Apollo Group looking to buy HGVC [Merged]

[dandjane1]

@JIMinNC that explanation makes sense. With HGVC Maui Villas sounding like it will be delayed or reduced due to local opposition, Diamond has some nuggets in their portfolio that could be renovated/upgraded to HGVC standard and resold rapidly. Specifically:

* Kaanapali Beach Club on Maui
* Embarc / former Interwest properties (Whistler, Calif Desert, Ixtapa, Eastern Canada etc.)
* Lake Tahoe Resort (former Embassy Suites).
* The Modern Honolulu which is only 1 block away from HHV.

What other Diamond properties/locations would add significant value to the HGVC portfolio?

Answer: Cabo Azul at San Jose del Cabo in California Sur

 

[dandjane1]

What's interesting is that on the FB HGVC *Owners* group there's at least one lady who claims DRI never increased MF that much and that it's basically a good thing if this happens. I gave up, but without any actual hard-numbers (I guess I'd have to see if there's a DRI group on TUG and see if they have their MF listing like we do here in this forum).

The only "hardcore" evidence I have is that the quality of DRI resorts (excluding the intrawest ones which apparently are Embarc and "separate" from DRI sorta) are that they are NOT up to the quality of HGVC (that Kaanapali one does not look appealing at all).

Here is more data than you will probably want, from our own TUGGER @youppi

Maintenance Fees since 2007
https://docs.google.com/spreadsheets/d/1jo0_ti3h8ZWy41VCCeaFLfpHqZKe38zADMPFQ9lDfg8/pubhtml#

A detailed history of the company
https://docs.google.com/spreadsheets/d/1WXE5rnFgWaPKJdByFs6kAUjkXWLhpwmq4pB8OuepK30/pubhtml#

Our DRI US Collection MFs have averaged 1.89% increase (now 17.7 cents/pt.) per year since 2016, which is better than Wyndham in either UDI or CWA points. For a Daytona Beach oceanfront 2 BR lockoff, we pay 8,500 points X $0.177=$1,504.50. This can be reduced by reserving a 1 BR and paying $49 upgrade fee to get the 2 BR (check availability at booking time). This drops the cost to 6,500 points @ $0.177= $1,150.50 + $49=$1,200. Either way, that ain't bad. We never had a problem with Cloobeck or Palmer - if we had a bad accomm. and complained, we would get points refunded and an apology. This only happened in recently-absorbed resorts which hadn't been "Diamond-ized" yet. Thanks for the accurate spreadsheets!

 

[RLS50]

@JIMinNC that explanation makes sense. With HGVC Maui Villas sounding like it will be delayed or reduced due to local opposition, Diamond has some nuggets in their portfolio that could be renovated/upgraded to HGVC standard and resold rapidly. Specifically:

* Kaanapali Beach Club on Maui
* Embarc / former Interwest properties (Whistler, Calif Desert, Ixtapa, Eastern Canada etc.)
* Lake Tahoe Resort (former Embassy Suites).
* The Modern Honolulu which is only 1 block away from HHV.

What other Diamond properties/locations would add significant value to the HGVC portfolio?

Answer: Cabo Azul at San Jose del Cabo in California Sur

I would also add the Oceanaire / Ocean Beach Club complex in Virginia Beach. Virginia Beach doesn't have the large and grand resorts that Hawaii, Hilton Head, or Mexico have, but on a relative basis this is the best property in Virginia Beach. For better or worse, when Diamond bought out Gold Key they got a monopoly on the best collection of resorts in Virginia Beach (also includes Turtle Cay, Beach Quarters, and Boardwalk Villas).

And Beachwoods in OBX. That is a very large property bordering a 700 acre nature preserve and has some of the largest and most updated units available in OBX, along with probably the best overall amenities on OBX. But the resort itself is not oceanfront.

 

[escanoe]

That's okay. II is even better. Trades for Marriotts, Hyatts, and Westins.

When Marriotts, Hyatts, Westins, and DRIs trade on II, can they trade in points (able to select your days) or is it all in fixed week blocks? I am under the impression that points trading is much less popular with II than RCI. As a family that has less flexibility with the school calendar and such, not being limited to blocks of weeks is a big plus to me.

I think my preference would be for HGVC to switch to II, but the ONLY reason I think that is I already have a non HGVC timeshare that gives me all the RCI points that I need.

 

[RLS50]

It has been mentioned already a number of times in this thread that (in general) Diamond maintenance fees are expensive relative to the rest of the timeshare world, but in return an owner only gets access to a collection of mostly 3 Star to 3.5 Star properties. Unfortunately I would have to agree that I think this is basically accurate. Diamond has some nice properties, but not enough of them to justify the high overall maintenance fees. As NUWERMJ has said in the past, basically Diamond owners pay Marriott level maintenance fees but only get back in return mostly Wyndham level properties.

As someone who became an involuntary Diamond owner in 2016 when Diamond purchased GoId Key, I have had almost 4 seasons now to evaluate Diamond’s management of the resorts they took over from Gold Key.

From what I have seen (and in my opinion), the easiest way to explain the discrepancy in Diamond’s fees versus the quality of their resorts (compared to say Marriott) is the percentage of the resort budget that goes to the Management Fees / Owner Services support line items. Basically on average it seems that possibly 8% to 14% of each annual budget at a typical Diamond property is almost wasted on very expensive back office owner support services versus being reinvested in the Reserves line item at each resort. Year after year after year of that wasted 8% to 14% of the budget going to Diamond for what feels like inflated overhead fees versus going into resort upgrades and refurbishments may help explain the difference between what an average Marriott property looks like versus what an average Diamond property looks like.

Having said that, I have come to better appreciate how Diamond manages a resort operationally. For example, I think the Diamond Regional GM in Virginia Beach does a very good job managing the resorts there. Immediately after the transition from Gold Key to Diamond, the Virginia Beach properties were in what seemed like chaos. Once Diamond brought in that new Regional GM things stabilized, and it seems like over the last couple of years he has assembled a staff and team that seems to be improving things each year. I also have found the Diamond HOA representatives to be very responsive and helpful when concerns are raised. I have come to realize that Diamond has some good, experienced, and qualified people in the operations side of their business.

So I don’t think Diamond is all bad, there are a number of positives I have experienced. I do believe they know how and what needs to be done at a property to keep it maintained properly. Our family certainly enjoys vacationing at the Diamond properties in Virginia Beach, and now I wouldn't trade the current Diamond Regional GM in Virginia Beach for any other GM in any other system anywhere. He is always approachable and responsive and is capable of giving a detailed response and plan of action, or reason for lack of action, on any issue that might be raised. I have engaged with a number of GM's over the years and he is excellent.

I also think the Destination Xchange internal trading program they recently added was a great idea and a very nice option for owners.

***********************************************

For me the main Achilles Heel in the Diamond timeshare model continues to be that they charge owners way too much for Owner Services fees (sometimes listed under “Indirect Corporate Costs” on the budget). The irony of these high fees is that Diamond appears to have consolidated their Owner Services operations to 2 major call centers (Las Vegas and Orlando). Consolidation of this kind should result in more operational efficiencies and less costs to owners, not higher costs. The high fees are bad enough, but what makes it worse is that the systems and processes they provide to owners can sometimes range from inefficient / slow, deficient, to downright dysfunctional at times.

The online systems are lacking basic functionality available from most other name brands, and some online functionality has remained broken for months at a time with no answers from Owner Services or responses their IT department. Some reported issues seem to just go into a giant black hole never to be heard from again.

The various departments can be very slow processing basic owner services requests (sometimes your request gets “lost” or ignored and then you have to start over again with a new rep), and frequently if there is any kind of real issue the owner services reps don’t even know who to contact in other departments or how to escalate to other departments. At times it can be very dysfunctional and time consuming for owners. It’s hard to “Stay Vacationed” when having to follow up on issues or requests that should be easily resolved or should have never happened in the first place.

If I was running Diamond my #1 priority would be to address the waste and dysfunction and high cost charged to owners for the Owner Services processes. Frankly for the amount of money Diamond owners pay for those services the experience should be much better, much faster, and much more consistent.

I would have to believe that the Diamond brand name and reputation overall would be in much better shape, and the individual resorts much closer to Marriott and Westin standards if that extra 10% or so a year in the budget was reallocated into improving the quality of the actual properties. Over time that can add up to make a significant difference.

And to be clear, I am not talking about the individual people in Owner Services (some of whom are very nice and who do try to be helpful). I am talking about the processes and what seems like frequent “dropped batons” between what I can only describe as isolated and / or independent departmental silos. The problem in my opinion seems to be in their internal processes and the (lack of) proper systems they provide their reps to manage those processes.


P.S…I also would allow for the possibility that Diamond charges owners a ton for Owner Services but all that money is not being fully re-invested in Owner Services. So the reason for the slowness and dysfunction encountered at times in Owner Services could be is that those departments are actually only receiving some partial amount of what Owners are actually paying for it.

 

[CalGalTraveler]

@RLS50 Thank you for your thoughtful response. This depresses me. Although HGVC is not perfect, they are well managed and we have seen continuous improvements under the leadership of Mark Wang with the IT systems and new location expansion. (Long-time HGVCers may remember the two clunky reservation systems they used 4 years ago. that have now been replaced.) Owners like HGVC because the good management translates into efficient MF at Marriott equivalent quality, and they treat owners well.

Perhaps Apollo sees HGVC as their white knight to fix these inefficiencies. However, once you raise the MF it is hard to put the genie back in the bottle and lower prices. A likely option would be to upgrade the Diamond properties to justify the MF and that would take a long time and be very expensive.

But where would the monies come from to pay for this? Efficiency improvements are slow and not assured. A faster option is to spin off the lower quality, lower profit resorts to another system, and use the cash raised to upgrade the nuggets that remain. Either way this would be a distraction for HGVC.

 

[terces]

It has been mentioned already a number of times in this thread that (in general) Diamond maintenance fees are expensive relative to the rest of the timeshare world, but in return an owner only gets access to a collection of mostly 3 Star to 3.5 Star properties. Unfortunately I would have to agree that I think this is basically accurate. Diamond has some nice properties, but not enough of them to justify the high overall maintenance fees. As NUWERMJ has said in the past, basically Diamond owners pay Marriott level maintenance fees but only get back in return mostly Wyndham level properties.

As someone who became an involuntary Diamond owner in 2016 when Diamond purchased GoId Key, I have had almost 4 seasons now to evaluate Diamond’s management of the resorts they took over from Gold Key.

From what I have seen (and in my opinion), the easiest way to explain the discrepancy in Diamond’s fees versus the quality of their resorts (compared to say Marriott) is the percentage of the resort budget that goes to the Management Fees / Owner Services support line items. Basically on average it seems that possibly 8% to 14% of each annual budget at a typical Diamond property is almost wasted on very expensive back office owner support services versus being reinvested in the Reserves line item at each resort. Year after year after year of that wasted 8% to 14% of the budget going to Diamond for what feels like inflated overhead fees versus going into resort upgrades and refurbishments may help explain the difference between what an average Marriott property looks like versus what an average Diamond property looks like.

Having said that, I have come to better appreciate how Diamond manages a resort operationally. For example, I think the Diamond Regional GM in Virginia Beach does a very good job managing the resorts there. Immediately after the transition from Gold Key to Diamond, the Virginia Beach properties were in what seemed like chaos. Once Diamond brought in that new Regional GM things stabilized, and it seems like over the last couple of years he has assembled a staff and team that seems to be improving things each year. I also have found the Diamond HOA representatives to be very responsive and helpful when concerns are raised. I have come to realize that Diamond has some good, experienced, and qualified people in the operations side of their business.

So I don’t think Diamond is all bad, there are a number of positives I have experienced. I do believe they know how and what needs to be done at a property to keep it maintained properly. Our family certainly enjoys vacationing at the Diamond properties in Virginia Beach, and now I wouldn't trade the current Diamond Regional GM in Virginia Beach for any other GM in any other system anywhere. He is always approachable and responsive and is capable of giving a detailed response and plan of action, or reason for lack of action, on any issue that might be raised. I have engaged with a number of GM's over the years and he is excellent.

I also think the Destination Xchange internal trading program they recently added was a great idea and a very nice option for owners.

***********************************************

For me the main Achilles Heel in the Diamond timeshare model continues to be that they charge owners way too much for Owner Services fees (sometimes listed under “Indirect Corporate Costs” on the budget). The irony of these high fees is that Diamond appears to have consolidated their Owner Services operations to 2 major call centers (Las Vegas and Orlando). Consolidation of this kind should result in more operational efficiencies and less costs to owners, not higher costs. The high fees are bad enough, but what makes it worse is that the systems and processes they provide to owners can sometimes range from inefficient / slow, deficient, to downright dysfunctional at times.

The online systems are lacking basic functionality available from most other name brands, and some online functionality has remained broken for months at a time with no answers from Owner Services or responses their IT department. Some reported issues seem to just go into a giant black hole never to be heard from again.

The various departments can be very slow processing basic owner services requests (sometimes your request gets “lost” or ignored and then you have to start over again with a new rep), and frequently if there is any kind of real issue the owner services reps don’t even know who to contact in other departments or how to escalate to other departments. At times it can be very dysfunctional and time consuming for owners. It’s hard to “Stay Vacationed” when having to follow up on issues or requests that should be easily resolved or should have never happened in the first place.

If I was running Diamond my #1 priority would be to address the waste and dysfunction and high cost charged to owners for the Owner Services processes. Frankly for the amount of money Diamond owners pay for those services the experience should be much better, much faster, and much more consistent.

I would have to believe that the Diamond brand name and reputation overall would be in much better shape, and the individual resorts much closer to Marriott and Westin standards if that extra 10% or so a year in the budget was reallocated into improving the quality of the actual properties. Over time that can add up to make a significant difference.

And to be clear, I am not talking about the individual people in Owner Services (some of whom are very nice and who do try to be helpful). I am talking about the processes and what seems like frequent “dropped batons” between what I can only describe as isolated and / or independent departmental silos. The problem in my opinion seems to be in their internal processes and the (lack of) proper systems they provide their reps to manage those processes.


P.S…I also would allow for the possibility that Diamond charges owners a ton for Owner Services but all that money is not being fully re-invested in Owner Services. So the reason for the slowness and dysfunction encountered at times in Owner Services could be is that those departments are actually only receiving some partial amount of what Owners are actually paying for it.

Thanks for the info. I'm not really understanding the problem. Could you give me some examples of what the Owner Services process entails and what kind of problems you have encountered? Do they actually charge you to resolve booking issues etc?

 

[terces]

@RLS50 Thank you for your thoughtful response. This depresses me. Although HGVC is not perfect, they are well managed and we have seen continuous improvements under the leadership of Mark Wang with the IT systems and new location expansion. (Long-time HGVCers may remember the two clunky reservation systems they used 4 years ago. that have now been replaced.) Owners like HGVC because the good management translates into efficient MF at Marriott equivalent quality, and they treat owners well.

Perhaps Apollo sees HGVC as their white knight to fix these inefficiencies. However, once you raise the MF it is hard to put the genie back in the bottle and lower prices. A likely option would be to upgrade the Diamond properties to justify the MF and that would take a long time and be very expensive.

But where would the monies come from to pay for this? Efficiency improvements are slow and not assured. A faster option is to spin off the lower quality, lower profit resorts to another system, and use the cash raised to upgrade the nuggets that remain. Either way this would be a distraction for HGVC.

Maintenance fees at some resorts do not include enough funds to fully support the Reserve Fund. The reserve fund money is used for budgeted upgrades including new furniture, carpets etc. I went through the HGVC Las Vegas Boulevard budget in detail. Some of my analysis is nothing more than a guess because I do not have access to the engineer reports or the discussion surrounding them, but I am a former builder, developer and owner of commercial properties and do understand the process. My best guess is that the Reserve Fund is underfunded by about $37million dollars. They have 714 units x 52 weeks = 37,000 weeks so they are shy by an amount of about $1000 per unit/week. LVB is a very well run resort, but this type of Reserve Fund underfunding seems to be endemic in the HOA world, and results in decisions being made such as "let's keep those ratty old sofas for one more year so we don't have to ask for a Special Assessment". The Reserve Fund studies or reports are done by engineers and upgraded each year and are very detailed in how much money is needed, but there is no legislation that I am aware of that forces them to fully comply. It will be interesting to see if Diamond is fully funding these reserves instead of kicking the can down the road, and if that is why they seem to have higher MF's in some instances.

 

[CalGalTraveler]

Maintenance fees at some resorts do not include enough funds to fully support the Reserve Fund. The reserve fund money is used for budgeted upgrades including new furniture, carpets etc. I went through the HGVC Las Vegas Boulevard budget in detail. Some of my analysis is nothing more than a guess because I do not have access to the engineer reports or the discussion surrounding them, but I am a former builder, developer and owner of commercial properties and do understand the process. My best guess is that the Reserve Fund is underfunded by about $37million dollars. They have 714 units x 52 weeks = 37,000 weeks so they are shy by an amount of about $1000 per unit. LVB is a very well run resort, but this type of Reserve Fund underfunding seems to be endemic in the HOA world, and results in decisions being made such as "let's keep those ratty old sofas for one more year so we don't have to ask for a Special Assessment". The Reserve Fund studies or reports are done by engineers and upgraded each year and are very detailed in how much money is needed, but there is no legislation that I am aware of that forces them to fully comply. It will be interesting to see if Diamond is fully funding these reserves instead of kicking the can down the road, and if that is why they seem to have higher MF's in some instances.

I did notice in their notes that Blvd is still subsidized slightly by the developer to keep their MF lower because they are still selling the building. This is a common method for condos until the building sells out. This would explain why the other Vegas properties run in the $1000 range vs. the $800 range for Blvd. 2 bdrm. Still a good deal at $1000 because equivalent Marriott are not that low. For example Grand Chateau runs $1300. Another reason buyers should consider all the FEPS (Flamingo, Elara, Paradise, Strip) properties in Vegas because this disparity will not last.

 

[escanoe]

It has been mentioned already a number of times in this thread that (in general) Diamond maintenance fees are expensive relative to the rest of the timeshare world, but in return an owner only gets access to a collection of mostly 3 Star to 3.5 Star properties.

For those that own a week somewhere that DRI manages the resort, I am sure they have good perspective into how DRI does and how competitive fees are.

Those of us on TUG that use the HGVC points system to squeeze the most value we can out of our ownership would have a tough time transitioning to a trust system. For the most part we have figured out how to have high point platinum properties with relative low point/me ratios. In other words we pay much less in MFs for a stay that uses the same number of points as someone that owned Gold or Silver exchanging for the same stay.

In the trust world for the most part everyone pays the same for MFs based only on the number of points owned. Even if DRI maintenance fees were the same overall as HGVC, making such a transition (either by hook or by crook) would be painful for many of us TUGers. I don’t think I am the first one to state this, but it has been what has really sunk in as reality to me as this thread develops. It is simply a realization of one of many possibilities that exists and I do still thing we are way ahead of ourselves.

 

[SueDonJ]

When Marriotts, Hyatts, Westins, and DRIs trade on II, can they trade in points (able to select your days) or is it all in fixed week blocks? ...

Basically:

Marriott Weeks that are unenrolled in the Destination Club points system exchange via II as weeks, to Marriott and non-Marriott resorts. Owners can choose to book available weeks and deposit those, or, can choose to have Marriott select the week for deposit. Each resort has its own calendar - all floating Weeks allow Fri-Sat-Sun check-in days but several also allow Thurs or Mon check-in days. The check-in day of the deposited interval does not have to match the check-in day of the requested interval.

Marriott Weeks that are enrolled can be used in all the usual ways including II exchanges as above, or, owners can elect on an annual basis to exchange their Weeks for an allotment of Destination Club Points.

The DC Exchange Company is the conduit for exchanging DC Exchange Points (from enrolled/elected Weeks) and DC Trust Points (purchased as points) to Marriott resorts.

II's points system is the conduit for exchanging DC Trust Points to non-Marriott resorts.

Worth mentioning:

The DC Trust can be a pool for exchanging DC Trust Points directly for intervals which have been conveyed to the DC Trust, BUT, it is very rare that Marriott does not make these intervals available immediately through the DC Exchange Company. Again, this happens very infrequently with high-demand intervals and appears usually at the earliest reservation windows. The overwhelming majority of all DC intervals are reserved via the DC Exchange Company.

 

[terces]

I did notice in their notes that Blvd is still subsidized slightly by the developer to keep their MF lower because they are still selling the building. This is a common method for condos until the building sells out. This would explain why the other Vegas properties run in the $1000 range vs. the $800 range for Blvd. 2 bdrm. Still a good deal at $1000 because equivalent Marriott are not that low. For example Grand Chateau runs $1300. Another reason buyers should consider all the FEPS (Flamingo, Elara, Paradise, Strip) properties in Vegas because this disparity will not last.

That is not my read on it in regards to the developer subsidy. I think this is an amount they paid for the unsold inventory they held and it was paid in proportion to what the "sold" units were paying for MF's. On the last statement it states that there is no more developer subsidy as the building is fully sold. The budget at HGVC whereby a 2 bdrm platinum is about $850 is a true amount, includes a healthy "management fee", but as previously stated in my opinion is not fully funding the Reserve Fund.

 

[RLS50]

Thanks for the info. I'm not really understanding the problem. Could you give me some examples of what the Owner Services process entails and what kind of problems you have encountered? Do they actually charge you to resolve booking issues etc?

Well none of the Owner Services issues are real show stoppers. They wouldn’t scare me off from keeping our Diamond weeks, buying additional Diamond deeded weeks, or owning with Diamond per se.

But over the last 3-4 years these issues have occurred with enough frequency to be a real annoyance and waste of time to monitor and drive a resolution to. Unfortunately almost every process involving your Diamond owned week requires, or eventually requires, some type of manual intervention. This takes time waiting on the phone and talking to different people across different departments and all that wasted time on hold and explaining and re-explaining issues on the phone adds up. I have to work much harder and spend more time managing our Diamond weeks than any other system requires.

You want to book even your basic home week reservation? You have to call somebody because you can’t do it yourself online.

You want to now view your reservation confirmation online? Oops…the online functionality has been broken for months so you have to call somebody.

You want to email yourself a copy of your reservation? Oops…that online functionality has also been broken for many months so you have to call somebody.

You want to prepay your maintenance fees online? Oops that functionality is also now broken so you have to call somebody.

You own 2 deeded weeks at the same resort during the same week, so you want to confirm the different unit details as listed on your deeds? Oh darn, the online system doesn’t even provide that basic information, so you guessed it, you have to call somebody to confirm (unless you have built out your own Excel matrix to keep track of them like I had to).

You want to deposit in Interval? Calling Interval is not enough as it is with Marriott, you have to call somebody in Diamond.

So you decide you want to sell or buy a Diamond week?

Marriott takes 3-5 days to provide an Estoppel, Diamond takes 3-5 weeks. Why does something so simple take so long? I have no idea.

After the ROFR decision, Marriott will typically take 3-5 weeks to process a transfer. Diamond can take anywhere from 8-12+ weeks to process a transfer.

Have a problem where a week you purchased was transferred into your account with usage details and owed maintenance fees incorrect? This has happened to me multiple times. You have to call somebody. Then typically those problems may involve multiple follow up calls until the issue is finally resolved. Even if somebody tells you they will take care of the problem, you have to keep watching since you may find weeks go by and the issue still remains, so you have to keep following up with more phone calls. The best is when there is an error in the maintenance fee payment (problem on their end caused by their process) and someone in Financial Service asks you to provide “proof” to them that the maintenance fees were actually paid…when you received and have a system generated email from Diamond confirming it. How that even happens I have no idea. I have never dealt with any other company ever that has made requests like that. And this has happened at least a 5-6 times over the last 3-4 years.

I have followed the process suggested to me by Owner Services and reported these issues multiple times over the years, including multiple times this year. Diamond is great for an immediate response or email acknowledging your complaint and promising timely resolution and follow up, but the actual follow up frequently never comes. It seems the “baton” frequently gets dropped from the initial report of an issue to getting to the right person in the right departmental silo who can fix the issue.

Beyond the frustration of dealing with the various system glitches, the missing or lack of functionality provided by the online systems, and time consuming (and seemingly inefficient) added manual steps in various processes, remember that we Diamond owners are paying near industry high rates for management and owner services.

Or to put it this way. Imagine paying for a high end model Mercedes and receiving a Honda Civic in return. The Civic is not a bad car and will still get you where you need to go…but you are making monthly payments on a Mercedes.

It's about the value of what you are paying for versus what you are receiving back in return.

 

[NOLA47]

I've never been involved in a merger before. When mergers or buyouts occur, are existing owners (say with HGVC) offered the opportunity to sell their properties back to the companies if they choose to?

 

[geist1223]

We have not noticed any of the problems mention in the Posting just before this. But then we are DRI Points Members. We do not own Deeded Weeks. We book online all the time. We can review our Confirmations online. We can send ourselves Confirmation emails.

 

[JIMinNC]

I've never been involved in a merger before. When mergers or buyouts occur, are existing owners (say with HGVC) offered the opportunity to sell their properties back to the companies if they choose to?

I think it's almost certain that option would NOT be offered.

But I think everyone is getting way over their skis on this. We don't even know if this is going to happen. It is just a rumor that is spreading in the stock market. Here is what we don't know, and the answers to these questions will determine how HGVC and DRI owners would be impacted:

1) Will the deal even happen?
2) If it happens, will DRI and HGVC be combined in some fashion over time (years), or will they be run separately indefinitely?
3) If it happens, which management team - DRI or HGVC - will Apollo put in charge of the combined organization?

The answers to these questions are critical to how owners are impacted. For example, if @nuwermj is correct and Apollo puts the HGVC management team in charge to "fix" DRI, then the outcome could be fine for HGVC owners. The HGVC business model would likely largely survive and elements of it could be applied to DRI to try to improve their operation. DRI owners could benefit as well from that, based on the comments made by DRI owners in this thread. If, on the other hand, the DRI team gets put in charge and their business model prevails, the outcome may not be as good for HGVC owners.

Either way, everyone should just step back off the ledge and wait and see what happens.

 

[GT75]

Either way, everyone should just step back off the ledge and wait and see what happens.

Thank you. I think that this is very good advice for us. In reality, there isn't anything that we can do anyways. I am also thankful for the DRI TUG members giving us HGVC TUG members a little understanding of their TS system.

 

[dougp26364]

I've never been involved in a merger before. When mergers or buyouts occur, are existing owners (say with HGVC) offered the opportunity to sell their properties back to the companies if they choose to?

I think it's almost certain that option would NOT be offered.

But I think everyone is getting way over their skis on this. We don't even know if this is going to happen. It is just a rumor that is spreading in the stock market. Here is what we don't know, and the answers to these questions will determine how HGVC and DRI owners would be impacted:

1) Will the deal even happen?
2) If it happens, will DRI and HGVC be combined in some fashion over time (years), or will they be run separately indefinitely?
3) If it happens, which management team - DRI or HGVC - will Apollo put in charge of the combined organization?

The answers to these questions are critical to how owners are impacted. For example, if @nuwermj is correct and Apollo puts the HGVC management team in charge to "fix" DRI, then the outcome could be fine for HGVC owners. The HGVC business model would likely largely survive and elements of it could be applied to DRI to try to improve their operation. DRI owners could benefit as well from that, based on the comments made by DRI owners in this thread. If, on the other hand, the DRI team gets put in charge and their business model prevails, the outcome may not be as good for HGVC owners.

Either way, everyone should just step back off the ledge and wait and see what happens.

Actually, DRI has had an active GIVE back program with the owner paying a fee to get rid of their ownership. We returned two deeded weeks to them a few years back. If you look on the DRI section it appears to still be an active option, but it’s not free.

I agree that anxiety over what might happen isn’t worth it. I’m not thrilled but I’m not tossing the baby out with the bath water either.

 

[terces]

I guess there are two possible positives that have gone through my mind as I walk the beach at Carlesbad:
First of all Blackstone owns the trump card with control of the HGVC brand. I assume they are earning revenue off this and I would doubt they will allow the brand to be degraded, or alternately they could be the suitor.
Secondly, the time share industry is gradually getting better as it emerges from the deep pit of distain that has surrounded it. It seems there is some potential for operational improvement in DRI.

 

[RLS50]

We have not noticed any of the problems mention in the Posting just before this. But then we are DRI Points Members. We do not own Deeded Weeks. We book online all the time. We can review our Confirmations online. We can send ourselves Confirmation emails.

This is a fair point.

After 4 years it's clear to me that DRI's computer systems and organizational structure were built primarily for points membership and usage. In fact, as it has been told to me by various DRI reps, it wasn't until Diamond bought Gold Key and their many thousands of deeded weeks owners that they attempted to custom code changes into their online system to better service the needs and requirements of deeded weeks owners.

So it is possible that some of what I have been experiencing and describing here are bugs or glitches in all that custom code implemented for deeded weeks owners. What I have been experiencing might also correlate with rumors I have heard that Apollo has been doing some cost cutting inside Diamond that has impacted headcount in the IT Department, and possible other Owner Services departments as well, however I can't personally confirm those rumors.

Things were worse in 2017 than today. We saw some noticeable improvements in 2018. But unfortunately 2019 seems like things are starting to slide backwards towards the 2017 version.

To be clear we still enjoy our Diamond deeded weeks ownerships, and the onsite management we have experienced at the physical resorts in Virginia Beach or Beachwoods in OBX seems to have gotten better each year.

But we deeded weeks owners are paying the same high cost (relative to other timeshare systems) of our HOA budgets for management and owner services as points owners are. For the amount of money we pay I believe the consistency of the quality in the internal owner services processes and overall functionality provided online should be better. At least for deeded weeks owners.

 

[dayooper]

Our DRI US Collection MFs have averaged 1.89% increase (now 17.7 cents/pt.) per year since 2016, which is better than Wyndham in either UDI or CWA points. For a Daytona Beach oceanfront 2 BR lockoff, we pay 8,500 points X $0.177=$1,504.50. This can be reduced by reserving a 1 BR and paying $49 upgrade fee to get the 2 BR (check availability at booking time). This drops the cost to 6,500 points @ $0.177= $1,150.50 + $49=$1,200. Either way, that ain't bad. We never had a problem with Cloobeck or Palmer - if we had a bad accomm. and complained, we would get points refunded and an apology. This only happened in recently-absorbed resorts which hadn't been "Diamond-ized" yet. Thanks for the accurate spreadsheets!

Thanks for this post. Can I ask you (or any other of our DRI experts) a question? How does DRI break down to cost per night? Just on a basic 2 bedroom week? With differences in point structure, how dies the MF per point ratio hold up? My 2 bedroom platinum at The Flamingo has a middle of the road MF ratio ($.15 this year). If I use all of my points for a full week in a standard 2 bedroom platinum, my cost is my $1049 MF + $65 booking fee. I stayed on the top floor of Ocean 22 (Myrtle Beach) in June for $159 a night. How does that compare to a DRI cost? I’m just trying to compare apples to apples here.

 

[dayooper]

I just want to thank our DRI guests that have come over and interacted with us this past week! @RLS50 @dandjane1 @geist1223 @youppi @nuwermj and anybody else that lent their knowledge here. There has been some freak out, but the dialogue has been incredible.

 

[Tamaradarann]

We just attended another DRI "owner update" on Thursday 22 August, and the sales weasel (no high pressure applied - we're Platinum and they don't bother us with pressure) was all agog over the "imminent" HGVC closing. I know one doesn't believe the SWs, but the whole resort management seemed convinced it would happen soon. Reputation aside, as a DRI owner, it would be great - the (reported) plan is to have full rights to reserve at either brand. I wonder how any deeded weeks from either would be worked into points...........and , would the various "Elite" levels of ownership co-mingle and operate smoothly? HMMMMmmmmmmmmmm.

I understand that the merger talk has made the market to sell HGVC timeshares very bad. However, I was just thinking that this could be a very good buying opportunity. If prices became very low and people tried to take advantage of those buying opportunities would HGVC buy up a lot of inventory or would they let many of them pass because they didn't want to buy up so much inventor?. If many properties were put on the market for say $100. At very low prices HGVC would have the funding to buy all of those properties, however, would they or would they just buy the ones that are below the price they have usually set as their threshold price?

 

[CalGalTraveler]

@Tamaradarann What data have you seen that supports that this has had a negative effect on the HGVC timeshare sales?

IMHO we are getting WAAY over our skis based on a tabloid rumor article. I'll bet these companies talk all the time about acquisition possibilities. This may be no different except it got leaked to the street.

 

[1Kflyerguy]

I would be surprised if the merger rumors were impacting resale prices this quickly. If the rumors persist with new information, then i am sure it will impact sales.

Timeshare weeks are really just inventory for developers. The decision to buyback via ROFR is always a combination of the price and the need for the actual inventory. During the last earning call HGV mentioned having the wrong inventory mix as one of the reasons for the poor results. With that as a backdrop i don't think will buy all available inventory just because its available at an attractive price, i believe it would need to be a unit they needed in their inventory. If their sales are indeed softening, its reasonable to expect them to lower their inventory levels. Even if they decide to maintain a steady inventory levels, that may result in fewer buy backs if the are not selling as much.