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Frankly, I'm nervous

stevens397

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There is a thread on the Marriott Board that has my pretty concerned:
http://www.tugbbs.com/forums/showthread.php?t=87030

Basically, a thread that started talking about this being a good time to buy timeshares has morphed into a thread that is predicting a dramatic increase in defaults and foreclosures. When that happens, the HOA ends up taking possession and they are responsible for the shortfall in terms of maintenance fees not paid - which means that it becomes a problem for the remaining owners.

But if our MFs go up dramatically, that may worsen the situation for all - more people will find it no longer affordable as the per night fee gets higher and higher, which means it will be harder and harder to get rid of our timeshares or more and more expensive to hold on to them.

Starwood especially has seen dramatic increases in MFs. If $1,400 MFs become $2,000+ in 1-2 years, how will that affect all of us.

Please say something to make me feel better!
 

DeniseM

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The MF's at these resorts are already at, or nearly at, 2K!

WKOV
WKORVN
WPORV
WSJ
Harborside

Feel better? :D
 

Transit

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There is a lot of gloom and doom talk but this correction will place units into the hands of owners that want them and can afford them.When the smoke clears the better resorts will survive.
 

ocdb8r

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I think the concerns are VERY valid but I don't think we should get overly concerned yet. The Starwood/Westin/Sheraton name is a nice backing to have for each resort (as is Marriott). As the industry slides and weeks hit bargain basement prices, people will shift from their noname resorts into the brand names.

I also think a much smaller portion of the Starwood resorts have problematic shoulder seasons. If you own at a ski resort, I might be concerned but other than that I think the other SVO resorts should weather the storm fairly well.
 

timeos2

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I think the concerns are VERY valid but I don't think we should get overly concerned yet. The Starwood/Westin/Sheraton name is a nice backing to have for each resort (as is Marriott). As the industry slides and weeks hit bargain basement prices, people will shift from their noname resorts into the brand names.

I also think a much smaller portion of the Starwood resorts have problematic shoulder seasons. If you own at a ski resort, I might be concerned but other than that I think the other SVO resorts should weather the storm fairly well.
How does having a brand name "back" a resort? I would see it 180 degrees differently. The smaller, more home like resorts that have owners who feel a strong connection and loyalty. They tend to be more involved (and welcome to be) in the operation - they probably have a owner controlled Board. The big name brings excessive overhead in many cases as well as demands for using only "their" services and contractors - again often at much higher cost than a competitive bid might yield.

Now both of us may be wrong - maybe neither type of resort is more or less likely to suffer. Perhaps it will be a function of the type of management, the type of buyer/owner, the resort age, the area - in other word it will affect resorts individually. The best will survive, the lesser or poorly run will suffer. Brand name or lack thereof won't be the deciding factor. That's my best guess.
 
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Ken555

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Brand names may not matter much, but I wouldn't be surprised to find some brands merge and/or ownership changes at certain resorts.
 

AwayWeGo

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[triennial - points]
Which People ?

As the industry slides and weeks hit bargain basement prices, people will shift from their noname resorts into the brand names.
I'm wondering which people will do that & why.

I may be lazier than the average bear & thus atypical of how most owners of no-name timeshares will respond to the current slump, but I have no plans for shifting to any hotel-brand timeshares despite the current timeshare price depression.

I'm happy with what I've got & can't see anything to be gained by churning the (pardon the expression) portfolio.

At this point I'm leaning toward the idea that if I really wanted a Marriott or Disney or Hyatt or StarWood, etc., timeshare I would have bought 1 by now.

As it is, I think we're currently set for life with the timeshares we already have.

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

ocdb8r

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How does having a brand name "back" a resort? I would see it 180 degrees differently. The smaller, more home like resorts that have owners who feel a strong connection and loyalty. They tend to be more involved (and welcome to be) in the operation - they probably have a owner controlled Board. The big name brings excessive overhead in many cases as well as demands for using only "their" services and contractors - again often at much higher cost than a competitive bid might yield.

Now both of us may be wrong - maybe neither type of resort is more or less likely to suffer. Perhaps it will be a function of the type of management, the type of buyer/owner, the resort age, the area - in other word it will affect resorts individually. The best will survive, the lesser or poorly run will suffer. Brand name or lack thereof won't be the deciding factor. That's my best guess.
The conversation referenced on the Marriott board centered around concerns over a larger number of weeks going into default and the HOA being forced to take ownership. A "brand name" increases exposure of those resorts to the public. In other words, the "brands" tend to increase the market for those weeks. More people are familiar with Marriott and Starwood, their names hold some "value" in the marketplace, and thus I believe it is easier for an HOA of the brand resorts to find buyers.

I never meant to imply that Marriott/SVN resorts would have lower maint. fees. I fully agree that we pay some premium for that designation. The topic of the conversation was not about maint. fees rising because of Marriott or SVO sticking it to us, but rather the result of there being fewer owned weeks to pay into the budget. That was the concern I was trying to address.

Further, I'm not sure where having a strong "connection" or "loyalty" play into the equation. If you're saying that people may be more inclined to keep up with maint. fees for that reason (and not go into default), I think that might be a bit of a stretch. No amount of "loyalty" is going to pay the bills...

I'm wondering which people will do that & why.

I may be lazier than the average bear & thus atypical of how most owners of no-name timeshares will respond to the current slump, but I have no plans for shifting to any hotel-brand timeshares despite the current timeshare price depression.

I'm happy with what I've got & can't see anything to be gained by churning the (pardon the expression) portfolio.

At this point I'm leaning toward the idea that if I really wanted a Marriott or Disney or Hyatt or StarWood, etc., timeshare I would have bought 1 by now.

As it is, I think we're currently set for life with the timeshares we already have.
As to whether people will shift...let me put it this way. If I can choose between a place like "Schooner Beach and Racquet Club" and "Sheraton Broadway Plantation" for the same initial investment, I'm going to go with the latter even though maint. fees are $550/1bdrm for SBP vs. only $499/1bdrm at Schooner. Now, that may just be me...but to me the options afforded with Starwood and the quality assurances of the brand have some value. I think as the barrier to entry (initial cost) goes down, the brand names will be hurt less for this reason (and again, by hurt less I just mean how many defaulted weeks the HOA is forced to keep and absorb the budget for). There are certainly a plethora of other arguments about how a "brand" can be detrimental to the budget or operations of a resort but that was not the topic in the original post.


Again, this is just based on my preferences....
 

bogey21

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How does having a brand name "back" a resort? I would see it 180 degrees differently. The smaller, more home like resorts that have owners who feel a strong connection and loyalty. They tend to be more involved (and welcome to be) in the operation - they probably have a owner controlled Board.
I agree 100% unless trading within the chain is your primary reason for owning. Often these smaller independent resorts have better locations (after all they were there first) and MFs about half those charged by the big boys. In addition, the $$$ invested to buy are 1/10 to 1/20 that of the big boys. No question but that the Marriotts, Hiltons, Starwoods, etc. are newer and nicer....but man, the difference in cost is staggering

George
 

LisaRex

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I can only speak with any clarity on Hawaii, as that's the reason I bought at WKORV. When I first looked into timesharing two years ago, I had certain criteria (2 bdrm, ocean front, on or near the two main resort areas, restaurant on site, great pool) and compared them to current rental market prices. I'd paid $330/night for an oceanfront hotel room in 2004 (Renaissance Wailea Mokapu wing) and $375/night for a 2 bdrm privately owned oceanfront condo in 2006 (Kaanapali Shores via VRBO). The latter met most of my criteria, so I used it as a basis for comparison.

I would have been very content to simply continuing to rent and not own at all, but when I went to book in 2008, the owner of the latter condo had raised his rates to over $500/night (incl. taxes, housekeeping charge, parking fee, etc). So I looked at alternatives, which brought me ultimately to WKORV. At the time, putting $50k down + $1600/yr. in MFs for a nicer condo in a nicer resort that met all of our critieria didn't seem unreasonable.

That was then; this is now. Our most recent MF bill is $1975, not including sales tax which we paid upon arrival. Meanwhile the owner of the KS condo has dropped his rates below what we paid in '06. In essence, his weekly rental is now nearly on par with the MFs I'm paying this year. So in hindsight, putting $50k down for WKORV seems rather foolish. Committing ourselves to an annual MF bill that will increase no matter what the economy does seems rather foolish.

Am I bitter? No. Had we not bought a TS, that money would have sat in our investment account, which took a 35% hit almost overnight. I'd rather overspend on a vacation than to have that money sit in a bank and simply disappear. Plus, given that I'm committed to this $2k MF, it makes me more determined to enjoy every vacation I take. We enjoyed a wonderful vacation with our daughters this past summer in Hawaii and plan on enjoying our 20th wedding anniversary in less than 6 weeks at WSJ. But would I buy another TS at WKORV? No, because the MFs have risen dramatically, because the HOAs are clearly in the pocket of the developer, and because it is so easy (and much cheaper) to trade in.

So, actually, I'd buy something like WMH or SDO and trade into WKORV via II. Which makes properties like SDO and WMH the most attractive units in all of SVO. WSJ, WPORV, and WKORV folks are the ones who have the most to lose because we have much farther to fall given the cost of buying them and annual MFs.
 
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BocaBum99

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I can only speak with any clarity on Hawaii, as that's the reason I bought at WKORV. When I first looked into timesharing two years ago, I had certain criteria (2 bdrm, ocean front, on or near the two main resort areas, restaurant on site, great pool) and compared them to current rental market prices. I'd paid $330/night for an oceanfront hotel room in 2004 (Renaissance Wailea Mokapu wing) and $375/night for a 2 bdrm privately owned oceanfront condo in 2006 (Kaanapali Shores via VRBO). The latter met most of my criteria, so I used it as a basis for comparison.

I would have been very content to simply continuing to rent and not own at all, but when I went to book in 2008, the owner of the latter condo had raised his rates to over $500/night (incl. taxes, housekeeping charge, parking fee, etc). So I looked at alternatives, which brought me ultimately to WKORV. At the time, putting $50k down + $1600/yr. in MFs for a nicer condo in a nicer resort that met all of our critieria didn't seem unreasonable.

That was then; this is now. Our most recent MF bill is $1975, not including sales tax which we paid upon arrival. Meanwhile the owner of the KS condo has dropped his rates below what we paid in '06. In essence, his weekly rental is now nearly on par with the MFs I'm paying this year. So in hindsight, putting $50k down for WKORV seems rather foolish. Committing ourselves to an annual MF bill that will increase no matter what the economy does seems rather foolish.

Am I bitter? No. Had we not bought a TS, that money would have sat in our investment account, which took a 35% hit almost overnight. I'd rather overspend on a vacation than to have that money sit in a bank and simply disappear. Plus, given that I'm committed to this $2k MF, it makes me more determined to enjoy every vacation I take. We enjoyed a wonderful vacation with our daughters this past summer in Hawaii and plan on enjoying our 20th wedding anniversary in less than 6 weeks at WSJ.
I think this is a good example of why I believe that resorts must do their very best to keep their maintenance fees below the rental equivalent for a comparable unit in the geography where they operate. What is important is not a single year since rental rates go up and down depending on the economy. The MFs must be lower over a long haul so that potential owners like you can do the simple own vs. rent calcluation to determine the financial wisdom of making the purchase.

As long as a resort keeps MFs below or substantially below average rental rates, they should survive long term. If they don't, they risk having worthless inventory owned by the HOA.

A brand has the added advantage that it will command a premium over a non-branded timeshare in the resale market if for nothing else, name recognition. As long as the timeshare has a positive value, it can give them away to new owners who will pay maintenance fees. As long as they re-capture at least the costs of foreclosure, which can be a few thousand dollars, then the resort can remain healthy.

Prescription for timeshare survival:

1) cut costs of operating resort to below average rental rates.
2) create rental program for owners and market it aggressively.
3) create resale program at resort to move HOA foreclosed weeks or deed in lieu of foreclosure into new owners hands.
4) offer excess weeks to owners at firesale rates to keep maintenance fees comin in.
5) create a bonus time program to rent last minute inventory to recapture some revenue for expiring weeks and dead beat owners
 
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AwayWeGo

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[triennial - points]
Ducking Out Of The Way So I Won't Get Run Over By The Shift.

As to whether people will shift...let me put it this way. If I can choose between a place like "Schooner Beach and Racquet Club" and "Sheraton Broadway Plantation" for the same initial investment, I'm going to go with the latter even though maint. fees are $550/1bdrm for SBP vs. only $499/1bdrm at Schooner. Now, that may just be me...but to me the options afforded with Starwood and the quality assurances of the brand have some value.
That makes sense if you're choosing between 2 timeshares when you're starting out fresh.

But if you already have Schooner Beach & Racquet Club & are happy with it, would you still dump it for Sheraton Broadway Plantation if the Sheraton price came down to approximately what you paid for Schooner Beach ?

If so, what would you do with Schooner Beach ?

I mean, if the Sheraton prices are down, then wouldn't the Schooner Beach prices be way down, assuming you could find a buyer for Schooner Beach at all ?

Based on zero research & nothing more than simple-minded assumptions, I'd expect to see most timeshare owners standing pat during the current depression, rather than stampeding away from what they've already got in order to snap up the hotel brand-name bargains.

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

ocdb8r

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That makes sense if you're choosing between 2 timeshares when you're starting out fresh.

But if you already have Schooner Beach & Racquet Club & are happy with it, would you still dump it for Sheraton Broadway Plantation if the Sheraton price came down to approximately what you paid for Schooner Beach ?

If so, what would you do with Schooner Beach ?

I mean, if the Sheraton prices are down, then wouldn't the Schooner Beach prices be way down, assuming you could find a buyer for Schooner Beach at all ?

Based on zero research & nothing more than simple-minded assumptions, I'd expect to see most timeshare owners standing pat during the current depression, rather than stampeding away from what they've already got in order to snap up the hotel brand-name bargains.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​
Well, if the entry level was $0 or near $0 then yes, I'd probably put forth the effort to switch....and this is exactly the situation that was being discussed in the Marriott thread. There are resorts who can't give away their units for free....just for someone agreeing to pay the maint. fees. I think the"brand names" are at lower risk of getting into that situation because their exposire to the market means there are more people around willing to pick the weeks up for a supposed bargain.

At the end of the day, even if you only consider those coming new to the market, as you seem concede above, the brands might fare better. Bottom line, I don't believe Marriott/SVO HOA's will be stuck with as high a percentage of defaults as noname resorts. That was the purpose of my post.
 

ocdb8r

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I think this is a good example of why I believe that resorts must do their very best to keep their maintenance fees below the rental equivalent for a comparable unit in the geography where they operate. What is important is not a single year since rental rates go up and down depending on the economy. The MFs must be lower over a long haul so that potential owners like you can do the simple own vs. rent calcluation to determine the financial wisdom of making the purchase.

As long as a resort keeps MFs below or substantially below average rental rates, they should survive long term. If they don't, they risk having worthless inventory owned by the HOA.

A brand has the added advantage that it will command a premium over a non-branded timeshare in the resale market if for nothing else, name recognition. As long as the timeshare has a positive value, it can give them away to new owners who will pay maintenance fees. As long as they re-capture at least the costs of foreclosure, which can be a few thousand dollars, then the resort can remain healthy.

Prescription for timeshare survival:

1) cut costs of operating resort to below average rental rates.
2) create rental program for owners and market it aggressively.
3) create resale program at resort to move HOA foreclosed weeks or deed in lieu of foreclosure into new owners hands.
4) offer excess weeks to owners at firesale rates to keep maintenance fees comin in.
5) create a bonus time program to rent last minute inventory to recapture some revenue for expiring weeks and dead beat owners
I was trying to avoid this becoming a general "maint. fees are high" thread given the unique concerns in the original post...but it seems determined to become that...

With that I will add, I totally agree. Maint. fees are getting out of control. Part of the problem is that many areas have gone way beyond the saturation point. This glut of supply depresses rental prices, while maint. fees continue to grow with the increased refurbishment needs of resorts as they age. The management companies have also cannibalized their recurring hotel profits by shifting many vacationers into timeshares and now have turned to extract higher management fees to compensate. This creates a VERY problematic situation for timeshares.

I will add though that I think it's more than just management fees. Even if you strip those out of the budget (well, not completely out but lets say 50% to compensate for how much we might be getting shafted for paying for the "brand"), you are still left with VERY high operating budgets. Not everyone got into KAA or WSJ to save money on vacations....some wanted to lock in quality vacations at high level resorts. HOA's must balance the desires of some owners to have a top shelf resort with the desire of others to minimize costs. At the end of the day I believe that maintaining the original level of quality will sometimes require maint. fees that outstrip rental prices...especially in times of economic downturns where demand dips.

Timeshares are NOT an investment or even a way to save on vacation costs...(don't get me wrong...I think tuggers and the strategies here CAN make them a sensible financial decision, but WE are the exception to the rule :-D )
 

LisaRex

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The management companies have also cannibalized their recurring hotel profits by shifting many vacationers into timeshares and now have turned to extract higher management fees to compensate. This creates a VERY problematic situation for timeshares.
I absolutely agree. Often I read accounts of FlyerTalkers who are thrilled to get into WKORV for StarPoints. (Of course, because they are FTers, they're also pissed that they didn't get upgraded to a larger room with a better view, but I digress.)

On the one hand, I'm happy to see folks use the resort because more customers means potentially more owners and I WANT to see a healthy resort for many reasons; what really troubles me is that I know that, via the Owner's Agreement, Starwood does not reimburse the HOA one dime for the usage of the unit. It's a terribly one-sided arrangement, one that an honest HOA would fight tooth and nail.

However, we have the added probelm that the HOA is merely a rubber-stamping outfit. All in all, it means that MFs will continue to rise no matter what the economy does. Not only do we have to bear the cost of everyday wear and tear of folks who don't pay to stay there, but we also have to pick up the tab for foreclosures and non-payers, not to mention the every decade or so 'special assessments' for renovations.

So, honestly, the big name resorts look less and less attractive. And I fear that as people realize that the emporer has no clothes, the price we'll be able to fetch on the resale market will drop even further, whether the economy rebounds or not.
 

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I think that the one factor that we haven't discussed in this thread is the desire and need for the hotel timeshares to protect their brands. Marriott, Starwood, Hilton, Hyatt etc. have invested billions of dollars over decades to build up brands that signify quality, trust and consistency. I believe that is force that limits just how far they will go. They don't want to get a reputation for screwing over its customers. So, they will take some action to prevent negative publicity.

Wyndham, on the other hand, just bought a brand and put it on the old Fairfield product, sales and marketing model and business practices. So, even though it is a hotel brand name, it doesn't truly act like one. If it doesn't change, it really may go under. Time will tell.

Starwood is a solid, global brand. I am sure their management cares about their reputation. They will take the required actions to be successful long term.
 

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We were at WKORV-N a couple weeks ago and the sales agent talked about Starwood buying back units (ROFR) to have inventory to sell. If they are really doing that, then they would obviously love to take back the foreclosed units in order to sell them as well. If the foreclosed units become part of Starwood's inventory for sale, then I would expect Starwood to be responsible for paying the maintenance fees to the POA. So, I think it depends on which organization really takes over the unit. Is it Starwood that forecloses on the unit because the owner defaults on their loan? Or is the POA that claims the unit because the owner defaulted on their maintenance fees? I suspect it is all spelled out somewhere in all the legal stuff surrounding the ownership.
Doug
 

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Hi Doug - unfortunately, the sales people have claimed that Starwood exercises ROFR forever, and it's never happened, to anyone's knowledge.
 

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I think that the one factor that we haven't discussed in this thread is the desire and need for the hotel timeshares to protect their brands. Marriott, Starwood, Hilton, Hyatt etc. have invested billions of dollars over decades to build up brands that signify quality, trust and consistency. I believe that is force that limits just how far they will go. They don't want to get a reputation for screwing over its customers. So, they will take some action to prevent negative publicity.
Wish I could agree with you. I think back to two years ago when there was a very significant devaluation in Starpoints and hotels were all going up dramatically in terms of levels. And here we were, developer purchasers, sold not only on the utility of trading for Starpoints if desired, but also pretty much told that trading in my week in Kierland would get me almost 10 full nights at in the hotel at St. John. Now, a few years later, it's 5 nights!

I wrote to them to discuss this concern, feeling that the only fair and just thing to do was to increase the redemption value - my unit would now get me 125,000 Starpoints instead of 72,000. They agreed it was a problem and said they would get back to me. That was two years ago!

They have NO PROBLEM screwing us if it serves their corporate need and their bottom line. I have a lot of reasons to like Starwood, but not because they're good people I can rely on!
 

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Wish I could agree with you. I think back to two years ago when there was a very significant devaluation in Starpoints and hotels were all going up dramatically in terms of levels. And here we were, developer purchasers, sold not only on the utility of trading for Starpoints if desired, but also pretty much told that trading in my week in Kierland would get me almost 10 full nights at in the hotel at St. John. Now, a few years later, it's 5 nights!

I wrote to them to discuss this concern, feeling that the only fair and just thing to do was to increase the redemption value - my unit would now get me 125,000 Starpoints instead of 72,000. They agreed it was a problem and said they would get back to me. That was two years ago!

They have NO PROBLEM screwing us if it serves their corporate need and their bottom line. I have a lot of reasons to like Starwood, but not because they're good people I can rely on!
Totally agree. Their priority is to the shareholders, not to the TS owners. i would NEVER rely on them to do a "nice" thing. Katherine
 

Ken555

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Totally agree. Their priority is to the shareholders, not to the TS owners. i would NEVER rely on them to do a "nice" thing. Katherine
The mean, mean grinch's at Starwood look out for themselves first and always.

Be happy! Buy resale! :hysterical:
 

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The mean, mean grinch's at Starwood look out for themselves first and always.

Be happy! Buy resale! :hysterical:
right now they are trying to stay afloat like every other hotel company. and we need them to stay afloat for our investment in our timeshares.
 

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Wish I could agree with you. I think back to two years ago when there was a very significant devaluation in Starpoints and hotels were all going up dramatically in terms of levels. And here we were, developer purchasers, sold not only on the utility of trading for Starpoints if desired, but also pretty much told that trading in my week in Kierland would get me almost 10 full nights at in the hotel at St. John. Now, a few years later, it's 5 nights!

I wrote to them to discuss this concern, feeling that the only fair and just thing to do was to increase the redemption value - my unit would now get me 125,000 Starpoints instead of 72,000. They agreed it was a problem and said they would get back to me. That was two years ago!

They have NO PROBLEM screwing us if it serves their corporate need and their bottom line. I have a lot of reasons to like Starwood, but not because they're good people I can rely on!
Obviously, Starwood did not view that devaluing starpoints would damage their brand. Until I read about it in the Wall Street Journal, on the cover of Business week or on CNBC, it doesn't rise up to the level of damaging the barnd. So, my comment stands.

Damaging their brand requires more than a small percentage of owners complaining. They get that all the time. All businesses do.

If there are massive foreclosures and an upheaval by 25% or more of Starwood owners, that is something that can damage their brand.

The timeshare division going under would do it, too. Starwood won't let that happen.
 

Ken555

Tug Review Crew: Rookie
TUG Member
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Jun 7, 2005
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Location
Los Angeles
Resorts Owned
Westin Kierland
Sheraton Desert Oasis
right now they are trying to stay afloat like every other hotel company. and we need them to stay afloat for our investment in our timeshares.
Well... of course! But, they need to do what's right, too. That doesn't change just because the economy is changing course. What's 'right' is a constant problem with Starwood - be it the 5* Elite devaluation and lack of notice (= disrespect for owners) or inability to uphold their own written policies (as in, do they or do they not have the right to choose which week to deposit for non-SVN owners).

Staying afloat is the business problem which affects everyone right now. But for the last few years it's been a constant theme on this board whether Starwood is building resorts in good areas and where their new construction is in the pipeline. They've had problems here that are more than just financial (at least, that's my impression).

I suspect it's time for new management at SVO.
 
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