Hilton Grand Vacations strikes deal to acquire Diamond Resorts

[dayooper]

I want to share a conversation I had this evening with Maria Kalber regarding the expected purchase by HGVC of Diamond Resorts. She is the Senior VP of Customer Service Operations for Diamond Resorts. Very nice lady and we had a good chat. This is in reference to an email I sent to the CEO's office.

Maria stated that they are trying to be transparent and is going to check on two of my concerns in the underlying documents to see if they can be changed or not by HGVC (number of nights minimum and reservations fees). She stated that just as Diamond did not force people to move from whatever system they were in when Diamond took over a company, HGVC will not force people to move to HGVC when/if they take over (meaning the HGVC way of doing business). The takeover is not guaranteed as it still has to be approved but expected closing date is the second week of June. If the sale is completed, Diamond will be a sub-division of HGVC and will continue to operate under the rules of the Trust we are in. That cannot be changed. Rules for The Club benefits can change (as they always could be in the past). This is where my sticking point with 2 night minimum and reservation fees comes into play as I don't no which document supports that, they have just always been in place. She is going to find those out for me. Obviously, HGVC is going to give folks the chance (probably numerous times) to somehow become part of HGVC (most likely convert your DRI points to HGVC points), for a price of course, but just as people still own fixed weeks in Gold Key or points in Monarch, we will effectively be allowed to exchange as we always have in the past unless we "upgrade". This was the basic gist of the conversation. I hope this puts everyone a little more at ease and I will post any additional info I receive though I don't expect to see anything truly concrete about what will change and what won't change until after the sale is compete in June (if it goes through that is).

Yup, that's how I always thought the gist of the situation was going to go. The devil is in the details, but I think the two systems will be separate with some sort of cross-over. There may be minor changes with both systems, but I think it will be very hard to make drastic ones (unless they benefit the owners and we know that will never happen).

 

[Panina]

I’ve said this before, I’ll say it again.

speculation is just that, speculation. We won’t know until they announce it, and what makes perfect sense to us might make no sense to the corporation, or not be possible thanks to governing documents that are difficult/impossible to change.

There are a few things you can bank on. They won’t/can’t change the rights of owners as they stand now. Sales teams will try to convince you better things await if you by now and are grandfathered in. Rumors and speculation will be rampant (as evidenced on this thread).

We can look at previous mergers and see what’s been done in the past. When DRI purchased Sunterra, for several hundred dollars (between $1,000 and $2,000, I don’t recall the exact amount), DRI owners could joins Sunterra’s existing points program. By virtue of existing DRI owners buying in, Sunterra owners gained access to DRI resorts.

We can look at all the resorts DRI has acquired and merged to see how those where handled. There’s Wyndham and Worldmark. There’s the less successful Marriott and Westin (they’re still not I tgrated). There’s the soon to be Hyatt and Welk. From these we can form speculation, but it’s just guesswork. I’m guessing since Hilton has said they want an entry level program, they’re planning some sort of integration or overlay program, but it will be years before we know what, if anything, gets done.

Totally agree, all speculation. We are comparing apples and oranges. To add to the speculation DRI names get changed to something that includes HGVC, the existing HGVC can be changed to HGVC Deluxe.......someone buys into HGVC DRI, then the sell is to later let them turn it in to buy a deluxe.

 

[tschwa2]

Totally agree, all speculation. We are comparing apples and oranges. To add to the speculation DRI names get changed to something that includes HGVC, the existing HGVC can be changed to HGVC Deluxe.......someone buys into HGVC DRI, then the sell is to later let them turn it in to buy a deluxe.

On the II forum someone posted the transcript of an interview with maybe it was a VP at HGCV who suggested that Diamond would be rebranded as the Hilton Vacation club vs the existing Hilton Grand vacation club and would have a lower average buy in cost with a pathway to upgrade to Hilton Grand at some time in the future with an additional purchase.

 

[SmithOp]

We can look at all the resorts DRI has acquired and merged to see how those where handled. There’s Wyndham and Worldmark. There’s the less successful Marriott and Westin (they’re still not integrated). There’s the soon to be Hyatt and Welk. From these we can form speculation, but it’s just guesswork. I’m guessing since Hilton has said they want an entry level program, they’re planning some sort of integration or overlay program, but it will be years before we know what, if anything, gets done.

HGVC acquired several unsold floors of the Westgate Elara in Vegas some years ago, and have been selling them as HGV brand, but left the prior Westgate owners as orphans. Don’t hold your breath on integration.

I’d be interested in how many unsold units DRI owns. HGV is a sales and management organization now, asset light strategy is the focus.

 

[Fried_shrimp]

Interesting conversation. I agree that HGVC will NOT force Diamond Owners to convert to HGVC. If a Diamond Member wants to become a member of HGVC they will need to purchase a timeshare.

I disagree on the Diamond Points converting to HGVC points issue. HGVC points are assign to a specific property and season that you own. Diamond Points are not. Therefore, I believe that the integrity of the 2 systems will be maintained separately with no conversion. I believe that over time some timeshare weeks at Diamond resorts will be assigned a point value that equates to HGVC points for exchange purposes. I have no clue on how that will be done. Perhaps it will be similar to the HGVC/RCI exchange formula where an RCI Studio is 2400 HGVC points, a 1BR is 3400 HGVC points, a 2BR is 4800 HGVC points. I suspect that a Diamond Points member will need to secure a reservation at a Diamond Resort before they can exchange to the HGVC system so that HGVC doesn't need to deal with the trust system availability that Diamond set up.

It wasn't so much forcing Diamond owners to convert to HGVC. It was about forcing Diamond owners to convert to HGVC rules.

My guess is that HGVC will first acquire unsold inventory (converting the points back to weeks??) from Diamond to allow HGVC owners access to Diamond locations. Then, of course, HGVC will woo Diamond owners to convert to Hilton to acquire more inventory within Diamond.

 

[Sandy VDH]

HGVC acquired several unsold floors of the Westgate Elara in Vegas some years ago, and have been selling them as HGV brand, but left the prior Westgate owners as orphans. Don’t hold your breath on integration.

It was way more than several unsold floors, it was 1,201 units as of the posting I saw. They also purchased Elara because of restructuring to avoid Bankruptcy at Westgate. I think this situation on buying DRI in entirely different.

 

[1Kflyerguy]

It was way more than several unsold floors, it was 1,201 units as of the posting I saw. They also purchased Elara because of restructuring to avoid Bankruptcy at Westgate. I think this situation on buying DRI in entirely different.

I agree this is very different. With Elara its quite possible that Westgate did not to sell / allow the existing owners to transfer their membership from Westgate to HGV. Westgate is not know for making it easy for owners to leave..

 

[Tamaradarann]

If this is the case, I wonder if it have to be at certain more upscale Diamond Resorts? Would you have to make reservations at certain resorts to exchange with HGVC? I know it's been talked about that they may sell off some of the lower quality resorts, but I don't see that happening. I don't think HGVC members would exchange their weeks unless they were the top quality resorts. They already hold back some of the lower RCI resorts from their portal so there's a precedent in that regard. With the differences "quality" (I only say that as HGVC resorts have an upscale feel that some of the DRI resorts don't have), I'm not sure a week exchanged in the lower "quality" resorts would get used.

I am very thankful for the many contributors to this thread. It's been great learning about the DRI system and resorts. These discussions have been very civil and there seems to be a genuine interest in learning about the two systems. Sometimes speculation can be a trigger, especially for those where it infringes on what they already have. I can only speak for myself, but I know absolutely nothing on how the systems will interact. I can only go by what the head honcho's say and they aren't saying much. If/when the deal is approved and completed, I'm sure we will start to hear more. Like @dougp26364 says, I'm interested in what the sales reps are going to push. Not that I believe everything they say, but I am curious on their angle and how it vibes with what the other side is saying.

Some have said on this thread that everything we say is speculation and I totally agree. However, Since HGVC is the buyer and owner of the merger they will have control. As an owner for 15 years with 6 HGVC timeshares and vacationing over 100 nights a year using HGVC points mostly at resorts I don't own I am trying to provide some incite into how HGVC system operates and exchanges within the HGVC system and outside of HGVC with RCI for those that are not familiar with the HGVC system. That is why I detailed the number of points for eschanging HGVC points to RCI.

On the issue of top quality Diamond Resorts I have this to offer. I recall years ago when I wanted to use HGVC points on the website to book an RCI resorts there was a filter or other mechanism that would only allow me to see the RCI resorts that were RCI Gold rated and maybe some Silver rated resorts. I believe that is what you are referring to when you say "hold back some lower quality resorts". Such a filter system could be used to only allow certain Diamond Resorts to deposit their resorts with HGVC, and only allow HGVC members to reserve at those Diamond Resorts.

 

[karibkeith]

People should also be aware that in the Diamond system, a 7-day stay with check-in/-out on Friday or Saturday will require fewer points than a 7-day with check-in any other day of the week. The "week" rate in the charts only applies to those check-in days.

The weekly rate also applies to Sunday to Sunday with a few exception but not many.
If you book less than a week, Friday and Saturday are 30% of the weekly rate and Sunday to Thursday are 10%. If you book a week on Monday to Thursday, it works out to 110%. Beware of booking periods beyond a week but less than a multiple of seven, you get charged the addition of all the days. For instance if you booked from Saturday to check out on the second following Wednesday, you get charged 150% which is 110%, not the weekly rate for Saturday to Saturday, then 10% each for Sunday, Monday, and Tuesday. You can avoid the extra 10% by making two bookings, one for a week (100%) and one for 3 days (3 X 10%).

 

[karibkeith]

You need to be a DRI member to look at this link.

Go to https://www.diamondresorts.com/destinations

 

[bakera]

I want to share a conversation I had this evening with Maria Kalber regarding the expected purchase by HGVC of Diamond Resorts. She is the Senior VP of Customer Service Operations for Diamond Resorts. Very nice lady and we had a good chat. This is in reference to an email I sent to the CEO's office.

Maria stated that they are trying to be transparent and is going to check on two of my concerns in the underlying documents to see if they can be changed or not by HGVC (number of nights minimum and reservations fees). She stated that just as Diamond did not force people to move from whatever system they were in when Diamond took over a company, HGVC will not force people to move to HGVC when/if they take over (meaning the HGVC way of doing business). The takeover is not guaranteed as it still has to be approved but expected closing date is the second week of June. If the sale is completed, Diamond will be a sub-division of HGVC and will continue to operate under the rules of the Trust we are in. That cannot be changed. Rules for The Club benefits can change (as they always could be in the past). This is where my sticking point with 2 night minimum and reservation fees comes into play as I don't no which document supports that, they have just always been in place. She is going to find those out for me. Obviously, HGVC is going to give folks the chance (probably numerous times) to somehow become part of HGVC (most likely convert your DRI points to HGVC points), for a price of course, but just as people still own fixed weeks in Gold Key or points in Monarch, we will effectively be allowed to exchange as we always have in the past unless we "upgrade". This was the basic gist of the conversation. I hope this puts everyone a little more at ease and I will post any additional info I receive though I don't expect to see anything truly concrete about what will change and what won't change until after the sale is compete in June (if it goes through that is).

I understand that you like the 2 night minimum stay, but to us that was the worst thing that Sunterra/Diamond (I cannot remember which) introduced. Prior to that change our trust rules were that stays had to be for either a 7 night stay with a fixed checking day dependant on the specific unit, or you could book 4-night midweek breaks (@ 25% of the weekly points) or 3-night weekend breaks (@ 75% of the weekly points). Only a small number of dedicated units were available for midweek/weekend breaks.

 

[nuwermj]

I’d be interested in how many unsold units DRI owns. HGV is a sales and management organization now, asset light strategy is the focus.

Diamond owns four years of unsold inventory (not sure how many units that would convert into). They also have access to another 12-14 percent of all outstanding points.

 

[dougp26364]

HGVC acquired several unsold floors of the Westgate Elara in Vegas some years ago, and have been selling them as HGV brand, but left the prior Westgate owners as orphans. Don’t hold your breath on integration.

I’d be interested in how many unsold units DRI owns. HGV is a sales and management organization now, asset light strategy is the focus.

Hilton did not acquire Westgate, only the management rights to Elara. There’s a HUGE difference here in that Westgate is still an independently operating company that did not sell those owners rights. They are NOT orphaned. They are still Westgate owners and will never be Hilton owners unless they buy into Hilton independent of their owned week at Elara.

 

[Fried_shrimp]

The weekly rate also applies to Sunday to Sunday with a few exception but not many.
If you book less than a week, Friday and Saturday are 30% of the weekly rate and Sunday to Thursday are 10%. If you book a week on Monday to Thursday, it works out to 110%. Beware of booking periods beyond a week but less than a multiple of seven, you get charged the addition of all the days. For instance if you booked from Saturday to check out on the second following Wednesday, you get charged 150% which is 110%, not the weekly rate for Saturday to Saturday, then 10% each for Sunday, Monday, and Tuesday. You can avoid the extra 10% by making two bookings, one for a week (100%) and one for 3 days (3 X 10%).

True, you would save points using that method but you could also be required to move mid-stay if someone used a DP (Diamond Preference) to book the unit you were staying in for the last 3 nights.

 

[Talent312]

They are NOT orphaned. They are still Westgate owners...

Orphaned in the sense that Westgate abandoned their home to strangers,
who swooped in, took over the offices and put up gaudy signs. But yes,
they can still call their real-parents at Westgate, for whatever that's worth.

I suspect that, given the differences in booking rules + practices, that HGVC
will not even try to unify the booking process for the two systems for years.
They may impose an HGVC overlay eventually, but change will not be quick.
Meantime, the DRI peep will carry-on w/o noticing the new puppet-master.

 

[Fried_shrimp]

I understand that you like the 2 night minimum stay, but to us that was the worst thing that Sunterra/Diamond (I cannot remember which) introduced. Prior to that change our trust rules were that stays had to be for either a 7 night stay with a fixed checking day dependent on the specific unit, or you could book 4-night midweek breaks (@ 25% of the weekly points) or 3-night weekend breaks (@ 75% of the weekly points). Only a small number of dedicated units were available for midweek/weekend breaks.

I don't know who introduced it but when I became a member of Diamond (converted my fixed week unit at Powhatan Plantation) it was already in place and one of the selling points for me so I have to assume Sunterra did. I converted 2 days after Diamond purchased Sunterra back in 2007. As for being the worst thing, that is a personal opinion and without it I would likely have not converted my fixed week to points nor purchased more point contracts afterwards. Probably half of my reservations in a year are weekend stays at the beach or in Orlando until I retire in 2 years.

 

[bakera]

I don't know who introduced it but when I became a member of Diamond (converted my fixed week unit at Powhatan Plantation) it was already in place and one of the selling points for me so I have to assume Sunterra did. I converted 2 days after Diamond purchased Sunterra back in 2007. As for being the worst thing, that is a personal opinion and without it I would likely have not converted my fixed week to points nor purchased more point contracts afterwards. Probably half of my reservations in a year are weekend stays at the beach or in Orlando until I retire in 2 years.

Agreed, it is a personal thing and one of the things that has changed over the years as the various owners try to recruit new owners.
My issue is that the change resulted in significant management fee increases to fund the additional cleaning and maintenance required (most damage is caused when checking in/out whilst pulling suitcases etc. which suddenly tripled in certain units).
The other problem it caused was that previously you could obtain a list of units that had, for example, Saturday checkin and if you arrived early enough you could almost always get your first choice. All of a sudden people were checkin in/out on totally random days. I know I can use my status to select a unit at the time of reservation, but as Gold Elite I can only do this for one reservation per year.

 

[karibkeith]

There are many who theorize that Diamond's resorts won't be upgraded/branded HGVC. I agree that HGVC will need to get revenue from somewhere but if they expect Diamond owners to pony up, I'm afraid that a lot of them will just decide to walk since the value to stay won't be there (yes, I am one of those people). That would not be good for the HOA or HGVC to have a ton of extra units with no maint fees coming in on them. And unfortunately, they communicated the sale but no plan to go with the sale which makes a lot of folks on this side of the fence very nervous..

I agree. This may be my reason to walk away. There may be a class action suit

 

[karibkeith]

DEX is far from being perfected as I still quite often see a Studio/1 bdrm/2 bdrm at the same resort, same week for the same price in points but I do see some variance in weeks at different times of the year and I also see a LOT more in the 6,000 to 8,000 point range whereas almost everything (around 90+%) was max 12,000 points when they first showed us DEX.

I have been trying to value independent weeks I own by studying values assigned to nearby resorts. I also noticed high values initially that dropped as the start date approached. I deposited the weeks in Club Select/Combo (it got renamed but I forget what it got called) but they never showed up in DEX availability. Instead of learning something about DEX, I have succeeded in becoming more confused especially when I see listing for Studio/1 bdrm/2 bdrm at the same resort, same week for the same price in points .

 

[Fried_shrimp]

Agreed, it is a personal thing and one of the things that has changed over the years as the various owners try to recruit new owners.
My issue is that the change resulted in significant management fee increases to fund the additional cleaning and maintenance required (most damage is caused when checking in/out whilst pulling suitcases etc. which suddenly tripled in certain units).
The other problem it caused was that previously you could obtain a list of units that had, for example, Saturday checkin and if you arrived early enough you could almost always get your first choice. All of a sudden people were checkin in/out on totally random days. I know I can use my status to select a unit at the time of reservation, but as Gold Elite I can only do this for one reservation per year.

If you just make a purchase to go to Platinum you can pick your own unit THREE times a year. (just kidding, don't ever make a purchase just for a benefit that can be gone tomorrow).

I do know that changing from weekly to nightly usage is also what drove Powhatan to remove all of their hot tubs which was one of the reasons we bought there in 1989 (in the 1st floor units they had a hot tub in each unit). After they decided to pull the hot tubs because they could not keep up with the cleaning maintenance, they left 2 buildings (about 10 or 12 units) with hot tubs, called them 2 bdrm Deluxe, and increased the price in point costs to book one of those units. Then, last year I believe, they removed the hot tubs from those units as well but left the higher point cost in place so, IMO, there is nothing deluxe about these units anymore. I know changing from week based to nightly based causes additional headaches but it also, IMO, created a lot more sales for folks that couldn't find the time to take a traditional full week.

 

[Fried_shrimp]

I agree. This may be my reason to walk away. There may be a class action suit

While I hate to entertain the thought of walking, it may come to that for me if the benefits don't outweigh the costs. I'm currently spending about $90 a night to stay in a 2 bdrm and would feel comfortable spending up to about $125 a night. If, because of sudden and dramatic increases in maint fees, the cost went to say $150 a night and above, it just wouldn't make sense anymore. I love cruising as well and spend about $100-120 a night on a cruise but that includes food and entertainment which timesharing does not (yes, the resort's pools could be considered entertainment but there is much more than that on a ship). I will always continue to vacation but I will utilize the method that I get the most value from and makes my wallet the happiest.

Personally, I wouldn't put any faith in a class action lawsuit but I've never been a suit happy person. Plus, I feel I have gotten my dollar's worth out of my $105k investment costs plus maint fees over the last almost 32 years.

 

[Fried_shrimp]

I have been trying to value independent weeks I own by studying values assigned to nearby resorts. I also noticed high values initially that dropped as the start date approached. I deposited the weeks in Club Select/Combo (it got renamed but I forget what it got called) but they never showed up in DEX availability. Instead of learning something about DEX, I have succeeded in becoming more confused especially when I see listing for Studio/1 bdrm/2 bdrm at the same resort, same week for the same price in points .

Agreed. It is confusing to understand why a studio, 1 bdrm, and 2 bdrm at the exact same resort over the exact same dates would expect to get the exact same number of points. Who in their right mind would book a Studio if a 2 bdrm could be had for the same costs??

 

[Magus]

I agree. This may be my reason to walk away. There may be a class action suit

Class action? Unlikely one that does anything and none of the other TS mergers have had a successful one. Anti-trust would be one area that could cause problems with the transaction occurring, though.

I think it'll will be years before the systems are integrated at all and much of their synergies will be back of the house (corp personnel, software, etc) or voluntary upgrades. As you said, they aren't going to want 10% of those paying MF to walk, so I expect changes to be slow and with enough of a carrot / upside on any negative change.

 

[escanoe]

If the Federal Trade Commission hasn’t done anything to curb timeshare sales abuses, they are not about to start doing anything on the antitrust side with this merger.

They have better things to do. Who shops competitively for a timeshare (other than us TUGers in the resale market)?

If the FTC were to start poking around timeshares (they will not), the place to start would be with the market consolidation and vertical integration with the exchanges. II and RCI being a duopoly and owned by the two largest timeshare companies.

I am a fairly liberal/progressive person that sees a role for the government in policing markets and competition. Them focusing on timeshares would be about #1,000,000 on my list of things they should care about. NO ONE has to buy one, unlike prescription drugs and hospital services.

Class action? Unlikely one that does anything and none of the other TS mergers have had a successful one. Anti-trust would be one area that could cause problems with the transaction occurring, though.

I think it'll will be years before the systems are integrated at all and much of their synergies will be back of the house (corp personnel, software, etc) or voluntary upgrades. As you said, they aren't going to want 10% of those paying MF to walk, so I expect changes to be slow and with enough of a carrot / upside on any negative change.

 

[Magus]

If the Federal Trade Commission hasn’t done anything to curb timeshare sales abuses, they are not about to start doing anything on the antitrust side with this merger.

They have better things to do. Who shops competitively for a timeshare (other than us TUGers in the resale market)?

If the FTC were to start poking around timeshares (they will not), the place to start would be with the market consolidation and vertical integration with the exchanges. II and RCI being a duopoly and owned by the two largest timeshare companies.

I am a fairly liberal/progressive person that sees a role for the government in policing markets and competition. Them focusing on timeshares would be about #1,000,000 on my list of things they should care about. NO ONE has to buy one, unlike prescription drugs and hospital services.

Doesn’t matter when it comes to anti trust and abuse is not the same as anti trust which has much stronger laws from 20s/30s. Unfortunately antitrust is largely politics these days and has been for decades. Anti-trust is virtually never looked at with what exists and is entirely mergers these days. What you outline is more ideal than reality, and it’s still a huge amt more likely than consumer lawsuit being successful for the suitees