Don't understand RCI math

[Beefnot]

I haven't really seen any evidence of a skim...just the difference between what the company RCI pays in TPU's for a Week and what they Sell in TPU's for a week....this is a common thing in almost all companies, even the subscription big box stores like BJ's, Costco, etc. who also seem to have deals with companies so they don't sell to other big box store, charge a 'membership fee'

Now as for offering weeks that aren't renting internally to the average joe off the street....i'm not a fan of that practice really, but it makes sense that if we don't want it, they wouldn't want to throw away good money, so to speak

That is an explicit skim when they are (1) charging a membership fee, (2) collecting an exchange fee and (2) establishing a bid-ask spread. One or two of the three, perhaps not a skim, but all three is definitely a skim. Add to that pulling inventory that would otherwise have demand for exchange, to rent instead, and it makes me wonder if the CEO's last name isn't Soprano.

 

[ronparise]

wonder if the CEO's last name isn't Soprano.

not Soprano...Wyndham

 

[ampaholic]

not Soprano...Wyndham

Not Soprano or Wyndham (FYI a "made up" name) but ... Geoffrey A. Ballotti

A +1 to Beefnot ... it does end in a vowel

 

[Beefnot]

Not Soprano or Wyndham (FYI a "made up" name) but ... Geoffrey A. Ballotti

A +1 to Beefnot ... it does end in a vowel

Wow. And now it all makes sense....

 

[Ridewithme38]

Not Soprano or Wyndham (FYI a "made up" name) but ... Geoffrey A. Ballotti

A +1 to Beefnot ... it does end in a vowel

Hey! Wait my name ends in a vowel, that doesn't mean I......Well, i guess, nevermind

 

[hypnotiq]

Hey! Wait my name ends in a vowel, that doesn't mean I......Well, i guess, nevermind

Oh sh*t, so does mine...Ill just shut up now. :ignore:

 

[Carolinian]

Well, Little Red Riding Hood, as you know from previous threads, I am not a European but an American expat working in Europe. My wife, on the other hand, is a citizen of three countries, two of which are in Europe, so you could count her as both. Indeed, my user name refers to the fact that I am from North Carolina.

You are relatively new to timesharing and to these boards, so I will excuse your lack of knowledge as to what it means to be overbuilt in timeshare. Most informed Tuggers have been well aware of that subject and its meaning for the decade plus that I have been involved with these boards. When I first signed up for TUG, one of the main timeshare gurus active on these boards was Fletch, and he frequently commented on the overbuilt areas, and it has been that way since.

As to supply and demand, what you should realize is that a resort or resort area with more demand than supply has a favorable supply / demand curve and therefore should have higher trade power in an honest system. On the other hand, a resort or resort area with more supply than demand has an unfavorable supply /demand curve and thus should have lower trade power in a fair system. It is easy to look at all availible weeks in the RCI system to see which is which. The key is the totality of demand from all sources versus the totality of supply in the system. That is a key element of free market capitalism. When there is price fixing, that is NOT a free market approach.

Then there are the subsidies where RCI is constantly ''buying'' for more than it is ''selling'' for, i.e. giving more points lite for deposits than they charge to trade into the same week. Those subsidies are inconsistent with a free market. And those subsidies from RCI are indeed what artificially sustains the overbuilt areas in timesharing.

There are MANY MANY 'Club' type store in america that charge a 'service' or 'membership' charge to shop there...they also have a separate buy and sell rate...Look at Concerts, Clubs, Stadiums, they all charge you for entrance and then use a different buy/sell rate for products once you are inside....This is just how the market works her in America Caroline, i think your European or something right? Capitalism is a whole different system then you maybe used to



I think 'overbuilt' is an improperly used term, if an area is overbuilt the resorts wouldn't be able to sustain enough rentals/owners to keep from going out of business, the market would correct itself, the resorts not popular would close and it would no longer be an over built area...Another Capitalistic priciple, i think there maybe a difference in understanding between countries with this...So i don't agree with that term...i'll agree that there are areas that have ALOT of TS availability....BUT, the reason they are able to have that large availability and still stay in business IS that they are in places people REALLY REALLY want to go to...These places have high trading power for that EXACT reason...they are popular...and the large amounts of resorts in that area that are able to maintain a profit are PROOF of that

 

[Carolinian]

That is an explicit skim when they are (1) charging a membership fee, (2) collecting an exchange fee and (2) establishing a bid-ask spread. One or two of the three, perhaps not a skim, but all three is definitely a skim. Add to that pulling inventory that would otherwise have demand for exchange, to rent instead, and it makes me wonder if the CEO's last name isn't Soprano.

Another way to look at it is that it is like the old command economies of the old Soviet system.

 

[e.bram]

Carolinian:
How about an anti competitive monopoly or quasi monopoly in a Capitalistic system.

 

[Tia]

Very creative, I like it

There should be a song written for that. Maybe they could call it "TaxmanRciman".

Let me tell you how trades will be
One blue for you 9 reds for me
If 10 percent appears too small
Just know that we can rent them all
Rciman
If you have a large we'll give you small
If you want some sun there's none at all
In March we have some sand and surf
In summertime we've got no worth
If the fee's too high we just don't care
We make our cash - go you know where
Cause we're Rciman Yeah Rciman
And you're depositing for no one but me

RIP George Harrison.

 

[ampaholic]

Another way to look at it is that it is like the old command economies of the old Soviet system.

A bunch of thugs propping themselves up by bastardizing the legal system?

I think the Soprano reference might be the closest model of all to how they really act.

YMMV

 

[ronparise]

A bunch of thugs propping themselves up by bastardizing the legal system?

I think the Soprano reference might be the closest model of all to how they really act.

YMMV

“it's just business nothing personal...”
― Mario Puzo

pure capitalism, unfettered by law or regulation

 

[Laurie]

The key is the totality of demand from all sources versus the totality of supply in the system. That is a key element of free market capitalism. When there is price fixing, that is NOT a free market approach.

Then there are the subsidies where RCI is constantly ''buying'' for more than it is ''selling'' for, i.e. giving more points lite for deposits than they charge to trade into the same week. Those subsidies are inconsistent with a free market. And those subsidies from RCI are indeed what artificially sustains the overbuilt areas in timesharing.

I agree with others who have pointed out that this is exactly a free market system - under unregulated capitalism. RCI is a corporation, not the government, and there are other companies citizens are free to do business with instead. This isn't a monopoly.

RCI is a corporation whose purpose is to make as much of a profit as possible - by purchasing its product as low as possible, and reselling it as high as the market will bear.

Price-fixing by a government has nothing to do with a corporate entity setting its prices however it wants to, without explanation to anybody.

As far as supply and demand, this analysis is looking to the wrong ratio for supply and demand. Supply is the quantity of "product" the company can buy for how little. Demand is the quantity it can resell, for how much.

So as long as it can obtain deposits from members (or whatever other sources) for low cost (ie TPU's, or cash, or whatever) and as long as it can resell those at current prices (rental $$ or TPU's), supply and demand is in balance.

I'm not saying I love it - I don't - but private companies get to make up their rules of business, and set their prices for what they buy and sell, and have no obligation to obtain my personal approval, nor to conduct their business in a way that I deem "fair." There's certainly no law or precedent that says they have to resell their product for what they buy it for.

I don't have to sell to, aka deposit with RCI if I don't like what they pay me, aka what I get back in exchange. I'm free to shop around - which I've done, and at the moment I feel I get less back from the other exchange companies. If/when that changes, I can take my business to many other alternatives under in this capitalist system.

(If it were allowed, I could post for a long time about what I think of unregulated capitalism. Perhaps it's ok to say that I don't love that either - I think regulation that promotes and protects fairness is an inherently good thing - but perhaps it's the best alternative for me at the moment, given the alternatives, just like RCI might be the best exchange company for me at the moment, given the alternatives.)

 

[Beefnot]

I agree with others who have pointed out that this is exactly a free market system - under unregulated capitalism. RCI is a corporation, not the government, and there are other companies citizens are free to do business with instead. This isn't a monopoly.

RCI is a corporation whose purpose is to make as much of a profit as possible - by purchasing its product as low as possible, and reselling it as high as the market will bear.

Price-fixing by a government has nothing to do with a corporate entity setting its prices however it wants to, without explanation to anybody.

As far as supply and demand, this analysis is looking to the wrong ratio for supply and demand. Supply is the quantity of "product" the company can buy for how little. Demand is the quantity it can resell, for how much.

So as long as it can obtain deposits from members (or whatever other sources) for low cost (ie TPU's, or cash, or whatever) and as long as it can resell those at current prices (rental $$ or TPU's), supply and demand is in balance.

I'm not saying I love it - I don't - but private companies get to make up their rules of business, and set their prices for what they buy and sell, and have no obligation to obtain my personal approval, nor to conduct their business in a way that I deem "fair." There's certainly no law or precedent that says they have to resell their product for what they buy it for.

I don't have to sell to, aka deposit with RCI if I don't like what they pay me, aka what I get back in exchange. I'm free to shop around - which I've done, and at the moment I feel I get less back from the other exchange companies. If/when that changes, I can take my business to many other alternatives under in this capitalist system.

(If it were allowed, I could post for a long time about what I think of unregulated capitalism. Perhaps it's ok to say that I don't love that either - I think regulation that promotes and protects fairness is an inherently good thing - but perhaps it's the best alternative for me at the moment, given the alternatives, just like RCI might be the best exchange company for me at the moment, given the alternatives.)

Generally speaking, you are correct. However they are also pulling out deposits to rent instead of exchange and are monkeying with demand, as well as the other aspects pointed out. This is capitalism, yes, and this manifestation of it is mafia-esque.

 

[ampaholic]

...
RCI is a corporation whose purpose is to make as much of a profit as possible - by purchasing its product as low as possible, and reselling it as high as the market will bear.

Just as Tony Sopranos "business" accurires inventory as cheaply as possible and "resells" for what the market will bear.

After all a "protection" client can't earn money to pay his "protection" with broken knees - so just bruise them.

... This is capitalism, yes, and this manifestation of it is mafia-esque.

Wait ... I thought there was no such thing as the Mafia ...

Let's keep this about the fictional group operated by Tony Soprano and his wife Carmela.

 

[Beefnot]

Vito: C'monnnn, Tony. I already paid you $89 for the right to deposit my unit, and I even pay you $169 for each exchange wit my unit I deposited. But Tone, why's you gotta make it so I gotta pay you rent for a week that I want to exchange? So now I can't even exchange for the week I want?

Tony: Whoa. You's a cheeky fella ain't ya. Ain't nobody says you can't exchange. We gots plenty of weeks for exchange. You just can't exchange for that week. That week, yeah, you gotta rent that one. The week after or the week before, that will be $169.

Vito: You're bussin' my bawz here, Tony. I mean, I suppose I could move some things around to take the week after, but this is really kcuffed up, Tone. I been put up wit a lot from you over the years, and when people's was disrespecting you behind your back, I dint say nuttin. But now, respectfully Tony, this is getting really kcuffing ridiculous. Respectfully, nohmsayin Tone?

Tony: Why you ungrateful mudda--. Dis is what I'm talkin bout. You have already said yourself that you are able to take the week after, but still you wanna go flappin your gums about it. You know what? You have upset me. You can have the week after as you stated. But now, it's gonna cost you $179. You are excused.

Vito: Oh, Tony. I wasn't tryin' to be disresp--

Tony: $189. Keep talkin'. God bless America. You are excused.

Vito: Thanks Tone.

 

[Laurie]

Generally speaking, you are correct. However they are also pulling out deposits to rent instead of exchange and are monkeying with demand, as well as the other aspects pointed out. This is capitalism, yes, and this manifestation of it is mafia-esque.

Who said demand isn't defined as = exchange demand + rental demand? To a corporation, demand = all potential clientele and all profitable markets.

IMO, this is capitalism, and this manifestation is simply corporation-esque - no more and no less. And the ways in which RCI screws people pales in comparison to ways in which other corporations screw people.

Fortunately, RCI's business practices can't cause me to lose my home, or to get cancer by polluting my groundwater, or to destroy my livelinhood by spilling toxic chemicals into the oceans in which I fish - as other corporations in pursuit of maximizing profits do all the time. An un- or under-regulated free market system under capitalism messes with people's lives in "unfair" ways every day.

What do y'all want, more regulation of RCI's business practices?

Edited to add - not meaning to make this a political thread, but I'm asking why do you expect anything different here from RCI, and what solutions are you suggesting?

 

[Beefnot]

I haven't asked for regulation of their practices, but if certain practices are unethical or violate the explicit or implicit covenants the company has with its members, then it is certainly acceptable to pursue legal action to remedy this. I'm not an RCI customer and not a lawyer, so I cannot speak to that, nor do I have a dog in the fight.

And I should have said monkeying with supply, not demand. They are monkeying with the supply of exchanges, which is the principal reason that they are in business.

 

[vckempson]

Back to the OP's original comments.

Many here talk about RCI "skimming"; charging more TPU's to trade back in than what was given for depositing that week. In past threads, my impression was that more times than not, it's the other way around. It's to RCI's benefit to give more TPU's to generate more trades. On whole, it seems that happens more frequently.

But there's something else to take into account. The amount given for deposit can't go down, but may go up. What's charged to trade into that week, however, starts out higher and will eventually go down as you get closer and closer to the week's usage time. Its value depreciates over time. You'd really have to look at the average TPU charged over the entire cycle and compare that to the TPU's given for deposit. Then you'd have an accurate picture.

I'd guess that rentals have something to do with any undervalueing of deposits. Didn't the lawsuit require them to give back an equal amount of high TPU resorts to offset those they take to rent? That would give them an incentive to undervalue those they might want to keep and rent vs overvalueing those that they put back into the system to replace what they keep and rent. That might very simply explain all the anomalies that we've seen.

 

[rickandcindy23]

This is what I have found for everything we own.

Many here talk about RCI "skimming"; charging more TPU's to trade back in than what was given for depositing that week. In past threads, my impression was that more times than not, it's the other way around. It's to RCI's benefit to give more TPU's to generate more trades. On whole, it seems that happens more frequently.