HGV Price Target Cut to $40 From $54 by Barclays. Video @ 10. fell 12% I guess

[WaikikiFirst]

will have to wait a few days for me to read details but BofA is out there bad-mouthing TS demand in general

 

[HuskerATL]

Not surprising if the amount of unsold inventory is as significant as has been discussed

 

[geist1223]

Also the number of defaults is a negative balance on the Bank's Balance Sheet. How many Banks want to take over and sell a Timeshare when the purchaser defaults on the Loan. Plus they will probably be fighting with the Timeshare Corporation because the Maintenance Fees are also likely in Arrears.

 

[WaikikiFirst]

something called Vacasa down 39%. I've barely heard of it. Almost a penny stock. No idea how big it is in what geography

 

[CalGalTraveler]

How does this compare to the rest of the travel industry? Covid revenge travel and work from anywhere is over so travel demand is soft. We can see it at our vacation rental in a resort town. People are booking at the last minute and rental prices are softer than in previous years. We are still filling peak months but mud season is dead similar to pre-Covid.

 

[WaikikiFirst]

a BofA report I saw this AM had travel data from all over the place and it was negative on almost all of it. I didn't make a copy.
Report had data from airDNA, govt flights data, googleflight searching, Playa Resorts in Caribbean, the big TS reports, and a bunch of other stuff.
I took a quick look at the Q/Q #s they summarized and I thought they were over-reacting, but I'm no expert on the industry and don't own any of these stocks so havent dug in at all.

But, I'd say BofA agrees with you on a much much broader data set

 

[brp]

We are still filling peak months but mud season is dead similar to pre-Covid.

This bodes well for prices, particularly airlines, in off-peak season. Of course, their other option is to cut capacity. Our SJC-LIH/LIH-SjC flights in January, for example, were nixed in favor of connections through SEA with very unpalatable times.

Cheers.

 

[CalGalTraveler]

Airfare is high right now. I hope they cut prices soon. We didn't buy our Europe fares until last minute this year because prices were crazy. Prices finally came down at the last minute, (but not as low as prior years) to take the trip but we almost cancelled.

 

[brp]

Airfare is high right now. I hope they cut prices soon. We didn't buy our Europe fares until last minute this year because prices were crazy. Prices finally came down, but not as low as prior years, to take the trip but we almost cancelled.

We bit the bullet on two Europe trips. Since AA status is based on spend, paying more for these means that there are some trips we won't need to take for status, so it all works out in the end in this case.

Business from West Coast to Europe is running about $4K. I've certainly seen it for less, but this is not unreasonable.

Cheers.

 

[CalGalTraveler]

We also bit the bullet on United to earn 1 million miler lifetime gold elite so we both get the benefit. Lifetime gold is already paying off as we are saving $380 on a flight to Canada for extra ski bags and seat upgrade fees.

However with nosebleed 180k one way to Europe awards and flights priced $1 - 2k more than Norse, French Bee or Level, I am opting for premium seats on these budget airlines. I flew one way on Norse LAX to UK nonstop this summer in premium and it was as good as United Premium Econ and the flight attendants were nicer.

 

[elaine]

And I wonder if there are higher defaults with the acquisitions, diamond, etc.?

 

[jp10558]

something called Vacasa down 39%. I've barely heard of it. Almost a penny stock. No idea how big it is in what geography

Vacasa is owned by Wyndham and I think competes with AirB&B. IDK if it's any better run or not, or how the experiences go.

 

[jp10558]

How does this compare to the rest of the travel industry? Covid revenge travel and work from anywhere is over so travel demand is soft. We can see it at our vacation rental in a resort town. People are booking at the last minute and rental prices are softer than in previous years. We are still filling peak months but mud season is dead similar to pre-Covid.

I kind of hope this gives me some good opportunities lol. But somehow I doubt we'll see Hotel prices or the like trend down at all. To the extent any of this was driven by price gouging, maybe if demand keeps trending down we'll see it go lower.

 

[HuskerATL]

You need to get creative with Europe travel. We saw $700ish tickets from ATL to Barcelona for Christmas so grabbed them and then will fly from there to Prague, train to Berlin, and the fly back Barcelona....regional flights in Europe are cheap...so you just need to get there. We went on spring break in Dublin this year and the flights were inexpensive for ATL.

 

[MM9]

Also the number of defaults is a negative balance on the Bank's Balance Sheet. How many Banks want to take over and sell a Timeshare when the purchaser defaults on the Loan. Plus they will probably be fighting with the Timeshare Corporation because the Maintenance Fees are also likely in Arrears.

These loans are not generally held on the bank's books. In many cases, they are sold off as "whole bundles," meaning Hilton sells an entire month's or three months' worth of loans, which are then packaged together to either be held by an investor or sold as a packaged investment. Until about 2009, these loans could be sold, and if they went bad, they would become someone else's problem.

Now, in many cases, HGV or other timeshare programs offer a "letter of credit" and a "repurchase agreement," agreeing to buy back loans that go sour or into default.

What Hilton does afterward, I do not know, but I assume they sell the debt after charging it off as a loss and have someone else pursue debtor collection.

 

[MM9]

And I wonder if there are higher defaults with the acquisitions, diamond, etc.?

From my understanding Loan Losses & Delinquency was far higher with Diamond Resorts than it ever was with Hilton. I think Diamond scrapped the bottom of the barrel too much and attracted lower-quality borrowers and buyers.

 

[TravelJoy]

How does this compare to the rest of the travel industry? Covid revenge travel and work from anywhere is over so travel demand is soft. We can see it at our vacation rental in a resort town. People are booking at the last minute and rental prices are softer than in previous years. We are still filling peak months but mud season is dead similar to pre-Covid.

Soft everywhere, travel, discretionary, car prices, McD introducing lower pricing meals, many $1 store closures, it's not surprising value brands and no brands like Aldi are expanding, Amazon's inventory is flooded with Chinese goods, TEMU is running wild, it is all revolving around AI/tech; which ironically will serve as a negative feedback loop for spending.

 

[WaikikiFirst]

loans are not generally held on the bank's books

I prefer when Margot explains it

 

[MM9]

I prefer when Margot explains it

That movie, and specifically that scene, is a highly inaccurate portrayal of the Financial Crisis and the securitization process.

For example, it's not widely known that the vast majority of loans that originated during the boom years of 2004-2007 were actually paid on time. Over 90% of borrowers with subprime mortgages successfully paid off or remain paying their loans. Before the boom, this figure was around 92%. Interestingly, borrowers with good credit (Alt-A) loans and prime credit often performed worse than those with subprime mortgages.

Moreover, of all the subprime RMBS issued during those years, less than half a percentage point of AAA-rated bond certificates experienced losses. Those that did were primarily linked to "high loan-to-value" or "second mortgage" securitizations. The losses on those deals were particularly bad, because the final liquidation of the assets, tended to be substantially less.

When it comes to a Timeshare Mortgage, the general value upon liquidation is virtually $0. There is hardly ever a recovery when the unit is auctioned off at Foreclosure. A home in contrast, does retain some value and generally can be liquidated for the principle balance of the loan, plus delinquent interest and foreclosure-related costs.

 

[4TimeAway]

That movie, and specifically that scene, is a highly inaccurate portrayal of the Financial Crisis and the securitization process.

For example, it's not widely known that the vast majority of loans that originated during the boom years of 2004-2007 were actually paid on time. Over 90% of borrowers with subprime mortgages successfully paid off or remain paying their loans. Before the boom, this figure was around 92%. Interestingly, borrowers with good credit (Alt-A) loans and prime credit often performed worse than those with subprime mortgages.

Moreover, of all the subprime RMBS issued during those years, less than half a percentage point of AAA-rated bond certificates experienced losses. Those that did were primarily linked to "high loan-to-value" or "second mortgage" securitizations. The losses on those deals were particularly bad, because the final liquidation of the assets, tended to be substantially less.

When it comes to a Timeshare Mortgage, the general value upon liquidation is virtually $0. There is hardly ever a recovery when the unit is auctioned off at Foreclosure. A home in contrast, does retain some value and generally can be liquidated for the principle balance of the loan, plus delinquent interest and foreclosure-related costs.

Agreed.

Also, the traunch idea was not invalid.

These cycles happen and trying to elimate them seems impossible.

 

[HuskerATL]

But, Margot Robbie in a bubble bath is welcome to any educational session for me... Even if they aren't accurate...

 

[dioxide45]

Also the number of defaults is a negative balance on the Bank's Balance Sheet. How many Banks want to take over and sell a Timeshare when the purchaser defaults on the Loan. Plus they will probably be fighting with the Timeshare Corporation because the Maintenance Fees are also likely in Arrears.

Banks really don't lend money for timeshares. These "securitizations" are really a bunch of nonsense. The timeshare companies start out seller financing. Then they issue new notes and use the timeshare notes as collateral. They then sell the new notes to institutional investors. I suppose if the timeshare company defaults on those new notes, the institutional investors can come along and take over the timeshare notes (the collateral) and if the timeshare owners that signed those notes have defaulted then the institutional investors can foreclose on those timeshares. It won't happen. These securitizations are really just the timeshare companies borrowing a bunch of money from investors and making money on the spread.

 

[dioxide45]

These loans are not generally held on the bank's books. In many cases, they are sold off as "whole bundles," meaning Hilton sells an entire month's or three months' worth of loans, which are then packaged together to either be held by an investor or sold as a packaged investment. Until about 2009, these loans could be sold, and if they went bad, they would become someone else's problem.

It isn't even that direct. The timeshare companies just issue new debt using the timeshare notes as collateral. They make money on the spread between the interest rate of the new debt and the interest rate on the timeshare notes. If the timeshare owner defaults, the investor that bought the new debt doesn't know, doesn't care and doesn't lose anything directly. The timeshare company is still obligated to pay the debt off.

 

[MM9]

It isn't even that direct. The timeshare companies just issue new debt using the timeshare notes as collateral. They make money on the spread between the interest rate of the new debt and the interest rate on the timeshare notes. If the timeshare owner defaults, the investor that bought the new debt doesn't know, doesn't care and doesn't lose anything directly. The timeshare company is still obligated to pay the debt off.

Unfortunately, in many cases, that doesn't even happen. While the strong Net Interest Margin is beneficial, oftentimes the excess interest is exhausted to cover defaulted and charged-off loans. This is where the over-collateralization and credit support in their recent issues have come from.

In effect, Borrowers are subsidizing others effectively, in the pool of loans. The same happens in many Non-Prime Auto Loan Securities.

 

[brp]

But, Margot Robbie in a bubble bath is welcome to any educational session for me... Even if they aren't accurate...

Who'd notice....?

Cheers.