[2008] Grand Regina Villa Cabo San Lucas [Not Starwood]

[nanaboat]

Yeah, check the site out now. Its over.

 

[mitchandjeanette]

Yeah, check the site out now. Its over.

What site?

 

[clsmit]

What site?

See earlier in the thread. The SVO site advertising Los Cabos now indicates the property is not under development. I'm really sorry to hear that.

 

[LisaRex]

Wait a minute. On 10/23 their website stated that despite difficulties, Cabo remained one of their top priorities!

I should have bought Marriott.

sigh.

 

[SDKath]

The development of The Westin Los Cabos Ocean Villas is currently under review until further notice.

Grand Regina Villas buyers should contact Grand Regina Member Services for questions about their purchase in the Grand Regina development. Grand Regina Member Services can be reached toll free at 866.881.3859 or by email at memberservices@grandregina.com.

This is all I see...

Katherine

 

[nodge]

Wait a minute. On 10/23 their website stated that despite difficulties, Cabo remained one of their top priorities!

Oh, I sense a Google searching contest here. Who can find the most recent SVO statement (that is still viewable via the web) making Cabo a "top priority?"

I'll start with this entry, dated March 1, 2007.

"For Starwood Vacation Ownership (SVO), which operates timeshare resorts under its Sheraton and Westin brands, Mexico is a top priority, according to Matt Avril, president, SVO. The company currently has new developments under way in Cancun and Cabo San Lucas. "There are a lot of dynamics that make Mexico attractive for us," Avril says. "Our ownership base is largely U.S., and Mexico is seen as an extension of the U.S. market today. We'll be the first branded player in Mexico, so we think there are a lot of synergies. The consumer is looking for brand confidence."

I think I should get extra points because this quote also includes the buzzwords "synergies" AND "brand confidence."

Can anyone beat that date?

-nodge

 

[clsmit]

I'm taking up nodge's challenge and in my search I found these quotes from the Q3 08 earnings call:

"We are starting no new (vacation ownership) projects, essentially completing projects that are well underway and partially sold."--Vasant Prabhu, CFO Starwood -- He emphasized that point later during the Q&A period.

"As it relates to the time-share first I want to be very clear and this is something we said earlier in the call already, we’re resizing the business, which doesn’t mean exiting, and we’re going to continue to focus on a small number of high return locations..." -- Frits van Paasschen, CEO Starwood

That would explain why Cabo is gone.

Quotes from Seekingalpha.com http://seekingalpha.com/article/101...orldwide-inc-q3-2008-earnings-call-transcript

 

[clsmit]

Oh, I sense a Google searching contest here. Who can find the most recent SVO statement (that is still viewable via the web) making Cabo a "top priority?"

I'll start with this entry, dated March 1, 2007.
(stuff deleted)
Can anyone beat that date?

-nodge

How about:
"Date: Wednesday, April 18 2007
Starwood Vacation Ownership, a division of Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT), announced today that it has broken ground on its second Westin-branded vacation ownership resort in Mexico. The Westin Los Cabos Ocean Villas is the first vacation ownership resort in Los Cabos, Mexico to be developed by a major U.S.-based lodging company. ... 'The location is one of the most beautiful in Los Cabos and we are eager to continue our expansion,' said Sergio Rivera, president of real estate development, Starwood Hotels & Resorts, Worldwide, Inc. "

http://www.allbusiness.com/services/business-services/4320265-1.html

 

[nodge]

I found these quotes from the Q3 08 earnings call:

"We are starting no new (vacation ownership) projects, essentially completing projects that are well underway and partially sold."--Vasant Prabhu, CFO Starwood -- He emphasized that point later during the Q&A period."

Ouch! No sugarcoating that one. I guess that WKORV-III in stinkyville is dead too. What about the Westin Riverside in Avon? Have construction and/or sales started? If not, I guess it's toast.

-nodge

 

[Denise L]

Los Cabos? Cabo San Lucas?

Is this the same place that you guys are talking about?

http://grandregina.com/index.html

I have a friend supposedly staying at the Grand in Cabo in June using her Club Regina Raintree ownerhip. Is this a different place? Same place? I obviously don't know Mexico at all .

 

[nanaboat]

They completed the Grand Reginia Residences but the villas are not going to be built because starwood backed out. Raintree/not to be confused with the Westin, is going to make a prosposal to buy out for cash the people who put up their money for the villas. I, not being smart, gave them my money four years ago and upgraded from the Club Regina/Raintree. I received my letter, by email, from Grand Regina/Raintree that the project is over. Starwood is not involved and their web site tells you to call Grand Regina/Raintree. Believe me, with the maint. fees they were going to charge, the Club Regina is just fine.

 

[SDKath]

Ouch! No sugarcoating that one. I guess that WKORV-III in stinkyville is dead too. What about the Westin Riverside in Avon? Have construction and/or sales started? If not, I guess it's toast.

-nodge

Riverfront is already selling. The hotel is built and 1/2 of the first TS building is supposed to be done this coming Summer. But I think they bailed on the second TS building. The sales rep at Riverfront tells me that "sales are very strong" and there has been "no impact" of the economy. If that is the case, why bail on the second building???

Yes nodge, I award you triple bonus points for finding "synergy" and "brand confidence!" Great detective work. I am sorry to say that your bonus points have been devalued by multiple of 0 starting yesterday, so really you get nothing for that find. Sorry.

Katherine

 

[TomH]

Riverfront

Wow! I did not hear that they scrapped the second building. Looks like a bad time to be selling timeshares. I am crossing my fingers for more realistic developer prices and attractive incentives when they come to the reality that the economy IS affecting timeshare sales. So far, Starwood VO seems to be living in a fantasy world with scheduled price increases, etc.

Tom

 

[djp]

"We are starting no new (vacation ownership) projects, essentially completing projects that are well underway and partially sold."--Vasant Prabhu, CFO Starwood -- He emphasized that point later during the Q&A period.

"As it relates to the time-share first I want to be very clear and this is something we said earlier in the call already, we’re resizing the business, which doesn’t mean exiting, and we’re going to continue to focus on a small number of high return locations..." -- Frits van Paasschen, CEO Starwood

I read "starting no new projects", and "were resizing the business" to really mean WE ARE EXITING. I am officially anticipating Starwood to spin off the timeshare biz to another developer. I just hope it is DVC or Marriott.

 

[LisaRex]

I read "starting no new projects", and "were resizing the business" to really mean WE ARE EXITING. I am officially anticipating Starwood to spin off the timeshare biz to another developer. I just hope it is DVC or Marriott.

I share your concern and hope that if it's sold, the buyer is Hyatt or Hilton. Marriott be great, but I think there's too much redundancy in locations for it to work.

Once the people who financed their timeshares have paid off their loans, there's very little to sustain SVO. The handwriting is on the wall.

 

[bizaro86]

Hilton got purchased in a leveraged buy-out approximately at the top of the real estate market with a huge amount of debt. No way they could buy anything right now, whether they wanted to or not.

And even if they decided to 'exit' the business, I think they'd be more likely to go the '4 seasons' route and just never build or sell any more timeshares, not sell the rights to their existing resorts, because most of the value they add is through their brand names, and I can't imagine they'd be willing to let anyone else use them. And anyone who has their own 'brand' name, ie. hyatt/dvc, probably doesn't want a bunch of the older SVO resorts with no development potential (ie, vistana beach club, SDO, etc).

Michael

 

[djp]

Here is an email I received from a fairly sr. starwood person, that I emailed with questions about aruba, and Cabo apparently being cancelled, and Riverfront being only half the size it was originally planned for.

"As for all developers this is a conservative time.
Starwood does fund its own projects (for the most part)
and is being conservative with its capital.

We are in a supply and demand system.
Obviously Consumers don't have as much expendible
income currently so we are not going to over build.

Aruba had some deeper issues and at this time is a no go.
Cabo is just on hold and the Riverfront is being built in phases.
This is just the first phase the other is still planned, we already
own the realestate. Sales are doing very well."

(I will provide name and title to anyone who PM's me, but do not want to post here as I did not ask him permission to quote)

So according to him Cabo will happen eventually, and Riverfront will be full size. I guess we will see.

 

[nodge]

Once the people who financed their timeshares have paid off their loans, there's very little to sustain SVO. The handwriting is on the wall.

I agree.

Starwood appears to have sealed its fate when its top official publically announced that the opposite will happen, all while the top SVO official, and his precious golf clubs, jumped to the Starwood mothership a few months ago. With SVO's first "top priority" announcements serving as a guide, I'm guessing the axe will fall in about 15-18 months from Frits' announcement to the contrary.

I don't think SVO "exiting" the sustaining timeshare business would be all that bad. Its current management only really knows how to build stuff and schmooze investors, so much so that it doesn’t even consider itself in the timeshare sustaining business anyway. If it let loose of the sustaining/management/always having to meet Marriott's profits at all costs mentality/purse string reigns, even a little, a much more responsive, effective and reasonable sustaining management team could work wonders.

We'd lose the whole "new resort" on the horizon opening soon thing, but we'd all gain control of our respective resorts AND enormous banquet/ballrooms at our resorts where those pesky SVO sales galleries currently sit.

-nodge

 

[SDKath]

I can't imagine why Starwood would want to sell their TS business. Remember that ML presentation this week? They had arrows pointing between their TS and their Hotel business. They will use one to drum up business at the other. What they have built so far is already (mostly) owned and paid for, except perhaps WKORV III. I bet they have funding in place for it already. They should go ahead. You know why? Because they can charge $65,000 for a week in a 2BR LO OV and call it OF AND sell all 52 weeks easily since HI has great weather year round. Same with Poipu. Now compare that with Riverfront, which only has about 15 good weeks of use a year. Hmmmmm. No brainer. Build in Hawaii. And MX. (I bet they WANT Cabo to happen. There must be some other issues at play in Cabo that have nothing to do with Starwood.)

I think they are going to do just what they say -- cut back. Lay off sales people, stop building new projects for a while and wait for the economy to pick up.

As a matter of fact, what I would be doing if I was Starwood right now is looking for cheap land! Plan ahead! In this economy, you buy, not sell. So I would be scouring the CA landscape (except Palm Springs) looking for a new location. Santa Barbara? Newport? San Diego? Napa? There are bound to be some bankruptcy sales that they can take advantage of. And that's just the state I know well. They should be looking in other parts of the country too, for opportunity. That's what savvy businesses do.

Then when the time is right and demand is higher, they can start building and selling again. That's what I would be doing right about now if I were sitting in Orlando behind a great big mahogany desk....

Katherine

 

[LisaRex]

Even if they bought a boat load of land today (which is unlikely because banks have tightened up their credit), new developments are at least 3 years down the road. The reason their profits are down, by Starwood's own admission, is because Hawaii sold out. Hawaii is STILL sold out, so my question is how will SVO sustain itself during the next 3-5 years? They make money selling VOIs. Timeshare is all they do. It's akin to McDonald's saying that their hamburgers are priced too high so they're going to quit selling them for now, but in a few years they'll start selling them again and all will be fine. You can't grow a business with a stagnant business plan.

 

[myip]

I know what SVO should do... They should exercise ROFR -- without building... We can keep the sales staffs --> Maybe my non-mandatory resort price will go sky rocket... :hysterical: Wishful thinking

 

[SDKath]

Well, I am not saying this is the best position to be in. But most large companies (all types not just TS -- look at Cisco's earning report yesterday!) are just trying to weather the storm right now. So unless Starwood is about to declare bankruptcy, which I don't think they are close to, they need to get through the next 3-4 years with cuts in staff and big expensive projects and start planning for the future so they can come out stronger and more profitable in 5 or 10 years.

K

 

[Fredm]

Well, I am not saying this is the best position to be in. But most large companies (all types not just TS -- look at Cisco's earning report yesterday!) are just trying to weather the storm right now. So unless Starwood is about to declare bankruptcy, which I don't think they are close to, they need to get through the next 3-4 years with cuts in staff and big expensive projects and start planning for the future so they can come out stronger and more profitable in 5 or 10 years.

K

Starwood is in the same boat as Marriott and just about every other large timeshare developer.
Although the economy in general isn't helping matters, their real problem is with the credit markets. They cannot package and sell timeshare loans in the marketplace. Worse, they do not have any visibility to when the markets might return to "normal". Worse, worse, every dollar that they finance themselves is deferring revenue from the sale. Publicly traded companies, especially, don't like that.

Unwilling and unable to commit vast amounts of capital for an unknown period of time, Starwood, Marriott, and others are intentionally postponing or canceling development, aggressively cutting costs, and consolidating.
As a result, I do not believe that there will be progress on ANY pipeline resorts until Starwood is again able to monetize their timeshare notes.

A couple of weeks ago Howard Nusbaum, President of ARDA, requested assistance under the Emergency Economic Stabilization Act (the $700 billion bailout) to address the loan liquidity crisis in the timeshare industry. ARDA wants the fed's to guarantee timeshare investment grade paper in exchange for credit insurance fees paid to the US Government.

Quoting Nusbaum: "The timeshare industry is literally selling itself out of business by generating consumer loans through sales while being unable to monetize them..."

Starwood is not growing its timeshare business for the time being. But, not because they can't sell it. It is an intentional, managed response to the credit markets. They have plenty of capital, but are choosing to invest it in the hospitality side of the business, rather than hold loans on their balance sheet.

 

[SDKath]

I agree with you Fred. But is the hotel side fairing any better? The first thing people cut back on when money is tight is vacations. Same with business clients. They are not filling those hotels as readily as they were 5 years ago?! Seems like the hotel side is suffering just as badly. I just saw an ad pop up on google for me saying Starwood stay 1 night, get 1 night free!

Katherine

 

[rocky]

Back to my prior negative comments about the value of being 5 star -- see how things change quickly and not for the good??????

The only silver lining I can see in all this is that average hotel room rates will fall and the associated starpoints required for a night in those hotels will fall -- at least that's how it's supposed to work. The annual revaluation comes soon and we will know soon enough.