2021 3rd Quarter HGVC Earnings Call

[dayooper]

So, yesterday HGVC had their 3rd quarter earnings call and there was some information we can take.

• The company is doing very well, almost back to pre-pandemic sales and income (over in some regards). As owners, we want them to do well. More income means more locations!
• The majority of the effort has been in integrated the back ends of the 2 companies. They have already shown a significant cost savings and have more to do.
• Renamed the Diamond LPGA event into The Hilton Grand Vacations Tournament of Champions
• They have been visiting DRI resorts and holding town hall meetings with the DRI and HGVC employees.
• They are still finalizing the rebranding phases of the integration.
• They are still expecting to announce a new membership in the first part of 2022. It will be voluntary and link the 2 divisions together. In the past, they have stated that owners do not have to be part and will have no disruption in their purchased rights.
• They are rebranding and updating all the sales centers and almost all of them should be completed by the end of 2022.
• They are aiming for rebranding 15-20 DRI properties by the end of 2022. These properties will mostly be in locations that currently don't have HGVC coverage.

My Take - My thoughts of the call

They are forging ahead with the new membership and rebranding locations that legacy HGVC owners don't have access to. The new membership will allow owners to go to places they couldn't before. While there may be some movement of DRI properties to HGVC, the majority of those resorts will remain in the trust and be part of HVC. My guess is that only HGVC properties and rebranded HVC resorts will be available in the new membership (or at least certain DRI resorts). The rebranded properties will be in places that HGVC isn't. My guess is places like Tahoe, Sedona, Virginia Beach, Maui, Kauai and maybe even Gatlinburg/Branson (or some combo of the above) will be part of that 15-20. Maybe that includes the 9 Embarc properties to HGVC? The biggest drawback to HGVC ownership is the lack of locations. I think it really hurts their bottom line. This new membership puts more locations on a map in an easy way. None (at least not as many) of the integration that MVC is seeing with Vistana. Owners at DRI and HGVC can keep their ownerships the same, or pay more (buy membership outright or buy more points) to add locations. The cost savings in integrating the back end will hopefully keep ownership costs down and new resorts coming on line.

What are your thoughts?

Link to transcript

 

[mjm1]

Thanks for the update. I agree with your conclusions. It will be interesting to see what they charge or require a HGVC owner to participate in the new arrangement.

Best regards.

Mike

 

[holdaer]

It wouldn't surprise me if the new tier/membership will require additional retail purchased deeds/points to get to a certain elite level. I could be wrong, but that would be an incentive to purchase additional deeds/points at retail to get up to elite and enjoy access to DRI properties. And vice versa.

 

[dayooper]

It wouldn't surprise me if the new tier/membership will require additional retail purchased deeds/points to get to a certain elite level. I could be wrong, but that would be an incentive to purchase additional deeds/points at retail to get up to elite and enjoy access to DRI properties. And vice versa.

Mark Wang has said previously that the new membership will be available as a stand-alone purchase. Whether it will be or not remains to be seen. If it is, I just hope it’s not more than my enrollment for my latest resale deed ($617).

 

[cindyc]

I am hoping that they will decide to rebrand DRI Sedona Summit to HGVC. And, I can't help but wonder, how they will integrate elite owners of DRI properties that they decide to rebrand to HGVC? While it is true that most DRI owners are points owners, there are still quite a few of us that own deeded weeks. I own both HGVC (non-elite status) and DRI (elite status), so I will wait and see.

 

[PigsDad]

I am hoping that they will decide to rebrand DRI Sedona Summit to HGVC. And, I can't help but wonder, how they will integrate elite owners of DRI properties that they decide to rebrand to HGVC? While it is true that most DRI owners are points owners, there are still quite a few of us that own deeded weeks. I own both HGVC (non-elite status) and DRI (elite status), so I will wait and see.

Just curious -- what kind of benefits does a DRI Elite receive? How do you think it maps up with the three levels of HGV Elite?

Kurt

 

[GT75]

Thank you @dayooper for the summery. To me, the big take-away is also that the merger is going very well (per the plan) and HGV is busy with the rebranding/new membership plan is for sales (HGV wants to show more places to travel on the map) {lucky for us this also helps our ownership}.

My opinion:
I guess that above was also my opinion but if something from DRI such as CI/Embarc is rebranded as HGVC then I can see either of the following:

• It will be just part of the HGVC club like all of the other new resorts added to the club. There won't be an additional fee for those already in the club. Maybe there will be an enrollment fee for those DRI legacy or CI/Embarc resorts being added to the HGVC club. I honestly don't know how CI/Embarc club works but maybe it is somewhat similar to HGVC affiliate resort where an owner releases their week into the HGVC club.
• Somehow a third HGV product similar to HGVC and bHC for CI/Embarc properties. There could be reduced booking windows for each unless you purchase this new membership plan. I just don't see how this option maintains inventory accounting so I am thinking the first option is my pick.
• DRI legacy resorts being added to HVC will be a separate product with this new membership plan to access the HGVC product and for HGVC owners to access HVC.

I know that this rebranding/new membership plan is still in the very early stages (and certainly could hit some roadblocks), but the plan is to get this accomplished much faster than what I am seeing from the MVC/Vistana merger.

 

[CalGalTraveler]

Thanks @dayooper for the detailed summary and @GT75 for your astute analysis. I hope it is bullet point 1. The last thing anyone needs is to make HGVC/bHC/DRI more complicated.

If bullet point 3 I wouldn't pay more than a few hundred dollars. I don't envision using the DRI resorts enough to justify for more than that and could live without - we could rent or trade in RCI/II for those limited times that we would use those properties.

 

[geist1223]

We are DRI Platinum. Our Home Collection/Resort is Cabo Azul. We do not pay Booking Fees for any Reservation. Our Booking Window for Cabo Azul is 14 Months and 11 months for all other DRI resorts. We get an extra month because of the Platinum Status. We have the option to give Worldmark Weeks to DRI in exchange for DRI Points. (Club Select/Club Combination.) There is a fee to do this but it is a reduced fee because of our Platimun Status.

The Benefits for Platimun are numerous. More free GC's, many options cost less, higher value for Points used for non-reservations, etc, etc. The Benefits page by level take up 1.5 pages in the Owners Manual.

 

[dayooper]

I am hoping that they will decide to rebrand DRI Sedona Summit to HGVC. And, I can't help but wonder, how they will integrate elite owners of DRI properties that they decide to rebrand to HGVC? While it is true that most DRI owners are points owners, there are still quite a few of us that own deeded weeks. I own both HGVC (non-elite status) and DRI (elite status), so I will wait and see.

I‘m not sure they are going to rebrand any DRI resorts as HGVC. If they do, it will be just a couple easy to transfer resorts like Cabo Azul (only resort in trust and already up to HGVC standards). The new membership will potentially give access to the DRI/HVC properties for us HGVC owners and I think that’s the mechanism they will use. I could be very wrong here and it wouldn’t be the first time I am.

 

[dayooper]

Thank you @dayooper for the summery. To me, the big take-away is also that the merger is going very well (per the plan) and HGV is busy with the rebranding/new membership plan is for sales (HGV wants to show more places to travel on the map) {lucky for us this also helps our ownership}.

My opinion:
I guess that above was also my opinion but if something from DRI such as CI/Embarc is rebranded as HGVC then I can see either of the following:

• It will be just part of the HGVC club like all of the other new resorts added to the club. There won't be an additional fee for those already in the club. Maybe there will be an enrollment fee for those DRI legacy or CI/Embarc resorts being added to the HGVC club. I honestly don't know how CI/Embarc club works but maybe it is somewhat similar to HGVC affiliate resort where an owner releases their week into the HGVC club.
• Somehow a third HGV product similar to HGVC and bHC for CI/Embarc properties. There could be reduced booking windows for each unless you purchase this new membership plan. I just don't see how this option maintains inventory accounting so I am thinking the first option is my pick.
• DRI legacy resorts being added to HVC will be a separate product with this new membership plan to access the HGVC product and for HGVC owners to access HVC.

Honestly, I believe it will be like 1.

I know that this rebranding/new membership plan is still in the very early stages (and certainly could hit some roadblocks), but the plan is to get this accomplished much faster than what I am seeing from the MVC/Vistana merger.

I think HGVC not totally integrating the 2 platforms really helps speed up the process. Keeping them separate simplifies the entire operation.

 

[escanoe]

Thanks to Da Yooper!

I am going to give this a good wait and see. If they bring some good things in with an HGVC affiliate type relationships AND make it affordable to use local DRI holdings in the Mid-Atlantic region, I may up my stock of HGVC points and downsize my RCI Points portfolio.

I have RCI exchanged into two nice DRI resorts in the past year (Outer Banks and Powhatan at Williamsburg).

DRI resorts are generally good (I don't always expect HGVC level), the problem is their resort fees can be way out of line compared to other local options. How a HGVC/HVC crosswalk product handles exchange fees and resort fees will be a major thing to pay attention to.

Further down the line (I expect at least 2 or 3 years out) I am remain VERY interested in what they decide to do with Destination Exchange. Something else competing with RCI/II could be good for competition.

Thanks @dayooper for the detailed summary and @GT75 for your astute analysis. I hope it is bullet point 1. The last thing anyone needs is to make HGVC/bHC/DRI more complicated.

If bullet point 3 I wouldn't pay more than a few hundred dollars. I don't envision using the DRI resorts enough to justify for more than that and could live without - we could rent or trade in RCI/II for those limited times that we would use those properties.

 

[GT75]

I am going to give this a good wait and see.

Honestly, I think this is the best approach. We can do all the speculation that we want but I certainly don't know what HGV plans are. That is what is important. I don't even know DRI booking windows like @geist1223 just gave us what his/her is for Club Azul/Platinum level. I can already see some issues matching the booking windows (but like I said, maybe just better to wait two months).

Again, the big take away for both former DRI members and HGVC members is that this is moving very fast.

 

[GT75]

Our Booking Window for Cabo Azul is 14 Months and 11 months for all other DRI resorts.

Just for my understanding. When you say all other DRI resorts, is that to mean all other DRI resorts except CI/Embarc?

 

[dayooper]

Just for my understanding. When you say all other DRI resorts, it that to mean all other DRI resorts except CI/Embarc?

Isn‘t @Bill4728 an Embarc owner? Maybe he could shed some light on the subject?

 

[cindyc]

Just curious -- what kind of benefits does a DRI Elite receive? How do you think it maps up with the three levels of HGV Elite?

Kurt

Diamond has a very complicated structure and many more ways to use points than HGVC. That is both a blessing and a curse as there is a huge learning curve to figure it all out. I am not familiar with the perks of HGVC Elite tiers, so I cannot speak to that. However, there are a couple of perks for me as a Platinum member that really work and which I will describe below. I have also attached two pages from DRI's member guide for points owners, called The Club, for those who care to look at the details.

First off, though, one of the things I like about DRI as compared to HGVC is that there is no fee to make a reservation, that is true for everyone regardless of their level for as many reservations as you can make with your point ownership. That said, here are the top perks for Platinum members that I use:
- Pay $10/night to upgrade from one room category type to the next as long as both categories are available at time of booking. This saves me points and allows our family to book larger rooms. For example, I can book a 1 BR unit for say, 5500 points and pay $70 in cash to upgrade to a 2 BR unit.
- Purchase points at a rate of $0.13/per point if I need a few extra points to book a stay for a stay within 35 days of check-in. I have used this a couple of times to "top up" points at the end of the year for a final booking. This perk is available for lower tier elites with less time to check in.
- I can add up to four people to my account as Legacy account users then allocate them a fixed number of points to use. This allows me to share my account with my adult children and sisters avoiding the need to pay a Guest Certificate fee. The financial responsibility for the account still stays with me and does not affect the deeded ownership.
- 5 free Guest Certificates a year, fewer are available for lower level elites.
- For reservations of 5000 points or less, I can cancel at 31+ days or more and have points redeposited in my account with no penalty.
- Three times a year I can pick the exact room number that I want to stay in. So, when I know which room at a resort has a superior view I can select it.
- 7 free upgrades per year if room upgrade is available 72 hours before check-in.
- Banking points to the next year is free as long as it done within the published deadlines, which are reasonable.
- I can use points at a conversion rate of $0.30/per point to book a wide range of cruises. I have checked the pricing and it is the same as at any other travel agency. My cost basis for DRI points is far below that, so that would put me ahead in terms of value. I haven't used this one yet, but am considering it.

For those that want to see the full guide for DRI members here is a link:
Diamond Resorts - US Members Guide to The Club

 

[PigsDad]

Thank you, @cindyc! Very informative.

Kurt

 

[GT75]

Diamond has a very complicated structure and many more ways to use points than HGVC. That is both a blessing and a curse as there is a huge learning curve to figure it all out.

I agree, very informative. It also points out that this merger will be more complicated than I previously thought.

- Pay $10/night to upgrade from one room category type to the next as long as both categories are available at time of booking. This saves me points and allows our family to book larger rooms. For example, I can book a 1 BR unit for say, 5500 points and pay $70 in cash to upgrade to a 2 BR unit.

I also don't understand how some of these DRI elite rules maintain inventory integrity/control.

 

[escanoe]

I also don't understand how some of these DRI elite rules maintain inventory integrity/control.

On this particular item, I guess they simply have to have enough excess points in the trust to cover the usage lost from upgrades. No one is entitled to a 2BR, 3 BR, etc. which inventory must be maintained for because everyone only owns points.

 

[dougp26364]

At least this acquisition appears to be moving forward faster than MVC’s acquisition of ILG.

At his point, my curiosity resides strictly with the stand alone membership. We own enough already and don’t need to add points or weeks with any brand. In fact I could say we own to much, largely because HGVC has so few regional locations and, after 24 years of going to Vegas, we’re burnt out on that location. We need something more that’s not going to cost an arm and a leg for us to reach. Sedona, Gatlinburg, Lake Tahoe and Branson would be nice additions and offer opportunities to burn some points. Branson would be ideal for weekend trips.

Hopefully Hilton won’t require a sit down presentation to consider the membership. Our p,and don’t include. Eggs next fall. We’ll spend saved points somewhere, but I’m pretty certain. we won’t want to waste a couple of hours listening to our options.

 

[trippka]

Thanks @dayooper for the detailed summary and @GT75 for your astute analysis. I hope it is bullet point 1. The last thing anyone needs is to make HGVC/bHC/DRI more complicated.

If bullet point 3 I wouldn't pay more than a few hundred dollars. I don't envision using the DRI resorts enough to justify for more than that and could live without - we could rent or trade in RCI/II for those limited times that we would use those properties.

I understand your logic. One thing to consider is that DRI has their own internal trading system, and discourages use of either II (Marriott) or RCI (Wyndham). Owners can pay their own II or RCI membership fees and trade there, but that involves some extra steps and extra fees. "Club Combinations" lets you combine non-DRI timeshare weeks with your membership and you can receive DRI points for those memberships each year. I suspect that DRI puts weeks out there in II or RCI as bait to get new customers to presentations, but I don't know this. Not sure how the merger will affect this process.

 

[Bill4728]

Club Intrawest ( CI ) - Embarc is a pure points timeshare system. So unlike HGVC where you own a week and that week is worth points, you own points in the Embarc trust and the trust owns the resorts/ weeks.

If HGVC wants weeks at CI resorts, they should be able to just put HGVC weeks into CI and take out CI weeks.

I hope this works out and really look forward to being associated with HGVC.

 

[geist1223]

One of the DRI Resorts HGVC Folks frequently talk about is Cabo Azul. It is close to being sold out. Though it looks like they are slowly adding a new Building. We are DRI Platinum Members and Our Home Collection is Cabo Azul at which we have a 14 Month Booking Window. 11 months at all other DRI resorts. First day of Reservation must be within the 14/11 months not the last day. So long as HGVC does not change anything in Our relationship with DRI including Club Select/Club Combination we are fine.

 

[dayooper]

One of the DRI Resorts HGVC Folks frequently talk about is Cabo Azul. It is close to being sold out. Though it looks like they are slowly adding a new Building. We are DRI Platinum Members and Our Home Collection is Cabo Azul at which we have a 14 Month Booking Window. 11 months at all other DRI resorts. First day of Reservation must be within the 14/11 months not the last day. So long as HGVC does not change anything in Our relationship with DRI including Club Select/Club Combination we are fine.

Our club booking windows starts at 9 months (actually 276 days from checkout) so that would work for both groups.

 

[geist1223]

Also DRI DOES NOT pay Booking/Reservation Fees and we have a number of free GC's.