Hilton Grand Vacations strikes deal to acquire Diamond Resorts

[frank808]

Diamond doesn't own (manage) 400 resorts. Diamond manages about 100 resorts and was affiliated with about 300 other resorts/hotels. Anything booked through the Diamond portal had no exchange fees. Only if you go outside the Diamond portal through II or DEX was there an exchange fee. So I would just go on the Diamond portal, find a place I wanted to go and book it with just my points. Booked two weekends last night for next Jan/Feb (get it while the getting's good) and didn't spend an extra penny. Now some say those exchange fees are embedded in out maint fees and that might be true but I don't have to worry about spending any extra money booking locations as long as I stayed inside of the Diamond portal.

Thanks for the explanation. So in essence it was their own trading company.

Why did Diamond start DEX(another internal trading arm) if they already had trading through internal exchanges?

Sent from my SM-T377P using Tapatalk

 

[nuwermj]

My crystal ball doesn't tell me exactly how they will structure. However one thing is certain. They need to pay for the debt acquired from the merger, the merger costs of re-branding, training staff, and IT, and upgrading DRI resorts to HGVC quality. They need to get the revenue from somewhere to pay for this.

I think Mark Wang has addressed this. First, they expect $125 million added to the combined bottom line through backoffice cost saving. Next, they expect to use the Hilton Hotel customer database as the marketing channel to sell the rebranded Diamond Club. The two clubs do not need to be integrated to bring this about.

Currently 80% of Diamond sales are made to current owners. Diamond was built on the a stratgey of incremental sales. Only 20% of DRI sales are made to new customers. Wall Street has never been fond of this strategy and discounted DRI for it in the days before Apollo. HGV, according to Wang, sells about 50-50; half of sales are made to current owners, half to new owners. Wall Street prefers that ratio. (50-50 is also Marriott's goal; they were 60-40 before the the pandemic.) This is why rebranding is a priority. Hilton resticts the use of their database to the Hilton brand.

 

[nuwermj]

How did it work for your trust owners when Diamond unloaded some of the EU Collection resorts (such as the 3 they held in Ireland)?

The Ireland resorts were never held in the EU Trust. They were affiliates. Diamond leased them for a specified number of years and didn't renew the leases.

But, to the broader question, at say Le Manoir des Deux Amants in Normandy, France all the deeds were withdrawn from the trust fund and sold as inventory along with the developer's rights and the management contract to a new company. After that, EU members and THE Club members were no longer permitted to make reservations at that location. White Sands Country Club, Benal Beach, Garden Lago, and Broom Park are other locations that have been sold.

 

[nuwermj]

Thanks for the explanation. So in essence it was their own trading company.

Why did Diamond start DEX(another internal trading arm) if they already had trading through internal exchanges?

Sent from my SM-T377P using Tapatalk

Destination Exchange is a traditional exchange system where use rights must be deposited and those deposits form the inventory. Although THE Club is a propriety exchange company it gets most of its inventory from the trust funds that affiliate with it. The remainder of the inventory is deposited, but the deposits are made by developers, not members.

 

[nuwermj]

Does anyone know if Diamond owns Teton Club? I’d definitely trade for that when we visit Yellowstone.

Diamond does not. Raintree owns that one. Diamond has an affiliation with Raintree so Diamond can make it available to its members.

 

[tschwa2]

Thanks for the explanation. So in essence it was their own trading company.

Why did Diamond start DEX(another internal trading arm) if they already had trading through internal exchanges?

Sent from my SM-T377P using Tapatalk

DEX allows money that would have gone to II to go back to them. Membership dues from points members were paying for annual II membership. Now without a reduction in membership fees, the II membership is no longer included but they are paying DEX for a membership. Also some of the Diamond controlled HOA are now paying for a DEX membership out of MF's so even if you aren't a points member but own a deeded week at a diamond managed resort even if you have no desire to use DEX you are paying fees that go to DEX and therefore Diamond. In addition to the membership fees that apply whether these members use it or not, Diamond makes money through fees everytime a diamond member actually uses DEX.

 

[Fried_shrimp]

Thanks for the explanation. So in essence it was their own trading company.

Why did Diamond start DEX(another internal trading arm) if they already had trading through internal exchanges?

Sent from my SM-T377P using Tapatalk

In essence, HGVC is it's own trading company as well, for HGVC properties. The difference is that HGVC charges you an exchange fee (reservation fee) to book outside of your single home resort. Diamond does not as long as you are booking through the Diamond portal at Diamond managed or affiliated resorts so we could book to almost 400 locations exchange free.

DEX was originally created to allow legacy week owners book at other locations. Legacy week owners do not have access to the Diamond portal because that is strictly for point owners (kind of like RCI having it's separate week/point sides of the website). The purpose was to give legacy week owners a cheaper alternative to RCI/II and for Diamond to keep those exchange fees from it's owners instead of sending it to RCI/II. DEX was originally started around 2013/2014. In 2020, Diamond decided to cancel it's affiliation with II effective 31 Dec 2020 and modified DEX so that points owners could utilize it. Also, DEX was modified to allow point owners to save points on a 2,000 increment basis for 5 years instead of the 1 year through the Diamond portal. The only problem, at least initially, is that the point values were set way to high for a week somewhere but they have been adjusting that as DEX went live for point owners this year. DEX is mostly based off of RCI inventory so it did open a lot of new areas for Diamond owners to go to.

 

[Fried_shrimp]

The Ireland resorts were never held in the EU Trust. They were affiliates. Diamond leased them for a specified number of years and didn't renew the leases.

But, to the broader question, at say Le Manoir des Deux Amants in Normandy, France all the deeds were withdrawn from the trust fund and sold as inventory along with the developer's rights and the management contract to a new company. After that, EU members and THE Club members were no longer permitted to make reservations at that location. White Sands Country Club, Benal Beach, Garden Lago, and Broom Park are other locations that have been sold.

But didn't they have to replace that inventory so the Trust wouldn't be oversold?

 

[Tamaradarann]

Simply put, the goal is to enhance the owners experience by getting then to pay more for the experience.

I’m hoping for a simple, relatively inexpensive, joiner fee. What I expect is a minimum purchase requirement. I’m not saying I wouldn’t buy more. I am saying at this point I wouldn’t be excited about it either.

Of course the ultimate goal is to bring in more revenue, but stategizing how that is the issue.

We know that all timeshare companies pay many dollars to get people to come to presentations so they can sell timeshares. They even put perspective buyers up in accomodations so that they can experience the resort before they try to sell to them. By allowing HGVC and DRI owners to use their points to make reservations in the system they don't own they expand their perspective market base to sell to without having to market to get the perspective buyers to come to the resort and put them up in accomodations. The sales staff will need to be retrained to sell different way to these perspective buyers just like the sales pitch is different for current owners versus non owners.

I don't thnk that owners in one system using their points in the other system should be allowed to reserve at the 9 or 10 month mark that owners of that system can. Perhaps being able to make reservations at the 3 or 6 month mark will be permitted. Those using points to reserve in the system that they don't own may pay a higher reservation fee than owners of that system which will also bring in more revenue. While it could be higher, it shouldn't be as high as RCI.

I don't believe you will have to pay anything to join the system if you are in one of the two timeshare systems. However, if you want to become member of the club you don't own in you will have to buy a timeshare in that system!

 

[T_R_Oglodyte]

But didn't they have to replace that inventory so the Trust wouldn't be oversold?

The European Trust operates under a very different set of requirements. From the discussions that I have seen at the Diamond message board, I have a sense that might not be required.

 

[Sandy VDH]

Everything remains to be seen.

I for one would hope that HGVC returns the All Inclusive membership fee structure, which is basically where DRI is at. You may a higher Membership fee than we do now, but you get unlimited reservations, like DRI does not. That would be an easy thing and the did offer this option in the past. Now only bHC are offered this, so it is supported by the IT system today.

Now the changing in Reservations windows. NO idea how that would be changed. It is a big enough change for both HGCVC and DRI members, so I have no idea which way they will go on this one.

As far as what does DRI get for more locations, while they get some of the same locations, they do get either better properties or better locations. But since I own Wyndham in addition to HGVC, I don't think getting DRI locations are a big win for me.

Patience Grasshopper, all will be revealed.

 

[bakera]

But didn't they have to replace that inventory so the Trust wouldn't be oversold?

If the trust was fully sold then they would have to. Currently approx 1/3rd of the points held within the trust are unsold. Diamond can do what they want with those.

 

[dayooper]

In essence, HGVC is it's own trading company as well, for HGVC properties. The difference is that HGVC charges you an exchange fee (reservation fee) to book outside of your single home resort. Diamond does not as long as you are booking through the Diamond portal at Diamond managed or affiliated resorts so we could book to almost 400 locations exchange free.

Eh, how much are your club dues? HGVC club dues are $186. If I remember correctly, Diamond club dues are considerably more. Like $300-$400 more. If that's the case, for someone like you that takes many short stay trips, it works great. To those that use their points in a more traditional manner with longer stays, the HGVC method of paying for what you use is much more beneficial. Like @Sandy VDH says above, I would love to have unlimited free reservations. Currently for me, it would be less economical to pay higher club dues for unlimited reservations as I only am making at most 2 reservations a year. As I accumulate more points, that may/will change and it might be better for me to pay more in club dues and have unlimited reservations.

 

[nuwermj]

But didn't they have to replace that inventory so the Trust wouldn't be oversold?

There is a one-to-one correspondence rule: every point must be backed by accommodations. But in the case of the EU Collection the rate of membership exit is much higher than the rate of sales. For at least ten years the unsold inventory of points has been accumulating and the deeds withdrawn reduce that excess supply of points. In 2013 there were about 431,695,000 points in the collection. At the end of 2019 there were only 333,180,000 points, a decline of about 24 percent. As the membership declined, Diamond reduced the inventory. (I hope this is understandable; it's hard to find the right words to explain it.)

 

[nuwermj]

... By allowing HGVC and DRI owners to use their points to make reservations in the system they don't own they expand their perspective market base to sell to without having to market to get the perspective buyers to come to the resort and put them up in accomodations. ...

HGV seems to think the membership groups are two different markets. Slide 8 in the HGV merger presentation made the point that the average HGVC sale is $60K while the average DRI sale is $25K. The slide states: "Diamond's 75th percentile price point sits just below HGV's lowest 25th percentile."

In the presentation Mark Wang said: "You can see how this broader offering benefits us, as you turn to Slide 8. With the addition of our new brand, we’ll increase the range of prices and expand our addressable market. Today, the majority of Diamond’s prices sit just below ours, giving us a full range of pricing options across our combined offering. The new lower entry price points will allow us to reach a wider segment of Hilton’s loyalty base and it also provides new compelling upgrade opportunities for our collective owner bases. Historically, we’ve focused on customers with incomes of over $100,000. We’re now better able to target customers at $75,000 and above, which will expand our marketing universe by over a third." (My emphasis)

I think of it like Toyota and Lexus are sold to different market segments.

 

[Fried_shrimp]

You may a higher Membership fee than we do now, but you get unlimited reservations, like DRI does not.

What do you mean by unlimited reservations, like DRI does not?? We can make as many reservations in a year that our points will allow for. Personally, my record has been 21 reservations in the same year.

 

[Fried_shrimp]

If the trust was fully sold then they would have to. Currently approx 1/3rd of the points held within the trust are unsold. Diamond can do what they want with those.

Wow, that high? Had no idea Diamond had so much unsold inventory in the EU Collection. Makes me wonder why they closed the sales centers several years ago with that amount of available inventory?

 

[Fried_shrimp]

Eh, how much are your club dues? HGVC club dues are $186. If I remember correctly, Diamond club dues are considerably more. Like $300-$400 more. If that's the case, for someone like you that takes many short stay trips, it works great. To those that use their points in a more traditional manner with longer stays, the HGVC method of paying for what you use is much more beneficial. Like @Sandy VDH says above, I would love to have unlimited free reservations. Currently for me, it would be less economical to pay higher club dues for unlimited reservations as I only am making at most 2 reservations a year. As I accumulate more points, that may/will change and it might be better for me to pay more in club dues and have unlimited reservations.

Without looking at my last statement, I believe Club dues were about $259 but there are many factors that make up out maint fees. We have base costs and then per point costs.

Yes, personally I take several weekend trips a year due to still working (in a school system). But I also take many week or longer trips as well in summertime with the longest so far being 20 nights. I know some folks that live up north and book 84 nights straight at a Florida resort and effectively become snowbirds every year. Even if I were to take only week long vacations I would still be taking about 10-12 weeks a year which at $59 a pop, that would equate to $590 to $708 a year in reservation fees, much higher than either of our Club fees. Depending on where I went, unit size, and time of year, I could get as many as 20 weeks of vacationing which would run $1,180 in reservation fees. You only have enough points for 2 reservations per year. SOme of us have invested much more so you can see where reservation fees would be a killer for us.

 

[Fried_shrimp]

There is a one-to-one correspondence rule: every point must be backed by accommodations. But in the case of the EU Collection the rate of membership exit is much higher than the rate of sales. For at least ten years the unsold inventory of points has been accumulating and the deeds withdrawn reduce that excess supply of points. In 2013 there were about 431,695,000 points in the collection. At the end of 2019 there were only 333,180,000 points, a decline of about 24 percent. As the membership declined, Diamond reduced the inventory. (I hope this is understandable; it's hard to find the right words to explain it.)

Yes, that make sense since Diamond would have to maintain all of the resorts without the underlying owners to support them. What I'm wondering is why did Diamond close the sales centers in the EU since that would only ensure the demise of the EU Collection as people got out but no sales folks to bring new owners in?

 

[NiteMaire]

Are there HGVC properties that DRI owners would like to visit?

We thoroughly enjoyed our time at The Bay Club (affiliate) on the Big Island. We stayed in a Villa, and would happily stay there again.

IDK...When the potential merger with HGVC was announced in late 2019 I started a poll in the Diamond Forum asking about owner happiness with the Diamond System since I knew zero about Diamond. Almost 60% (58.5%) of Diamond Owners said they were neutral or unhappy with Diamond. Not a good sat score for Diamond.

FYI to contrast, here is the happiness poll for HGVC owners (28% neutral/unhappy HGVC vs. 58% neutral/unhappy Diamond).

The "sample" size for the DRI poll was only 41 total (24 legacy weeks owners and 17 points owners), far from being a statistically significant sample (but let's assume the % remain).
It's telling when you separate DRI weeks and points owners:
For weeks owners, it was 62.5% neutral/happy vs 54.17% neutral/unhappy. We you exclude neutral, 37.5% of legacy weeks owners are unhappy/dissatisfied. It's higher than HGVC, but I don't think it's horrendous.
For points owners, it was 52.94% neutral/happy vs 64.71% neutral/unhappy. We you exclude neutral, 58.82% of legacy weeks owners are unhappy/dissatisfied. That's a drastic increase (>20%) compared to weeks owners.

Forget DEX. As an EU Collection points owner the number of points required to exchange is far higher than through II. I cannot see any benefit of DEX.

This is inline with the frustration I've read from other points owners. Legacy weeks owners are less frustrated, and some (including me) are happy with it.

 

[nuwermj]

Yes, that make sense since Diamond would have to maintain all of the resorts without the underlying owners to support them. What I'm wondering is why did Diamond close the sales centers in the EU since that would only ensure the demise of the EU Collection as people got out but no sales folks to bring new owners in?

Closing the sales centers was Diamond's way of "gaming" European Union laws. In effect they outsourced sales to a third party.

 

[nuwermj]

Without looking at my last statement, I believe Club dues were about $259 but there are many factors that make up out maint fees. We have base costs and then per point costs.

The minimum dues for the DRI Club are $250. Every members pays at least that amount. Members with about 15,000 points (the equivalent of two composite weeks) start paying more. Their formula is $187 plus 0.0053 per point. So Fried_shrimp, who has 50,000 points (6.67 composite weeks) paid $452 for club dues. In addition, because resale accounts are not Club members and do not pay Club dues, the HOA pays $45 per account to The Club for reservation services, which, of course, is part of our MFs. So I pay $295 and Fried_shrimp pays $497 for Club services. My Bluegreen and Welk accounts are considerably less for the same services.

 

[Fried_shrimp]

The minimum dues for the DRI Club are $250. Every members pays at least that amount. Members with about 15,000 points (the equivalent of two composite weeks) start paying more. Their formula is $187 plus 0.0053 per point. So Fried_shrimp, who has 50,000 points (6.67 composite weeks) paid $452 for club dues. In addition, because resale accounts are not Club members and do not pay Club dues, the HOA pays $45 per account to The Club for reservation services, which, of course, is part of our MFs. So I pay $295 and Fried_shrimp pays $497 for Club services. My Bluegreen and Welk accounts are considerably less for the same services.

Every member who is in The Club. Dirty point owners do not pay Club dues and still pay no reservation fees. The point I was trying to make is that the amount one pays in Club dues versus the rest of the maint fee bill is immaterial. Some members pay more, some pay less, some pay nothing at all to the Club but all have the ability to make reservations without an exchange fee.

Thank you for taking the time to look up the exact amounts though you are off slightly.

I did finally go look at my bill and I was probably thinking of the points fee which was $265.00 for 2021. My total Club fees for 2021 were $452.00 ($187 base and $265 points) according to my statement. But as I attempted to refer to before, I don't look at the individual components of my maint fee bill. I simply worry about the whole of it. I make an average of 16 reservations a year based on my last 5 years which if Diamond switched to the HGVC way of doing things, it would cost me $944 a year in reservation fees which would be more than double what my Club dues are. As @dayooper pointed out, HGVC pays $186 in Club dues a year plus reservation fees. If one only makes a few reservations a year, then they pay less for their Club fees. But at only 5 reservations a year, one is spending less using Diamond's method which many people exceed. Even folks with fewer points based on booking inexpensive weeks or 5 mid-week vacations to stretch their points. And we haven't even gotten into their $149 transaction fee to save their points which are free (included) for us.

 

[CalGalTraveler]

If you have more than 5 reservations a year some people do one of the following in HGVC

1) Become a top elite tier 32k points (must buy from the developer) no fees but big $$$$
2) buy a resale bHC property (NYC, DC) which has Al inclusive reservations. About $320/year ($189 dues + $120) for all you can eat reservations. Still must pay to bank but borrowing points is free With the downturn some low point resales have been at bargain basement prices. Plus you get preferential reservations to NYC and owners lounge privilege at your home resort.
3) Change reservations instead of booking/rebooking. Still must pay initial fee.

 

[Zenichiro]

Diamond does not. Raintree owns that one. Diamond has an affiliation with Raintree so Diamond can make it available to its members.

Thanks