Hilton Grand Vacations strikes deal to acquire Diamond Resorts

[brp]

Plus, one of my HGV converts 50:1 with Hilton Honors (and also no club booking fees for all my points), combined with buy 4 nts with pts get 5th free and free weekend night cert + Hilton hotel diamond status with CC = nearly unlimited flexibility worldwide with Hilton, I am thrilled with the HGV system in my two years in the program. With my low MF locations really even 25:1 works for me well. I am looking forward to seeing if Diamond will open up any international locations, even out of season, for me, which would be a huge bonus.

Although I (and others) will note that, except for HGVC points that would otherwise go wasted, converting HGVC to HH is generally not a cost-effective strategy as the points/stays can usually be had for less than the HGVC investment. As a stopgap to prevent wastage, though, not bad at all.

Cheers.

 

[Magus]

Although I (and others) will note that, except for HGVC points that would otherwise go wasted, converting HGVC to HH is generally not a cost-effective strategy as the points/stays can usually be had for less than the HGVC investment. As a stopgap to prevent wastage, though, not bad at all.

Cheers.

Depends - at 50:1, with 5th night free and $0.005 value per Hilton peso, it’s the equiv of $.3125 per hgv point with MFs roughly half that on mine, plus way more flexibility on both location, time booked and number of nights, especially over weekends where Hilton pesos are same cost as weekdays while HgV is double usually on weekends. And you can find redemptions in the $0.008 to $0.012 ranges or even higher from time to time. For example, next year in Italy we will do 5 nights in Tuscany with timeshare and 5 nights in Rome with converted points at $0.006 value per Hilton peso

For 25:1 I would tend to agree, though, but with planning you can still get some pretty decent value out of it even not just as a stop gap last resort, and they don’t expire like HGV points. Cheers

 

[Tamaradarann]

I initially thought that the merger would be good for DR owners. However, I must say that I am not thinking it may not be as good a deal for us. First, I have been to quite a few Hilton presentations and they throw a lot points around but I notice that they don’t have a lot of properties. I went to two presentations in New York and was not impressed. I have stayed in Hilton Hawaiian Village, it was okay but doesn’t compare to Ko Olina in my humble opinion. I stayed at the Hilton timeshare in Orlando where they boasted of Universal going to build right next to the property. Hilton is fine, but not extraordinary in my opinion. I have been with Diamond since they took over Sunterra. My issue with them has always been their maintenance fees being so high and seeing their resorts being rented for less than what I pay in points. I use DR mainly for Hawaii. I love KBC and The Point but for different reasons. The Point is in a quiet area and it is beautiful and has everything in the unit. I like KBC for its location. It’s close to Whaler’s Village, you can walk to places to eat and there’s a grocery store and pizza shop across the street. They’re affiliate on the Big Island, Vacation Internationale at the base of the volcano is a nice property and close to the Black Sand Beach.
I have not been to the European properties, but my European counterparts enjoy them for holiday.

Diamond is not the best but it is decent. They have some properties that are equivalent to HGVC. My original timeshare company, Epic Resorts, had great locations such as the Daytona Beach Regency, Sedona Summit and the Palm Springs Marquis Villas. Back in the day these were all great places to stay as they were big accommodations and were in great locations. However, they were not ever maintained to the level that they once were after being bought.

I caution HGV owners to not look down their noses at Diamond. Depending on how this merger goes, you have a lot to gain. I feel we as Diamond owners could potentially gain, but I don’t really see that. I see a bunch of new owners who have limited places to go competing with lover 400,000 Diamond owners for units at the most popular times. I hope that it is run similarly like Marriott in which Marriott owners still get preference and Vistana still has their preferences for their properties before they start allowing others to to cross over from other systems.

I don't think I have conveyed a message of looking down on Diamond in my posts. I have tried to give an even an approach to how the merger of the systems could work without impeding the integrity and benefits of the individual HGVC and Diamond Clubs.

I must comment on your thoughts about the Hilton Hawaiian Village versus Ko Olina. When comparing the two one need to take into consideration what type of vacation one wants.

Ko Olina is a beautiful relatively quite location in the middle of no where. It is great for a nice resort type of vacation in a great tropical location. However, you need a car to go anywhere and many places are far away.

The Hilton Hawaiian Village is in the middle of a city. There is so much to do in the area. We vacation at the Hitlon Hawaiian Village for months at a time without a car since many things are within walking distance and the bus service is right there and very convienient and inexpensive. We never lack for things to do and some days we have 2 or 3 things we want to do and have to choose between them. We go to Parades, All Types of Music Performances. Symphony Concerts, the Royal Hawaiian Band, Iolani Palace, Art Museums, Street Festivals, Beer Festivals, Art Festivals, Live Theatre Art Shows, All different types of Restaurants. It is quite different than Ko Olina.

 

[csalter2]

I don't think I have conveyed a message of looking down on Diamond in my posts. I have tried to give an even an approach to how the merger of the systems could work without impeding the integrity and benefits of the individual HGVC and Diamond Clubs.

I must comment on your thoughts about the Hilton Hawaiian Village versus Ko Olina. When comparing the two one need to take into consideration what type of vacation one wants.

Ko Olina is a beautiful relatively quite location in the middle of no where. It is great for a nice resort type of vacation in a great tropical location. However, you need a car to go anywhere and many places are far away.

The Hilton Hawaiian Village is in the middle of a city. There is so much to do in the area. We vacation at the Hitlon Hawaiian Village for months at a time without a car since many things are within walking distance and the bus service is right there and very convienient and inexpensive. We never lack for things to do and some days we have 2 or 3 things we want to do and have to choose between them. We go to Parades, All Types of Music Performances. Symphony Concerts, the Royal Hawaiian Band, Iolani Palace, Art Museums, Street Festivals, Beer Festivals, Art Festivals, Live Theatre Art Shows, All different types of Restaurants. It is quite different than Ko Olina.

I was not stating that anyone in particular was looking down on Diamond. However, I have noticed quite a few from HGV mention bringing DR properties up to HGV standards. I would be the first to say that DR has some dogs for resorts, but they also have some real “diamonds” in their collections and properties that with a little renovation and TLC could be very, very special.

I will admit that I am probably spoiled. I usually spend 5 or 6 weeks when I go to Hawaii and visit three islands. I always save Oahu for last because it has the most things to do. I rent a car because no matter where you are on the island you need a car if you want to get around even if you are downtown. I like the North Shore area and even if you’re downtown you need a car to get there unless you want to take a cab or something. I say I am spoiled because when I am staying at Ko Olina I also book a two or three days at the Royal Kuhio downtown through DR. I love Waikiki’s beach, my wife likes the shopping and my kids like the action. It allows us to spend some time there and have a place to change clothes, leave items that were bought and most importantly provide a place to park. We don’t sleep there unless we have some night activity and we don’t feel like driving back to Ko Olina and that has only happened once or twice. Ko Olina is not that far from downtown. Heck, from where I live from Los Angeles, Waikiki to Ko Olina is down the block.

 

[Tamaradarann]

I was not stating that anyone in particular was looking down on Diamond. However, I have noticed quite a few from HGV mention bringing DR properties up to HGV standards. I would be the first to say that DR has some dogs for resorts, but they also have some real “diamonds” in their collections and properties that with a little renovation and TLC could be very, very special.

I will admit that I am probably spoiled. I usually spend 5 or 6 weeks when I go to Hawaii and visit three islands. I always save Oahu for last because it has the most things to do. I rent a car because no matter where you are on the island you need a car if you want to get around even if you are downtown. I like the North Shore area and even if you’re downtown you need a car to get there unless you want to take a cab or something. I say I am spoiled because when I am staying at Ko Olina I also book a two or three days at the Royal Kuhio downtown through DR. I love Waikiki’s beach, my wife likes the shopping and my kids like the action. It allows us to spend some time there and have a place to change clothes, leave items that were bought and most importantly provide a place to park. We don’t sleep there unless we have some night activity and we don’t feel like driving back to Ko Olina and that has only happened once or twice. Ko Olina is not that far from downtown. Heck, from where I live from Los Angeles, Waikiki to Ko Olina is down the block.

We have been to all 6 islands that you can go to and love them all but we love Honolulu the best because of all that there is to do and we don't need a car. One of the things that I always say about going to Hawaii is if you must rent a car why stay in Honolulu. All of the Islands are great but in Honolulu a car is expensive to park, parking is hard to find, and the traffic is bad. Therefore, I can see the benefit of staying in Ko Olina when on Oahu with a car.

I can see from your post that you and your family have found some of the benefits of staying in Honolulu and I don't believe you have even touched the surface of some of the things to do that I mentioned in the previous e-mail. From 2009 to 2020 we have spent most of the winter in Honolulu and have become very familiar with what there is to do.

We are in our 70's so while we can drive we would rather not so staying in Honolulu and being able to take THE BUS, at the inexpensive Senior rates or with a bus pass, works out great. When my husband worked he travelled to Queens from Suffolk County with a minimum 1-1/2 hour drive each way so we know what long distances are but that was to make money not to spend money and enjoy ourselves. Also, we don't drink and drive but we do like to drink so not having the burden of a car to get around is another factor for an enjoyable vacation for us. By the way you can get to the North Shore by Bus and with our Senior Bus Pass it is Free. However, we usually do rent a car for the day when we want to go out exploring to far out other parts of the island since THE BUS doesn't run that frequently there and it does take a long time with many stops.

 

[dayooper]

I was not stating that anyone in particular was looking down on Diamond. However, I have noticed quite a few from HGV mention bringing DR properties up to HGV standards. I would be the first to say that DR has some dogs for resorts, but they also have some real “diamonds” in their collections and properties that with a little renovation and TLC could be very, very special.

I can only speak for myself, but I don’t think saying bringing resorts up to HGVC standards is looking down on DRI. Looking at pictures that DRI uses and personal albums (like @dougp26364 ), there is a difference in style and upkeep between the two. One of the things that my family and I like is when we go to an HGVC resort, there are no surprises. We have walked into hotel rooms that are dirty, broken and not well maintained. Walking into an HGVC resort, we know what to expect. We know that we won't get old or worn furniture, carpeting or bedding. We will get properly working appliances, very comfortable beds and working electronics. We know the unit will be very clean and, if it's not, it will be taken care of quickly. Here's an example. In 2018, we spent a week in Vegas at HGVC on The Boulevard. Our dishwasher was making clunking noises as it ran, very annoying. We always try to let the front desk know of any issues so they could look into them after we check out. They called us and scheduled a time for Maintenence to take a peek. They looked at it, determined it was failing and replaced it. All within an hour. It was quick, painless and they never let the appliance fail, causing more damage (or the owner not being able to use the appliance). I don't know if DRI has the same consistent maintenance/upgrade policies/schedules, but the online reviews of many DRI resorts I have read suggest otherwise. Yes, there are some that are very well maintained, but it's not consistent from resort to resort. If HGVC can bring up the level of consistency throughout the system while not raising (or even lowering) MF's, that's a huge win for every DRI member.

 

[csalter2]

We have been to all 6 islands that you can go to and love them all but we love Honolulu the best because of all that there is to do and we don't need a car. One of the things that I always say about going to Hawaii is if you must rent a car why stay in Honolulu. All of the Islands are great but in Honolulu a car is expensive to park, parking is hard to find, and the traffic is bad. Therefore, I can see the benefit of staying in Ko Olina when on Oahu with a car.

I can see from your post that you and your family have found some of the benefits of staying in Honolulu and I don't believe you have even touched the surface of some of the things to do that I mentioned in the previous e-mail. From 2009 to 2020 we have spent most of the winter in Honolulu and have become very familiar with what there is to do.

We are in our 70's so while we can drive we would rather not so staying in Honolulu and being able to take THE BUS, at the inexpensive Senior rates or with a bus pass, works out great. When my husband worked he travelled to Queens from Suffolk County with a minimum 1-1/2 hour drive each way so we know what long distances are but that was to make money not to spend money and enjoy ourselves. Also, we don't drink and drive but we do like to drink so not having the burden of a car to get around is another factor for an enjoyable vacation for us. By the way you can get to the North Shore by Bus and with our Senior Bus Pass it is Free. However, we usually do rent a car for the day when we want to go out exploring to far out other parts of the island since THE BUS doesn't run that frequently there and it does take a long time with many stops.

Ha! I’ve been going to Hawaii since the mid 90’s. I used to stay mostly in the Honolulu/Waikiki area until I bought Marriott’s Ko Olina in 2003. I’m quite familiar with downtown and used to take the bus to almost every place to save money back in my early years going there. I was born and raised in New York City so public transportation is familiar to me as well. I’ve lived in California for the last 37 years and got spoiled driving everywhere. I’ve never drunk alcohol so driving isn’t an issue. I think I have chilled out a bit. I am not one who needs to be in the city, but I like to have access to the things it offers when I want it. I live in Orange County California. I live smack in the middle between L.A. and San Diego. I love going to L.A. to watch the Lakers and or San Diego to catch plays at the Old Globe or The La Jolla Playhouse. Cities offer lots of fun to do. However, I love the Hawaiian scenery. I absolutely love Kauai! After Oahu, it’s my second favorite island because of its pure beauty and simplicity. I can appreciate that. I live 5 minutes by car from Laguna Beach and the coastal cities of Orange County but their beauty doesn’t compare to that of Hawaii.

Sounds like we have lots in common. I’m not in my 70’s but my early 60’s, but I have learned to enjoy just being able to visit the beautiful place on earth. Time sharing has been one avenue to help facilitate that.

 

[csalter2]

I can only speak for myself, but I don’t think saying bringing resorts up to HGVC standards is looking down on DRI. Looking at pictures that DRI uses and personal albums (like @dougp26364 ), there is a difference in style and upkeep between the two. One of the things that my family and I like is when we go to an HGVC resort, there are no surprises. We have walked into hotel rooms that are dirty, broken and not well maintained. Walking into an HGVC resort, we know what to expect. We know that we won't get old or worn furniture, carpeting or bedding. We will get properly working appliances, very comfortable beds and working electronics. We know the unit will be very clean and, if it's not, it will be taken care of quickly. Here's an example. In 2018, we spent a week in Vegas at HGVC on The Boulevard. Our dishwasher was making clunking noises as it ran, very annoying. We always try to let the front desk know of any issues so they could look into them after we check out. They called us and scheduled a time for Maintenence to take a peek. They looked at it, determined it was failing and replaced it. All within an hour. It was quick, painless and they never let the appliance fail, causing more damage (or the owner not being able to use the appliance). I don't know if DRI has the same consistent maintenance/upgrade policies/schedules, but the online reviews of many DRI resorts I have read suggest otherwise. Yes, there are some that are very well maintained, but it's not consistent from resort to resort. If HGVC can bring up the level of consistency throughout the system while not raising (or even lowering) MF's, that's a huge win for every DRI member.

DR does lack consistency without a doubt. They’ve bought several that had financial problems whose resorts were in need of repair. However, there are the gems. One of the reasons I bought Marriott properties was due to wanting the consistency in the quality of resorts so I get it.

 

[dayooper]

DR does lack consistency without a doubt. They’ve bought several that had financial problems whose resorts were in need of repair. However, there are the gems. One of the reasons I bought Marriott properties was due to wanting the consistency in the quality of resorts so I get it.

Absolutely there are gems! Cabo Azul looks amazing! I think Tahoe and Sedona Springs look nice as well. I'm sure if I looked more in depth, I would find others.

 

[Fried_shrimp]

I don't know if DRI has the same consistent maintenance/upgrade policies/schedules, but the online reviews of many DRI resorts I have read suggest otherwise.

In my travels with DRI I have only had an issue one time that could not be repaired (dead built-in microwave). They had to replace it when the unit was empty due to how it was installed and the work it required. They did offer to move us to another unit but we declined since it was just a weekend stay. Other than that, every issue was corrected in a fairly timely manner.

Now how many issues are found at an HGVC property at check in compared to a DRI property could be a good bit different but having never stayed in an HGVC property so I don't really know.

 

[1Kflyerguy]

In my travels with DRI I have only had an issue one time that could not be repaired (dead built-in microwave). They had to replace it when the unit was empty due to how it was installed and the work it required. They did offer to move us to another unit but we declined since it was just a weekend stay. Other than that, every issue was corrected in a fairly timely manner.

Now how many issues are found at an HGVC property at check in compared to a DRI property could be a good bit different but having never stayed in an HGVC property so I don't really know.

We have experienced a few issues with HGVC units, but they usually make a solid effort to resolve them. I think we had built in microwave fail on us, and they provided a countertop unit. We also had a sofabed bed in the living room at Kings Land, that was really beat. We were only using it as sofa, but it was really uncomfortable. I lifted the cushions and frame looked bent, i guess some kids must have really been jumping or something.. Once again they replaced the sofa with a different one.

 

[nuwermj]

Then it sounds like Diamond must have a lot of unsold inventory they can use for their sales and add to to their points trust.

Developers use ROFR as way to acquire inventory.

The HGV merger presentation slides say that Diamond has "4 years of excess developed inventory available for sale." And that is without using ROFR. As Mark Wang stated in the written section: "The maturity of Diamond’s trust will also provide us with the ability to recapture a high level of inventory, which creates a capital-efficient model." Diamond's inventory recapture model makes ROFR unnecessary.

 

[dayooper]

The HGV merger presentation slides say that Diamond has "4 years of excess developed inventory available for sale." And that is without using ROFR. As Mark Wang stated in the written section: "The maturity of Diamond’s trust will also provide us with the ability to recapture a high level of inventory, which creates a capital-efficient model." Diamond's inventory recapture model makes ROFR unnecessary.

Can someone explain who this works?

 

[Tamaradarann]

Ha! I’ve been going to Hawaii since the mid 90’s. I used to stay mostly in the Honolulu/Waikiki area until I bought Marriott’s Ko Olina in 2003. I’m quite familiar with downtown and used to take the bus to almost every place to save money back in my early years going there. I was born and raised in New York City so public transportation is familiar to me as well. I’ve lived in California for the last 37 years and got spoiled driving everywhere. I’ve never drunk alcohol so driving isn’t an issue. I think I have chilled out a bit. I am not one who needs to be in the city, but I like to have access to the things it offers when I want it. I live in Orange County California. I live smack in the middle between L.A. and San Diego. I love going to L.A. to watch the Lakers and or San Diego to catch plays at the Old Globe or The La Jolla Playhouse. Cities offer lots of fun to do. However, I love the Hawaiian scenery. I absolutely love Kauai! After Oahu, it’s my second favorite island because of its pure beauty and simplicity. I can appreciate that. I live 5 minutes by car from Laguna Beach and the coastal cities of Orange County but their beauty doesn’t compare to that of Hawaii.

Sounds like we have lots in common. I’m not in my 70’s but my early 60’s, but I have learned to enjoy just being able to visit the beautiful place on earth. Time sharing has been one avenue to help facilitate that.

We were brought up on Long Island where without a car you are totally disfuncional so I know the feeling that you are conveying when you say you got "spoiled into driving everywhere". Vacations before 2001 in our lives were always a car vacation. Either we drove to the vacation, or if we took a plane we rushed to rent a car at the destination so we could drive to everything. In 2001 we took a flight to Miami to stay in Miami South Beach and didn't get a car. That changed our vacation lives. That location was so prime for vacationing without a car that we have always strived to vacation in an area that we didn't need a car since. Waikiki is certainly one of those areas and with the weather being so nice you can do it 12 months a year. Other areas that we have vacationed in without a car are; New York City, Washington DC, New Orleans, San Diego Gas Lamp District, San Francisco.

 

[nuwermj]

Can someone explain who this [inventory recapture model] works?

Basically Diamond holds an option to acquire defaulted points from the HOA. Generally, 12-15% of the points controlled by an HOA are in default. On the plus side this system subsidizes the bad debt line in the HOA budget. On the negative side the model requires a weak secondary market for points. Diamond claims their cost of recovering a week's equivalent in points is $750. The following is Diamond's description of the model.

==quote==
With respect to members who have failed to pay their annual maintenance fee or any assessment, we have entered into IRAAs with a substantial majority of the Collection Associations and HOAs for our managed resorts in North America, together with similar arrangements with the European Collection and a majority of our European managed resorts. Each agreement provides that in the event that a member fails to pay these amounts, we have the option to enforce the rights of the HOA or Collection Association with respect to the subject VOI, which includes preventing members from using their points or intervals and, if the delinquency continues, recovering the property in the name of the HOA or Collection Association. Our rights to recover VOIs for failure to pay annual maintenance fees or assessments are subject to any prior security interest encumbering such VOI, including any interest we hold as a lender on a consumer loan. We are responsible for payment of certain fees, ranging from 30% to 100% of the annual maintenance fees relating to the defaulted intervals or points. Depending upon whether the VOI in default is intervals or points, recovery is effected through a foreclosure proceeding or by contract termination. The recovery of points is more efficient than the recovery of intervals, because the recovery of intervals is governed by local real estate foreclosure laws that significantly lengthen recovery periods and increase the cost of recovery.

Under the terms of our IRAAs, we are granted full use of the inventory as a result of delinquent annual maintenance fees or assessments for rental and marketing purposes, and we are under no obligation to commence recovery proceedings. ... Upon recovery, the HOA or Collection Association transfers title to the VOI to us, and we are responsible for all annual maintenance fees and assessments thereafter. We have written or oral agreements with most of our European HOAs that provide us similar rights with respect to recovering delinquent VOIs. After recovery, VOIs are returned to our inventory and become available for sale. Although we recover inventory in the form of intervals as well as points, all inventory recovered is sold in the form of points. Recovered intervals are transferred to one of the Diamond Collections and become part of our points-based system.

VOIs recovered through the default process are added to our existing inventory and resold at full retail value. Although the volume of points or intervals that we recover could fluctuate in the future for various reasons, we have recovered in the ordinary course of our business approximately 2% to 5% of the total outstanding VOIs in each of the past five years. Recovered VOI inventory may be sold by us in the form of points to new customers or existing members.

==end quote==

 

[ljmiii]

Basically Diamond holds an option to acquire defaulted points from the HOA. Generally, 12-15% of the points controlled by an HOA are in default....

Thank you. This was very informative.

 

[dayooper]

Basically Diamond holds an option to acquire defaulted points from the HOA. Generally, 12-15% of the points controlled by an HOA are in default. On the plus side this system subsidizes the bad debt line in the HOA budget. On the negative side the model requires a weak secondary market for points. Diamond claims their cost of recovering a week's equivalent in points is $750. The following is Diamond's description of the model.

==quote==
With respect to members who have failed to pay their annual maintenance fee or any assessment, we have entered into IRAAs with a substantial majority of the Collection Associations and HOAs for our managed resorts in North America, together with similar arrangements with the European Collection and a majority of our European managed resorts. Each agreement provides that in the event that a member fails to pay these amounts, we have the option to enforce the rights of the HOA or Collection Association with respect to the subject VOI, which includes preventing members from using their points or intervals and, if the delinquency continues, recovering the property in the name of the HOA or Collection Association. Our rights to recover VOIs for failure to pay annual maintenance fees or assessments are subject to any prior security interest encumbering such VOI, including any interest we hold as a lender on a consumer loan. We are responsible for payment of certain fees, ranging from 30% to 100% of the annual maintenance fees relating to the defaulted intervals or points. Depending upon whether the VOI in default is intervals or points, recovery is effected through a foreclosure proceeding or by contract termination. The recovery of points is more efficient than the recovery of intervals, because the recovery of intervals is governed by local real estate foreclosure laws that significantly lengthen recovery periods and increase the cost of recovery.

Under the terms of our IRAAs, we are granted full use of the inventory as a result of delinquent annual maintenance fees or assessments for rental and marketing purposes, and we are under no obligation to commence recovery proceedings. ... Upon recovery, the HOA or Collection Association transfers title to the VOI to us, and we are responsible for all annual maintenance fees and assessments thereafter. We have written or oral agreements with most of our European HOAs that provide us similar rights with respect to recovering delinquent VOIs. After recovery, VOIs are returned to our inventory and become available for sale. Although we recover inventory in the form of intervals as well as points, all inventory recovered is sold in the form of points. Recovered intervals are transferred to one of the Diamond Collections and become part of our points-based system.

VOIs recovered through the default process are added to our existing inventory and resold at full retail value. Although the volume of points or intervals that we recover could fluctuate in the future for various reasons, we have recovered in the ordinary course of our business approximately 2% to 5% of the total outstanding VOIs in each of the past five years. Recovered VOI inventory may be sold by us in the form of points to new customers or existing members.

==end quote==

Perfect. Thanks!

 

[CalGalTraveler]

@nuwermj This is extremely helpful info. Where was this published? Can this policy be changed? or is this part of a contractual trust agreement with customers?

For example: "Although we recover inventory in the form of intervals as well as points, all inventory recovered is sold in the form of points."
Could this be changed if HGVC wanted to keep the recovered intervals as weeks instead of points to put into the HGVC system?

 

[CalGalTraveler]

Basically Diamond holds an option to acquire defaulted points from the HOA. Generally, 12-15% of the points controlled by an HOA are in default. On the plus side this system subsidizes the bad debt line in the HOA budget. On the negative side the model requires a weak secondary market for points. Diamond claims their cost of recovering a week's equivalent in points is $750. The following is Diamond's description of the model.

==quote==
With respect to members who have failed to pay their annual maintenance fee or any assessment, we have entered into IRAAs with a substantial majority of the Collection Associations and HOAs for our managed resorts in North America, together with similar arrangements with the European Collection and a majority of our European managed resorts. Each agreement provides that in the event that a member fails to pay these amounts, we have the option to enforce the rights of the HOA or Collection Association with respect to the subject VOI, which includes preventing members from using their points or intervals and, if the delinquency continues, recovering the property in the name of the HOA or Collection Association. Our rights to recover VOIs for failure to pay annual maintenance fees or assessments are subject to any prior security interest encumbering such VOI, including any interest we hold as a lender on a consumer loan. We are responsible for payment of certain fees, ranging from 30% to 100% of the annual maintenance fees relating to the defaulted intervals or points. Depending upon whether the VOI in default is intervals or points, recovery is effected through a foreclosure proceeding or by contract termination. The recovery of points is more efficient than the recovery of intervals, because the recovery of intervals is governed by local real estate foreclosure laws that significantly lengthen recovery periods and increase the cost of recovery.

Under the terms of our IRAAs, we are granted full use of the inventory as a result of delinquent annual maintenance fees or assessments for rental and marketing purposes, and we are under no obligation to commence recovery proceedings. ... Upon recovery, the HOA or Collection Association transfers title to the VOI to us, and we are responsible for all annual maintenance fees and assessments thereafter. We have written or oral agreements with most of our European HOAs that provide us similar rights with respect to recovering delinquent VOIs. After recovery, VOIs are returned to our inventory and become available for sale. Although we recover inventory in the form of intervals as well as points, all inventory recovered is sold in the form of points. Recovered intervals are transferred to one of the Diamond Collections and become part of our points-based system.

VOIs recovered through the default process are added to our existing inventory and resold at full retail value. Although the volume of points or intervals that we recover could fluctuate in the future for various reasons, we have recovered in the ordinary course of our business approximately 2% to 5% of the total outstanding VOIs in each of the past five years. Recovered VOI inventory may be sold by us in the form of points to new customers or existing members.

==end quote==

"Depending upon whether the VOI in default is intervals or points, recovery is effected through a foreclosure proceeding or by contract termination. The recovery of points is more efficient than the recovery of intervals, because the recovery of intervals is governed by local real estate foreclosure laws that significantly lengthen recovery periods and increase the cost of recovery."

IMHO...this statement seems to reinforce that points held in a trust do not fall under the protections of non-judicial, anti-deficiency laws for deeded weeks real estate in states such as CA, Florida, South Carolina etc. that we have with HGVC. In addition to potential shell games of cherry-picking inventory out of the trust and swapping with an inferior interval, the potential that there could be a deficiency judgement in a trust is concerning e.g. they can come after your assets beyond the timeshare if you walk. At a minimum a trust has not been proven in court to have non-judicial, anti-deficiency protections. In comparison, there is precedent for foreclosure protection in walking from deeded weeks. This is why I am wary of trust products and will likely never own one.

However I am not a lawyer so I will cc: @Grammarhero and @Fredflintstone for better interpretation of this statement.

 

[nuwermj]

@nuwermj This is extremely helpful info. Where was this published? Can this policy be changed? or is this part of a contractual trust agreement with customers?

For example: "Although we recover inventory in the form of intervals as well as points, all inventory recovered is sold in the form of points."
Could this be changed if HGVC wanted to keep the recovered intervals as weeks instead of points to put into the HGVC system?

The quotation is from Diamond's financial disclosure document filed with the US Securities and Exchange Commission, the so called 10k document. It describes a contractual agreement between Diamond, Inc. and various HOAs, one contract for each HOA. It is not part of the trust agreement. These contracts can be changed or terminated. They are renewed annually. Selling recovered inventory as points is a Diamond policy. It is not a clause of the recovery agreement between DRI and the HOA. HGV could change that policy at its own will.

Also: the actual trust agreement is between the trustee, the developer (Diamond) and the HOA (The socalled Collection). The consumer (or points owner) is not a party to the agreement. The points owner holds what is called a "beneficial interest" in the trust, where the benefit is access to the deeds held by the trustee.

 

[cindyc]

I am a DRI owner. During the past year, DRI announced they were terminating their association with II at the end of 2020 and giving a membership in Destination Xchange. When I did a search on DEX I found guides back to 2016-2017. It appeared to me that it was an exchange company for anyone to join., the latest edition is 2020-21 and it is a different guide than the one for members of the Club.

There are two Destination Exchange programs. One is for the deeded week owners and is called Traditional Destination Exchange. The program for Collections/Trust/Points owners is just called Destination Exchange. I have access to both systems and the inventory is very different. The programs for weeks owners is better than for points owners and a better value in my opinion.

 

[dayooper]

I wonder how much of Diamond is still owned as weeks and not in the club?

 

[cindyc]

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.

This is absolutely right, but I can't figure out why it is structured this way. Is it to try to incentivize stays to begin on Friday or Saturday for simplicity on their end?

 

[dougp26364]

This is absolutely right, but I can't figure out why it is structured this way. Is it to try to incentivize stays to begin on Friday or Saturday for simplicity on their end?

Way back when, we were told the increased cost in points was to cover the increased cost of housekeeping 7 day/week.

You’ll also notice that a two bedroom unit takes fewer points for a reservation than a one bedroom and studio reserved separately. One of the things that ticked me off was how there would be plenty of one bedroom and studio units separately, but few to no two bedrooms to reserve. Just how intentional this was to Jack up the price in points I can’t say, but it was an anomaly we noticed all to often for it to be an accident. Since we’ve been out of DRI for several years, I can’t even say if it’s continuing to happen.

 

[cindyc]

Legacy week owners do not have access to the Diamond portal because that is strictly for point owners (kind of like RCI having it's separate week/point sides of the website).

This has changed within the past month or so and deeded week owners can now book their units online as the points owners have done for quite some time. It is an improvement that was long overdue. Not that I minded speaking with the Owner Services, they were always very helpful.