Diamond Resorts, Poipu Point

[Poobah]

I friend is in Orlando at a Diamond Resort and attended the presentation. Since he owns at Poipu Point the points discussion got around to putting his deed into the trust. The salesman made the following points:

1. Almost 90% of the owners at Poipu have deposited their deeds in the trust
2. If your deed is in the trust your maintenance fee goes into a different fund that represents an amalgam of all of the maintenance fees. The total collected is then divided by the number of deeds in the trust and that is what you pay. So if you have a high end property (like Poipu you will pay less. I think this is illegal because it means that some peoples maintenance fees are effectively going to other resorts.
3. Because of the above, the salesman told him that his MFs at Poipu would be less than if he kept his deed out of the trust! Further, that Diamond is doing this to "incentivize" owners to put their deeds into the trust. He said that the MFs at Poipu will continue to go up (duuuh), but not as much for owners whose deeds are in the trust.

We need to consider the source here, but has anyone else heard of this? Substantiate any of it?

I find it hard to believe any of it!

I seem to remember a lawsuit in the Caribbean where Fairfield (?) was pooling all the MFs and then allocating out to various properties. I believe the settlement was substantial.

Cheers,

Paul

 

[AKE]

We have been on a few of the Diamond Resort tours (and we also own at a resort where there are DR units but not in the majority so DR does not have control of the HOA) - I have heard all of the above in various forms. My comments:

Re: Almost 90% of the owners at Poipu have deposited their deeds in the trust - A SALESMAN WILL TELL YOU ANYTHING THAT HE THINKS WILL GET YOU TO BUY... this one I find hard to believe (but again only my opinion)

Re: If your deed is in the trust your maintenance fee goes into a different fund that represents an amalgam of all of the maintenance fees. The total collected is then divided by the number of deeds in the trust and that is what you pay. So if you have a high end property (like Poipu you will pay less. I think this is illegal because it means that some peoples maintenance fees are effectively going to other resorts. - I BELIEVE THAT THIS IS TRUE - IF YOUR RESORT IS IN A TRUST THEN YOU NO LONGER REALLY OWN AT THAT RESORT, RATHER YOU OWN PART OF A TRUST.. NOW THE POINTS MAY BE DEEDED TO A PARTICULAR RESORT BUT HOW WOULD YOU EVER REALLY KNOW? WHY WOULD ANYONE GIVE UP A DEED TO A UNIT IN EXCHANGE FOR PART OF A PRIVATE COMPANY OVER WHICH YOU, AS AN OWNER, ARE A SHAREHOLDER AND YOUR FORTUNES WILL GO UP AND DOWN LIKE THE STOCKMARKET?

RE: Because of the above, the salesman told him that his MFs at Poipu would be less than if he kept his deed out of the trust! Further, that Diamond is doing this to "incentivize" owners to put their deeds into the trust. He said that the MFs at Poipu will continue to go up (duuuh), but not as much for owners whose deeds are in the trust. AS ABOVE, A SALESMAN WILL TELL YOU ANYTHING THAT HE THINKS WILL GET YOU TO BUY / CONVERT. READ ALL THE OTHER POSTS ON TUG RE OWNERS AT DIAMOND RESORTS WHO HAVE HAD SIGNIFICANT FEE INCREASES.

RE: I seem to remember a lawsuit in the Caribbean where Fairfield (?) was pooling all the MFs and then allocating out to various properties. I believe the settlement was substantial. I BELIEVE THAT FAIRFIELD WAS A PUBLICLY TRADED COMPANY - DIAMOND RESORTS IS PRIVATELY OWNED SO THE LAWS I WOULD THINK ARE DIFFERENT. (again only my opinions)

 

[T_R_Oglodyte]

I friend is in Orlando at a Diamond Resort and attended the presentation. Since he owns at Poipu Point the points discussion got around to putting his deed into the trust. The salesman made the following points:

1. Almost 90% of the owners at Poipu have deposited their deeds in the trust

Salesman lie. As of six or seven months ago, about one-half of the total inventory at Po'ipu was in THE Club; that includes both properties that are in the trust as well as ownerships (such as ours) that are affiliated with THE Club but for which the owners retained onwership of the deed. My numbers are directly from Jamie Shigeta, Po'ipu Point resort manager.

2. If your deed is in the trust your maintenance fee goes into a different fund that represents an amalgam of all of the maintenance fees. The total collected is then divided by the number of deeds in the trust and that is what you pay. So if you have a high end property (like Poipu you will pay less. I think this is illegal because it means that some peoples maintenance fees are effectively going to other resorts.

3. Because of the above, the salesman told him that his MFs at Poipu would be less than if he kept his deed out of the trust!

This is true. When you join the club, you have a UDI in the Trust. The Trust then pays the maintenance fees for all deeds that are in the trust. That becomes part of the overall operating fees for the trust (and is by far the largest component of trust expense). Annual fees for trust owners are then prorated based on the percentage of ownership that owner has in the trust.

The net effect is that trust owners see a "blended" maintenance fee that reflects the holdings of the trust. For owners at Po'ipu this is an advantage because the annual fees at Ka'anapali are less than those at Po'ipu. OTOH - Ka'anapali owners see a spike in annual fees when they join the Trust because their fees get blended with the higher Po'pu fees.

Further, that Diamond is doing this to "incentivize" owners to put their deeds into the trust. He said that the MFs at Poipu will continue to go up (duuuh), but not as much for owners whose deeds are in the trust.

I don't know that they are doing it to incentivize owners to put deeds into the Trust, because as discussed it is exactly the same disincentive for owners at Ka'anapali to add to the Trust.

More to the point it would be difficult to set up the Trust in any other way. If it's a UDI, the only reaasonable way to pay expenses is simply to have everyone pay their share based on their fraction of trust ownership.

Another important factor to remember if you put a deed in the Trust is that you replace the reservation rights you had under the deed with Trust reservation rights (unless you negotiate something different). The big issue here is that the Trust charges a points premium for reservations during peak periods. If you have a 52-week float ocean front unit at Po'ipu, for example, you get 15,000 points allocation if you bring that into the Trust. But after you are in the Trust you will find that reservations over Christmas and New Years require more than 15,000 points - unless you negotiate an exception you will find that you just surrendered your ability to reserve any week of the year.

Working with fresh meat on the sales floor (i.e, people who aren't owners and who don't have a deed to bring into the Trust,) the sales force will use that points chart to try to sell more points - buy enough points to reserve any week you want if you think you might want to stay at the resort during Christmas or New Years.

 

[Werner]

The only resorts in the DRI Hawaiian Trust are Poipu and Ka'anapali so a trust member owns a share in both, equally. The MF's should be the average of the two MF's. I suspect that Poipu has slightly higher MF's than Ka'anapali so the trust MF is probably slightly lower than Poipu and slightly higher than Ka'anapali. You should get current real numbers from DRI to sort that out.

You have to decide whether the trust benefits are worth it to you. The big selling point seems to be that you can make reservations in trust-owned units in either resort 13 months out rather than 12 months out at your deeded home resort (Poipu) and 10 months out at Ka'anapali. So far we have never had difficulty getting Poipu reservations 12 months out and Ka'anapali always seems to have openings, even less than 60 days out. I don't see any benefit to the extra month. Two years ago we made reservations at Poipu 12 months out, then waited for 2 months to make the linked Ka'anapali reservations. There were lots of units available and always seem to be. Unless you are restricted traveling only during prime holiday weeks, like Christmas or Washington's Birthday, its unlikely that the extra month is worth paying anything for.

I don't know about your lawsuit example but DRI uses trusts to pool unit/weeks from multiple properties into one entity. I believe that there is also a Florida trust?

 

[T_R_Oglodyte]

The only resorts in the DRI Hawaiian Trust are Poipu and Ka'anapali so a trust member owns a share in both, equally. The MF's should be the average of the two MF's. I suspect that Poipu has slightly higher MF's than Ka'anapali so the trust MF is probably slightly lower than Poipu and slightly higher than Ka'anapali. You should get current real numbers from DRI to sort that out.

Sorry, Werner, it is incorrect to say that it is an average. It is a weighted blend, based on what deeds are actually held by the trust, with trust operating fees added on top of that. For example, if 75% of the deeds held by the Trust are Ka'anapali deeds and 25% Po'ipu deeds, then the annual fees passed through to trust will be a 75:25 blend of Ka'anapali and Po'ipu (plus trust fees on top of that).

The Hawai'i trust also now includes two properties beside Ka'anapali and Po'ipu. Inventory from both Polo Towers and one of the Sedona resorts (I believe it is Sedona Summit) are being added to the Hawai'i collection.

 

[timeos2]

How does paying to get fees on top of fees equal less?

Salesman lie. As of six or seven months ago, about one-half of the total inventory at Po'ipu was in THE Club; that includes both properties that are in the trust as well as ownerships (such as ours) that are affiliated with THE Club but for which the owners retained onwership of the deed. My numbers are directly from Jamie Shigeta, Po'ipu Point resort manager.

See your first statement. Says it all. And anyone who studies the trust system will realize they are giving up a ton of deeded rights (including voting for their Board) for a promise. And it has already been made very clear to "valued Club members" that remaining a member is a privilege, not a right, and it can (and has) been terminated upon actions the Club found to be insulting. You want to pay and give up your deeded rights for that? It is easy under the rules to "terminate" a Club member. Not so when you hold a deed of your own. No thank you. They will never get 90% of deeded owners to change over to the RTU Club. Never.

This is true. When you join the club, you have a UDI in the Trust. The Trust then pays the maintenance fees for all deeds that are in the trust. That becomes part of the overall operating fees for the trust (and is by far the largest component of trust expense). Annual fees for trust owners are then prorated based on the percentage of ownership that owner has in the trust.

The net effect is that trust owners see a "blended" maintenance fee that reflects the holdings of the trust. For owners at Po'ipu this is an advantage because the annual fees at Ka'anapali are less than those at Po'ipu. OTOH - Ka'anapali owners see a spike in annual fees when they join the Trust because their fees get blended with the higher Po'pu fees.
I don't know that they are doing it to incentivize owners to put deeds into the Trust, because as discussed it is exactly the same disincentive for owners at Ka'anapali to add to the Trust.

And don't forget the ever popular (with Diamond at least) management fee overhead tacked on top to run The Club! It is not insignificant and seems to be on a path to erase any potential savings from not remaining a deeded, voting owner of a single property. As an example one Trust owner posted his fees. He was a former deeded owner at Cypress Pointe Grande Villas. The Club fee for 2009 is over $1500. Had he remained a deeded owner at CPGV- $794. he PAID for that? And since most (all?) fees at most resorts are going up - and any special assessments for Club or the individual resorts also have to be paid by ALL trust members - the chances of the blended fee staying lower than an individual resort fee would be is very low to non-existent. Paying to get into such a system to me is the height of money thrown down the drain. You'll never see a return.

Take a look around the various timeshare boards and see what the prevailing opinion is of what value the Club Trust(s) represents and where fees have been headed. I don't think it will stimulate your desire to buy in. On the other hand The Club itself is a good system. If they still let you hold on to your deed and become a member that might be a better deal. I would never give up my deed and would pass if membership requires that.

 

[Werner]

Thanks Steve, I thought there had to be an equal number weeks/units from both resorts in the trust so that a trust holder would have equal access to either resort. If the split was 90/10, then you would have a hard time getting reservations in the resort with fewer units. In your post above you noted that Ka'anapali owners might not want to join the trust since their maintenance fees might go up. Another reason might be that if few Ka'anapali units are in the trust they might have a hard time getting back into the resort they used to own, and, as you pointed out, they might not have enough points to trade in peak weeks.

How does the trust decide how many units, and which ones should go into the trust? How does the trust share owner know exactly what it is that he or she owns?

 

[Poobah]

Trust

Verrrry Interesting! When I intially heard about the trust thing, I decided it was not something I would ever do, so I never really followed it.

It is an interesting concept and I guess skirts the law with the subtly that you no longer own at your resort, you own a piece of the trust. You have essentially "banked your week" to the Trust. You pay trust fees not maintenance fees.

High priority interrupt: we are getting into the hot tub, more later.:whoopie:

Cheers,

Paul

 

[T_R_Oglodyte]

Thanks Steve, I thought there had to be an equal number weeks/units from both resorts in the trust so that a trust holder would have equal access to either resort. If the split was 90/10, then you would have a hard time getting reservations in the resort with fewer units. In your post above you noted that Ka'anapali owners might not want to join the trust since their maintenance fees might go up. Another reason might be that if few Ka'anapali units are in the trust they might have a hard time getting back into the resort they used to own, and, as you pointed out, they might not have enough points to trade in peak weeks.

How does the trust decide how many units, and which ones should go into the trust? How does the trust share owner know exactly what it is that he or she owns?

The Trust gets started with the developer putting inventory in the Trust. That provides trust inventory for the sales floor people to work with. Then as existing deeded owners join the trust (and give up ownership in their weeks in the process) the trust adds that inventory to their holdings.

On the inventory control side at the resort, the resort sees the Trust as simply one owner who owns a certain number of weeks at the resort. For each type of inventory at the resort, the resort looks at how much of that particular inventory type is owned by the trust, then assigns that fraction of that inventory slice to the trust. The resort also distributes the inventory on a flat line basis throughout the year.

Then whenever someone from the Trust makes a reservation of that type of unit at the resort, that reservation gets debited against the Trust availability for that type of unit. So if, for example, there are 600 deeded ocean front intervals at Po'ipu, and the Trust holds title to 200 of those units, a maximum of 200 ocean front reservations can be made by the Trust against that deeded inventory. That means that the remaining 400 deeded ocean front slots can only go to the 400 ocean front owners who are not in the Trust.

This is the cause of some consternation and confusion among THE Club members trying to trade in to Po'ipu, because they keep doing requests that have no availability and they wonder where all of the inventory goes. They don't realize that a good portion of the inventory is not available to the Club.

Further I suspect that ocean front conversions may be slower because, frankly, I think ocean front owners have less incentive to convert. Many of those owners bought their units because they want to spend one or two weeks on the ocean front at Po'ipu. If that's all you plan to do with your unit, there is little reason to convert, especially if you wind up losing the ability to reserve at peak times. And that's without considering the added trust fees and other issues.

 

[AwayWeGo]

T. H. E. Club.

-- hotlinked -- ​

-- Alan Cole, McLean (Fairfax County), Virginia, USA. ​

 

[Kauai Kid]

What a wonderful opportunity to get pay again and get to reserve 13 months in advance. Where do I stand in line?

At the Maui Schooner owners can reserve 18 months in advance and still keep the deed to their property and it doesn't cost anything additional.

My opinion of Diamond Resorts is that it should be renamed Zircon Resorts. I didn't think it could get any lower after our Oct stay but it certainly has with these posts. Wish we'd never purchased there.



Stale Meat, Sterling

 

[Poobah]

Zircon Trust

Steve,

Thanks for the explanation. I am going to call my friend today and pass some of this on so that he understands. His son and DIL are going to the pitch on Monday, so maybe we can prime them a little with some pointed questions.

I now several people who sold their Poipu ocean front weeks back to Diamond. The buy back was $11,400. It struck me at the time that Diamond was actively pursuing buy backs. SunTerra never really seemed interested. Now we know why: ocean front inventory for the Trust.

I would assume that the unsold weeks are in the trust, as well.

I too believe that most of the Ocean Front owners, bought Ocean Front units because that is where they want to be. We always go at the same time every year (first two weeks in March) and we see a lot of familiar faces. BTW they are usually in the same units.

The salesman "made it clear" that it was just a matter of time before all Poipu owners would put their units in the trust, "so why not just do it now." You gotta love it.

Sterling: Did I detect a bit of cynicism. It was subtle, but I think it was there!!!! Have a good time on your trip.

It is snowing in MSP today. Got to go clear the driveway.

Cheers,

Paul

 

[Kauai Kid]

If Diamond would buy back our two deeded oceanfront units for $11K we'd probably sell and buy two weeks at Alii Kai for $1/wk on ebay. But Diamond is like a politician--I don't believe anything any of them say anymore.

I still remember walking across the quadrangle in Feb at the University and the thermometer was 34 below without windchill. Amazingly that temp seems like it is burning your face.

Things will look better on Saturday when we are at Alii Kai II for two weeks.
They always do.


Sterling

 

[Dollie]

13 month vs 12 month reservation

Then whenever someone from the Trust makes a reservation of that type of unit at the resort, that reservation gets debited against the Trust availability for that type of unit. So if, for example, there are 600 deeded ocean front intervals at Po'ipu, and the Trust holds title to 200 of those units, a maximum of 200 ocean front reservations can be made by the Trust against that deeded inventory. That means that the remaining 400 deeded ocean front slots can only go to the 400 ocean front owners who are not in the Trust.

It seems to me that with this arrangement, there is no advantage to being able to make reservations 13 months in advance. The trust people are competing against other trust people for reservations out of their pool of units. When I make my reservation at 12 months in advance, I am not competing with the trust people, I am competing with my other non-trust people for a different group of units. The number of trust units reserved at 13 months has no affect on what units are available to me at 12 months. -- Do I have this right?

 

[T_R_Oglodyte]

It seems to me that with this arrangement, there is no advantage to being able to make reservations 13 months in advance. The trust people are competing against other trust people for reservations out of their pool of units. When I make my reservation at 12 months in advance, I am not competing with the trust people, I am competing with my other non-trust people for a different group of units. The number of trust units reserved at 13 months has no affect on what units are available to me at 12 months. -- Do I have this right?

You have that correct.

The sales people make it sound as if by buying into the Trust you are getting first crack at reservations as compared with owners who aren't in the Trust. That is not the case. Patti Ornellas, the reservations manager at Po'ipu, walked me through the reservations and inventory control process on that very matter.

The only advantage I can see with the 13-month window is that it allows someone to make travel reservations slightly earlier. And it gives the sales crew another marketing point.

From personal experience making reservations at Po'ipu in August, I can attest that ocean-front and ocean-view unit availability through THE Club has traditionally been completely booked very quickly. If it's not taken by Club members with Home Resort Advantage, it has been taken by Club members almost as soon as the 10-month window opens.

Meanwhile, at eight to nine months before check-in ocean-front and ocean-view units remain available to non-Club owners.

******

There's an important lesson there --> if you're a Po'ipu owner who usually doesn't reserve until eight or nine months before arrival, don't join THE Club unless you're ready to start booking reservations during the Home Resort Advantage period.