Just Got The Royal Screw From Rci

[Ridewithme38]

Actually quite the reverse is true:

If they "pay" 27 for it and "sell" it for 46 - over time they will have half as many exchanges by volume.

Extrapolate it out - they buy 500,000 weeks for 27 each = 13,500,000 tpu's total --- then they sell them for 46 tpu each; only 293,478 people will be able to "buy" a week before the 13,500,000 TPU's are "spent".

That is 206522 less exchanges than they would have otherwise had - at $189 each that is real money.

It would behoove them to sell the interval cheaper rather than more dear.

I surmised in a previous thread that the difference between the sell and buy rate equaled the amount/value of weeks they took out of the pool for rental...I.E., they give you 27 TPU's for a week that they exchange for 42 TPU's, they now have 15 TPU's floating available, they can now take a 15 TPU's week out of the system and put it up for rental and nothing is lost

 

[MichaelColey]

Situations like this are the minority. For almost all intervals I've looked at, the TP given for a deposit is comparable to or higher than the TP asked for an exchange. This is also demonstrated by the rarity with which these types of complaints are made.

I can understand why RCI would have separate TP values. For deposits, they want it to be pretty stable and not changing regularly. If you think people are upset now, imagine what would happen if the TP for deposits changed frequently. For exchanges, they want it to be more fluid so it'll adjust based on demand. If weeks sit there, they drop the TP. If they always disappear quickly (like DVC), they raise the TP. Eventually, I would expect the two values to syncronize, but I would expect some inefficiencies like this.

 

[ampaholic]

I surmised in a previous thread that the difference between the sell and buy rate equaled the amount/value of weeks they took out of the pool for rental...I.E., they give you 27 TPU's for a week that they exchange for 42 TPU's, they now have 15 TPU's floating available, they can now take a 15 TPU's week out of the system and put it up for rental and nothing is lost

accounting shenanigans from Wyndham ... naaaaaaaa

 

[Carolinian]

accounting shenanigans from Wyndham ... naaaaaaaa

ahhh! I see you know the history of the company before it was called Wyndham! Quite an accounting scandal then, and it shows a lot about the character of this company.

 

[Beefnot]

Actually quite the reverse is true:

If they "pay" 27 for it and "sell" it for 46 - over time they will have half as many exchanges by volume.

Extrapolate it out - they buy 500,000 weeks for 27 each = 13,500,000 tpu's total --- then they sell them for 46 tpu each; only 293,478 people will be able to "buy" a week before the 13,500,000 TPU's are "spent".

That is 206522 less exchanges than they would have otherwise had - at $189 each that is real money.

It would behoove them to sell the interval cheaper rather than more dear.

You forget that they have a rental business to support. Makes more money per interval than $189.

 

[Carolinian]

I can see that you have never studied tourism statistics at all.

You also have apparently not spent much time looking at RCI availibility in various places. That tells the tale on supply and demand within timesharing.

Yeah, Pa and Ma Kettle may be satisified with the kitsch Europe of EPCOT or kitsch Africa of Animal Kingdom, but the more sophisticated Americans want to experience the real thing. And you totally disregard all of the tourists from other countries outside the US, who BTW typically get a lot more vacation time from work than Americans do.

I was hardly the first one to use the term ''overbuilt'' on TUG. It was widely used when I first posted here years ago. One of the main TUG gurus of the day, Fletch, used to use it regularly, particularly with reference to Orlando. So have RCI insiders who have posted here like Bootleg.

You seem to run down beach timeshares, but that just shows you are not a typical timesharer. Beach destinations are often not easy to get. Orlando, on the other hand always is.

You have also nevers looked at developer strategy. They don't care where people want to go. They build where they can get the right type of tour flows. Orlando gets the right demographic for developers and enough quantity of people coming through that they will keep building. although the area has been overbuilt for years.

I don't buy it, the reason the places are low supply is BECAUSE they have low demand, the places that are built to capacity(i.e. overbuilt in your opinion) are built that way to accommodate all the people that WANT to go there, just like the places with 'low supply' are built that way because of 'low demand' to accommodate that demand...If you compare the amount of people that travel to 'Williamsburg'(#1 family travel destination 2yrs in a row) or Disney every year to the amount of people that travel to the 'outer banks' or Hilton Head Island every year, you'll see why the supply is so low, because they only built for the handful of people that actually go there

Global Demand is just a silly statement, unless you are counting all the American's living in other countries, most other countries are nothing more then 'Travel Destinations' or 'tourist traps'

 

[Karen G]

You forget that they have a rental business to support. Makes more money per interval than $189.

Ah, yes, the rental business. I didn't take that into consideration. Maybe that's part of the reason for raising the TPU value in OP's original scenario. If RCI makes the TPU value exceedingly high compared to the TPU value given to the depositor, RCI can then offer the week to renters because no exchangers wanted it badly enough to spend that many TPU's to get it.

 

[Margariet]

More of these !

Situations like this are the minority. For almost all intervals I've looked at, the TP given for a deposit is comparable to or higher than the TP asked for an exchange. This is also demonstrated by the rarity with which these types of complaints are made.

I can understand why RCI would have separate TP values. For deposits, they want it to be pretty stable and not changing regularly. If you think people are upset now, imagine what would happen if the TP for deposits changed frequently. For exchanges, they want it to be more fluid so it'll adjust based on demand. If weeks sit there, they drop the TP. If they always disappear quickly (like DVC), they raise the TP. Eventually, I would expect the two values to syncronize, but I would expect some inefficiencies like this.

I think Michael hits the nail on the head again. I do like his valuable comments.

 

[ampaholic]

ahhh! I see you know the history of the company before it was called Wyndham! Quite an accounting scandal then, and it shows a lot about the character of this company.

Well, technically Cendant was able to "escape" by giving up Shelton and Forbes to the SEC - both went to Federal Prison as did several underlings.

Cendant however continued and morphed into among other names Wyndham. Shareholders were left to lick their wounds with regard to the 6.5 billion (yes Billion) that "vanished"

A very (very) dirty history indeed.

 

[Ridewithme38]

Well, technically Cendant was able to "escape" by giving up Shelton and Forbes to the SEC - both went to Federal Prison as did several underlings.

Cendant however continued and morphed into among other names Wyndham. Shareholders were left to lick their wounds with regard to the 6.5 billion (yes Billion) that "vanished"

A very (very) dirty history indeed.

Wow, if i were them i wouldn't be making THAT mistake again!

 

[arihillfarm]

And so I ask again, since no one has answered my question: How does RCI make more money by giving someone 27 TPU's for their week and then requiring someone else to give up 46 TPU's to exchange for it? Doesn't RCI get the same exchange fee no matter how many TPU's it costs?

In your example, they would make less money. If the person who has 47 TPUs were able to get that unit for the 26 TPUs that RCI gave the owner, they would still have 21 TPUs left in their acct. to make a second exchange.

-Astrid

 

[Karen G]

In your example, they would make less money. If the person who has 47 TPUs were able to get that unit for the 26 TPUs that RCI gave the owner, they would still have 21 TPUs left in their acct. to make a second exchange.

-Astrid

And that second exchange would bring in another exchange fee. RCI isn't paying anything for the week. They don't give up any kind of "value" for the TPU. RCI doesn't pay anything or incur any expense for the TPU it assigns to a week.. It's just supposedly an indication for the owner of a timeshare what it is worth with regard to it's trading power. It is supposed to show what other exchanges they might be able to to get for the week they gave up.

When an owner makes an exchange, they make it with their TPU's (or points if you want to call it that) plus an exchange fee. The exchange fee is the only actual thing of monetary value in the transaction. The number of TPU's just give them "permission" to make the exchange.

 

[Ridewithme38]

And that second exchange would bring in another exchange fee. RCI isn't paying anything for the week. They don't give up any kind of "value" for the TPU. RCI doesn't pay anything or incur any expense for the TPU it assigns to a week.. It's just supposedly an indication for the owner of a timeshare what it is worth with regard to it's trading power. It is supposed to show what other exchanges they might be able to to get for the week they gave up.

When an owner makes an exchange, they make it with their TPU's (or points if you want to call it that) plus an exchange fee. The exchange fee is the only actual thing of monetary value in the transaction. The number of TPU's just give them "permission" to make the exchange.

to be fair, we really don't know how they account for TPU's they may very well be a line on their balance sheet, sort of like commodities, the tpu's you receive would be the current melt value or the value of previous years, and the tpu's to exchange into at week could be 'futures' or what they 'expect' to receive in the future

Because, after all, the real thing they are selling on the weeks side are those tpu's, the weeks are just what you decide to do with those TPU's sort of like tokens at an arcade

 

[Tamaradarann]

How RCI makes money on the different TPU's

Actually quite the reverse is true:

If they "pay" 27 for it and "sell" it for 46 - over time they will have half as many exchanges by volume.

Extrapolate it out - they buy 500,000 weeks for 27 each = 13,500,000 tpu's total --- then they sell them for 46 tpu each; only 293,478 people will be able to "buy" a week before the 13,500,000 TPU's are "spent".

That is 206522 less exchanges than they would have otherwise had - at $189 each that is real money.

It would behoove them to sell the interval cheaper rather than more dear.

I think your analysis is correct. However, I think you demonstrated how RCI can make money on the different TPU's for depositing and exchanging. If there are 206522 less exchanges RCI has 206522 weeks in their pool doing nothing. Since they now own the weeks and nobody exchanged for them, they can put them on sale as last calls or possibly they put them on sale at a higher rate as extra vacations. They are starting a big sale for tomorrow for extra vacations.

I know that Hilton rents out using open season, which is the same as last calls, the nights that are not booked to members. They also rent out nights to non members but I am not sure if those nights are nights that are not booked or nights that are available since the timeshare owner is maintenance fee delinquent.

 

[ronparise]

It seems to me that what gets deposited into RCI are weeks, and what gets taken out are also weeks...The tpu are nothing but the medium of exchange

So if I am able to deposit my one Vacation Village at Parkway week and take out 3 weeks at the same resort (or another) then someone else is going to have to deposit 3 weeks for an exchange into one week.

The weeks have to balance; TPU do not.

 

[ampaholic]

It seems to me that what gets deposited into RCI are weeks, and what gets take out are also weeks...The tpu are nothing but the medium of exchange

So if I am able to deposit my one Vacation Village at Parkway week and take out 3 weeks at the same resort (or another) then someone else is going to have to deposit 3 weeks for an exchange into one week.

The weeks have to balance; TPU do not.

There are always more weeks deposited than are taken out, some rot on the shelves.

Developers and HOA's bulk deposit hundreds at a time and don't take any out.

It is not a zero sum game.

And if the TPU don't balance RCI is playing with fire in the form of the Secret Service - it is quite illegal to create a private currency.

If the TPU's are "tokens" as Ride points out no issue as long as there are as many tokens sold as are bought.

If they create more tokens in service than what are bought they are creating a "fiat" currency and are cruising for a bruising.

 

[HawaiiLove1]

Does RCI have some sort of "converter" that can be accessed by owners that shows what your week will be worth in TPU's if you deposit?

 

[ampaholic]

Does RCI have some sort of "converter" that can be accessed by owners that shows what your week will be worth in TPU's if you deposit?

yes but you have to have an account to access it.

 

[Tamaradarann]

It seems to me that what gets deposited into RCI are weeks, and what gets take out are also weeks...The tpu are nothing but the medium of exchange

So if I am able to deposit my one Vacation Village at Parkway week and take out 3 weeks at the same resort (or another) then someone else is going to have to deposit 3 weeks for an exchange into one week.

The weeks have to balance; TPU do not.

However, if a number of people deposit 10 weeks and get 25 TPU's each that is 250 TPU's available for exchanging. If those ten weeks are valued by RCI as 50 TPU's each for exchange the 10 weeks that weeks that were deposited can only exchange for 5 weeks and the other 5 weeks are RCI's to rent for profit.

 

[MichaelColey]

The weeks have to balance; TPU do not.

Neither have to balance. Many people deposit weeks and let them expire. Many exchange companies give 2 (or even 3) weeks for one deposit. Plus you have developer weeks being thrown into the pool.

And if the TPU don't balance RCI is playing with fire in the form of the Secret Service - it is quite illegal to create a private currency.

I'm not so sure this would apply. What about frequent flyer programs, S&H stamps, RCI Points, MyPoints, and other similar things? I don't see it as being any different than these types of things.

 

[geekette]

IMHO, RCI's greed has outstripped both their common sense and their usefullness.

I share this opinion. excessive greed.

 

[geekette]

Ride: you forgot to factor in the appeal to the vanity of Americans.

Excuse me? Wanting to go see other parts of teh world makes me vain?

Also, Ride, some of us aren't saddled with tots and can go where we please without regard to school calendars. Are you saying that you have no desire to see anything other than the US? that when you are an empty nester you have no plans to see Europe or Asia or Carribbean islands? That's fine. FOR YOU, but let's not pretend that plenty of American FAMILIES can and do fly out of this continent to see others. Just because it isn't your cup of tea doesn't mean that NOBODY with kids does it.

I think you also are being short-sighted about the independents. If you haven't looked into them how can you be so sure there is nothing you want?

 

[ronparise]

However, if a number of people deposit 10 weeks and get 25 TPU's each that is 250 TPU's available for exchanging. If those ten weeks are valued by RCI as 50 TPU's each for exchange the 10 weeks that weeks that were deposited can only exchange for 5 weeks and the other 5 weeks are RCI's to rent for profit.

Those other 5 weeks may be available to me as well. When I deposit my one week, a year in advance and get 25 tpu and make my exchange a week before check in at 5 tpu I get 5 weeks for the one deposited. RCI has to "find" these weeks somewhere. Im suggesting they get them from the folks that have to combine 2 or 3 deposits to get that one week they want

Ill modify the position I took in my above post to say RCI must always have on the shelf, more deposits than they have folks wanting to exchange. The excess are theirs to rent or let go to waste as they see fit

My point is the same; its weeks that they have to keep an eye on. TPU are the currency that they can manipulate (like the federal reserve) to keep the supply and demand for weeks at their desired ratios

For example If they see a big demand for weeks at a particular resort they can raise the tpu required for an exchange to a level where the demand falls off. or if they have a glut of weeks that no one is asking for, they can reduce the TPU required, until those weeks jump off the shelf

If I understand it right the TPU calculator gives the tpu that an owner can get for their deposit, so that side of the equation is somewhat fixed. The tool they use to bring demand in line with their needs is the TPU required for an exchange

Of course they will always be on the lookout for weeks they can rent for more than the exchange fee

So how does RCI make more money by setting tpu for an exchange twice as high as the tpu given for the deposit?...They guarantee that no one will want to exchange for this week and so they can rent it for more

 

[bnoble]

excessive greed.

Nonsense. When it comes to a for-profit company, there is no such thing as "excessive greed." The entire raison d'être of any such company is to make more money.

The only constraint is that you have to make money without breaking the law. That's it. What's more, for a publicly-held company, the company is failing its fiduciary duty to its shareholders if it is not making every dollar it can.

That said, in the course of making money, most companies also deliver good value to some of the people with whom they do business. It is a customer's job to figure out if they are getting good value, or if they should take our business elsewhere. Companies that successfully convince their customers that they are getting good value, while making money themselves, succeed. Those that don't fail.

It's been said upthread, but RCI's primary customer is not the individual timeshare owner. RCI's primary customer is the developer. Developers bring affiliation agreements. Affiliation agreements bring members. Members bring their exchange business with them, mostly through inertia, but also possibly with intent.

Our goal as informed consumers is simple: does RCI (or, indeed, any exchange company) deliver value, or not? When it does, make use of their services. When it doesn't, don't.

As an added twist, most of us have more than one way to "access" RCI. For example, I have a regular Weeks account, and the Wyndham portal---both paid for out of my annual Wyndham fees. They offer vastly different value propositions. The regular Weeks account does better for "cheap" weeks with low TPU values. The Wydnham portal over-averages; it does very poorly for "cheap" weeks, but better for "expensive" ones. As an example, I recently confirmed a week at Disney's BCV in a 1BR for Food & Wine. That's a primo reservation for those not allergic to the Mouse, one that Disney owners fight for. And, in Weeks, it's ridiculously over-priced at 41 TPU. However, through the Wyndham RCI portal, my total cost was less than $560. After subtracting out the exchange fee and the DVC extortion fee, you'd need a $/TPU ratio of less than $6.75 to beat that in Weeks.

Over time, I expect those sorts of market inefficiencies to continue to disappear. When they do, I'll stop using RCI. But, until they do, I plan on making hay, and I don't care if RCI is "evil" or "greedy". I'm in it for my family's vacations.

 

[geekette]

Honestly, Fire Island is nice to visit, but the 'atmosphere' isn't something i'd like my 6yr old daughter associating with, too much drinking, nude beaches & other things, i'd compare it to Key West....and the Hamptons are a Zoo from Memorial day to Labor day, i avoid even the highways that lead out there during that time frame....I'm more of a Montauk guy then a Hamptons guy.....

I'm 99% sure that if you asked people with young children if they'd rather bring their kids to Disney, williamsburg or to the Hamptons, Fire Island, they'd pick Disney, williamsburg every single time..And with the Majority of Americans having young children...

If i was part of the Minority, with no kid to travel with...I'd be at Fire Island every weekend....But i'm part of the Majority

Believe it or not, I was a young child once. And my parents never took us to Williamsburg nor Disney. We went to the Carolinas (Myrtle Beach a lot), amusement parks throughout the country (tho never Disney's), went west, saw mountains, etc. We drove all over. I don't ever recall there even being discussion of W'burg nor Mousetown.

as an adult, I still have no interest in Williamsburg nor Disney. While MANY desire those places, plenty of us never had interest and never will.

I also disagree that the majority of Americans have young children. I don't even think that the majority of people "with kids" have young children.