How is the destination Club market holding up?

[BocaBum99]

....from Boca's #43 posting above: "Due to the current economic conditions, we believe that once the mortgage holders are paid there will not be any equity left for us to refund to our members. Management and investors of HCC would not receive any compensation from a liquidation unless our members were fully paid their refundable..."

Question on this- so, where would the equity monies go? If all the funds are used to pay motgage holders, would there not be some equity once they are paid? Who gets that equity?

Best of luck to all members, I sincerely hope it works out OK for each of you.

The point is that due to the fall in the real estate values of the properties that the member "equity" is now zero. They can't call it equity because it was never equity in the first place. It was an unsecured interest free loan.

My guess is that the reason for the 20-50% drop in real estate values is partially due to the market. The other part is due to the appraiser who gave them those artificially high numbers to report.

Many people tried to warn others on this message board that this was an issue. Most just blew off the warnings and suggested that the DC market was immune to fluctuations in the economy because the rich aren't affected by economic recessions. Well, this goes far beyond recession. It threatens the fabric of our capitalist system. So, the rich are really getting hammered.

I think one hedge fund manager even challenged my assertions about it. I wonder how his hedge fund is doing right now. And, how all of those so called educated consumers feel about putting their "trust" into the biggest "trust me" industry on earth. I think that trust bond has been more than violated.

 

[tombo]

The point is that due to the fall in the real estate values of the properties that the member "equity" is now zero. They can't call it equity because it was never equity in the first place. It was an unsecured interest free loan.

My guess is that the reason for the 20-50% drop in real estate values is partially due to the market. The other part is due to the appraiser who gave them those artificially high numbers to report.

Many people tried to warn others on this message board that this was an issue. Most just blew off the warnings and suggested that the DC market was immune to fluctuations in the economy because the rich aren't affected by economic recessions. Well, this goes far beyond recession. It threatens the fabric of our capitalist system. So, the rich are really getting hammered.

I think one hedge fund manager even challenged my assertions about it. I wonder how his hedge fund is doing right now. And, how all of those so called educated consumers feel about putting their "trust" into the biggest "trust me" industry on earth. I think that trust bond has been more than violated.

It seemed to me that in the past there were many people who believed in HCC regardless of anything many of us said. I went back and re-read many of the past posts where several of us repeatedly said that HCC and all DC's were a huge risk not worth taking. We were blasted as ignorant because we didn't understand how safe HCC was. We were all supposed to hurry and buy because the membership fees were going to keep increasing. There was no reason for state or federal regulation of DC's because these smart business men were self regulating. We referenced a couple of DC's that went out of business and were told that only happened because they were new, they leased too many properties, etc. Where are all of the posters who begged people to buy HCC on this forum and many others. I am wondering why I haven't heard from the moderator who repeatedly blasted me for stating that buying HCC was a bad idea. Unfortunatelly many who listened to the HCC cheerleaders are now paying a huge price.

I am going to go back and re-read some more of the abuse I received for having the audacity to say that it was crazy to give people your money so they could buy themselves homes that they would then let you rent through annual fees you paid to them. I am going to re-live my ignorance for suggesting that it was crazy to pay all that money to own nothing, to not have a vote in HCC's purchases or leases, and how crazy it was to blindly trust that the owners of HCC would do what is best for the members rather than what was best for their wallet.

 

[caribbeansun]

Before you pat yourself on the back too much you should probably consider whether or not you could have predicted the problems that occurred over the past 2 months.

If you did then you sold the market short and you have made enough until the end of your days. If you didn't then like most of the rest of us you got spanked.

Gloating is distasteful at best and sentiments like "I told you so" are more telling about the one that speaks the phrase.

Those that joined HCC will pay the real price of doing so, such as myself, you won't. I would imagine that those that were avid proponents of HCC were so because they truly believed in what they were experiencing and there's nothing wrong with that. I do not blame them on any level for my own decision - my crystal ball didn't see the termoil of the past 2 months so with the benefit of hindsight I can say I made a mistake.

So try to restrain your joy at the cost of others - if you can't then go look at your 401k statement/investment statements again - that should be sobering enough for anyone these days.

 

[vivalour]

Well put, thank you. I think that most of us who bought into HCC understood the risks (to the extent that we could, at the time we bought in) and do not need a scolding from Tuggers at this point. I ignored my own mantra "if it looks too good to be true, it probably is." But money is only money -- this is not the end of life or good times -- I hope.

 

[tombo]

Before you pat yourself on the back too much you should probably consider whether or not you could have predicted the problems that occurred over the past 2 months.

If you did then you sold the market short and you have made enough until the end of your days. If you didn't then like most of the rest of us you got spanked.

Gloating is distasteful at best and sentiments like "I told you so" are more telling about the one that speaks the phrase.

Those that joined HCC will pay the real price of doing so, such as myself, you won't. I would imagine that those that were avid proponents of HCC were so because they truly believed in what they were experiencing and there's nothing wrong with that. I do not blame them on any level for my own decision - my crystal ball didn't see the termoil of the past 2 months so with the benefit of hindsight I can say I made a mistake.

So try to restrain your joy at the cost of others - if you can't then go look at your 401k statement/investment statements again - that should be sobering enough for anyone these days.

Please feel free to go back and read comments made about those of us who warned about DC's on this forum in the past (by many including a moderater) to see distasteful. Back then it was group maulings of any who weren't on the HCC band wagon. We didn't know that this economic downturn was coming, but we always felt that DC's were a house of cards sold using smoke and mirrors. Many of us posted warnings well over a year ago about the risk of joining DC's. This is not patting myself on the back, these are the facts. I simply want to remind those who gave us such grief that we had repeatedly warned everyone on the forum about numerous risks associated with giving large sums of money to HCC and other non equity DC's. For stating our reasons for concern about HCC we were booed out of the forum. The HCC booster club didn't want to hear anything other than HCC is great. Those people I don't feel very sorry for. They refused to listen to valid concerns about the safety of investing money in DC's. For that select group of HCC fans to not apologize to those of us they ridiculed in the past for our DC warnings (which hopefully saved many people a lot of misery), and to not apologize to those they talked into joining HCC (while telling them to ignore us) is very telling about certain people too.

This was not directed at all HCC owners, this was directed at the HCC fans who belittled us when we warned repeatedly against investing in DC's. There was no open dialogue here about the potential problems with HCC and other DC's. If you ever spoke against buying HCC you were crucified here. I am sorry for those who got hurt and especially those who financed their membership fees. If more civil discussions of the pros and cons of HCC had occurred, then more people could have made their choice after hearing both sides. Most of us quit posting on this thread because of constant attacks. I personally didn't post a thing about DC's for the last several months because it wasn't worth all the attacks I received when I did. If we had posted more negative facts and conjectures about the risks involved with joining DC's on this forum there might be fewer "HCC members" in this sad situation now. For those who didn't buy because of doubts we raised, thank goodness we weren't totally silenced. For those who joined after we were driven off of this forum, I hope the HCC cheerleaders will offer their apologies.

 

[BocaBum99]

Before you pat yourself on the back too much you should probably consider whether or not you could have predicted the problems that occurred over the past 2 months.

If you did then you sold the market short and you have made enough until the end of your days. If you didn't then like most of the rest of us you got spanked.

Gloating is distasteful at best and sentiments like "I told you so" are more telling about the one that speaks the phrase.

Those that joined HCC will pay the real price of doing so, such as myself, you won't. I would imagine that those that were avid proponents of HCC were so because they truly believed in what they were experiencing and there's nothing wrong with that. I do not blame them on any level for my own decision - my crystal ball didn't see the termoil of the past 2 months so with the benefit of hindsight I can say I made a mistake.

So try to restrain your joy at the cost of others - if you can't then go look at your 401k statement/investment statements again - that should be sobering enough for anyone these days.

I had no idea the financial markets were in as bad a shape as they were. I did know, however, that people were taking great risks by investing in Destination Club memberships.

Warnings were given and many put their heads in the sand. I am not happy that this is happening to so many people. What is most unfortunate is that people didn't heed the warnings and chose instead to put their heads in the sand.

Regarding investments in real estate and stocks. I am a heavy investor in both. I took a large loss on all of those investments like most people did. The big difference is that today, I am still an investor in real estate and stocks and will be for the rest of my life. However, I am not going to be an investor in a Destination Club.

 

[Bourne]

This was not directed at all HCC owners, this was directed at the HCC fans who belittled us when we warned repeatedly against investing in DC's. There was no open dialogue here about the potential problems with HCC and other DC's. If you ever spoke against buying HCC you were crucified here. I am sorry for those who got hurt and especially those who financed their membership fees. If more civil discussions of the pros and cons of HCC had occurred, then more people could have made their choice after hearing both sides. Most of us quit posting on this thread because of constant attacks. I personally didn't post a thing about DC's for the last several months because it wasn't worth all the attacks I received when I did. If we had posted more negative facts and conjectures about the risks involved with joining DC's on this forum there might be fewer "HCC members" in this sad situation now. For those who didn't buy because of doubts we raised, thank goodness we weren't totally silenced. For those who joined after we were driven off of this forum, I hope the HCC cheerleaders will offer their apologies.

Apologies eh!

Personally, here is how I see it. I always touted the risk vs reward ratio. For me,the risk is worth it. Consider this...

1. The membership and dues paid till now have already paid off based on the value of vacations taken.
2. The current stock market downturn has made me lose my membership value many times over. Every large gyration is a few memberships lost and regained. Point is, calculate the risk. If you cannot stomach the loss, don't even bother buying it.

Lastly, don't write off the HCC members just yet. The "success plan" or a "T&H type merger" would probably be the final outcome. Realistically, getting deposit is out of question in the next 5 years, but we will still be vacationing in some of those properties for many years to come.

It ain't over till the fat lady sings. And baankruptcy is not the fat lady.

 

[TarheelTraveler]

I agree with you 100%, Bourne, on risk vs reward being a significant part of the equation. However, my problem with that is consumers have no way of adequately judging the risk. For example, HCC in the last six months had many members pay deposits and dues that were much higher than prior members paid, yet their risk was significantly higher and their reward significantly lower. On the outside, a DC looks like a DC looks like a DC, but the mechanics and models are completely different from DC to DC. Failing clubs have historically been very adept at hiding the ball to prospective members. I've seen the financials of my own club and the financials of many others. Clubs with the most to worry about tend to show you projections and also leave off cash flow statements or apply deposits to the cash flow statements to make them look better. Unless you're an accountant (and even if you're an accountant), it can be very difficult to ascertain the true long term health of a club. While clubs are often sold as "country clubs for vacation real estate," very few are operated that way and if prospective members actually understood that many would not join or would join clubs that actually are operated that way. I bet in many situations (particularly now) one club might be 20% cheaper but have 5 or 10 times the risk of failure. No prospective consumer has any idea of these metrics.

 

[tombo]

Apologies eh!

Personally, here is how I see it. I always touted the risk vs reward ratio. For me,the risk is worth it. Consider this...

1. The membership and dues paid till now have already paid off based on the value of vacations taken.
2. The current stock market downturn has made me lose my membership value many times over. Every large gyration is a few memberships lost and regained. Point is, calculate the risk. If you cannot stomach the loss, don't even bother buying it.

Lastly, don't write off the HCC members just yet. The "success plan" or a "T&H type merger" would probably be the final outcome. Realistically, getting deposit is out of question in the next 5 years, but we will still be vacationing in some of those properties for many years to come.

It ain't over till the fat lady sings. And baankruptcy is not the fat lady.

The risk vs reward is worth it? If someone "joined" a few months ago and haven't taken a single trip, was that a good deal for them? Did their reward equal the huge risk? Would they take half of their memership fees back right now just to get out? Wouldn't most members?

I am sure that most members feel great that they were able to take a couple of trips or so for only $70,000 plus annual fees with no future vacations or refunds likely.What a reward. Members who took out a 30 year Home Equity Loan to pay membership fees will still be paying for a defunct "club" for decades to come. Those members have to feel the reward was worth the risk. Who are you kidding? They were sold a lifetime of travel, they instead got a year or two. Members got screwed, and there is no sugar coating it!

Don't count HCC as finished? Really? They themselves said if 75% of the members won't give up the rights to what they purchased by signing the addendum by November 14'th (negating the contract members signed when they joined), that HCC will begin shutting the business down on November 17th. You have the choice of definite closure of HCC and a total loss, or you can agree to new club rules and annual fees much different than you signed up for hoping that HCC might survive.You also have to hope that enough HCC members have enough faith in the owners to pay next year fees to keep HCC operating( I wouldn't pay them in this situation), and you also have to hope that the owners don't take your fees and still shut it down. There's that ugly risk thing again. No matter how it turns out, HCC is finished being the club that was sold to current members.

A T and H type merger? They said they don't have anone lined up to buy them out (translation no one wants to buy the mess they created in this economy). Here is the quote from your CEO: "HCC explored the possibility of merging with or being acquired by another club. HCC does not currently have any merger/acquisition offers pending from any destination club." I guess you feel that they will find a buyer by the 17th before they shut it down with no member refunds.

You are right about bankruptcy not being the end of HCC. Bankruptcy is not an option that HCC is currently exploring. They have stated that they will take all of the HCC assets (your money), and pay off all of their debts (on properties members bought for them), so they will walk away owing nothing(no reason to file bankruptcy), and members will simply walk away with nothing. You can either sign away your rights, pay higher annual dues, and succumb to any changes they make on your membership, or they will shut it down not refunding a penny. If 75% of the members sign agreeing to the forced membership changes, and you won't sign away your rights, they won't let you reserve any more vacations even though you paid to be a member. What a kind and benevolent group those HCC owners are. You are being forced to do what the owners want, or no vacations for you (sounds like the soup nazi from Seinfeld). But at least they aren't threatening Bankruptcy.

Once again in the face of irrefutable facts (this time spelled out by HCC's CEO), proponents are still saying that the HCC risk is (and was) worth the rewards. Some are still making positive statements about HCC's future. Please find out how many owners faced with losing their entire investment with nothing but a few weeks of vacation to show for it feel like you, that the rewards were worth it. I can't imagine that you mirror the feelings of many (if any) of HCC's members. The risk was always way too high, and obviously the rewards weren't worth it. Even the owners of HCC have given up trying to sell HCC to new members. That is a sure sign that the fat lady has sung.

 

[Troopers]

1. The membership and dues paid till now have already paid off based on the value of vacations taken.

Bourne, not trying to be confrontation here but just trying to understand. How did you arrive at this? You must be adding some phantom dollars for your vacation experiences to get the math to work out, right? When i looked at HCC this summer, my recollection was that the annual dues per night was more or less the rental price per night.

 

[TarheelTraveler]

Bourne, not trying to be confrontation here but just trying to understand. How did you arrive at this? You must be adding some phantom dollars for your vacation experiences to get the math to work out, right? When i looked at HCC this summer, my recollection was that the annual dues per night was more or less the rental price per night.

That's a good question, but the deposit and dues varied depending on when you joined. As an example, early members might have paid a $5,000 or $10,000 deposit with dues 1/4 of current dues (don't actually know the numbers but I bet that's not far from reality for those first joining).

 

[RoshiGuy]

New HHC Member's POV

I joined HCC in September 2008 and, like carribeansun, have yet to take any trips. Fortunately, the potential loss of $$ on my Affliliate membership, painful as it is, will not affect our family's lifestyle in any material way. I cannot say that I was duped. I had read all the posts on TUG by people pro and con - PerryM, tombo, boca, etc. I realized there was a risk but I did not fully appreciate how much of a risk! Also, economic events of the past 45 days (after I joined) apparently pushed HHC beyond the "worst-case" scenario I had anticipated (takeover at less favorable membership terms).

Did the huge support for HCC here and on DestinationClubForum influence my decision to join HCC? Of course it played an important role. But I took that for what it was - members commenting on the great experience they had vacationing in HCC homes. I had also read the posts on "Ponzi Scheme" that those skeptical of DCs had posted. As a business consultant I thought about sustainable business models, did some math (can explain this later if people care) and tricked myself into believing that HCC was close to getting there. Clearly "getting a good deal" played a role in my decision - wanting to get in before the costs were raised a bit more to a level that was sustainable for HCC. Ironically, I still think that a DC model in the $400-$500 per night cost range would work for many people like me. Unfortunately, most HCC members were in much lower and the next 400 full-paying members never materialized.

So thanks for all the pro/con arguments made on this site. It'll be interesting to see what happens with HCC - of course, now I have major skin in the game!

 

[tombo]

I am truly sorry for your loss but glad to hear that it won't affect your family's lifestyle. Hopefully somehow this will not be a total loss for you, and I hope that your family will at least be able to make some trips to what all agree are great accomodations.

 

[TarheelTraveler]

Well said RoshiGuy. Welcome to the forum. I hope that everything works out for the HCC members including yourself. I also hope the bar gets raised across the industry for creating responsible DCs. The DC idea is fantastic and you just hope that the irresponsible DCs (I don't blame the members at all in this) don't ruin the industry as a whole.

 

[BocaBum99]

I joined HCC in September 2008 and, like carribeansun, have yet to take any trips. Fortunately, the potential loss of $$ on my Affliliate membership, painful as it is, will not affect our family's lifestyle in any material way. I cannot say that I was duped. I had read all the posts on TUG by people pro and con - PerryM, tombo, boca, etc. I realized there was a risk but I did not fully appreciate how much of a risk! Also, economic events of the past 45 days (after I joined) apparently pushed HHC beyond the "worst-case" scenario I had anticipated (takeover at less favorable membership terms).

Did the huge support for HCC here and on DestinationClubForum influence my decision to join HCC? Of course it played an important role. But I took that for what it was - members commenting on the great experience they had vacationing in HCC homes. I had also read the posts on "Ponzi Scheme" that those skeptical of DCs had posted. As a business consultant I thought about sustainable business models, did some math (can explain this later if people care) and tricked myself into believing that HCC was close to getting there. Clearly "getting a good deal" played a role in my decision - wanting to get in before the costs were raised a bit more to a level that was sustainable for HCC. Ironically, I still think that a DC model in the $400-$500 per night cost range would work for many people like me. Unfortunately, most HCC members were in much lower and the next 400 full-paying members never materialized.

So thanks for all the pro/con arguments made on this site. It'll be interesting to see what happens with HCC - of course, now I have major skin in the game!

Thanks for the note. As long as you did the analysis, read the threads and made your decision, you will be okay. You made a calculated risk and the market turned against you. It happens. As long as you make calculated risks, over time, the averages turn in your favor. It's when people make bad risks is when they get hosed and can't understand why.

 

[BocaBum99]

Bourne, not trying to be confrontation here but just trying to understand. How did you arrive at this? You must be adding some phantom dollars for your vacation experiences to get the math to work out, right? When i looked at HCC this summer, my recollection was that the annual dues per night was more or less the rental price per night.

That's my thinking as well. I'll bet if you did the net present value calculation on his actual vacations including the lost membership that he is paying way more than the rental rate.

It may be a good time to find out if HCC and other Destination Clubs will now rent to non-members. My guess is that the rate will be less than the maintennace fees and owners should gladly take it. No reason why unbooked member days should go unused when money can be acquired to offset maintenance fees.

My guess is that some will reject this concept because it would further devalue their ownership when indeed it would reduce their own cash outlays if they did it.

 

[caribbeansun]

More on HCC

Everyone is different in how they arrived at their decision to either join or not join.

If you do a search of my posts on the topic you'll find that I was very negative on DC's in general.

I gradually warmed to the idea, did considerable research, talked to numerous DC's and made a decision. My timing was impeccable wasn't it?

Going in, it was known that there was substantial risk, I knew there was a chance that I'd lose 100% of what I put in. I didn't honestly believe that would be the case and I really did believe that in the worst case I could visit a couple places and back out in my first year. Okay, so I underestimated the life span of HCC - my bad and I own that or lost that whichever way works for you.

It's dead money no matter what happens going forward.

Applying hindsight to this is pointless. Where did you predict the Dow to be a year ago? - honestly - if you were wrong (and you ALL were) there's really not a whole lot different. The contrarians say "we are brilliant and were right that the Dow couldn't sustain the gains of the past few years", the optomists say "yes, but you're going to miss the bottom of the market so we will win in the end" - it's all just noise.

Debating the cost per night calculations - you know what, everyone is of a different economic reality. $390/night is a drop in the bucket compared to many high end places - in fact you don't get in the door although it's possible that you might find a studio/garbage bin view room at that rate. But again it really doesn't matter does it? It's whatever the individual wants to spend, whereever they place value and how you decide to travel or spend your $'s isn't relevant, both are right because it's a personal decision.

Everyone that joined is an adult capable of making their own decisions, assessing risk/reward trade offs and writing a cheque. This also will have little, if any, impact on me. I don't like losing money no matter the quantum but come on - I'm not buying into something like this with anything other than discretionary dollars.

Will I consider a DC again - NFW! I'm done with TS as well - low value, one-step above a hotel room stuff (no Mary-otts in my future). The only TS's I'm going to look at going forward are Aviara (if I can remember how to spell it), Troon North and Westin St. John - I haven't found anything else close to what my expectations are.

Frankly, I'm going back to what I know - beachfront, luxury condos that are off shore. Worst case in that scenario is that I have to buy more sunscreen and find someone to bring me ice for my bucket of beer.

 

[caribbeansun]

Some have been doing this all along. I personally rejected one that was doing it because it was taking away from availability to the members.

It may be a good time to find out if HCC and other Destination Clubs will now rent to non-members. My guess is that the rate will be less than the maintennace fees and owners should gladly take it. No reason why unbooked member days should go unused when money can be acquired to offset maintenance fees.

 

[PerryM]

You bought what?

VRBO.com is the logical next step for displaced DC members. They have 110,000 vacation rental homes/condos that easily match HCC villas and probably some of the $300k+ DCs.

Something comparable to a DC could probably be built from those owners if they wanted.

There probably are chat rooms that have VRBO experts who can help folks get into the DC like units that timeshares can’t address.

No up front cash to worry about.

Of course the key question is: What will replace DCs as the hot new gimmick to get involved with?

I still like the DC idea and as the DC universe unravels maybe one of the guys in the industry will put together a real DC that is 100% equity based and is 100% transparent and is a co-op where the investors get to reap the rewards and the management company gets paid to manage the thing.

It will have to be called something else since DC’s are about to join Timeshares in the list of phrases that make folks point at you, smile, and say “You bought what?”

 

[Steamboat Bill]

I agree that vrbo adn other sites like them are a great (but not perfect) alternative as many times the pics and descriptions are lacking and/or deceiving. Even tripadvisor ratings and reviews get "gamed" by a few people.

There are only a few equity DCs such as Equity Estates and A&K RC.

Even if HCC go bankrupt, I still don't think it is fair to condem the entire DC industry as there are still over 6,000 members out there.

On the other hand, it is clear the DC industry could use some regulation to make sure they are selling a product that can be honored and delivered. This is one area that Perry (and ARDA) has been calling attention to and the DCA obviously has no teeth.

One thing to think about is that "rich people" are the ones joining DCs and HCC was a "value" club that competed more with high end timeshares than any other DC out there. HCC had the cheapest membership fees and annual dues of any club, by far. As funny as this seems, many of the other DCs never considered HCC to be a real player or competition for them. Unfortunately, if they go bust, it will have a negative effect on every club.

A few other factors, that were unknown to me, was HCC was putting the minimal down (20%), taking unfavorable mortgages, too many leased homes, too many unclear partnership homes, and started to fragment the market with 1 week membership plans, and needed new members to survive.

Did I have my head in the "Maui" sand on anything? Possibly as I brought up a topic of charging a premium for premium homes that was met with resistance. I also advocated a "points based" reservation system that was very unpopular and I wanted to put restrictions on the 1 week members. I thought I was trying to help the club and had no idea that the foundation was so shaky.

With an average cost of $200-300k or so to join a DC like ER, Quintess, LUSSO, UE and annual dues that are $500-1000 per night, it is pretty clear that these clubs have a ton of money. If they have been responsible with investing and minimizing debit, then the clubs will thrive. Hopefully the other clubs will learn from T&H and HCC mistakes and quickly modify their clubs to avoid the same fate.

I am sadden to witness the turn of events for HCC and hope they can pull off a miracle, but the clock is running out and they need a hail mary pass.

 

[PerryM]

Greed doomed the DC market from the start....

When the DC market finally dies, and I can’t even guess when that will be, folks will look back and use 20/20 hindsight and many, especially the drive-by media, will ask “Wasn’t it obvious to everyone?”.

DCs are a great idea but the folks who started them were just to greedy – they went way too far in screwing the consumer in every way possible:

1) They should have been 100% equity based – a few were, they should have ALL been

2) They should have banned together to promote an industry association that would aggressively advertise against DCs who did not join – self policing

3) A major CPA firm should have blessed every possible aspect of the operation of the DCs

4) Investors should have pledged iron clad agreements and stake their fortune on the operation of the DC

5) 100% points oriented in every aspect of the operation and free market rental rates determine what a villa was worth for reservation purposes

6) Yearly independent real estate appraisals

7) Price of memberships are directly tied to these appraisals and thus can increase OR decrease over time

8) Memberships can be sold on eBay but the DC industry had a ROFR and could buy each other’s memberships if need be to shore up a poorly run DC and thus not have one DC sink the entire industry

Well that’s just 5 minutes of typing – I’m sure I missed some points and will add them as I think of them.

But NOOOOOOOOO! Our DC founders found greed far too much of a driving force to worry about the members – and that’s what the DC market will be remembered for – greed.

 

[tombo]

There are only a few equity DCs such as Equity Estates and A&K RC./QUOTE

Since there are only a few of these operating I guess one should throw their money away on the many non-equity money pits.

Even if HCC go bankrupt, I still don't think it is fair to condem the entire DC industry as there are still over 6,000 members out there. .

They are all at great risk to fold and as such deserve to be condemned, avoided, and exposed for what they are, a get rich scheme for the owners which is diastrous for the paying members. Several hundred unsatisfied customers so far with 6000 or more left to lose their investments in the future.

On the other hand, it is clear the DC industry could use some regulation..

You reckon? When did this become apparent? Many of us have said this for years. It is good that you are starting to agree that the owner's benevolence and business skills aren't enough.

A few other factors, that were unknown to me, was HCC was putting the minimal down (20%), taking unfavorable mortgages, too many leased homes, too many unclear partnership homes, and started to fragment the market with 1 week membership plans, and needed new members to survive..

Everything is unclear to members because DC's don't have to disclose any information they don't want to. This is why any you invest in could be fine or about to file bankruptcy. No transparency, no way I would invest in their get rich schemes.

Did I have my head in the "Maui" sand on anything?.

Yes on about everything, and it is apparently still in the sand. You are one of the few that still feels like non equity DC's are a good investment. Please feel free to join all of the exisiting DC's to keep the failing DC industry going, but how can you (with good conscience) possibly still tell people here that there is any reason to join any non equity DC in this environment?

With an average cost of $200-300k or so to join a DC like ER, Quintess, LUSSO, UE and annual dues that are $500-1000 per night, it is pretty clear that these clubs have a ton of money. If they have been responsible with investing and minimizing debit, then the clubs will thrive. Hopefully the other clubs will learn from T&H and HCC mistakes and quickly modify their clubs to avoid the same fate..

Bigger investments simply will translate into bigger losses for members when they fold. Having a lot of income does not guarantee that the clubs have a lot of money, only that those owners have large salaries. Keep trying to convince people that they need to join a DC and you are going to make some very bitter enemies when another one of these "scams" fold.

I am sadden to witness the turn of events for HCC and hope they can pull off a miracle, but the clock is running out and they need a hail mary pass.

I hope that there is not another HCC member trusting enough to put another penny in HCC. Surely it is obvious that it is over and would be a total waste of money. How many times are you going to believe the rhetoric of how everything is going to be OK at HCC when you have so many facts to prove otherwise. If you read these threads and spend another penny on HCC or joining another DC, you do so with the knowledge that you are making a very expensive mistake!

 

[PerryM]

Bill is not the enemy here.....

I know and like Bill – let’s not lump a member of a DC whose one and only responsibility was to buy a membership, pay the dues, and use that membership to his benefit.

We’re all grownups here and “Due Diligence” is a theme that runs throughout TUG – I know for a fact Bill did his due diligence and HCC made a lot of sense to him – I believe Bill has already gotten more out of HCC than he put in. (If you look at the rental rates he would have had to pay to stay at the same exact villas).

Bill is the kind of guy who shares his experiences and that’s what he did – his adventure into the world of DCs – I for one, can’t fault Bill for simply sharing his experiences with us and I distinctly remember him warning that DCs aren’t for everyone.

I think an examination of the DC market is worthy of discussion and to those stuck in this horrible mess I, for one, can only throw in my 3¢ worth and secretly say to myself (Wow, I almost stepped into that one).

 

[caribbeansun]

My own perspective:

I reviewed the Equity Estates model and I found it scarier than HCC and had serious questions around many things to do with the club. A&K's buy in was way too many $'s for something I wasn't convinced of.

The DCA is pointless, their bogus net asset test is pointless (I did know this going in BTW)

The DC industry will have a difficult time surviving a 3rd failed club, particularly one with this many members. I don't think this is the last club to go under but that's just my own prediction which is tainted by what's happened. I think the HCC failure will make it very difficult for any new entrant to be possible.

I wouldn't assume that any DC is flush with cash.

There are only a few equity DCs such as Equity Estates and A&K RC.

Even if HCC go bankrupt, I still don't think it is fair to condem the entire DC industry as there are still over 6,000 members out there.

On the other hand, it is clear the DC industry could use some regulation to make sure they are selling a product that can be honored and delivered. This is one area that Perry (and ARDA) has been calling attention to and the DCA obviously has no teeth.

One thing to think about is that "rich people" are the ones joining DCs and HCC was a "value" club that competed more with high end timeshares than any other DC out there. HCC had the cheapest membership fees and annual dues of any club, by far. As funny as this seems, many of the other DCs never considered HCC to be a real player or competition for them. Unfortunately, if they go bust, it will have a negative effect on every club.

A few other factors, that were unknown to me, was HCC was putting the minimal down (20%), taking unfavorable mortgages, too many leased homes, too many unclear partnership homes, and started to fragment the market with 1 week membership plans, and needed new members to survive.

Did I have my head in the "Maui" sand on anything? Possibly as I brought up a topic of charging a premium for premium homes that was met with resistance. I also advocated a "points based" reservation system that was very unpopular and I wanted to put restrictions on the 1 week members. I thought I was trying to help the club and had no idea that the foundation was so shaky.

With an average cost of $200-300k or so to join a DC like ER, Quintess, LUSSO, UE and annual dues that are $500-1000 per night, it is pretty clear that these clubs have a ton of money. If they have been responsible with investing and minimizing debit, then the clubs will thrive. Hopefully the other clubs will learn from T&H and HCC mistakes and quickly modify their clubs to avoid the same fate.

I am sadden to witness the turn of events for HCC and hope they can pull off a miracle, but the clock is running out and they need a hail mary pass.

 

[pwrshift]

Writing off membership fees?

I think someone posted this question elsewhere but not answered...is there any way the membership fees and dues of a DC can be written off against other income? I suspect not as it's like joining a golf club, but perhaps there are other roads.