HRC to acquire Welk Resorts [MERGED]

[nuwermj]

Ownership in the points system is a "beneficial interest" (a share) in a trust fund. The trust fund owns deeds to resorts and point owner have rights to use those deeds according to some system of rules.

The Welk point system and the legacy deeds are completely separated. Owners in one group have no access to inventory in the other group. Only San Diego and Palm Springs has individual deeds. For the other locations, 100% are in the trust fund. (San Diego is three HOAs, Two have deeds, the third does not.)

Recently Welk has purchased inventory at some locations that they don't manage or own the developer rights for. These deeds are also in the trust fund.

@nuwermj @Shankilicious

I'd like to understand what is owned when you own Welk points. Are you sold a deed that has points attached? Or is it all in a points trust? Does Welk have the right to adjust point valuations?

Most "legacy" Hyatt owners own a fixed unit, fixed week that has a points value associated with it. Hyatt reserves the right to adjust point values for those weeks (which is a little bit scary, but when they adjusted the vast majority of people got more points, with a few that lost).

When Hyatt created the new system (HPP), they didn't allow owners (even developer purchased owners) to opt into the points program. You had to purchase a minimum number of points at a crazy price ($13000 was thrown at as the minimum, some have gotten in as low as 10K). The value proposition really isn't there for existing owners to opt into the program.

To make their points program more palatable for sale, HPP owners have the ability to book units within the "legacy" system at 6 months. Because they can't just rob inventory from the "legacy system", legacy owners can also book HPP units at 6 months out. I have booked a few HPP reservations (6 nights without a Saturday is a sweet spot). Since the buy in is so high to get into the HPP product, there has been a limited number of owners in the new system and so we really haven't seen a decrease in availability.

I don't think a whole lot changes for anyone for 12-18 months.

I think the unsold point allocations (Breckenridge for sure), will get sold as HPP.

I don't see a reason from Hyatt's perspective to allow existing Welk Owners to book into Hyatt without buying into it (the inventory in Welk just isn't that appealing outside of the ski properties to most Hyatt owners).

Does Welk have RoFR on sales? If so, Hyatt could RoFR points contracts and take point allotments from the more desirable properties to be sold as points in HPP.

Most Welk listings I see on eBay go for nothing, so that is a really cheap way for Hyatt to build up decent inventory in their points product.

 

[Tenga]

The press release speaks of the buyout by "HRC". The term "HRC" is quite broad as it includes the legacy HRC AND the HPP points program. As I recall Hyatt has said there would be no more HRC resorts and any new additions would go into HPP. Given the Welk split of 75% points owners and 25% weeks owners, you have to think thru the concept of bringing new owners who don't have a weeks units into the HRC system. Those owners would fit well into the HPP program. However, the fundamental concept of HPP is to deposit a week into that system. If an owner does not deposit a week, they decrease the availability of HPP reservations to those members.

Then you have to think thru giving the Welk points owners full participation into HPP without paying a huge ransom to be a a member in that system. If they stay in the HRC program, they would be able to access weeks units WITHOUT depositing a week unit available to existing HRC owners. That would be a huge hit on HRC availability.

My guess there will be a split of the Welk owners - the 25% weeks owners would go into HRC and the 75% points owners would go into HPP. Then will Hyatt as always charge the new Welk owners $13,000 to play in the HPP scam?

I can't see any positives for either the HRC or HPP owners. The Welk weeks owners could be the only people who are winners.

The Welk owner would use point to get the week and that would make inventory in the Welk system available to HRC owners. Access in both directions must always work on an exchange basis. Could you please elaborate as to why there would be huge hit on HRC?

I'll surmise it in three words, HRC in its bylaws "SEPARATE INVENTORY POOLS" Welk point members like HPP members left standing at the door waiting to get in the 16 existing Hyatt clubs! The building's exists, but the inventory is not there!
Tenga

 

[heathpack]

To those who want to understand how HPP works, @alameda94501 wrote a series of very informative and detailed posts in this forum. Search here for those details.

The bottom line is Hyatt never really rolled this out to legacy owners. One day there was a HPP system and some legalese documents posted on the website but it was very hard to figure out what happened. After a long time in this state (6-8 months?), more details started to appear on the website. Still there was no comprehensive explanation of it provided to owners. Sales pitches (I attended one) gave info but it was very skewed and incomplete and full of half truths.

@alameda actually started the purchase process and read all the documents provided with that. Once all the info was available, HPP was clearly a "no buy" and that purchase was rescinded. But all the details were posted her in this forum. Its the magnum opus of what you need to know abour HPP.

 

[travelhacker]

Ownership in the points system is a "beneficial interest" (a share) in a trust fund. The trust fund owns deeds to resorts and point owner have rights to use those deeds according to some system of rules.

The Welk point system and the legacy deeds are completely separated. Owners in one group have no access to inventory in the other group. Only San Diego and Palm Springs has individual deeds. For the other locations, 100% are in the trust fund. (San Diego is three HOAs, Two have deeds, the third does not.)

Recently Welk has purchased inventory at some locations that they don't manage or own the developer rights for. These deeds are also in the trust fund.

How does inventory from the "Experiences" collection get populated for Welk owners to book?

Is that just from weeks that welk owns that get put into the pool? Did Welk buy DVC points?

 

[RunCat]

@nuwermj @Shankilicious

I'd like to understand what is owned when you own Welk points. Are you sold a deed that has points attached? Or is it all in a points trust? Does Welk have the right to adjust point valuations?

Most "legacy" Hyatt owners own a fixed unit, fixed week that has a points value associated with it. Hyatt reserves the right to adjust point values for those weeks (which is a little bit scary, but when they adjusted the vast majority of people got more points, with a few that lost).

When Hyatt created the new system (HPP), they didn't allow owners (even developer purchased owners) to opt into the points program. You had to purchase a minimum number of points at a crazy price ($13000 was thrown at as the minimum, some have gotten in as low as 10K). The value proposition really isn't there for existing owners to opt into the program.

To make their points program more palatable for sale, HPP owners have the ability to book units within the "legacy" system at 6 months. Because they can't just rob inventory from the "legacy system", legacy owners can also book HPP units at 6 months out. I have booked a few HPP reservations (6 nights without a Saturday is a sweet spot). Since the buy in is so high to get into the HPP product, there has been a limited number of owners in the new system and so we really haven't seen a decrease in availability.

I don't think a whole lot changes for anyone for 12-18 months.

I think the unsold point allocations (Breckenridge for sure), will get sold as HPP.

I don't see a reason from Hyatt's perspective to allow existing Welk Owners to book into Hyatt without buying into it (the inventory in Welk just isn't that appealing outside of the ski properties to most Hyatt owners).

Does Welk have RoFR on sales? If so, Hyatt could RoFR points contracts and take point allotments from the more desirable properties to be sold as points in HPP.

Most Welk listings I see on eBay go for nothing, so that is a really cheap way for Hyatt to build up decent inventory in their points product.

My understanding that all Welk points are in a trust. Thus you are not buying into any one location. All owners have equal access to the inventory; albeit a small % of that inventory is set aside for owners to make reservations prior to the general 15 month open reservation period. I think a similar transaction took place when Welk moved from weeks to points; we owned a week in a location and had to convert to points (and pay) in order to take advantage of the additional locations. Welk has only sold points for many years now.
re: points adjustments - not sure if they could legally dilute an owner's proportional ownership; I think that would have the net effect of overselling the resort system. They could, I suppose, adjust the value of specific resorts provided the total value remains static.
Now if I was to hypothesize about things going forward. . . . the Welk points system will be adopted by the HPP with a conversion factor. I also suspect, in order to "entice" legacy owners to convert to points, that the legacy owners may have very limited access to the "new" Welk Resorts.
Honestly, based on what I am reading, it sounds like the systems are quite similar albeit Welk has been in the points game much longer.

 

[Shankilicious]

How does inventory from the "Experiences" collection get populated for Welk owners to book?

Is that just from weeks that welk owns that get put into the pool? Did Welk buy DVC points?

Welk bought intervals at those resorts and we have access via call in booking.

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[travelhacker]

Welk bought intervals at those resorts and we have access via call in booking.

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This is fascinating.

So I'm not saying this is what will happen. Theoretically, Welk could buy inventory at some of those timeshares for nothing, move it into the trust and move out more desirable properties to a different trust.

Marriott can theoretically do this with their Trust points, but the trust so far only holds deeds on properties that they manage.

 

[heathpack]

Here's the first of Alameda's posts: https://tugbbs.com/forums/threads/h...ction-how-the-hpc-affects-hrc-members.294333/

 

[nuwermj]

Did Welk buy DVC points?

No. The trust fund does not own any DVC assets. Disney is handled as an internal exchange between the two companies. I suspect going forward the DVC options well go away.

The Welk Public Offering is posted here. It includes all the inventory owned by the trust fund.
https://welkresorts-prod.azureedge.net/sites/default/files/2020-02/public-report.pdf

 

[Kal]

The Welk owner would use point to get the week and that would make inventory in the Welk system available to HRC owners. Access in both directions must always work on an exchange basis. Could you please elaborate as to why there would be huge hit on HRC?

The would be a HUGE hit on HRC if the Welk owners used their points to book an HRC unit without depositing a Welk unit into the HRC system. The "Welk Points" would be of no value to an HRC owner as their "currency" is in available Welk units to book.

 

[Kal]

If the new Welk owners think they are getting a "free lunch" from Hyatt in getting unhindered access to the full set of Hyatt resorts, don't hold your breath. Hyatt is in the money business where every transaction benefits Hyatt. In the end game, be prepared to pay bucks, in some cases $13,000. Furthermore, if a Welk resort only has weeks owners, that's a stand alone entity where maintenance fees are predictable. If a Welk resort has a combination of weeks owners and points owners, that situation is in for a shock as it doesn't fit the Hyatt system. Shock = BUCKS.

 

[RunCat]

If the new Welk owners think they are getting a "free lunch" from Hyatt in getting unhindered access to the full set of Hyatt resorts, don't hold your breath. Hyatt is in the money business where every transaction benefits Hyatt. In the end game, be prepared to pay bucks, in some cases $13,000. Furthermore, if a Welk resort only has weeks owners, that's a stand alone entity where maintenance fees are predictable. If a Welk resort has a combination of weeks owners and points owners, that situation is in for a shock as it doesn't fit the Hyatt system. Shock = BUCKS.

Not sure if the situation is any different from every other time share company. So, initially both systems may work independently. But eventually the two systems will need to find a way to work together and the points merged. Now, due to the unsold inventory that Welk owns, that may be pushed into the HPP system to encourage HRC owners to convert. Another possibility is that the HPP and Welk Resort points combine and normalize their point values and allow cross use per the HPP model. More likely, they keep the systems separate and all owners need to pay to take advantage of each others resorts. $$$$$$ Re Welk Weeks: less than 25% own weeks.

 

[Kal]

Not sure if the situation is any different from every other time share company. So, initially both systems may work independently. But eventually the two systems will need to find a way to work together and the points merged. Now, due to the unsold inventory that Welk owns, that may be pushed into the HPP system to encourage HRC owners to convert. Another possibility is that the HPP and Welk Resort points combine and normalize their point values and allow cross use per the HPP model. More likely, they keep the systems separate and all owners need to pay to take advantage of each others resorts. $$$$$$ Re Welk Weeks: less than 25% own weeks.

That makes good sense. The game plan might be to maintain Welk as a separate entity where the weeks owners can play in the HRC game and the points owners can buy into the HPP program. That buy-in may have a small discount but would hover around $13,000 to play that game. Hyatt would take the unsold Welk inventory and use it as HPP bait just like they did with the unsold HRC inventory. Without having access to the Welk weeks would leave those owners with limited options.

A new opportunity to make more HPP sausage.

 

[travelhacker]

That makes good sense. The game plan might be to maintain Welk as a separate entity where the weeks owners can play in the HRC game and the points owners can buy into the HPP program. That buy-in may have a small discount but would hover around $13,000 to play that game. Hyatt would take the unsold Welk inventory and use it as HPP bait just like they did with the unsold HRC inventory. Without having access to the Welk weeks would leave those owners with limited options.

A new opportunity to make more HPP sausage.

I think this is close, but I don't think they will let Welk weeks owners (or anyone but HPP owners) play in the other system without a purchase.

My guess is that they treat them as separate systems and you need to buy HPP to play in both (the handful of existing HPP owners would be grandfathered in). They could figure out an exchange system, but why would they do that when they can make more money off of interval trades?

My guess is that when people "upgrade" or "convert" their old welk points to HPP that they move inventory from the Welk Trust to the HPP trust. I am guessing they start with the best stuff first. I mean if you wanted to sell stuff to new owners, wouldn't you want to start with Northstar or One Village Place, rather than Branson?

Since owners in Welk don't own at a particular resort they can cherry pick the best inventory.

Obviously, it would take some time for that to have an impact on either system.

 

[Sugarcubesea]

My understanding that all Welk points are in a trust. Thus you are not buying into any one location. All owners have equal access to the inventory; albeit a small % of that inventory is set aside for owners to make reservations prior to the general 15 month open reservation period. I think a similar transaction took place when Welk moved from weeks to points; we owned a week in a location and had to convert to points (and pay) in order to take advantage of the additional locations. Welk has only sold points for many years now.
re: points adjustments - not sure if they could legally dilute an owner's proportional ownership; I think that would have the net effect of overselling the resort system. They could, I suppose, adjust the value of specific resorts provided the total value remains static.
Now if I was to hypothesize about things going forward. . . . the Welk points system will be adopted by the HPP with a conversion factor. I also suspect, in order to "entice" legacy owners to convert to points, that the legacy owners may have very limited access to the "new" Welk Resorts.
Honestly, based on what I am reading, it sounds like the systems are quite similar albeit Welk has been in the points game much longer.

Once the deal is done if Hyatt wants to have folks give up their week for points, I will pass as non of the Welk resorts are in spots I go to. I just hope Hyatt does not force me to sell my week but I don’t see how they could. However I’ve learned to never say never

 

[nuwermj]

For those who might have an interest, the attached image shows Welk's inventory in their points system.

 

[alexadeparis]

I am curious about what will eventually happen. I thought about this a lot overnight and today. MVC hasn't even merged the damn Westin and Marriott systems yet and how many F-ing years has that been, and yet they're out here buying more up. That being said, the fact that they are saying that Welks will be rebranded as Hyatt, to my mind, means that everyone will have to be equalized in some way and that the full set of both resorts will become one unified group. SO that probably means merging one points value into the other so that there is a common currency. Probably the Hyatt point structure survives the merging of HPP with the Welk points. The Legacy Hyatt owners will be able to book just as we do now with separate buckets of HPP inventory - at 6 months out - and the Welk points owners can book HPP inventory like an HPP member could. Which means the Welk resorts for practical purposes wouldn't be bookable until 6 months out, and therefore of limited use value to me. Whatever does happen, given their track record, the eventual resolution is years away.

 

[nuwermj]

I am curious about what will eventually happen. I thought about this a lot overnight and today. MVC hasn't even merged the damn Westin and Marriott systems yet and how many F-ing years has that been, and yet they're out here buying more up.

According to Marriott's call with investors, they were not looking for an acquisition. Welk signaled they were looking for a sale. A number of parties were interested. Marriott thought it was an opportunity too good to pass. They said the Hyatt license agreement includes growth and development requirements which this acquisition will fulfill. Also there are not many higher quality systems out there. So they felt they had to take the opportunity as it presented itself.

That being said, the fact that they are saying that Welks will be rebranded as Hyatt, to my mind, means that everyone will have to be equalized in some way and that the full set of both resorts will become one unified group. SO that probably means merging one points value into the other so that there is a common currency. Probably the Hyatt point structure survives the merging of HPP with the Welk points. The Legacy Hyatt owners will be able to book just as we do now with separate buckets of HPP inventory - at 6 months out - and the Welk points owners can book HPP inventory like an HPP member could. Which means the Welk resorts for practical purposes wouldn't be bookable until 6 months out, and therefore of limited use value to me. Whatever does happen, given their track record, the eventual resolution is years away.

The investor's call spoke as if there will be one system in the future. They estimated 2023. Diamond Resorts has made many acquisition, and they have at least five models for how to integrate clubs. Much depends on the by-laws of the trust funds.

 

[dioxide45]

It seems that HPP runs more like the Westin/Sheraton Flex products do more so than how Marriott handles DC. Westin/Sheraton Flex owners can only book weeks inventory inside of 8 months. Weeks owners with StarOptions can only book Westin/Sheraton Flex inventory inside of 8 months. That is if Vistana makes the inventory available. However, with HPP it doesn't sound like there is any cross over between weeks (HRC) based points and HPP.

Hyatt is likely to create an exchange company that will allow HPP and Welk Platinum Points (WPP) to trade between each other. This is kind of like the Marriott DC exchange company (not the trust). There may be multiple ways to get into this exchange company. Perhaps simply owning HPP or WPP, either now or in the future. Perhaps some kind of enrollment fee, available to everyone, even HRC weeks owners. Perhaps require the purchase of additional HPP or WPP in the future. It would be very difficult to merge the two trust together. I think that is what is causing a lot of issues with Marriott trying to integrate Vistana into the Marriott program. Vistana has trusts out the wazoo (Westin Flex, Sheraton Flex, two Nanea trust, multiple trusts at WSJ). Then there is also Westin Aventuras in Mexico. Merging or removing inventory from a trust is messy. I suspect what they would do is any new inventory they add in the future would go into HPP and there is an exchange company setup where all inventory from both trusts is dumped in and all HPP/WPP owners can access it. If there is some kind of enrollment and not everyone is automatically allowed in, then it will work more Marriott DC exchange company and they would move inventory into the exchange company when someone books between systems.

 

[TUGBrian]

another link, just in case it hasnt been posted in here (lot of posts to read)

Marriott Vacations Worldwide Announces Agreement to Acquire Welk Resorts For Approximately $430 Million

/PRNewswire/ -- Marriott Vacations Worldwide (NYSE: VAC) ("MVW" or the "Company") announced today that it has entered into a definitive agreement to acquire...

www.prnewswire.com

 

[WBP]

I'm entirely unimpressed by the Welk acquisition by Marriott Vacations Worldwide. I think Hyatt Residence Club has a mixed bag of resorts, and Welk, the same. I speculate that Welk was a "Fire Sale" acquisition by MVW, with one goal being to put pins in a map, and increase resort locations/destinations.

 

[Sapper]

Here are my two cents. The properties that Welk owns will be rebranded as Hyatt’s. The inventory in Welk‘s point system that is in other locations (Ex, Aviara, Troon, etc) is not leaving their point system in some Marriott conspiracy. It can’t because it makes up their trust inventory (which they have publicly disclosed; unlike Hyatt’s HPP, which is a murky pool of who knows what inventory). They can reassign point values, and will in order to bring it inline with the Hyatt system. That does not mean that people will get less value for their points, even if it appears as a smaller number (Ie, a two bed unit in high season may go from 240,000 points to 2200, but you are still getting a two bed unit). The small percentage of deed holders will have a point value assigned and will be able to exchange their unit week for points to be used in the system just like Hyatt deed owners. No forcing a deed owner to sell (though I can see a stronger push to “upgrade” to all points at the sales meetings for both Welk and Hyatt deed holders), if you want to use your deeded unit, it’s yours. Timeline is probably dependent on Marriotts end goal for the Hyatt system. If they want to spin it off (IPO or sell to another company) it will be faster, if they want to be parasitic leaches slower. Either way, speculating two to four years from close of the deal. Cost to owners? Lets be clear, Marriott does not part with a red cent unless they can generate revenue for their share holders. What ever scheme they come up with, expect it to be driven by revenue maximization. If their end goal is to spin Hyatt off, they will merge the systems quickly and make it free to owners to participate. If their goal is to hang on to the Hyatt system, expect it to be expensive.

 

[Kal]

I can see the new announcement from Hyatt: "Great announcement - We have added some NEW shiny resorts to our collection. BRANSON and a few others!! Now you will have another highly cherished resort to visit" And with each visit we will give you FREE, two tickets on the Tilt-O-Whirl where you can see the pixie-dust spreader.

 

[Shankilicious]

It seems that HPP runs more like the Westin/Sheraton Flex products do more so than how Marriott handles DC. Westin/Sheraton Flex owners can only book weeks inventory inside of 8 months. Weeks owners with StarOptions can only book Westin/Sheraton Flex inventory inside of 8 months. That is if Vistana makes the inventory available. However, with HPP it doesn't sound like there is any cross over between weeks (HRC) based points and HPP.

Hyatt is likely to create an exchange company that will allow HPP and Welk Platinum Points (WPP) to trade between each other. This is kind of like the Marriott DC exchange company (not the trust). There may be multiple ways to get into this exchange company. Perhaps simply owning HPP or WPP, either now or in the future. Perhaps some kind of enrollment fee, available to everyone, even HRC weeks owners. Perhaps require the purchase of additional HPP or WPP in the future. It would be very difficult to merge the two trust together. I think that is what is causing a lot of issues with Marriott trying to integrate Vistana into the Marriott program. Vistana has trusts out the wazoo (Westin Flex, Sheraton Flex, two Nanea trust, multiple trusts at WSJ). Then there is also Westin Aventuras in Mexico. Merging or removing inventory from a trust is messy. I suspect what they would do is any new inventory they add in the future would go into HPP and there is an exchange company setup where all inventory from both trusts is dumped in and all HPP/WPP owners can access it. If there is some kind of enrollment and not everyone is automatically allowed in, then it will work more Marriott DC exchange company and they would move inventory into the exchange company when someone books between systems.

I can see the new announcement from Hyatt: "Great announcement - We have added some NEW shiny resorts to our collection. BRANSON and a few others!! Now you will have another highly cherished resort to visit" And with each visit we will give you FREE, two tickets on the Tilt-O-Whirl where you can see the pixie-dust spreader.

How badly did Hyatt hurt you?

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[GTLINZ]

How badly did Hyatt hurt you?

What happened to your sense of humor ?

The cynicism from both long time posters is quite refreshing. It has been forged from years of observation of corporate actions compared against corporate words spoken.