price is terrible.

Probably isn't much anyone can do about it...


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## bizaro86 (Jun 4, 2018)

ilene13 said:


> Why do you think you will be screwed?  Most timeshares do not pay residuals!  Haven’t you had 30 years of vacations and wonderful memories?  Sounds like a deal regardless of what you get back.  We are owners at the RS and RH.



I don't have a dog in this fight, but if someone has a contractual obligation to pay me $X, I wouldn't be inclined to take half just because I had nice memories...


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## WLEE100919 (Jun 5, 2018)

ilene13 said:


> Why do you think you will be screwed?  Most timeshares do not pay residuals!  Haven’t you had 30 years of vacations and wonderful memories?  Sounds like a deal regardless of what you get back.  We are owners at the RS and RH.



The annual dues had gone up year after year for a long time,  and then it has stopped at current level for years.  In the meantime, the Mexican peso lost 50% of its value.  Yes RS is better than the other operators, however, the facts are facts.


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## pjrose (Jun 13, 2018)

bizaro86 said:


> How big is the Royal Carribean (ie, how many units?) I went to their website and counted and got 207, does that sound right? Are the numbers listed all lockoffs? IE is D612 actually two units?
> 
> The best comparable transaction I could find was the sale of the Fiesta Americana Cancun. It sold to a Mexican Fibra (a type of public company) that I happen to own stock in. The reported sales price in that transaction was $2,892 MM MXP, or about $145 MM USD. It is operated as an all-inclusive and has 507 rooms. That would make the price for the Fiesta Americana $286,000 USD per room.
> 
> ...



Every unit is the same - two bedrooms (one of which is a lockoff), living room with dining area, full kitchen, two full baths. If you are counting "rooms" do you mean "sleeping rooms" or "bedrooms"?  Or two-bedroom units/villas? 

The first letter, D, refers to the building.  Look at a resort map online at RoyalResorts.com, under Discover Royal Resorts / The Royal Caribbean / Accommodations .  All the Royals (except the Royal Cancun formerly known as Club International de Cancun and Vacation Club International) are horse-shoe shaped, with the open part of the horseshoe on the beach, and the curve back from the beach.  Overlay a clock on the horseshoe; the beach is at 12:00 noon, and the back curve of the horseshoe is 6:00.  The beach front buildings start with A at 11:00, and go around counter-clockwise to B (9:00-10:00), C (8:00-9:00), D ( 6:00), E ( 4:00-5:00), F (2:00-3:00), and two beachfront buildings, G (1:00 - 2:00) and H (12:00).  The first number/s refer/s to the floor:  The beach is first floor, and since the pool area is raised, pool walk-out is 4th floor.  Then the last two number/s count around from 01 to 31.

D 612 is in the D building, at the curve of the horseshoe behind the restaurant. 6 is the sixth floor (but really it's level 3 of the D building, which starts at 4 because it's at pool level), and 12 - the 12th sit counting around counterclockwise from 01, on the beach. 

Bottom line - Lockoff rooms are not separate units.  Each unit is a full two-bedroom villa.


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## pjrose (Jun 13, 2018)

bizaro86 said:


> In that case my opinion (not rendered in my professional capacity fwiw) is that the valuation firms used the market price for a hotel room to do the valuation work. *Since the units at RC are more comparable to 2 hotel rooms, I think it's probably worth about twice the price being paid.*
> 
> There is probably a bit of a premium deserved for an operating hotel, as it comes with bookings, etc. Still, this price is terrible.
> 
> Probably isn't much anyone can do about it...



Perhaps each BEDROOM/bathroom combination is comparable to a hotel room, but the living room, dining area, full American kitchen, and large terrace have to count too!


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## bizaro86 (Jun 13, 2018)

pjrose said:


> Perhaps each BEDROOM/bathroom combination is comparable to a hotel room, but the living room, dining area, full American kitchen, and large terrace have to count too!



That just makes it worse. I think owners are getting paid the equivalent of a hotel room price for a 2 bedroom lockoff. Whether that is actually worth 2x or 2.5x or whatever versus a hotel room isn't a big deal, imo.

I doubt there is much that can be done about the issue, unless someone steps up and makes a public higher offer for the whole thing.


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## BoaterMike (Jun 13, 2018)

According to a recent email, there was an unsolicited bid received last Friday.   Now it's up to RR to decide if they want to match it, beat it, or walk away.  This could really cloud the water for RR.  If they are successful in completing the purchase, they could potentially start selling points soon after based on RC inventory whether it's been renovated or not.  

One thought comes to mind about the valuation.  Operating hotels and resorts being sold will typically have a cash flow stream (hopefully positive).  That's a key piece of what an investor is looking at in great detail plus the assets of the business.  In the RC situation, the cash flow would be management fees, profit after rentals and food sales minus expenses.  I'm sure that these values are determined but it's not the same as the cash flow driven by over 200 units at X% occupancy.  So, whoever purchases the property has to figure on the cash flow for their business model which may or may not be the same interval ownership system.

In any event, let's hope for the deal that provides the highest residuals.

Mike


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## bizaro86 (Jun 13, 2018)

Looks like maybe it was too low to be ignored. Potentially good news for owners. I agree an operating hotel is worth more because the cash flow starts right away, and mentioned that in my second post. No way the active bookings make it worth double though. Maybe an extra 5-15%...


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## dennisokey (Jun 14, 2018)

tselios said:


> Royal Caribbean
> 
> 
> Dear The Royal Caribbean Member:
> ...


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## dennisokey (Jun 14, 2018)

Just to jog everyone's memory. This is what the Mayan sold for

Some people on the rrowners site have said they have received letters giving them a buyout price on their weeks. It was about 60% of the residual.

This is what was posted from
the letter.

Sales Price: $40,200,000.00
Severance payments & Union Agreement Termination: -772,850.72
Broker sales commissions: -781,500.00
Taxes: 0.00
--------------------------------------------------------
Club Cash reserve: 430,439.93
Hurricane fund: 1,779,391.79
------------------------------------------------------------

Total amount to be distributed as Residual Rights: $40,855,481.00

Owners actually ended up with approximately  60% of the listed residual value in the contract on their unit. 

On another note; sad to see the contract run out. Always enjoyed our time there. Great concept that will not be repeated in the future.


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## Robert M (Jun 16, 2018)

dennisokey said:


> Just to jog everyone's memory. This is what the Mayan sold for
> 
> Some people on the rrowners site have said they have received letters giving them a buyout price on their weeks. It was about 60% of the residual.
> 
> ...






The Royal owners were tight-lipped about the sale, but I believe they had a plan all along.  They were not required to put it up for sale to the public (read the agreement).  A general sale would have garnered many higher bids (the size of the beachfront and location are unparalleled).  I believe they were shamed into announcing an outside bid after people realized that they were trying to get a "steal" on the price.  All that nonsense about saving advertising costs in their announcement was just that.  They knew exactly what they were doing.  So many people seem (perhaps because of their good memories) willing to look the other way when it comes to the reality of the situation - the Company is out to make lots of make money, and they're doing it at the expense of all its loyal owners!  How can the difference between the sale of the Mayan (in a totally depressed real estate market) and the sale of the Caribbean (in a really up market - not to mention the over 3X size of the beach and the unparalleled location) be so little?  Also, talking a 60% return at the Mayan makes no sense since they paid FAR less than what the original owners of The Caribbean forked over.  The only losers here are the owners who bought into the con-deal that we would recoup all the residual value+ after 30 years.  Granted, that sounded like a very logical argument - do you know of any property that has been maintained that is worth only a fraction of its original cost after 30 years!  This whole thing is a scam - wake up and smell the flowers...


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## hopjo (Jun 16, 2018)

Am a Caribbean Owner.  We received the following several days later.


*Dear Members of The Royal Caribbean,*
We would like to give you an update on the termination of The Royal Caribbean membership program and the sale of the resort.

Last Friday, June 8, the Company received an offer to purchase The Royal Caribbean. We are currently reviewing this proposal and will make a decision considering what is best for the members and for Royal Resorts.

As soon as we have additional information to share with you about our decision we will let you know.



Warm regards,
*Grand Caribbean Company, Ltd.*


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