HRC to acquire Welk Resorts [MERGED]

[dsmrp]

What happened to your sense of humor ?

The cynicism from both long time posters is quite refreshing. It has been forged from years of observation of corporate actions compared against corporate words spoken.

Not so much cynical, but realistic from past experience ;-)

 

[Shankilicious]

What happened to your sense of humor ?

The cynicism from both long time posters is quite refreshing. It has been forged from years of observation of corporate actions compared against corporate words spoken.

Fair enough.

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[Kal]

How badly did Hyatt hurt you?

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Hmmm, sounds like Branson is one of your favorite resorts. For Hyatt, I have been an owner for decades and it's illustrative to just sit back and watch what they do. Just watch the annual budget documents and the picture readily comes into focus.

 

[heathpack]

lol, I didn't even find @dioxide45's post to be cynical

 

[travelhacker]

lol, I didn't even find @dioxide45's post to be cynical

Same. Just super logical and well informed.

 

[RunCat]

I'm entirely unimpressed by the Welk acquisition by Marriott Vacations Worldwide. I think Hyatt Residence Club has a mixed bag of resorts, and Welk, the same. I speculate that Welk was a "Fire Sale" acquisition by MVW, with one goal being to put pins in a map, and increase resort locations/destinations.

Have not visited many HRC resorts. And I agree with you re: Welk being a mixed bag. But all of the Welk resorts have their attractions . Cabo, Northstar and Breckenridge are all high-end (IMO). Branson fits Branson. Escondido is a great place to visit and stay. I have had friends go and never leave the resort due to the numerous activities that are on site. It could use some upscaling. But I believe that the foundation is sound and just needs some TLC. My family loves Escondido and will be visiting at least twice this year (coming from CO)

Re: Fire sale -> not so sure about that. But between the inventory backlog, Covid, and a lost lawsuit, I think Welk Resorts was hurting and selling made sense. But there were probably others that would have happily taken the assets and membership that Welk "controlled."

 

[dioxide45]

lol, I didn't even find @dioxide45's post to be cynical

Yeah, I was wondering why my post was quoted there. I was thinking perhaps it was in error, not sure.

 

[nuwermj]

Re: Fire sale -> not so sure about that. But between the inventory backlog, Covid, and a lost lawsuit, I think Welk Resorts was hurting and selling made sense. But there were probably others that would have happily taken the assets and membership that Welk "controlled."

I think it could be described as a fire sale. The selling price was 5.6 times EBITDA (i.e. discretionary cash flow). This is a standard industry metric for estimating value. Marriott paid a primum for ILG at 13 times EBITDA. A timeshare company's value in normal times has been around 9x or 10x EBITDA

 

[GTLINZ]

Yeah, I was wondering why my post was quoted there. I was thinking perhaps it was in error, not sure.

Fair enough. When you start trying to figure out what Hyatt is up to I am the one who assumed you might be being cynical. No harm meant.

Kal's post still has me laughing.

 

[andrea.annis17]

Where is a good place to learn more about the Welk system?

Is it points based or deeded ownership?

The vast majority of HRC ownership is deeded weeks.

I'm curious if the Welk system will be rolled into the HPC trust in an attempt to resuscitate Hyatt's attempt at a points system?

I am Welk owner and they have converted to points. There are some legacy deeded contracts still out there but they don’t sell them anymore.

 

[Kal]

How badly did Hyatt hurt you?

It may have been because they wouldn't let me take a BIG bar of soap and bubble bath into the hot tub???

 

[Shankilicious]

Hmmm, sounds like Branson is one of your favorite resorts. For Hyatt, I have been an owner for decades and it's illustrative to just sit back and watch what they do. Just watch the annual budget documents and the picture readily comes into focus.

Lol! Branson/Ozarks is about the only place within a five hour drive of STL with enough to make a 4-7 night stay worth it.
I've been all over though and really enjoy my Welk ownership the way it is so I do get a bit defensive when someone talks trash on a resort company they know little about or haven't visited but one of their locations.
I would never buy into a company that has fixed weeks, seven seasons to separate the levels of owners, and a single home resort. But I'm not bashing Hyatt, it's just not for me.


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[ann824]

[MERGED]

Marriott Vacations Worldwide plans to rebrand the Welk resorts as Hyatt Residence Club properties
After more than a half-century of family ownership, the Welk Resorts portfolio, including the original Escondido location, is being sold to Marriott Vacations Worldwide Corporation for $430 million.
Once the still pending sale is finalized — by early in the second quarter — Marriott says it plans to rebrand the Welk vacation resorts in California, Colorado, Missouri, New Mexico and Cabo San Lucas as Hyatt Residence Club properties. The purchase price includes roughly 1.4 million Marriott Vacations common shares.

 

[Fasttr]

[Link to closed thread deleted; open threads merged.]

 

[heathpack]

But I'm not bashing Hyatt, it's just not for me.

Yet here you are... a new member of Hyatt Residence Club!

 

[Kal]

.... or haven't visited but one of their locations....

Just to assure my purity, I have never visited any of the Welk properties. My only guess is that Branson is not one the absolute best of the litter. Now, Cousin Eddie (aka Christmas Vacation) may have parked his RV at Branson!

 

[Shankilicious]

Yet here you are... a new member of Hyatt Residence Club!

Lol! Touche! But not by choice and just praying HPP gets revamped to be more like Welk and with a more reasonable buy in. Or just leave us "legacy" points owners alone.....

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[Shankilicious]

Just to assure my purity, I have never visited any of the Welk properties. My only guess is that Branson is not one the absolute best of the litter. Now, Cousin Eddie (aka Christmas Vacation) may have parked his RV at Branson!

Depends on a lot of things. The majority of the units are the exact same as the mountain villas at San Diego and the cabo resort with slightly more rustic decor.
And Branson is great for a less expensive family vacation especially if you're in the Midwest and don't wanna fly the whole family or spend 12+ hours in the car to get to a beach.

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[Kal]

Lol! Touche! But not by choice and just praying HPP gets revamped to be more like Welk and with a more reasonable buy in. Or just leave us "legacy" points owners alone.....

Try not to judge Hyatt by the Portfolio Program. If you consider an upfront fee of $13,000 to play, that also means you have a legacy week (or equivalent points) to add to the pot. Now if you are just someone off the street with no timeshare ownership, the cost of entry is closer to $40,000. So maybe there's some street person who thinks a timeshare opportunity is a solid investment, they may see it as a bargain.

With some careful searching, someone could play in the Hyatt HRC program for $3,000 to $6,000 (with a reasonably quality resale legacy week).

 

[Shankilicious]

Try not to judge Hyatt by the Portfolio Program. If you consider an upfront fee of $13,000 to play, that also means you have a legacy week (or equivalent points) to add to the pot. Now if you are just someone off the street with no timeshare ownership, the cost of entry is closer to $40,000. So maybe there's some street person who thinks a timeshare opportunity is a solid investment, they may see it as a bargain.

With some careful searching, someone could play in the Hyatt HRC program for $3,000 to $6,000 (with a reasonably quality resale legacy week).

Almost everything I've read so far is pretty negative about the HPP. Low inventory, what is there is mostly off season.... I love the quality of Hyatt and would love to be able to transfer into some of the Florida or colorado properties, but it wouldn't be worth $13k to do it when I could exchange through II to those locations

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[Pathways]

Almost everything I've read so far is pretty negative about the HPP

The only thing we have been told for sure is: Welk will be branded 'Hyatt'.

Given most 'Welk' folks here like their point system, and virtually 100% of the Hyatt people think the Hyatt point system is a colossal failure, why are we not speculating that the HPP will instead be folded into the Welk system, but called 'Hyatt"?

 

[Kal]

Almost everything I've read so far is pretty negative about the HPP. Low inventory, what is there is mostly off season.... I love the quality of Hyatt and would love to be able to transfer into some of the Florida or colorado properties, but it wouldn't be worth $13k to do it when I could exchange through II to those locations

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If Welk weeks owners get rolled into Hyatt HRC (and not HPP) it will be great for those folks. However, for the points owners without an underlying deeded unit, it will not be good, especially if HPP charges some kind of outrageous ransom to join.

 

[bizaro86]

I think it could be described as a fire sale. The selling price was 5.6 times EBITDA (i.e. discretionary cash flow). This is a standard industry metric for estimating value. Marriott paid a primum for ILG at 13 times EBITDA. A timeshare company's value in normal times has been around 9x or 10x EBITDA

5.6x ebitda is what they said in the release, but that has about as much truth as the average sales presentation. If you squint, and assume everything turns out rosy the EV/EBITDA is 5.6x.

They deducted the inventory from EV, which is absolutely non standard analysis. They didn't use the 2020 number because of covid, they used 2019. And then they assumed a bunch of synergies and benefits that may or may not happen.

So in summary, if you assume they can easily convert the inventory to cash and that they are able to ramp up quickly to double Welk's 2019 ebitda then they got a bargain at 5.6x ebitda.

On the other hand, using a more standard financial analysis the purchase price of $461 MM is 17.7x Welk's 2019 (pre-covid!) EBITDA of $26 MM.

It very much seems to me they paid a full price here. There will probably be lots of synergies (aka lots of new owners to try and upgrade) but this isn't a bargain purchase initially.

 

[alexadeparis]

It seems that HPP runs more like the Westin/Sheraton Flex products do more so than how Marriott handles DC. Westin/Sheraton Flex owners can only book weeks inventory inside of 8 months. Weeks owners with StarOptions can only book Westin/Sheraton Flex inventory inside of 8 months. That is if Vistana makes the inventory available. However, with HPP it doesn't sound like there is any cross over between weeks (HRC) based points and HPP.

Hyatt is likely to create an exchange company that will allow HPP and Welk Platinum Points (WPP) to trade between each other. This is kind of like the Marriott DC exchange company (not the trust). There may be multiple ways to get into this exchange company. Perhaps simply owning HPP or WPP, either now or in the future. Perhaps some kind of enrollment fee, available to everyone, even HRC weeks owners. Perhaps require the purchase of additional HPP or WPP in the future. It would be very difficult to merge the two trust together. I think that is what is causing a lot of issues with Marriott trying to integrate Vistana into the Marriott program. Vistana has trusts out the wazoo (Westin Flex, Sheraton Flex, two Nanea trust, multiple trusts at WSJ). Then there is also Westin Aventuras in Mexico. Merging or removing inventory from a trust is messy. I suspect what they would do is any new inventory they add in the future would go into HPP and there is an exchange company setup where all inventory from both trusts is dumped in and all HPP/WPP owners can access it. If there is some kind of enrollment and not everyone is automatically allowed in, then it will work more Marriott DC exchange company and they would move inventory into the exchange company when someone books between systems.

Actually there is a very simple way that Hyatt and Welk (and more globally Marriott and Vistana) could merge these trusts: treat ALL owners the SAME. Marriott has realized this in the past when they started their points program and offered very low enrollment into their system. Where all these companies make their mistake is in not realizing that when a unit changes hands, they have already made their money when they sold it the first time. They aren’t being shorted anything, especially in light of the fact that most units are worth very little, yet carry a never ending MF obligation. Could you imagine Chevy wanting to send a disabling engine signal to every used car they saw on the street because the local dealer made a few hundred dollars on the resale, and that buyer didn’t buy new? Why are these timeshare companies so concerned with whether the unit is resale or not? If they really thought their product was that great they would offer to rebuy at a set price so they can sell it again. They SHOULD be concerned with having willing owners that can pay their ever higher MF. If they treated all purchasers alike, they would have no problem merging these inventories and it wouldn’t take 5 years. Didn’t Marriott purchase Vistana in 2017? This is 2021. Treat a point as a point regardless of who owns it. Secondly, anything weeks based should be given the option to enroll at a modest cost into a points overlay that can be elected yearly, like the Marriott weeks/dc interplay. The weeks product, except for perhaps the priority reservation, for a specific fixed/event week, is dead on arrival nowadays. People want flexibility now more than ever. Maybe they can’t go to Hawaii for the third week of April anymore every year like they used to, the product needs to evolve with the times. People don’t want to be trapped into something that is hard to use. People want to go for a long weekend or two over a 7 day vacation all the time. It would generate a lot more goodwill to the public. If anyone asks me about my timeshares I tell them I love them but there is a huge learning curve and you have to plan at least a year in advance. That usually turns them off. An easy to use product would do much better on resale and perhaps people could even recoup some of their outlay. I love my Hyatt units, but I also hate them because of the complicated rules.

 

[heathpack]

Lol! Touche! But not by choice and just praying HPP gets revamped to be more like Welk and with a more reasonable buy in. Or just leave us "legacy" points owners alone.....

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I hope so too but I’m not holding my breath. So far, I’ve not known HRC to make very many owner-friendly moves.

Funny your comment on not wanting a deed. HRC has been (maybe no more!) the best of both worlds- deed plus points. I find myself thinking with this change- well worst case scenario, I can just use my deeded weeks. It will make me sad if HRC makes my points less usable by diluting the system with lots of new users and not giving me access to the new inventory. But worst case scenario I go to Tahoe every June and mountain bike for a week, and I go to Carmel every other year in May for road biking and wine tasting.

I get it that some folks don’t like to travel to the same places repeatedly. Hyatt points have always traded very well in II. So we had three great options- deeded week usage, internal Hyatt trading, and II use. I’m not trying to talk anyone into liking a deeded week but I personally see only upside.

We‘ve settled into a fairly happy cycle of travel: Carmel March-ish, Tahoe June-ish, Park City Septemberish, and Sedona Novemberish. With some modifications to accommodate other locales.

Anyway, I hope the same as you: this merger makes things better. But if not, I can live with visiting the units on my deeds.