[2008] SDKath's guide to 5* platinum [merged]

[RoshiGuy]

Bottom line is that one should not assume unrealized capital cost until it is sold.

A developer TS purchase (which is what is needed to get to 4* or 5*) is worth much less the moment you make the purchase. Choosing to ignore this "unrealized" loss distorts the true cost associated with the TS purchase (and conversion into SPs). People can make different assumptions about how much this loss will be but any newbie thinking about this shouldn't be led to conclude that it's okay to ignore this cost.

Opportunity Cost. This is perhaps the most misused term in timeshare cost "analysis". It is theoretical, and almost always has no basis in reality. It presumes that in the absence of the discretionary timeshare purchase, there would not be an alternative cost of accommodations and travel.
If this is the case, there would no financial justification
for the timeshare purchase in the first place.
Almost always, the alternative costs will exceed any return on retained capital.

Fred, opportunity cost has nothing to do with alternative cost of accomodation. IMO, you're mixing apples and oranges here; not incurring alternative cost of accomodation is the "benefit" (savings) that come with a TS purchase. Opportunity cost is simply what one might reasonably have expected to do with the money used to purchase the TS. If the money would be stored in a mattress, opportunity cost is zero; if kept in a bank checking account, again close to zero at current rates. Most financial planners would suggest that using 4% for a long-term return on investing this money is reasonable.

I am not debating the validity of the analytical approach taken by some. It is their reality, and it how they choose to view the matter.
I do, however, take exception to the notion that theirs is the only "right" cost analysis.

I'm not suggesting that my "numbers" are exactly right. Each person needs to make assumptions they are comfortable with when it comes to expected capital loss and opportunity cost. I am suggesting however that ignoring these two pieces is wrong analysis and an example of fuzzy math.

 

[DeniseM]

As LisaRex points out the limitation to purchasing SPs is that this is restricted to 20K per person which does not go very far either for hotel stays or airline tickets.

A family of four can buy 80K Starpoints per year, and most people should be able to charge $30K per year on an AMEX Credit Card with optimal use. (Well, anyone who has the income to support the costs of 4 Star Elite, anyway.)

So that would be 110,000 Starpoints a year. Converted to airline miles with most airlines (x 1.25) that's 137,500 miles. With no upfront investment!

Obviously there are many ways to approach this, but if the OP only wants to buy more timeshares so he has more Starpoints, there are far less costly ways to do it.

Do I do this personally? - Nope - We have found that it is very easy to stay in 4 and 5 Star Hotels using Priceline and we usually pay $75 - $150 per night - always far below the lowest rate available. Do I get the pent house suite? Nope - but even the standard room in a 4 or 5 Star hotel is going to be a nice room. Again - this is the frugal approach - but it works well for those of us who are conservative spenders.

Looking at the big picture, isn't it nice that timesharing works both for conservative spenders and people with bigger budgets? There are some here that scoff at the frugal approach, but I think we need a balance on TUG. If someone has the time and resources to become Elite and make it work for them - more power to them! But there are lower cost ways to be successful as well, and we provide the best info. to a newbie, if they know all their alternatives. YMMV

 

[DeniseM]

What are the yearly maintenance fees for 4 and 5 Star Elite Owners? - 2011 Info.

 

[Fredm]

A developer TS purchase (which is what is needed to get to 4* or 5*) is worth much less the moment you make the purchase.

Roshi, thanks for your comments.

Of course a developer purchase is "worth" much less the moment it is purchased.
This is the 5* Elite thread. Not timeshare economics for newby's. Please consider my remarks a (perhaps poor) attempt at nuance for those who are actually considering it.
If my contribution/response missed the mark, I apologize.

If this was a newby situation we would simply advise them to buy a resale. Calculating rent vs. own scenarios would be pertinent. Opportunity cost would then be a real (if minor) consideration in the comparison.

Choosing to ignore this "unrealized" loss distorts the true cost associated with the TS purchase (and conversion into SPs). People can make different assumptions about how much this loss will be but any newbie thinking about this shouldn't be led to conclude that it's okay to ignore this cost.

Again, context. No one in this thread has come here without understanding resale market values. In fact, all here who consider ways to attain 5* do so from a retro-qualification perspective.
I never suggested the depreciated value should be ignored.
I said "Some assume zero, some less than zero. Others make an assumption based on current "market" value."

I also said "At some point in the future the actual cost must be reckoned with. How it is reconciled remains unknown, and is based on the circumstances at the time."
I then gave examples of how it may vary in individual circumstances, given the same "market".

This was my attempt at offering something to consider beyond the simple way it is too often portrayed.
I assumed that each individual can take it from there.

I'm not suggesting that my "numbers" are exactly right. Each person needs to make assumptions they are comfortable with

Of course. I just think we sometimes get too wrapped up in boiler plate response, and lose sight of the actual issue being discussed. Hence, the opening comment of my prior post: " I usually stay out of these "cost" discussions because they are not as straightforward as some portray".

The considerations for pursuing 5* Elite, or not, are best expressed in sophisticated uses of the system.

I have repeatedly advocated that an owner should be sure they can effectively use the underlying timeshares associated with Elite Status. DeniseM offered a suggestion for alternative ways to secure StarPoints. I assume the info is digested and considered along with other options.
jarta points out that use matters when determining potential cost/benefit. He has shared how he leverages StarPoints in his utilization of the system.
Etc, etc.

Not mentioned in the discussion is perhaps the most critical financial consideration in buying a timeshare primarily for its StarPoints value.
While the points are fixed contractually at time of purchase, what they will buy is not.

I guess I just give an existing multi-share Starwood owner credit for being able to understand how they could, or should not, spend $100,000 + to their advantage.
I suspect many do so for other than strictly financial reasons.

 

[CTtraveler]

Getting started - first post!

Have been reading SVO TUG posts for about a month now

Am looking to make the plunge in purchasing SVO timeshares, with a goal of eventually achieving 5* status (currently am Starwood Platinum via work travel but am hoping to travel less going forward so want to find a way to replicate it)

Looking for opinions on best properties to build a portfolio towards reaching 5*

Have read SDKath's guide To 5* Platinum and a bunch of related posts but am still a relative newbie

Who I am:
Busy professional (but 4-6 weeks of vacation a year and want to use every bit of it), mid 30s, married (wife also works and has similar vacation allotment) 2 kids (toddlers), high disposable income, live in NY Metro area (CT), frequently travel with extended family, we like checking out new places but are by nature creatures of habit, prefer eating out for dinner and staying in for breakfast with simple lunch, vacation schedule flexible (although imagine would change to fit kids' schools in a few yrs), both golfers, love the beach (and anywhere warm to get away from CT winters)

We recently stayed in WKORV-N for 2 weeks and loved it, although it is quite a trek from JFK - we thought it was doable annually but would need to go for more than a week at a time

Places I am considering:
WKV, WLR, WMH, SDO, SBP (driveable?), WKORV(S or N - to be guaranteed a spot during prime vacation times - would even consider event weeks 51 & 52 as it seems seems impossible to get otherwise via exchange), HRA (for similar reasons as WKORV), WSJ (same?)

MF/$ is main consideration, given that I plan to retro any resale purchases via developer purchase, but like the idea of diversifying in places I would be comfortable having to go every yr in case SVN changes, etc

(to that point, is WLR a true deeded property being in Mexico? Legal differences vs US timeshares in deed?)

Any advice on building the best portfolio, assuming I would try to achieve 5* elite by buying 5 weeks (all 2br lo or larger) - particularly which I should buy
resale vs developer to retro and in which order? And does anyone have a good Starwood rep they would recommend to use?

thanks to all in advance!

 

[RoshiGuy]

If this was a newby situation we would simply advise them to buy a resale. Calculating rent vs. own scenarios would be pertinent. Opportunity cost would then be a real (if minor) consideration in the comparison.

Fred, the thread had moved slightly OT. Poster who owned 2 units asked about the best approach to getting SPs and Elite status. DeniseM correctly pointed out that doing this to convert into SPs can be more expensive than simply buying the SPs from Starwood. Jarta disagreed. That is when we got into the OT discussion on how to calculate the correct cost of SPs, with my perspective being that one should not ignore depreciation and opportunity cost in determining the cost of their SPs.

 

[RoshiGuy]

Any advice on building the best portfolio, assuming I would try to achieve 5* elite by buying 5 weeks (all 2br lo or larger) - particularly which I should buy resale vs developer to retro and in which order?

Given your context, I would buy resale - HRA, WSJ and an SDO (true plat) or SMV (plat). Then retro these 3 units with 3 EOY Lagunamar units. You end up with 4.5 weeks and enough SOs for 5*.

Assumption would be that you'd regularly go to HRA & WSJ which are great locations/resorts, easy to get to from JFK, very difficult to get into via SOs; and then use SOs/SPs for other destinations.

 

[CTtraveler]

Given your context, I would buy resale - HRA, WSJ and an SDO (true plat) or SMV (plat). Then retro these 3 units with 3 EOY Lagunamar units. You end up with 4.5 weeks and enough SOs for 5*.

Assumption would be that you'd regularly go to HRA & WSJ which are great locations/resorts, easy to get to from JFK, very difficult to get into via SOs; and then use SOs/SPs for other destinations.

Thanks RoshiGuy

SDKath's original post mentioned Hawaii and Carribean resales needing $40k to retro - is that still the case and if so does that make eoy Lagunamar developer purchase still a possibility to retro HRA and WSJ?

 

[YYJMSP]

Thanks RoshiGuy

SDKath's original post mentioned Hawaii and Carribean resales needing $40k to retro - is that still the case and if so does that make eoy Lagunamar developer purchase still a possibility to retro HRA and WSJ?

I believe that current EOY pricing at WLR ($18,900?) is below the $20K threshold for requalifying...

I think it's the same issue for EOY's at any of the other mainland properties (WDW, WMH) being priced just below the $20K boundary.

 

[CTtraveler]

Given your context, I would buy resale - HRA, WSJ and an SDO (true plat) or SMV (plat). Then retro these 3 units with 3 EOY Lagunamar units. You end up with 4.5 weeks and enough SOs for 5*.

Assumption would be that you'd regularly go to HRA & WSJ which are great locations/resorts, easy to get to from JFK, very difficult to get into via SOs; and then use SOs/SPs for other destinations.

I believe that current EOY pricing at WLR ($18,900?) is below the $20K threshold for requalifying...

Is there a recent thread showing current developer pricing and inventory?

Last I saw was Denise's from 2008

Also, would anyone be able to recommend a good broker for resales?

 

[RoshiGuy]

SDKath's original post mentioned Hawaii and Carribean resales needing $40k to retro - is that still the case and if so does that make eoy Lagunamar developer purchase still a possibility to retro HRA and WSJ?

You're right, it will not work; I overlooked this twist. Separately, my understanding of EOY Lagunamar pricing was that it was over $20K but if it is now lower then there's another strike against using that.

Have you considered another option. Buy HRA or WSJ resale but don't retro this. The resorts suit your travel preference and fit the "buy where you want to go" dictum. Then buy SDO (true plat) and SMV and use Lagunamar to retro these. You'd get 4* plus have HRA and/or WSJ in your portfolio. This will probably be more cost effective than trying to get the Caribbean units retroed.

 

[pathways25]

Thanks RoshiGuy

SDKath's original post mentioned Hawaii and Carribean resales needing $40k to retro - is that still the case and if so does that make eoy Lagunamar developer purchase still a possibility to retro HRA and WSJ?

My strategy has been to buy resale voluntary resorts such as SDO (3-season) and SMV and developer mandatory resorts such as WKV. I do this for 2 reasons: First, WKV only loses about 60% of its value after purchase (based on today's prices) while WLR is losing 95% and second, this minimizes annual maintenance fees. Of course, if you plan on going to HRA and WSJ frequently, it makes more sense to own at those resorts as they are hard to exchange into.

PM me if you'd like the contact info for my rep. He's helped me with 3 retros so far and I'm very happy with him.

 

[YYJMSP]

Is there a recent thread showing current developer pricing and inventory?

Here's a http://www.tugbbs.com/forums/showpost.php?p=1034474&postcount=1 link back to the pricing we were offered just after Christmas...

 

[SDKath]

I believe that current EOY pricing at WLR ($18,900?) is below the $20K threshold for requalifying...

I think it's the same issue for EOY's at any of the other mainland properties (WDW, WMH) being priced just below the $20K boundary.

You can get around that easily by either fixing the certain week you want or fixing the unit. It will cost you 10% more but is well worth it to be able to retro a unit. I prefer fixing the week (basically making it like an "event week" and then if you chose not to go that week or use SOs or SPs, they will just put you into the float week for your season).

Katherine

 

[ketamine]

so close to 4*

Does anyone have suggestions on how to easily get from 303,150 to 359,000
to get to 4* elite status?

We just had our Owner Update and of course they wanted to buy here in Princeville.....not goin' to do that.... but it is tempting.

I so appreciate all the great resources so many of my fellow tuggers provide here. It is such a value.

I know this is off topic but I don't understand why the "guests" don't contribute and pay the tiny membership dues.

It is by far the best bang for the buck.

best to all,
k

 

[DeniseM]

Hi - glad you are having a great time on Kauai - our favorite island!

Here is the 6 million dollar question - why do you want to be 4 Star Elite?

Elite Member Perks

 

[YYJMSP]

You can get around that easily by either fixing the certain week you want or fixing the unit. It will cost you 10% more but is well worth it to be able to retro a unit. I prefer fixing the week (basically making it like an "event week" and then if you chose not to go that week or use SOs or SPs, they will just put you into the float week for your season).

So what happens if the price is $19,900 (which is what I think WDW EOY is right now for a Platinum+ week) -- can you offer to pay an extra $100 "over sticker" to make the $20K minimum?

Or do you really have to go the +10% route to fix the unit or week?

 

[SDKath]

So what happens if the price is $19,900 (which is what I think WDW EOY is right now for a Platinum+ week) -- can you offer to pay an extra $100 "over sticker" to make the $20K minimum?

Or do you really have to go the +10% route to fix the unit or week?

Good question. No idea! Hopefully they would "work" with you and grant an exception. A few years ago when I retro'd something, I was short $500 and they said sorry. But things change...

Katherine

 

[SDKath]

Have to agree with Denise here. 4* gives you nothing special except more SOs and SPs....

Katherine

 

[YYJMSP]

Good question. No idea! Hopefully they would "work" with you and grant an exception. A few years ago when I retro'd something, I was short $500 and they said sorry. But things change...

Well, I think we've worked out our purchase plan, and I'm just sending "K" a note right now to see if it passes checks at their end...

 

[Fredm]

Fred, the thread had moved slightly OT. Poster who owned 2 units asked about the best approach to getting SPs and Elite status. DeniseM correctly pointed out that doing this to convert into SPs can be more expensive than simply buying the SPs from Starwood. Jarta disagreed. That is when we got into the OT discussion on how to calculate the correct cost of SPs, with my perspective being that one should not ignore depreciation and opportunity cost in determining the cost of their SPs.

Oops! looks like I was the one going OT on the OT

 

[klatkiew]

The only benefit i like having 4* status is the ability to wait list for the specific weeks/units/locations you want. However.... sometimes they are not even accepting wait lists depending on the property and season.

Last year i was able to waitlist for a 2 bdrm at Harborside during memorial day week --- and i got it.

The other benefits that come with 4* are basically worthless. my opinion of course.

 

[pathways25]

The only benefit i like having 4* status is the ability to wait list for the specific weeks/units/locations you want. However.... sometimes they are not even accepting wait lists depending on the property and season.

Last year i was able to waitlist for a 2 bdrm at Harborside during memorial day week --- and i got it.

The other benefits that come with 4* are basically worthless. my opinion of course.

I'm not sure 4* is that worthless. The perks that I really value are the 9/30 StarPoint conversion deadline, the waiving of the $99 conversion fee and the 10% StarPoint bonus. Those $99 conversion fees can add up pretty quickly if I need to convert a bunch of unused studio sides from my 2BR units.

 

[jarta]

pathways, ... I agree. 9/30, no conversion fee and the 10% bonus are very useful perks. ... eom

 

[Maui_ed]

I also agree with pathways25 that 4* is not worthless - but "value" depends on what you want to do. If you don't plan to convert SOs to SPs, the value might not be there for you.