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From the NY Post - Hilton fears bad rep over timeshare deal

1Kflyerguy

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Is Blackstone still in the mix (likely not or someone would have said something here)? A number of people here know a lot more than me about this, but I thought that we potentially liked Blackstone relative to the other options.

Cheers.

At one point I heard that Blackstone was outbid by Apollo, but i have not heard that they were completely out. But to be honest I don't recall hearing that Wyndam was in the mix either. Not too surprising, but had not heard they were under consideration.

I would think Hilton would object to mixing competing hotel brands such as Wyndam and HVC into a single entity. That has been problematic for MVC and Hyatt timeshares.
 

Talent312

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I thought this statement was particularly self-serving:
"Diamond says that, under Apollo’s ownership, it has stabilized fees, scaled back aggressive sales tactics and made it easier for clients to walk away from their timeshares if they wish."

Oh, really?
 

escanoe

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I thought Wyndham would benefit greatly from the system and brand.

I was previously thinking I might wind up going to the Wyndham system if Diamond made it too tough to stick around.
 

escanoe

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In fact, I thought Wyndham would benefit greatly from the system and brand. More so than Diamond, IMHO. Wyndham as a need for the high end timeshare to keep up with Marriott and HGVC, as long as they kept the Hilton branding, would fill that void spectacularly.

I agree with the reasoning above, plus one other consideration. Wyndham owns RCI. Diamond resorts are currently/mostly with II. If Diamond/Apollo were to consider taking HGVC’s affiliation to II, that would pull many of the good high end properties out of RCI and might devalue it.
 

Mowogo

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I agree with the reasoning above, plus one other consideration. Wyndham owns RCI. Diamond resorts are currently/mostly with II. If Diamond/Apollo were to consider taking HGVC’s affiliation to II, that would pull many of the good high end properties out of RCI and might devalue it.
Exactly why Wyndham might actually be decent. Wyndham needs HGVC for RCI, as I could actually see Disney flip as well if HGVC went with II.
 

Deb & Bill

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I wonder how this will affect the HGVC affiliated resorts. I just sold my last affiliated week (we moved to Marco and don't need a timeshare there any more) and I know lots of people come to Marco by trading through RCI.
 

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FYI...Centerview partners doesn't appear to be a buyout firm as indicated in the article. They appear to be an investment bank brokering the deal, perhaps on behalf of HGV. They were the investment bank working with Diamond in 2016 when Apollo bought. Below is an article in 2016 describing the relationship:


 

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Is Wyndham TS separate from the hotels similar to HGVC and Hilton? If not, I doubt Hilton would want to mix brands and share hotel sourced leads that could potentially get in the hands of a competitor. This could damage relationships with their lower end brand franchisees such as Hampton. In general, Hilton and Wyndham are two separate classes.

Hilton HTL should be rightfully concerned about the tarnish on their brand if these deals succeed.

I hope these deals fall apart.

Hi all. I’m a forum member but usually frequent the Wyndham section, and actually started a thread over on our forum about this same topic since Wyndham is a suitor. I think the fact that Michael Brown was the COO at HGVC prior to coming to Wyndham Destinations as CEO makes it likely that Wyndham is one of the primary suitors for this deal.

To answer your question, similar to Hilton, Wyndham spun off their timeshare division into a separate company back in 2017, now called Wyndham Destinations. This is the company that Michael Brown now heads up as CEO. So your concern about the hotel brand issue is limited as a result.

I would also surmise that much like when Wyndham acquired Worldmark, if they acquire HGVC, which would become a “premium” timeshare brand, it will be segmented off from Club Wyndham timeshares. It would have to be since the HGVC founding timeshare trust documents probably don’t allow for any integration without explicit majority approval from the ownership base.

As a Club Wyndham timeshare owner I can book into Worldmark, another previously acquired timeshare company, via a program called Club Pass, but I have to call in (no online reservation capability is available) and inventory availability is limited since we can only book nine months out. Worldmark owners can book further in advance than anyone using Club Pass so we only get the leftovers so to speak. I would expect any access into HGVC to be the same. I would expect HGVC owners to have a similar ability to book into Club Wyndham resorts as well, were this M&A to actually occur.

It will be interesting to see who ends up scooping up HGVC.





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"In particular, Hilton Worldwide appears worried that a sale of the timeshare resort company could tarnish the brand of its own swanky chain, according to sources close to the situation. "

What I find most shocking in this article is the mention of “a 2 billion dollar” loss for HGVC...yikes!
How long will they be able to resist a sale?
Bankrupcy or huge $ losses could do a lot more damage to the “Hilton brand”.
In 2020, is the timeshare business model still sustainable? I really wonder.
 

CalGalTraveler

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@HitchHiker71 Thanks for the background. I see Wyndham as a much better suitor than Diamond for several reasons:

1) Wyndham has done a good job separating the Worldmark brand which many owners seem to like.
2) Hilton license would require HGV to be separate from Wyndham similar to MVC and Hyatt. I don't see this as the case with Diamond.
3) RCI ownership and participation as stated previously.
4) Wyndham may want to leverage the HGV reservation system to its other brands as is it now quite good.
 
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Panina

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I wonder how this will affect the HGVC affiliated resorts. I just sold my last affiliated week (we moved to Marco and don't need a timeshare there any more) and I know lots of people come to Marco by trading through RCI.
For owners of Marco Island affiliates, the risks are minimal. If you don’t want to be part of HGVC you don’t have to be. For the affiliates that can trade in II, they are great traders. For trades coming from RCI, as always no guarantees, if you don’t own it.
 

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It's 2 billion debt. Not loss. Debt is normal for businesses and the norm for take over is suck out all the money, crank up debt, and dump the lame duck to slowly dies on someone else's dime.
 

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$2 billion debt likely reflects construction of new TS locations such as Maui, NYC, Cabo etc. Although I haven't calculated the debt leverage for HGV, a look at Wyndham Destinations shows a similar structure with $3B in debt on their bal sheet. They indicated that debt was 2.9x leverage (as defined below) which is within range of 2.5x to 3.0x as a norm for the company.


Leverage Ratio: The Company calculates leverage ratio as net debt divided by Adjusted EBITDA.
 
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escanoe

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Not advocating for a Wyndham takeover here, but the big addition I would put near the top of @CalGalTraveler's list ..... based on what I know about Wyndham is they are less likely to try to transition HGVC into some kind of trust system.

On the flip side I might like it if HGVC went to II. Pretty sure I like RCI the best for my needs, but I have a couple of good RCI traders. Adding II access to my current portfolio might be nice.

@HitchHiker71 Thanks for the background. I see Wyndham as a much better suitor than Diamond for several reasons:

1) Wyndham has done a good job separating the Worldmark brand which many owners seem to like.
2) Hilton license would require HGV to be separate from Wyndham similar to MVC and Hyatt. I don't see this as the case with Diamond.
3) RCI ownership and participation as stated previously.
4) Wyndham may want to leverage the HGV reservation system to its other brands as is it now quite good.
 
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CalGalTraveler

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I am not sure what is driving them to sell, but IMHO, I would like them to remain separate as well. I view Wyndham as the lesser of two evils. No matter whom they sell to, it sounds like licensing fees to Hilton will increase and owners will be stuck with the burden of paying for all of this. :(
 

dayooper

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I am not sure what is driving them to sell, but IMHO, I would like them to remain separate as well. I view Wyndham as the lesser of two evils. No matter whom they sell to, it sounds like licensing fees to Hilton will increase and owners will be stuck with the burden of paying for all of this. :(

I think the driving force behind push to sell is an equity firm (can’t remember their name). Back in the fall, there was a report that one of the stock holders was pushing to sell off. They on something like 5-7% of the stock.
 

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Not advocating for a Wyndham takeover here, but the big addition I would put near the top of @CalGalTraveler's list ..... based on what I know about Wyndham they are less likely to try to over time try to transition HGVC into some kind of trust system.

On the flip side I might like it if HGVC went to II. Pretty sure I like RCI the best for my needs, but I have a couple of good RCI traders. Adding II access to my current portfolio might be nice.

Can you provide more detail on what you mean by “some kind of trust system.”? I ask because Club Wyndham has at least three ownership types at present. They still have legacy weeks based deeded ownerships - from Fairfield owners that have never had any desire to convert to a UDI points based deeded contract(s). Then there’s UDI deeded points based contracts - these are called Club Wyndham Select ownerships (CWS). Finally there are trust based contracts - no deeded ownerships - the trust actually holds the deeded inventory. These are called Club Wyndham Access ownerships (CWA).

A Wyndham account can actually hold all three ownership types. I’m both a CWA and a CWS owner myself.


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rickandcindy23

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Wyndham does control maintenance fees, which would be a plus for HGVC owners. I am not an owner of HGVC, but I do own Wyndham, and fees do not increase like Marriott does.

My concern for owners of HGVC is the way Wyndham resale owners are treated in Wyndham. Resale benefits of HGVC could suffer under Wyndham.

Now Vistana is with Marriott, and I am seeing a future for my SBP that is not positive for me. Higher fees with my Marriott's Willow Ridge do not compute for my many weeks SBP weeks, specifically all of the 2 bed, 2 bath villas. I may have to dump my regular 2 bedroom villas and keep the lockoffs.
 

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"In particular, Hilton Worldwide appears worried that a sale of the timeshare resort company could tarnish the brand of its own swanky chain, according to sources close to the situation. "

https://nypost. [QUOTE="tombanjo, p...on-fears-bad-rep-over-timeshare-deal/[/QUOTE]
Interesting article - after visiting LV this December, and having stayed at the HGVC at the Flamingo about 15 years ago, and then seeing it less than two months ago, I would say that the resort is extremely run down, and in need of someone or something to rescue it. The property was dirty and when we went in through the casino entrance there were homeless hanging around the door, (didn’t see that at other properties?) The bird sanctuary was very sad, the flora and fauna was wilted and dying, and there was a lot of bird dung around. No one seemed to care, it just looked awful, and after staying there 15 years ago, it seems to me that it hasn’t been taken care of in all that time. Sad!
 

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Likely, all of this is posturing so that Hilton can negotiate an increase of their annual 5% royalty fee from the new buyer


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Sorry if this has been covered elsewhere, but how would a sale impact owners at properties like Elara? As I recall, HGV is only a partial owner there. Would each property make a choice about whether to go with the new company or breakaway?
 

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My suggestion: If you care about this and have thinking similar to Hilton, I suggest you send an email to reinforce their fears. Let them know that HGVC managed by Wyndham or Diamond will irreparably damage your view of the Hilton brand and that you'll consider leaving both Hilton and HGVC if something like this were to occur. I guarantee you Wyndham and Diamond are pulling out every trick in the book to make Hilton feel ok about this...and we should be making sure Hilton knows this matters to owners. You can send an email to the CEO's office (of course he won't be reading these, but they are more likely to get to the right hands) at christopher.nassetta@hilton.com with cc to ir@hilton.com.

I understand there may be some who think it might not be so bad being merged into Wyndham or Diamond, but I for one am not interested in becoming part of those behemoths.
The money offered maybe to much for them to walk away from. It also can be hard to exit your HGVC without taking a financial loss above and beyond your initial purchase price.
 

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The money offered maybe to much for them to walk away from. It also can be hard to exit your HGVC without taking a financial loss above and beyond your initial purchase price.

Remember, the money isn't being offered to Hilton, but rather HGV which is a separate entity. Hilton retains a veto on the transaction as part of the branding license. The new buyer will either need to abandon the Hilton name or get approval pursuant to this license.

Now, I have no doubt that a suitor could sweeten Hilton on the deal by offering up some cash or improving the terms of of the overall license, but I think these reports make clear Hilton is giving this some pause as tarnishing the name could have wide reaching implications. A deal make not make sense to these suitors if there's a bigger cost to maintaining the Hilton name...and the more we pressure Hilton, the more likely they are to veto the transaction or require too much to make the deal happen. In either case, I think it's in our interest to try to use what little leverage we have to ensure Hilton protects us from someone looking to just extract as much cash as possible from the HGV operation (with no regard to the reputational damage it could do).
 
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