Timeshare Resort Take Backs and Receivables

[WinniWoman]

I was listening in on a HOA call today for our Smuggs resort. They mentioned that the take back program helped their receivables tremendously.

I was stupid and didn't ask, but I am not understanding why. In order to qualify for their program you have to have no outstanding loan or maintenance fees.

So if they take back your week and you are paid up anyway, how does this help receivables?

I am thinking that once our resort takes back an ownership it goes into the Wyndham pool, but not sure. Our resort is a mix of deeded fixed/float week owners, RCI points, Wyndham Smuggs deeded weeks owners with Wyndham points and Wyndham points owners.

Ok- I am not the sharpest tool in the shed....I am missing something here...

 

[goaliedave]

if they didn't have the take back program, those people wouldn't pay their MF

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[mcsteve]

if they didn't have the take back program, those people wouldn't pay their MF

I would agree with this. The need to have their MF up to date in order to qualify for the deed back will likely decrease the amount of outstanding debt. If there was no deed back, those individuals would likely continue in arrears as they try to rid themselves of the unwanted property.

 

[jabberwocky]

Technically it would reduce their bad debt expense and allowance for bad debts which is netted against the receivables.

Also, if they take back the unit and hold it in their own inventory then it isn't a receivable (although someone - perhaps other owners - would most likely have to still pay a higher MF as the expenses for the resort are spread across fewer units).

 

[WinniWoman]

if they didn't have the take back program, those people wouldn't pay their MF

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But how did it bring down the receivables in the present time? In other words- before the program there were some collection issues. If people that DO pay their fees leave, now they need to replace those good paying owners.

 

[WinniWoman]

I would agree with this. The need to have their MF up to date in order to qualify for the deed back will likely decrease the amount of outstanding debt. If there was no deed back, those individuals would likely continue in arrears as they try to rid themselves of the unwanted property.

So ok. I was thinking this also. That maybe people in arrears decided to pay what they owed and then get out.

 

[tschwa2]

They probably give the weeks to Wyndham to sell. Is smuggs part of Access for wyndham?

 

[bnoble]

Yes, with some limits.
https://www.myclubwyndham.com/mycw/resorts/cwa-resorts.page

 

[WinniWoman]

They probably give the weeks to Wyndham to sell. Is smuggs part of Access for wyndham?

I believe they do go to Wyndham inventory. I don’t know what “ Access” is.

But still- units they take back are all in good standing. They are not collection problems.

 

[bnoble]

Access is their blended-contract program. You don't buy at a particular resort, but rather an undivided interest in a big pool of points backed by whatever weeks Wyndham can string together to back them. They switched to this model from UDI at an individual resort several years ago.

 

[WinniWoman]

Access is their blended-contract program. You don't buy at a particular resort, but rather an undivided interest in a big pool of points backed by whatever weeks Wyndham can string together to back them. They switched to this model from UDI at an individual resort several years ago.

why does this matter in terms of receivables?

 

[bogey21]

Does the "Take Back" program require a cash payment in addition to the Week's MF being up to date. If not, they should...

My "they should" comment is referring to Independent HOAs not the big boys (Marriott, Wyndham, HGVC, Hyatt, etc. They have alternatives the Independents don't have...

George

 

[WinniWoman]

Does the "Take Back" program require a cash payment in addition to the Week's MF being up to date. If not, they should...

George

No it does not.Why do you say it should?

 

[goaliedave]

But how did it bring down the receivables in the present time? In other words- before the program there were some collection issues. If people that DO pay their fees leave, now they need to replace those good paying owners.

you're overthinking it

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[WinniWoman]

you're overthinking it

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LOL! Story of my life with everything! I just like to know how things work is all.

 

[bobinmich]

I'm sure it looks better on the "books" as it is property THEY now own and can resell. It is sort of like "cash in the bank". Wyndham can now sell it for 150-256 per thousand.

 

[goaliedave]

LOL! Story of my life with everything! I just like to know how things work is all.

example unpaid annial MF $200,000. so year 2 it will be $400,000, yr 3 $600,000. yr 4 institute buyback it stays at $600,000 instead of adding more.

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[WinniWoman]

example unpaid annial MF $200,000. so year 2 it will be $400,000, yr 3 $600,000. yr 4 institute buyback it stays at $600,000 instead of adding more.

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I still don't get it. Guess I am stupid. The ownerships they take back are all people in good standing.

Anyway- I do understand how mcsteve explained it. That must be it.

 

[goaliedave]

I still don't get it. Guess I am stupid. The ownerships they take back are all people in good standing.

lol but people who would default of no buyback

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[WinniWoman]

lol but people who would default of no buyback

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That might be true for some people. But I know many who would not who are giving theirs back. They are just making a rationale decision and planning for their futures.

 

[goaliedave]

I still don't get it. Guess I am stupid. The ownerships they take back are all people in good standing.

Anyway- I do understand how Steve explained it. That must be it.

say its October 2019 and you lose your job. you say ok I cant pay MF in January 2020. if instead there is a buyback program, you give it back they resell it and MF get paid for 2020 by the new people. everyone is happy.

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[bnoble]

why does this matter in terms of receivables?

One possible reason: you don't need a shiny new resort to sell to a new customer. The oldest resort in the system can still contribute "new" inventory to be sold to new customers, because they are buying a portion of the blended whole, not that specific resort. The resort doesn't even need to be in active sales; the deed you take back at resort A and folded into Access can be resold at resort B. So, something that was (or shortly will be) an un-performing week can easily be recycled.