2022 Hyatt Portfolio Club - Maintenance Fees Increase (Does anyone have the 2020 budget?)

[alameda94501]

I have been comparing budgets of the Hyatt Portfolio Club from 2018, 2019, 2021, and 2022. (see attached)

Sorry for the wall of numbers, but this is a summary of what I found:

(For the "per-point percent difference from last year", because I'm missing 2020 I've taken 2021 from 2019 and divided by two as an average).

1. The "component site expenses" in yellow are the various 9 legacy Maintenance Fees. What's interesting is that things appear to be going up by a huge amount per point ($0.9850/pt in 2021 from $0.8128/pt in 2019, a +21.2% increase over two years). This should be reflected in our Legacy HRC resorts somewhere.

I'm hoping someone here has the 2020 Hyatt Portfolio budget to see when this trend started.

2. The "trust association administration - not including bad debt and credit card fees" in orange are the fees of the organization on top of the component resorts. Whatever they do (management of the HPC members, sales, and voting, I guess - HVGG, a different organization, is the one that runs the website/reservations line) it's actually gone down over the years on both a per-point basis and an overall dollar basis. But that's not necessarily a good thing because....

3. "Bad Debt" - has really skyrocketed in 2021 and 2022. I'm assuming the $30,000 is a placeholder from 2018 and 2019, but on a per-point basis it's gone up a +1,000%.

4. "Credit Card Fees" - has also increased from $25,461 (placeholder) to $167,158. I believe when I first was pitched you could only put up to 10% of the Portfolio purchase on a credit card, but last week it was 100%. Clearly the sales team believes this will give more 'debt lubrication' to pull in additional members at sales pitch go-time. So now every Portfolio member is paying for the credit-card miles of new members.

5. So per-point Expenses of the Association have gone up from $0.8373 in 2018 to $1.0733 in 2022, which is an average of a 7.0% increase over four years.

BUT THAT'S NOT WHAT MEMBERS PAY...

There are three entities in Portfolio :
a. the Trust Developers (HPC Developer, LLC - responsible for holding unsold inventory and acquiring new resorts)
b. the Owners Association (HPC Owners' Association, Inc. - responsible for paying resort MFs and collecting Portfolio MFs, and new member sales), and
c. the Reservation Services Operator (HV Global Group, Inc. aka HVGG) - responsible for online/phone reservation services in exchange for our Club Fees (min $157, just like in HRC Legacy).

6. "Trust Developers Voluntary Contribution" - This is a "let's keep selling my unsold inventory" boost from the HPC Developer when things are not looking good, like 2022 and 2021 (and possibly 2020?) They put in $150k in 2021 and $100k in 2020. This is great for current HPC members but clouds the cost whenever it is they will decide not to contribute....

7. "HVGG Rebate" - this is a "here's a gift to Portfolio members but not legacy HRC members" boost from HVGG to give them all their Club Fees back. That's right, HPC members have had their Club Fees rebated to them for 2022 and 2021 (and possibly 2020?) As the budget reads in the fine print: "HVGG does not make any guarantee that it will elect to provide a rebate in the Annual Operating Budget in any budget year beyond December 31, 2022. If HVGG does not agree to provide such a rebate in a future year, the assessment owed by HPC Club Members shall increase accordingly."

As an aside, we can infer that there are at most 5,000 Portfolio members in 2020 and at most 5,365 Portfolio members in 2021, by dividing the HVGG Rebate by $157. The reason it's not exact is because Portfolio members with more points pay a slightly increased fee beyond $157 depending on their Tier.

8. So after these temporary/voluntary rebates, HPC members are paying a subsidized MF. From $0.8371 in 2018 to $0.9757 in 2022 this is a 4.1% increase over four years instead of the 7.0% increase from HRC component resort increases and bad debt expenses.


Must be nice to have HVGG refund club fees... ! If anyone has the 2020 budget from HPC membership, or an HPC sales pitch, please DM me - I would appreciate it!

 

[Kal]

I have been comparing budgets of the Hyatt Portfolio Club from 2018, 2019, 2021, and 2022. (see attached)

Sorry for the wall of numbers, but this is a summary of what I found:

View attachment 44946

(For the "per-point percent difference from last year", because I'm missing 2020 I've taken 2021 from 2019 and divided by two as an average).

1. The "component site expenses" in yellow are the various 9 legacy Maintenance Fees. What's interesting is that things appear to be going up by a huge amount per point ($0.9850/pt in 2021 from $0.8128/pt in 2019, a +21.2% increase over two years). This should be reflected in our Legacy HRC resorts somewhere.

I'm hoping someone here has the 2020 Hyatt Portfolio budget to see when this trend started.

2. The "trust association administration - not including bad debt and credit card fees" in orange are the fees of the organization on top of the component resorts. Whatever they do (management of the HPC members, sales, and voting, I guess - HVGG, a different organization, is the one that runs the website/reservations line) it's actually gone down over the years on both a per-point basis and an overall dollar basis. But that's not necessarily a good thing because....

3. "Bad Debt" - has really skyrocketed in 2021 and 2022. I'm assuming the $30,000 is a placeholder from 2018 and 2019, but on a per-point basis it's gone up a +1,000%.

4. "Credit Card Fees" - has also increased from $25,461 (placeholder) to $167,158. I believe when I first was pitched you could only put up to 10% of the Portfolio purchase on a credit card, but last week it was 100%. Clearly the sales team believes this will give more 'debt lubrication' to pull in additional members at sales pitch go-time. So now every Portfolio member is paying for the credit-card miles of new members.

5. So per-point Expenses of the Association have gone up from $0.8373 in 2018 to $1.0733 in 2022, which is an average of a 7.0% increase over four years.

BUT THAT'S NOT WHAT MEMBERS PAY...

There are three entities in Portfolio :
a. the Trust Developers (HPC Developer, LLC - responsible for holding unsold inventory and acquiring new resorts)
b. the Owners Association (HPC Owners' Association, Inc. - responsible for paying resort MFs and collecting Portfolio MFs, and new member sales), and
c. the Reservation Services Operator (HV Global Group, Inc. aka HVGG) - responsible for online/phone reservation services in exchange for our Club Fees (min $157, just like in HRC Legacy).

6. "Trust Developers Voluntary Contribution" - This is a "let's keep selling my unsold inventory" boost from the HPC Developer when things are not looking good, like 2022 and 2021 (and possibly 2020?) They put in $150k in 2021 and $100k in 2020. This is great for current HPC members but clouds the cost whenever it is they will decide not to contribute....

7. "HVGG Rebate" - this is a "here's a gift to Portfolio members but not legacy HRC members" boost from HVGG to give them all their Club Fees back. That's right, HPC members have had their Club Fees rebated to them for 2022 and 2021 (and possibly 2020?) As the budget reads in the fine print: "HVGG does not make any guarantee that it will elect to provide a rebate in the Annual Operating Budget in any budget year beyond December 31, 2022. If HVGG does not agree to provide such a rebate in a future year, the assessment owed by HPC Club Members shall increase accordingly."

As an aside, we can infer that there are at most 5,000 Portfolio members in 2020 and at most 5,365 Portfolio members in 2021, by dividing the HVGG Rebate by $157. The reason it's not exact is because Portfolio members with more points pay a slightly increased fee beyond $157 depending on their Tier.

8. So after these temporary/voluntary rebates, HPC members are paying a subsidized MF. From $0.8371 in 2018 to $0.9757 in 2022 this is a 4.1% increase over four years instead of the 7.0% increase from HRC component resort increases and bad debt expenses.


Must be nice to have HVGG refund club fees... ! If anyone has the 2020 budget from HPC membership, or an HPC sales pitch, please DM me - I would appreciate it!

The bad debt is interesting. It suggests that there are numerous HPP owners walking away from their purchase. Some arithmetic dealing with the number of HPP members (5,365) and the amount of bad dept ($406,680) might also tell a story.

 

[alameda94501]

The bad debt is interesting. It suggests that there are numerous HPP owners walking away from their purchase. Some arithmetic dealing with the number of HPP members (5,365) and the amount of bad dept ($406,680) might also tell a story.

Yes, but just to clarify this is the bad debt of the HPC Owners' Association [HOA], not HPC Developer (like a mortgage walkaway from the purchase price).

Bad Debt in this context should be the shortfall of owners in unpaid annual MFs.

There would be two categories, free-and-clear owners who default, and mortgaged owners who default.

1. When I look at the Orange County web site I don't see any free-and-clear based Trustee Deeds (granting deeds to the HOA for unpaid MFs) before 08/27/2020, and even after that only around 35 of them. On average people there are defaulting around $2,000 (but there is a big 4,300 HPC point deed going for ~$5,000, what a tragedy at probably an $86k free-and-clear purchase price). So maybe $70-80k of the Bad Debt is from the 35 free-and-clear owners which makes a statement when they aren't interested in a few thousand dollars to keep their deed.

2. For the mortgaged owners who default, I count 1,063 Deeds (including VOI Special Warranty Deeds, Trustee Deeds, and Deeds-in-lieu-of-foreclosure) since 03/06/2018. It gets particularly thick after 2020, around 753 Deeds are in that timeframe. The amounts are high for these because they include the purchase price, but I can't imagine the unpaid MFs are high because they collect their Developer debt monthly and wouldn't allow things to get too far. I can't imagine more than a year's worth of MFs, probably for a low number of points (most people buy 660 pts to hybridize).

So between the two in 2020/2021, ($309,786) + ($406,680) = ($716,466) Bad Debt seems to jive with these numbers of lost members; 35 free-and-clear owners (avg $2k bad debt) and 753 mortgaged owners (avg $845 bad debt).

If there are around 5,000 owners, that's quite a lot of foreclosure, over 15%...

 

[AJCts411]

Regarding the foreclosures/bad debt. The value or dollar amount listed, how does this relate to the number of points foreclosed upon/returned? It has to be something very different that the selling price? Am I wrong that even HPC discounts the actual value of a point way below retail?

 

[alameda94501]

Regarding the foreclosures/bad debt. The value or dollar amount listed, how does this relate to the number of points foreclosed upon/returned? It has to be something very different that the selling price? Am I wrong that even HPC discounts the actual value of a point way below retail?

Let's take the 4,300 point package as an example. Mr Smith goes to the presentation(s) and over time purchases $86,000 of 4,300 Portfolio Points to convert or hybridize his legacy HRC weeks. He mortgages his house and paid cash to Hyatt.

Over time he can no longer pay the $5,000 annual maintenance fees for the Portfolio Points. Because he owes so much, they foreclose on him faster than folks with smaller point packages who stop paying.

Just because there is only $5,000 in Bad Debt, it's because of the $1/pt maintenance fees, not because of the resale value of the points which I would say is closer to $0.01/pt.

The Developer wins because now they have 4,300 Portfolio Points back they can sell to someone else. The Owner's Association half wins because the Developer is back on the hook to pay for the MFs until they sell them, which is better than Mr Smith's default. Mr Smith (or his estate) has lost the 4,300 points and the $86,000.

 

[alameda94501]

Thanks @AJCts411 for sending out the 2023 budget in the other thread. (Do you happen to have 2020's numbers?)

The trends in what you shared are showing a huge growth (+30%) to the club membership count, but also a huge increase (+36%) in pro-rata expenses, and an even more huge increase (+61%) in bad debt.

Details:

1. Component Site Expenses went up from $10,261,439 (2022) to $13,968,009 (2023), a +36.1% Increase. HVGG's rebate couldn't keep up with this, and the $/pt went from $0.9757/pt to $1.0682/pt, or a 9.5% increase.

2. "Trust association administration - not including bad debt and credit card fees" has gone up from $131,699 (2022) to $158,262 (2023), a +20.2% increase. Hard to believe the costs of management of the HPC members, sales, and voting has gone up.

3. "Bad Debt" - went from $406,680 (2022) to $652,930 (2023), a +60.6% increase. Wow.

4. "Credit Card Fees" - they had a huge year going from $167,158 (2022) to $227,097 (2023) a +35.9% increase. Since merchant rates probably haven't increased, it means that the last year was probably a banner year for them.

5. "Trust Developers Voluntary Contribution" - This is a "let's keep selling my unsold inventory" boost from the HPC Developer when things are not looking good, like 2022 and 2021 (and possibly 2020?) They put in $150k in 2021 and $100k in 2022 and again in 2023.

6. "HVGG Rebate" - This is a "here's a gift to Portfolio members but not legacy HRC members" boost from HVGG to give them all their Club Fees back as it was in 2021 and 2022 as well. If we divide the HVGG rebate by $157, we can determine there are at most 6,976 Portfolio Members in 2022. That is quite an increase from "at most 5,365" members in 2022 [a +30.0% increase] and "at most 5,000" members in 2021.

Finally, the sentence you recited: "[...] the Board of Directors has approved a Foreclosed Inventory Purchase Agreement with an affiliate of the Developer to allow the Developer to purchase inventory that has been foreclosed upon and is owned by the HPC Owner's Association making the Developer responsible for future maintenance fee payments." - I don't think this is big news, it should be how it should have worked from the start. I may have been mistaken in my last reply in this thread January 2022 that the "Developer" (assuming Trust Developer, HPC Developer) automatically takes back a foreclosed unit and pays maintenance fees. I guess prior to the Agreement the Owner's Association had to manage disposal themselves?

 

[ChicagoDave]

How can we find HRC units currently in foreclosure and/or heading to the auction block? I know there are websites to search for traditional home/condo foreclosures, but wasn't sure if anything comparable exists for timeshares.