• The TUGBBS forums are completely free and open to the public and exist as the absolute best place for owners to get help and advice about their timeshares for more than 26 years!

    Join tens of thousands of other owners just like you here to get any and all Timeshare questions answered!
  • TUG has now saved timeshare owners more than $14,000,000 dollars just by finding us in time to rescind a new Timeshare purchase! A truly incredible milestone!

    Read more here: TUG saves owners more than $14 Million dollars
  • Follow the TUG Member Banner as it travels the world on vacation with Timeshare owners! Also sign up to get the banner sent to you so you can submit a photo of your vacation with the banner to share with TUG! Banner Thread
  • Sign up to get the TUG Newsletter for free! Join tens of thousands of other owners who get this every week! Latest resort reviews and the most important topics discussed by owners during the week!
  • Our official "end my sales presentation early" T-shirts are available again! Also come with the option for a free membership extension with purchase to offset the cost!

    Read more Here
  • A few of the most common links here on the forums for newbies and guests!

Apollo Group looking to buy HGVC [Merged]

Status
Not open for further replies.

JIMinNC

TUG Member
Joined
Jun 6, 2005
Messages
3,638
Reaction score
2,325
Points
449
Location
Marvin, NC (Charlotte suburb)
Resorts Owned
Marriott:
Maui Ocean Club
Waiohai Beach Club
Barony Beach Club
Destination Club Trust
HGVC:
HGVC at Sea World
Post #22 in this thread was originally posted as a new thread on the Marriott forum, first we'd seen of it. JIMinNC mentioned the stock bump but I don't think there's been anything "official" mentioned about Marriott being involved. :shrug:

I merged that thread and another started on the TUG Diamond forum into this one on the HGVC forum.
The only thing I’ve seen that would explain how Marriott started getting sucked into the market speculation was the JPMorgan analyst who said the credible rumor of the Apollo bid for HGV could entice other private equity firms to bid for Marriott Vacations, so their stock was driven up over 7% today to $97 as well.

Interestingly, in after hours trading Marriott Vacations dropped from $97 back to $94. That’s a stock that seems to rarely trade after hours.
 

1Kflyerguy

TUG Review Crew: Rookie
TUG Member
Joined
Nov 20, 2012
Messages
1,808
Reaction score
387
Points
194
Location
San Jose, Ca
Resorts Owned
HGVC Kings Land, Marriott Destination Club Points
I'm even wondering what change of control provisions might be in the Hilton brand licensing agreement. If Hilton Hotels Corp doesn't like the reputation/business practices of DRI, could they pull the brand license? The license benefits HGV more than Hilton Hotels as the only real benefit to the hotel company is the licensing revenue. I can't imagine Hilton would be OK with the smarmy DRI reputation.
I know they do have some change of control provisions as they mentioned that as "risk" in one of early investor calls, or perhaps the investor day presentations shortly after they were spun off.

Its been a long time, but I am pretty sure they mentioned forfeiting the license if they were acquired by another Hotel Brand. That makes sense to me. I don't recall if they specified any other restrictions, but they may well be included.
 

Chop999

TUG Member
Joined
Oct 1, 2018
Messages
20
Reaction score
19
Points
63
Location
Louisville, KY
Its been a long time, but I am pretty sure they mentioned forfeiting the license if they were acquired by another Hotel Brand. That makes sense to me. I don't recall if they specified any other restrictions, but they may well be included.
I’ll save some people the time for searching with this long copy and paste from their Sec filing form 10-K Annual Report
https://otp.tools.investis.com/clients/us/hilton_grand_vacation1/SEC/sec-show.aspx?Type=html&FilingId=13264840&CIK=0001674168&Index=10000

“Under the license agreement, our right to use the Hilton Marks as a trade, corporate, d/b/a or similar name will automatically terminate if (i) the aggregate number of units of accommodation in our Licensed Business falls below two-thirds of the total number of units of accommodation in our entire vacation ownership business; (ii) we merge with or acquire control of the assets of Marriott International, Inc., Marriott Vacations Worldwide Corporation, Hyatt Hotels Corporation, Wyndham Destinations and Interval Leisure Group, Inc. or their respective affiliates and we or they use their brands in any business after such acquisition; or (iii) we become an affiliate of another Hilton competitor.

Hilton has the right to terminate the license agreement as a whole if, among other things: (i) we file for bankruptcy or cease business operations; (ii) 25 percent or more of our Hilton-branded vacation ownership properties fail certain performance thresholds or the overall customer satisfaction score for all our Hilton-branded vacation ownership properties falls below a certain threshold level, and we do not promptly cure such failures; (iii) we operate the Licensed Business in a way that has a material adverse effect on Hilton; (iv) we fail to pay certain amounts due to Hilton (and in certain cases, do not promptly cure such failures); (v) we contest Hilton’s ownership of the Hilton IP or the Hilton Data; (vi) we merge with, consolidate with or are acquired by a competitor of Hilton; or (vii) we assign the agreement to a non-affiliate without Hilton’s consent.

Hilton also has the right to “deflag” (prevent use of any Hilton IP or Hilton Data at) any property in our Licensed Business in certain circumstances, including if (i) a $10 million or more final judgment is assessed against such property or a foreclosure suit is initiated against such property and not vacated; (ii) an ongoing threat or danger to public health or safety occurs at such property; (iii) such property fails to meet certain quality assurance system performance thresholds; or (iv) such property is not operated in compliance with the license agreement or Hilton’s other standards and agreements, and such breaches are not cured in accordance with the license agreement.

If we breach our obligations under the license agreement, Hilton may, in addition to terminating the license agreement, be entitled to (depending on the nature of the breach): seek injunctive relief and/or monetary damages; suspend our access to and terminate our rights to use Licensed IP and/or Hilton Data (other than the Hilton Marks and certain other content); or terminate our rights to use the Licensed IP (including the Hilton Marks) and Hilton Data at specific locations that are not in compliance with performance standards.

If the license agreement terminates due to our fault before the end of the term, we are required to cease use of the Hilton IP and Hilton Data according to a specified schedule. Hilton has the right to demand liquidated damages based upon its uncollected royalties and fees for the remainder of the term.

Hilton has registered certain of the Hilton Marks for vacation ownership services in jurisdictions in which we currently operate vacation ownership resorts and residential projects under the Hilton Marks. However, Hilton does not have affirmative trademark rights in the Hilton Marks in relation to every aspect of our business in every country around the world, and we, therefore, may not be able to use one or more of the Hilton Marks to expand various aspects of our business into one or more new countries. If we want to use a Hilton Mark in a country where it is not registered, we will have to seek Hilton’s consent, which may not be withheld if the new trademark would not reasonably be expected to harm or jeopardize the value, validity, reputation or goodwill of the Hilton Marks or subject Hilton to any risk of legal liability.

Unless we obtain Hilton’s prior written consent, we may not be able to: (i) merge with or acquire a Hilton competitor or a vacation ownership business that has entered into an operating agreement with a Hilton competitor; (ii) merge with or acquire a vacation ownership business together with a lodging business; or (iii) be acquired or combined with any entity other than an affiliate. We may acquire control of a business that is not a vacation ownership business or a lodging business without Hilton’s consent, but we are required to operate such business as a separate operation that does not use the Hilton IP or Hilton Data unless Hilton consents to such use. Without Hilton’s prior consent, we may not assign our rights under the license agreement, except to one our affiliates as part of an internal reorganization for tax or administrative purposes.”
 

nuwermj

TUG Member
Joined
Aug 28, 2013
Messages
519
Reaction score
200
Points
153
Location
Potsdam, NY
Hopefully Blackstone will swoop in as a white knight suitor. Combining HGVC into Diamond would be a disaster for HGVC owners if they adopted the Diamond business model. We used to be Diamond owners and consider DRI a bottom-feeder in the timeshare business, right down there with Westgate.
If the two companies merged and HGVC management remained in charge (dumping the Diamond team), would that be so bad? No change to HGVC. Both systems continue to run separately (like Wyndham does with its three systems).

Apollo is in deep trouble with Diamond. When it took DRI private in 2016 it had a huge image problem to deal with. That is the image on Wall Street that Diamond's inventory model and customer acquistion was not sustainable. Diamond made a number strategic changes, but these changes have not produced successful results. I think Apollo may be interested in getting control of HGVC management so that Diamond's team can be dumped.
 

Panina

TUG Review Crew: Elite
TUG Member
Joined
Jul 13, 2015
Messages
6,023
Reaction score
7,508
Points
449
Location
South Carolina
Resorts Owned
Hgvc Eagles Nest, Hgvc Surf Club, Hgvc Indian River, Hgvc Anderson, Sunrise Bay & Club, Chetola, Jade Tree Cove, Banyan Resort, Blue Ridge Village
I’ll save some people the time for searching with this long copy and paste from their Sec filing form 10-K Annual Report
https://otp.tools.investis.com/clients/us/hilton_grand_vacation1/SEC/sec-show.aspx?Type=html&FilingId=13264840&CIK=0001674168&Index=10000

“Under the license agreement, our right to use the Hilton Marks as a trade, corporate, d/b/a or similar name will automatically terminate if (i) the aggregate number of units of accommodation in our Licensed Business falls below two-thirds of the total number of units of accommodation in our entire vacation ownership business; (ii) we merge with or acquire control of the assets of Marriott International, Inc., Marriott Vacations Worldwide Corporation, Hyatt Hotels Corporation, Wyndham Destinations and Interval Leisure Group, Inc. or their respective affiliates and we or they use their brands in any business after such acquisition; or (iii) we become an affiliate of another Hilton competitor.

Hilton has the right to terminate the license agreement as a whole if, among other things: (i) we file for bankruptcy or cease business operations; (ii) 25 percent or more of our Hilton-branded vacation ownership properties fail certain performance thresholds or the overall customer satisfaction score for all our Hilton-branded vacation ownership properties falls below a certain threshold level, and we do not promptly cure such failures; (iii) we operate the Licensed Business in a way that has a material adverse effect on Hilton; (iv) we fail to pay certain amounts due to Hilton (and in certain cases, do not promptly cure such failures); (v) we contest Hilton’s ownership of the Hilton IP or the Hilton Data; (vi) we merge with, consolidate with or are acquired by a competitor of Hilton; or (vii) we assign the agreement to a non-affiliate without Hilton’s consent.

Hilton also has the right to “deflag” (prevent use of any Hilton IP or Hilton Data at) any property in our Licensed Business in certain circumstances, including if (i) a $10 million or more final judgment is assessed against such property or a foreclosure suit is initiated against such property and not vacated; (ii) an ongoing threat or danger to public health or safety occurs at such property; (iii) such property fails to meet certain quality assurance system performance thresholds; or (iv) such property is not operated in compliance with the license agreement or Hilton’s other standards and agreements, and such breaches are not cured in accordance with the license agreement.

If we breach our obligations under the license agreement, Hilton may, in addition to terminating the license agreement, be entitled to (depending on the nature of the breach): seek injunctive relief and/or monetary damages; suspend our access to and terminate our rights to use Licensed IP and/or Hilton Data (other than the Hilton Marks and certain other content); or terminate our rights to use the Licensed IP (including the Hilton Marks) and Hilton Data at specific locations that are not in compliance with performance standards.

If the license agreement terminates due to our fault before the end of the term, we are required to cease use of the Hilton IP and Hilton Data according to a specified schedule. Hilton has the right to demand liquidated damages based upon its uncollected royalties and fees for the remainder of the term.

Hilton has registered certain of the Hilton Marks for vacation ownership services in jurisdictions in which we currently operate vacation ownership resorts and residential projects under the Hilton Marks. However, Hilton does not have affirmative trademark rights in the Hilton Marks in relation to every aspect of our business in every country around the world, and we, therefore, may not be able to use one or more of the Hilton Marks to expand various aspects of our business into one or more new countries. If we want to use a Hilton Mark in a country where it is not registered, we will have to seek Hilton’s consent, which may not be withheld if the new trademark would not reasonably be expected to harm or jeopardize the value, validity, reputation or goodwill of the Hilton Marks or subject Hilton to any risk of legal liability.

Unless we obtain Hilton’s prior written consent, we may not be able to: (i) merge with or acquire a Hilton competitor or a vacation ownership business that has entered into an operating agreement with a Hilton competitor; (ii) merge with or acquire a vacation ownership business together with a lodging business; or (iii) be acquired or combined with any entity other than an affiliate. We may acquire control of a business that is not a vacation ownership business or a lodging business without Hilton’s consent, but we are required to operate such business as a separate operation that does not use the Hilton IP or Hilton Data unless Hilton consents to such use. Without Hilton’s prior consent, we may not assign our rights under the license agreement, except to one our affiliates as part of an internal reorganization for tax or administrative purposes.”
For enough money anything can happen but this makes me feel a bit better.
 

GT75

Moderator
Joined
May 30, 2016
Messages
1,929
Reaction score
851
Points
323
Location
Gig City in Tennessee
Resorts Owned
HGVC-x7
If the two companies merged and HGVC management remained in charge (dumping the Diamond team), would that be so bad? No change to HGVC. Both systems continue to run separately (like Wyndham does with its three systems).
If DRI wanted HGVC management then it just needed to hire them.
 

nuwermj

TUG Member
Joined
Aug 28, 2013
Messages
519
Reaction score
200
Points
153
Location
Potsdam, NY
If DRI wanted HGVC management then it just needed to hire them.
Apollo wants HGVC as a way to legitimate DRI. Apollo needs HGVC management and the system they manage in order to do this.
 

dayooper

TUG Member
Joined
Apr 14, 2018
Messages
1,497
Reaction score
1,041
Points
224
Location
The Land of Ice and Snow
Resorts Owned
HGVC at The Flamingo
If the two companies merged and HGVC management remained in charge (dumping the Diamond team), would that be so bad? No change to HGVC. Both systems continue to run separately (like Wyndham does with its three systems).

Apollo is in deep trouble with Diamond. When it took DRI private in 2016 it had a huge image problem to deal with. That is the image on Wall Street that Diamond's inventory model and customer acquistion was not sustainable. Diamond made a number strategic changes, but these changes have not produced successful results. I think Apollo may be interested in getting control of HGVC management so that Diamond's team can be dumped.
I know HGVC is different than the smaller systems that DRI has assimilated, but their MO is to absorb the resorts, raise MF’s through the roof and bully its new members into paying a crap ton of money for something they already own. If Apollo really wanted to move toward the HGVC model, why would they spend billions acquiring a new system when they could pluck a few choice executives from HGVC and allow them to change how they run their resorts? I think Apollo/DRI wants the upscale HGVC resorts and the ability to charge us HGVC members an obscene amount of money to use what we already own.
 

JIMinNC

TUG Member
Joined
Jun 6, 2005
Messages
3,638
Reaction score
2,325
Points
449
Location
Marvin, NC (Charlotte suburb)
Resorts Owned
Marriott:
Maui Ocean Club
Waiohai Beach Club
Barony Beach Club
Destination Club Trust
HGVC:
HGVC at Sea World
If the two companies merged and HGVC management remained in charge (dumping the Diamond team), would that be so bad? No change to HGVC. Both systems continue to run separately (like Wyndham does with its three systems).

Apollo is in deep trouble with Diamond. When it took DRI private in 2016 it had a huge image problem to deal with. That is the image on Wall Street that Diamond's inventory model and customer acquistion was not sustainable. Diamond made a number strategic changes, but these changes have not produced successful results. I think Apollo may be interested in getting control of HGVC management so that Diamond's team can be dumped.
In theory that would be a potentially better outcome for HGVC - as long as the Diamond stench didn’t infect HGVC by association.
 

nuwermj

TUG Member
Joined
Aug 28, 2013
Messages
519
Reaction score
200
Points
153
Location
Potsdam, NY
If Apollo really wanted to move toward the HGVC model, why would they spend billions acquiring a new system when they could pluck a few choice executives from HGVC and allow them to change how they run their resorts?
It would take too long to make these changes internally. And image is important in this case. If Apollo can show HGVC is in charge, then they don't need to wait for Diamond's bottom line to turn around.
 

CalGalTraveler

TUG Member
Joined
Dec 21, 2014
Messages
5,128
Reaction score
3,824
Points
398
Location
California
Apollo wants HGVC as a way to legitimate DRI. Apollo needs HGVC management and the system they manage in order to do this.
Very interesting observations. If true, the Hilton Brand would be very important to overcoming such concerns. Wouldn't the brand license be lost in a takeover? I haven't been able to dissect the legalese above.

If they are trying to overcome Diamond brand issues, it wouldn't make sense to run both systems separately and keep both brands.

Lastly, I am not convinced that overcoming the brand issues would be sufficient motivator for such a large acquisition. While I can understand MVC synergy with Vistana to align with the hotel partners and leverage each others deal flow and bases, I don't understand the synergy of these two brands other than to leverage the HGVC Hilton hotel deal flow into Diamond resort presentations. What Hotel or other deal flow does Diamond bring to the table?

What do they ultimately hope to get out of the deal? Do they hope to upsell Diamond members to HGVC as a revenue source? Sure HGVC would gain additional locations, but with the exception of Embarc and a few others, the quality is lower, I am not sure how many would buy access vs. trade.

Besides HGVC owners can gain access today to some Diamond Resorts via RCI.
 
Last edited:

nuwermj

TUG Member
Joined
Aug 28, 2013
Messages
519
Reaction score
200
Points
153
Location
Potsdam, NY
What do they [Apollo] ultimately hope to get out of the deal? Do they hope to upsell Diamond members to HGVC as a revenue source? Sure HGVC would gain additional locations, but given the quality is lower, I am not sure how many would buy access vs. trade.
Apollo wants to liquidate its holdings in Diamond. It paid $2.2 billion in 2016. They are now approaching year fourth of their investment. Their target price is about $4 billion. The longer they delay, the lower the rate of return per year becomes.

Notice in the news story, Apollo says they are willing to buy HGVC and take it private, or merge it with Diamond and leave it public. Either way they are trying to create value (real and perceived) in the eyes of Wall Street.
 

CalGalTraveler

TUG Member
Joined
Dec 21, 2014
Messages
5,128
Reaction score
3,824
Points
398
Location
California
IMO Apollo seems to have this backward. If they really wanted out of Diamond to overcome brand concerns they would structure the deal to sell Diamond to HGVC/Blackstone as an HGVC acquisition of Diamond. But this is not my wheelhouse. Maybe they are approaching this from what they can control.
 

dayooper

TUG Member
Joined
Apr 14, 2018
Messages
1,497
Reaction score
1,041
Points
224
Location
The Land of Ice and Snow
Resorts Owned
HGVC at The Flamingo
Apollo wants to liquidate its holdings in Diamond. It paid $2.2 billion in 2016. They are now approaching year fourth of their investment. Their target price is about $4 billion. The longer they delay, the lower the rate of return per year becomes.

Notice in the news story, Apollo says they are willing to buy HGVC and take it private, or merge it with Diamond and leave it public. Either way they are trying to create value (real and perceived) in the eyes of Wall Street.
I’m not a huge investor (I play a safe game with my investments and let someone I trust run them) so help me understand. You are saying Apollo wants to spend billions of dollars to take over HGVC so their management can take over the entire operation and increase its brand image value with Wall Street. By changing the brand image, it will make it easier to liquidate their holdings in DRI. Help me understand this. I’m not a business man (I’m a science teacher/coach) so I’m not sure how this would work and how Apollo would make out in the long run.
 

JIMinNC

TUG Member
Joined
Jun 6, 2005
Messages
3,638
Reaction score
2,325
Points
449
Location
Marvin, NC (Charlotte suburb)
Resorts Owned
Marriott:
Maui Ocean Club
Waiohai Beach Club
Barony Beach Club
Destination Club Trust
HGVC:
HGVC at Sea World
I’m not a huge investor (I play a safe game with my investments and let someone I trust run them) so help me understand. You are saying Apollo wants to spend billions of dollars to take over HGVC so their management can take over the entire operation and increase its brand image value with Wall Street. By changing the brand image, it will make it easier to liquidate their holdings in DRI. Help me understand this. I’m not a business man (I’m a science teacher/coach) so I’m not sure how this would work and how Apollo would make out in the long run.
Apollo's strategy is to buy out-of-favor companies at deep discounts to the market, improve their performance, and then typically sell them for a big profit later. That's an oversimplification, but their goal is to buy companies cheaply and then sell them at a profit. Their ultimate goal is to make lots of money for the large investors who invest in their private equity funds. https://www.apollo.com/our-business/private-equity

Among the other companies they own other than Diamond are ADT Security and Chuck E. Cheese's. I think they missed the boat by not making Chuck E. Cheese the Diamond spokesman (spokes-rat?)
 
Last edited:

dayooper

TUG Member
Joined
Apr 14, 2018
Messages
1,497
Reaction score
1,041
Points
224
Location
The Land of Ice and Snow
Resorts Owned
HGVC at The Flamingo
Apollo's strategy is to buy out-of-favor companies at deep discounts to the market, improve their performance, and then typically sell them for a big profit later. That's an oversimplification, but their goal is to buy companies cheaply and then sell them at a profit. Their ultimate goal is to make lots of money for the large investors who invest in their private equity funds. https://www.apollo.com/our-business/private-equity

Among the other companies they own other than Diamond are ADT Security and Chuck E. Cheese's. I think they missed the boat by not making Chuck E. Cheese a Diamond sales rep!
So what @nuwermj is saying is that by combining HGVC with DRI, the whole becomes greater than the sum of the parts. If their target is selling at $4 billion that nuwermj is saying and they paid $2.2 billion for the initial DRI investment, they would have to pay significantly less for HGVC than what they are reporting in the above article ($2.4 billion), correct? Or do they squeeze every last penny out of the system and sell it for a “small” loss, while the returns make it a profit?
 

escanoe

TUG Member
Joined
Jun 3, 2018
Messages
354
Reaction score
166
Points
104
Location
Washington, DC
Resorts Owned
HGVC: Flamingo & Anderson Ocean Club
Woodstone (Luxury, RCI Points) at Massanutten Resort
They already tried that - the CFO of Diamond was formerly the CFO of HGVC.
Yes, but they did not exactly hire him away from HGVC. He was first terminated from HGVC “for conduct and behavior not consistent with the company’s policies.”

https://www.bloomberg.com/amp/news/articles/2018-09-18/apollo-s-diamond-resorts-hires-cfo-fired-from-last-timeshare-job

Obviously, we have no idea what happened. It could be a privately held company may have more flexibility to have such an individual than one that is publicly held.

I’m not just going to assume this CFO is dreaming about how chummy he wants to be with a management team that let him go.
 

JIMinNC

TUG Member
Joined
Jun 6, 2005
Messages
3,638
Reaction score
2,325
Points
449
Location
Marvin, NC (Charlotte suburb)
Resorts Owned
Marriott:
Maui Ocean Club
Waiohai Beach Club
Barony Beach Club
Destination Club Trust
HGVC:
HGVC at Sea World
So what @nuwermj is saying is that by combining HGVC with DRI, the whole becomes greater than the sum of the parts. If their target is selling at $4 billion that nuwermj is saying and they paid $2.2 billion for the initial DRI investment, they would have to pay significantly less for HGVC than what they are reporting in the above article ($2.4 billion), correct? Or do they squeeze every last penny out of the system and sell it for a “small” loss, while the returns make it a profit?
If they did pay $2.4 billion for HGVC, on top of the $2.2 billion they paid for DRI, they would likely be looking to eventually realize a heck of lot more than $4 billion from the combination. Saying that “The whole becomes greater than the sum of the parts” is certainly a way to state it, but they would then have an investment of over $4.6 billion in the timeshare business, so they would hope that the combination could be leveraged to generate an eventual return far greater than that.
 

Tamaradarann

TUG Review Crew: Expert
TUG Member
Joined
Aug 20, 2006
Messages
2,058
Reaction score
482
Points
293
Location
Long Island, New York
Resorts Owned
HGVC South Beach, HGVC Las Vegas, HGVC Las Vegas on the Strip, HGVC Sea World, Misner Place
Relax, the sky isn’t falling yet.

Look at the other merger, there still isn’t a consolidated points/trust system at Marriott/Vistana yet, and it may never happen.

I can’t imagine how they will merge DRI points with HGVC points.

If we choose to keep out Hawaii deeds they still have to allow us to book what we own right up to 1 week+ 9 months. Even now at 9 months we have to contend with other points owner booking Hawaii, it operates very similar to a trust. Airfares and travel distances keep Hawaii out of reach for most as an every year option.

Recall the earnings transcript about HGVC looking at a trust system, wonder if they knew about this offer already?

It will suck for me because I never intend to book what I own in Hawaii, I get better bang by point stretching smaller units and weekdays in club season.

Weren’t you thinking about selling anyway since you purchased a condo in Hawaii? Might be a good time to dump HGVC.


Sent from my iPad using Tapatalk Pro
SmithOp you seem to be reading my mind with your last statement, however, we were intending on dumping some of our units anyway since we mostly use our points from Florida and Vegas in Honolulu and we do not need to do that anymore.

The only HGVC resort that we own that we have stayed in is Miami South Beach. We probably will not be staying there anymore since we have our winter refuge in Honolulu. Since we rarely stay where we own your comment about keeping out Hawaii deeds is not relevant. We have always felt that the value in an HGVC purchase was that you could use your points anywhere in the system at 9 months and there was usually availability. If a Trust System takes that away it devalues what we purchased.
 

Tamaradarann

TUG Review Crew: Expert
TUG Member
Joined
Aug 20, 2006
Messages
2,058
Reaction score
482
Points
293
Location
Long Island, New York
Resorts Owned
HGVC South Beach, HGVC Las Vegas, HGVC Las Vegas on the Strip, HGVC Sea World, Misner Place
They already tried that - the CFO of Diamond was formerly the CFO of HGVC.
However, he was a CFO. A CFO is a glorified accountant or Bean Counter as some say. I am a retired Operations Professional. Operations People and the Bean Counters are 2 different types of people and think differently. Bean Counters look at the bottom financial line. Operations people look at how thinks work or don't work. That is one of the reasons that we own six 1 BR, 2 BR and 3 BR units in Las Vegas and Florida but we stay in Studios for about 16 weeks of vacation a year anywhere in the HGVC system.
 

nuwermj

TUG Member
Joined
Aug 28, 2013
Messages
519
Reaction score
200
Points
153
Location
Potsdam, NY
If they did pay $2.4 billion for HGVC, on top of the $2.2 billion they paid for DRI, they would likely be looking to eventually realize a heck of lot more than $4 billion from the combination. Saying that “The whole becomes greater than the sum of the parts” is certainly a way to state it, but they would then have an investment of over $4.6 billion in the timeshare business, so they would hope that the combination could be leveraged to generate an eventual return far greater than that.
HGV's recent guidance projects adjusted EBITDA to be between $379M and $399M. Diamond's is projected to be about $420M. Marriott paid over 10x EBITDA for Vistana and Bluegreen sold for 9x EBITDA after it went public in 2017. This would put the combined company's value somewhere between $7B and $8.2B. (HGV's current enterprise value is $3.9B.)

Unless a recession comes, I think these are reasonable valuations if Apollo can sell it to Wall Street.
 

nuwermj

TUG Member
Joined
Aug 28, 2013
Messages
519
Reaction score
200
Points
153
Location
Potsdam, NY
IMO Apollo seems to have this backward. If they really wanted out of Diamond to overcome brand concerns they would structure the deal to sell Diamond to HGVC/Blackstone as an HGVC acquisition of Diamond.
That is one of the three options stated in the news article. "merge the company [HGV] with smaller Apollo-owned rival Diamond Resorts and keep the combined business public..."
 

terces

TUG Member
Joined
Feb 18, 2013
Messages
275
Reaction score
64
Points
138
Location
Alberta
Resorts Owned
HGVC LVB x3, Sandos Mexico for RCI points
Another point is I do not see in the agreements where a resort like Las Vegas Boulevard is required to stay in any system. It is completely sold out and run by the HOA, and HGVC is under a year-to-year agreement to operate a timeshare function out of it. I don't know about other resorts, but if DRI tried to degrade this property or crank the MF's it could walk. This is of course extreme thinking, but at the end of the day I bought into a quality property for a great price, and I feel it is in a good position going forward.
 
Status
Not open for further replies.
Top