Hilton Buyout by Blackstone Group Impact

[bluemax]

I understand that Hilton sold out to the Blackstone Group last July for a premium on the stock price. What impact has this had on Hilton and HGVC if any? What impact could this have on upkeep, expansion, maintenance, etc?

BSG had indicated they would make large investments into Hilton but I have not seen or heard anything. Also BSG usually spins out companies they purchase after 4 -5 years when they can capitalize on the proceeds. They also own Wyndham, Extended Stay and LaQuinta

Also know that Hilton utilized Bear, Stearnes & Co., Inc. until recently. What impact would this have on improvements, maintenance, expansion?

Any investment gurus out there that can analyze the benefit of the buyout?

 

[nonutrix]

It is my understanding the deal with Blackstone didn't close until November. So when I was at HHV last week I specifically asked several employees what kinds of changes they were seeing. What I found out:

First there has been a shake-up in the management. Dagout (sp?) is gone and one of the managers on the TS end of the company from HHV has been promoted. There were other changes in management, but not recognizing the names or titles, it did not mean anything to me.

Second, there is an on going analysis of profitability areas at HHV. Examples are the library/reading room that just opened in September will close because the space rental has been tripled. The Chinese restaurant, which has been at HHV as long as anyone can remember, has been closed to use the room with a sunset view more profitably.

HGVC is trying a new way to get people into the TS presentation by offering two nights with a rental car, complimentary. This offer is made to owner referrals.

There are enough changes being made that the employees I talked to seemed to be generally nervous with the uncertainties. I think that they are wondering what will happen next.

While it is understandable that the employees are worried about the changes they see, everything I saw seemed to be smart business. I'm probably a Pollyanna, but I see these changes in a positive light.

nonutrix

 

[bluemax]

Hope you are right about the changes being positive. Usually a private equity group has one goal - profitability by cutting costs (including employees), spend minimal amout of CAPEX, make the venture profitable (20% ROE) and spin it back out into the open market.

Will be interesting to watch and I may check out the blog site of Blackstone.

As HGVC property owners we should be viligent of any changes affecting property values. Hopefully the terms and conditions would allow an intervention.

New World Order

 

[nonutrix]

I intend to watch what happens with great interest. I'll be back to HHV and HGVC Waikoloa in June/July, and will be interested to see if there are any discernable differences. Except for the concern of the employees, there were none this time as compared to our visit in Dec. I am hoping that all HGVC TUGers will report on their stays, and anything they notice from the Hilton ownership changes.

nonutrix

 

[Emi]

Aloha nonutrix

Just wanted to introduce myself. I am a board member of HGVC Waikoloa and would like to hear any observations, concerns, etc that you have. The board currently have 5 members, 2 owners and the other 3 are HGVC's senior staff. Please be sure to cast your vote for a new board member. After the election, we will have 3 owners on the board and will have majority control.

Amy Sien

 

[nonutrix]

Aloha nonutrix

Just wanted to introduce myself. I am a board member of HGVC Waikoloa and would like to hear any observations, concerns, etc that you have. The board currently have 5 members, 2 owners and the other 3 are HGVC's senior staff. Please be sure to cast your vote for a new board member. After the election, we will have 3 owners on the board and will have majority control.

Amy Sien

sent a PM

nonutrix

 

[johnmfaeth]

Blackstone does not own Wyndham which is a publically traded compay that was spun off from Cendent Corp in July, 2006. That is the parent of Wyndham Vacation Ownership, the timeshare bunch who also owns Worldmark.

It bought much of Wyndham International's Hotel Operations. Here is an except fro the web (Wikipedia):

-------------------------------------------------------------

In June, 2005, Blackstone acquired Wyndham International for $3.2 billion. The Wyndham brand and management business was sold to Cendant Corp and 14 full-service Wyndham hotels located primarily in urban locations were sold to Columbia Sussex, a private hotel ownership and management business based outside Cincinnati. The 21 hotels that remained consisted of Wyndham's prized resort assets and included such properties as El Conquistador Resort & Spa in Puerto Rico, The Reach Resort in Key West, FL, and Carmel Valley Ranch in Carmel, CA. These assets were converted to the LXR brand. Summerfield Suites, Wyndham's extended stay offering was sold to Global Hyatt and renamed Hyatt Summerfield Suites.

 

[korndoc]

Should I NOT buy into HGVC now?

I find the buyout alarming.

If Hilton is no longer involved, will my Hilton credit card still accumulate HH points at the HGVC resorts?

I was planning on buying a Hilton managed t/s in south Florida. What will happen to those? Will they still represent a pathway to the HGVC resorts?

Is it too soon to answer these questions and therefore a good reason to wait on making a purchase?

Jeff

 

[bluemax]

I find the buyout alarming.

If Hilton is no longer involved, will my Hilton credit card still accumulate HH points at the HGVC resorts?

I was planning on buying a Hilton managed t/s in south Florida. What will happen to those? Will they still represent a pathway to the HGVC resorts?

Is it too soon to answer these questions and therefore a good reason to wait on making a purchase?

Jeff

Great questions and hopefully Hilton (or now Blackstone management) can provide some feedback. I have asked several Hilton employees and they do not know. Would recommend e-mailing senior management at HGVC and see what response you get.

I plan on e-mailing some folks to see what they can advise - strange that there was no mention / announcement to HGVC owners of a chamge in corporate ownership - guess there was no by-law requiring this or disclosure terms.

Let us know if you get any feedback as well as other owners / TUG members.

 

[Talent312]

I find the buyout alarming.

If Hilton is no longer involved, will my Hilton credit card still accumulate HH points at the HGVC resorts?

I was planning on buying a Hilton managed t/s in south Florida. What will happen to those? Will they still represent a pathway to the HGVC resorts?

Is it too soon to answer these questions and therefore a good reason to wait on making a purchase?

Jeff

HGVC is a wholly owned subsidiary of Hilton Corp. and Blackstone's buyout was for all of Hilton, lock, stock & barrel, including HGVC. Thus, the contractual relationships between the units and your Hilton CC is not affected, nor are the relationships between HGVC and its affiliated TS's... at least not immediately.

But if Blackstone were to breakup or spin-off HGVC from Hilton Hotels, we could see a loosening or loss of tie-ins between HGVC, H'Hotels and H'Honors. Affiliated TS may feel that association with HGVC no longer holds the same cachet. This could leave HGVC pretty much limited to Orlando, Vegas and Hawaii. Hopefully, that downside will deter Blackstone from considering such an option.

 

[Seth Nock]

The timeshare division of Hilton is one of the most profitable divisions. I do not see them changing it much. What I was told will change is that once Blackstone feels more comfortable, they will give the timeshare division more money to buy back inventory under right of first refusal. Regarding the credit card, after the takeover, Hilton announced the reduction of capacity control for hotel reservation capacity control. I there is a standard hotel room available, you can book it for points. The Blackstone takeover should be a good thing.
Take Care,
Seth

 

[Emi]

Hi Jeff,

Buying a HGVC affiliated resort is the most inexpensive way to get into the program. All the resorts, including the HGVC built, have a management contract with HGVC of 3 to 5 years. There is always a chance the resort may decide not to renew a contract. There are benefits of owning HGVC and I would think the board will have to answer to many owners if they decide to disengage from HGVC. IMHO I do not think it would be an easy and quick decision for the resort nor for HGVC.

Amy

 

[lvhmbh]

We are members of the Boca Raton Resort and Club which is now owned by Blackstone. As a member we have been contacted by their LXR properties and offered pretty good discounts on hotels. We also were contacted for a timeshare presentation in Las Vegas in a free 1 or 2 br. It is the one on the strip (down towards the Strat). It just so happens that we are going to Vegas in July (I know, I know sweltering) for the American Contract Bridge League's Summer National. DH is a tournament player and usually fields a team with a friend so...... Anyway, he took them up on the deal for the first couple of days and then we move into the Hilton that is the host hotel (off the strip with a big convention area). I'm pretty sure we were contacted because we are members at BRRC as we don't own any HGVC. Linda

 

[bluemax]

We are members of the Boca Raton Resort and Club which is now owned by Blackstone. As a member we have been contacted by their LXR properties and offered pretty good discounts on hotels. We also were contacted for a timeshare presentation in Las Vegas in a free 1 or 2 br. It is the one on the strip (down towards the Strat). It just so happens that we are going to Vegas in July (I know, I know sweltering) for the American Contract Bridge League's Summer National. DH is a tournament player and usually fields a team with a friend so...... Anyway, he took them up on the deal for the first couple of days and then we move into the Hilton that is the host hotel (off the strip with a big convention area). I'm pretty sure we were contacted because we are members at BRRC as we don't own any HGVC. Linda

Interesting - I just received an e-mail inviting me to utilize HGVC points to stay at the Boca Raton Resort & Club - a LXR Blackstone owned property. It appears that Blackstone is having an influence on Hilton.

 

[OnMedic]

Interesting - I just received an e-mail inviting me to utilize HGVC points to stay at the Boca Raton Resort & Club - a LXR Blackstone owned property. It appears that Blackstone is having an influence on Hilton.

Very interesting... looks like another affiliate coming on board? Was this to be directly with HGVC? Looks very nice!