I worked for one of the major xchange companies...

[PerryM]

The GetReal Timeshare Ratio is now defined!

GetReal,

I like your idea! Rental rack rates can also be used to value a timeshare. If a timeshare generates $2,000 per week in rental income (Rental rack rate) what should that timeshare sell for? Kind of like the old Price to Earnings ratio of a stock. When the PE of a stock is too high it is overpriced as to it’s value generated.

Price to Rental ratios could easily be established and the lower this number the better your purchase. E.g. If a Platinum Marriott sells for $35,000 and its rack rate is $2,450 then the ratio is .07 Is this a good deal or not? The inverse of this number might make more sense i.e. the purchase price divided by the rack rate = 14.28.

That means it takes 14.28 years of renting to pay for the timeshare. The lower the number the less time to pay off the timeshare and the better the deal. For instance, financing that timeshare thru the developer at 14.99% doubles the price of the timeshare and thus this ratio would be 28.56 - it takes almost 3 decades to pay off that timeshare - a clear warning sign.

This might start owners thinking of the price of their timeshare grounded back to some reality and not the fairytales spun by the salesrep.

In your honor, I'm going to name this ratio the "GetReal" timeshare ratio.

 

[pedro47]

Sound like Change the X - change has gotten what he wanted TUGS t/s owners would like and would support another exchange company. Look at the number of hits that have read this thread over one thousands.

 

[Change the X-change]

I would like to thank everyone for all the responses and all the great Ideas and concerns that have been exposed here...this will prove to be invaluable when making my final draft of the business plan.

As promised in one of my earlier postings, I would like to keep the members involved and since I do not yet have actual members, I will compile a list of the people that have participated in this thread with ideas and/or opinions until 12PM EST today and will send them all my game plan (it'll be a couple of weeks), they will also be the first to view the website (1-2 months) and will be able provide feedback on that also.

Please continue to post your ideas and opinions...I really take them to heart. I will always be in debt with you all.

 

[geekette]

The process for reserving a unit – You reserve a unit it is then classified as reserved for 12 hours (everyone will be able to see it). The unit is then confirmed unless someone with a stronger unit wants it. The person with the strongest deposit gets the unit. If there is a tie, the earliest request is the tie breaker

No way. If it's held, no one else gets a shot, Holder has priority. It's ridiculous to be checking with family and friends and then have it yanked out from under you.

I like your brainstorming for the most part, Blue, but on this one, I strongly vote No, even if the Hold is bumped to 24 hours.

 

[boyblue]

No way. If it's held, no one else gets a shot, Holder has priority. It's ridiculous to be checking with family and friends and then have it yanked out from under you.

I like your brainstorming for the most part, Blue, but on this one, I strongly vote No, even if the Hold is bumped to 24 hours.

Yea, you’re right Geek. If a week is strong enough to reserve, it should be good enough to keep it. On this point I digress.

 

[Kola]

Re: My dream exchange company

e.g. I own 3 Silver Marriotts that each rent by Marriott on the reservation days for $125 per day. 7 * $125 = $875 * 3 units = $2,625 in my account.

I see a January week in Park City to ski for $2,000 and I make the exchange and have $625 in my account.

No mumbo-jumbo, the exchange company has experts who determine the rental rate and the person depositing the unit would be allowed to challenge the rate, for a fee ($50 in the account removed).

Perry,
A brief comment about your example:
As you know, Marriott can charge $125/day (or more) in prime season based on Marriott's quality and reputation. Their brand name supports the demand. For each Marriott in a given location there are at least ten ( or more) timeshare weeks in the II system that don't come with a similar brand name.
If you have a choice between a Marriott's and a Westgate in Orlando which one would you take ? How would you assign rental values to them ? As is well known, off-season Marriott's weeks are being offered at significantly lower exchange values to exercise some control over their surplus inventory. In fact, some high quality offseason weeks are practically given away as getaways considering their maintenance and tax fees. The present mumbo-jumbo in the system makes some owners very unhappy, while others cherish an opportunity to stay at a Marriott's resort at less than 50% of the hotel cost. Indeed. the mumbo-jumbo may be just as bad or worse under your idea of internal exchange company 'experts' determining the rental rates and the owners being permitted to challenge the verdict subject to $50 cost. Could you challenge twice if you win more than your cost ?

Kola

 

[PerryM]

Dream exchange company

Kola, great question!

In my dream exchange company the humans that work there actually do some work! They would be experts at finding rental sources and coming up with rental rates. If the resort does not rent units then comparable units must be found. This would initially take time and effort but once one reservation is deposited this rate becomes a base for future deposits.

This is no different than real estate appraisers – these folks will quickly become experts at looking at surrounding rental rates and come up with a rate that is based on reality. Heck, just look at RedWeek and MyResortNetwork and you have a great feel for what owners rent their units for now. Those rates normally reflect a 50% discount over renting from the resort. Where the resort does not rent then these numbers reflect the rental Rack Rate.

Humans make mistakes and when a person places their unit up for deposit the company replies with the rental rate and if they have some proof that the rate should be higher they could challenge the rate. They would get 1 chance and it would cost $50 (or whatever).

It’s important to understand that all of this is done BEFORE the owner accepts the offer and deposits the week in the program. Folks depositing have therefore decided that the rack rate is correct – folks not depositing have decided that the rack rate is too low and those folks can challenge the judges – 1 time for a fee.

I want to emphasize that this company does NOT have relations with 3,000 resorts like II and RCI has – you deposit your reservation and you sign a contract and acknowledge that you give this company the reservation according to their rules. This company could start up overnight.

 

[Change the X-change]

Re: Dream exchange company

I want to emphasize that this company does NOT have relations with 3,000 resorts like II and RCI has – you deposit your unit and you sign a contract and acknowledge that you give this company the reservation according to their rules. This company could start up overnight.

Relationship with the reosrts?? The one and only relationship the resorts understand is $$$$.

If I call up a resort and tell them I can send current timeshare owners (potencial buyers) to the resort, and I tell them it would cost them nothing except some space that would be given up on a contingency basis (they would take it back if not exchanged within 60 days of the check-in date), the reosrts would jump all over it. Believe me I know.

The good thing about my system is that in all actuality you don't have to deposit your week at all unless you find what you want. Period.

I know there will be questions as to how will there be any space available if I don't have any affiliated resorts and if you (the memeber) are not required to deposit unless you find what you want...I will explain this in detail in my business plan.

Please continue posting...you are all great!

 

[gmarine]

Re: Dream exchange company

Relationship with the reosrts?? The one and only relationship the resorts understand is $$$$.

If I call up a resort and tell them I can send current timeshare owners (potencial buyers) to the resort, and I tell them it would cost them nothing except some space that would be given up on a contingency basis (they would take it back if not exchanged within 60 days of the check-in date), the reosrts would jump all over it. Believe me I know.

The good thing about my system is that in all actuality you don't have to deposit your week at all unless you find what you want. Period.

I know there will be questions as to how will there be any space available if I don't have any affiliated resorts and if you (the memeber) are not required to deposit unless you find what you want...I will explain this in detail in my business plan.

Please continue posting...you are all great!

Let me see if I understand this. A former II employee with, what was it 10 years under his belt, thinks a resort is going to give him inventory to use on a contingency basis. And the resort is going to get what ? Guests? Possible buyers? Big deal, they want rental $$ and a possible buyer. That doesnt even take into account the resorts that are sold out.

The resorts will rent the units before they give them away for free only to possibly get them back 60 days before check in and likely not rent the week at that point.

Your ideas are nothing new and your experience isnt enough to impress any resorts into a relationship with you.

New exchange companies are popping up all the time. DAE, Platinum, SFX etc. Its nothing we havent heard before.

Unless you have some great ideas hidden that you havent divulged, your business plan sounds very flawed.

Should you attempt it, good luck.

 

[suzanne]

CRAIG, it is great to see you on TUG again. You have been missed. Hope all is well with you.

Suzanne

 

[PerryM]

Caveats

X,

In my theoretical company, no one need deposit their week unless they saw something that was of interest to them. However, the clock is ticking and each day has the rental rate decreased by a small amount. Also, there are ongoing searches that are time stamped and get first dibs at newly deposited reservations.

I could see another caveat, if the unit you placed up for exchange did not exchange (check-in day came and no one exchanged) it could never again be placed in the system. This would allow owners of undesirable units or units put up so late that no one could use them to do the following:

The rental rate for each reservation can be moved downwards by the owner but not upwards. The balance in their account would be adjusted downwards by that decrease and if a negative balance resulted their credit card would immediately be charged before this took place.

This allows the owner who’s reservation is foundering a reason to monitor that reservation and even voluntarily reduce the points needed to exchange in. Right now the cheap weeks are taken by the exchange companies and I suspect some expire worthless.

Oh, the exchange cost is very simple, you pay only if you make an exchange and it’s 1% (or some rate that makes sense) of the rental rate. If you find a $3,000 reservation, you pay $30. There might be a minimum charge like $25. There are no membership fees or annual dues - there are no reasons not to set up an account, shop and if you like what you see deposit your reservation at no cost.

Another caveat; if something happens to your reservation, like you forget to pay the maintenance fees you are immediately billed, on your credit card, for the rental amount. Deposit a week 52 at Maui and the rental rate is $4,000 you have a very big incentive to make sure you pay that maintenance fee and you don’t rent the reservation twice to someone else. This puts pressure on the owner to insure that everything flows smoothly.

Another benefit – you can rent any reservation for the rental amount. You are limited to the amount you have deposited in the past. So, for instance, you deposit 4 weeks worth $6,000 of rentals you can pay cash for another $6,000 anytime you wish.

Any cash that enters the system as rent is kept to rent units from other folks (outside the program) if it should be deemed necessary.

This business plan could be implemented within a year with the right resources.

I'll keep dreaming.....

P.S.
ALL historical transactions are open for inspection to all members 24/7 - they can see what units exchanged and for what rental rate - this helps when deciding if they are interested in trying the program. (Can you imagine the shock of all II and RCI members saw every single exchange!) (If you agree that this would lead to rioting in the streets, you now understand why a different approach is needed).

P.P.S.
Reviews by folks would contribute as input to the rental amount. Right now the exchange companies keep this all secret – no secrets here. If you find the resort to be not up to standards you just say so and the pressure is on the owner to reduce the rental rate if need be. However evidence, like pictures, must support any claim positive or negative. Any negative claim will be sent to the resort for their reply – this reply will be part of the review.

Basically the more the owners get involved the better the program – this is 180° opposite of what the exchange companies do now.

 

[Change the X-change]

PerryM,

You have very interesting Ideas...I find that some of them are not applicable however, many, maybe even most of them are viable.

You have sparked my interest in your Idea. Although I have a set gameplan already, I would be willing to implement your idea also as an additional option for members. After determining which program is more successful the other would be gradually faded out.

I have seen many posts stating the similarities betwwen my proposed idea and the "traditional" exchange companies...I think the main thing that sets me apart from all other companies is that I came here first, to the end user, to the direct source...I have to pat myself on the back for doing that it has proven invaluable...I must also say that the TUG community has been very open about thier ideas, this tells me that there is a very unselfish desire for a new and better alternative.

Thanks to you all,

Mike V.

 

[#1 Cowboys Fan]

I'm reading along with this thread----hmm, interesting.

Mike, do I need to go out and buy a better week SOON---or will you take my 'weak week'??

Pat

 

[boyblue]

Mike,

Is your plan going to involve only weeks trading? If you are going to include Points, can you share the outline of that plan with us?

 

[fnewman]

I've scanned the posts quickly, but see a couple of issues.

RACK RATES: The so called 'rack rates' are so arbitrary and ficticious that they really don't represent realy value, IMHO. If they were to be the basis of exchange, I can see them getting even more unrealistic. If you really want a TUG - friendly value system, come up with a system of points based on TUG member feedback and evaluation.

POINTS : To gain broad acceptance, the system must allow for points as well as weeks on a basis that is fair to all. Otherwise people who own 3 and 4BR weeks will never be able to trade to 1BR when desired.

 

[PerryM]

Starting small

Frank,

Marriotts would be the first folks to introduce this concept. Every Marriott has a rack rate that is real – you pay that rate unless there are more than 1 and then you can get certain discounts. That rack rate is reality.

FairField is another huge developer that has realistic rack rates – they would be next. Disney is in the same boat – realistic rack rates. This would be enough to start this going without much of a staff – simply use the internet to get these rates.

I agree that the smaller resorts require more work and I have no doubts that a rack rate can be found for each week at any resort. The owner must agree to the rack rate before they deposit.

I see no reason why everything on VRBO can’t be immediately incorporated into this plan – they would have to supply proof of past rentals. Why limit this to just timeshares when realistic rental rates are involved? Timeshares, private condos, private homes, etc - anything with a verifiable rental rate can be incorporated.

I don’t see any reason why everything on RedWeek, MyResortNetwork, and VRBO can’t be integrated with no problems at all - it will take time and work.

 

[T_R_Oglodyte]

VRI also has real rack rates for the resorts it manages.

edited to add: So does Raintree Vacation Club (including Club Regina and Whiski Jack).

 

[geekette]

The problem with points

is in the execution.

Seems to me it will be way more work to get those 3 and 4 day reservations correctly filed with the resorts that will even consider it. That might kill the 100% electronic. Mark, is this something you are considering and do you have a way around it?

 

[Change the X-change]

I'm reading along with this thread----hmm, interesting.

Mike, do I need to go out and buy a better week SOON---or will you take my 'weak week'??

Pat

Kepp your week, It'll probably do fine.

 

[Change the X-change]

Kepp your week, It'll probably do fine.

I should start using spell check I meant keep.

 

[Change the X-change]

Mike,

Is your plan going to involve only weeks trading? If you are going to include Points, can you share the outline of that plan with us?

I knew TUG would be a good starting point, never did I think it would be as great as it has.

After reading all the posts I went back and drafted something new and bigger and better. My original game plan is pretty much already set so, changing it now would probably detrimental to my entire structure however, I have decided to implement many of the ideas here exposed.

My project will have three phases:

1. - The initial phase will be as planned, straight week exchanges
2. - Second phase will introduce a points system based on members input and reviews
3, - Third and last phase, rack value of the weeks.

Details of phase one will be available soon. I estimate it will take aprox. 2 years for all phases to be complete. With phase one launching in aprox. 3 – 6 months.

Again, I can’t thank you enough for the ideas.

 

[Change the X-change]

Re: The problem with points

is in the execution.

Seems to me it will be way more work to get those 3 and 4 day reservations correctly filed with the resorts that will even consider it. That might kill the 100% electronic. Mark, is this something you are considering and do you have a way around it?

I am considering points, please see my previous post...I am sure just like everything else it has a work around...I'm sure I'll find it!

 

[PerryM]

Stick with 7-day reservations with timeshares

I think RCI made a huge mistake getting into the less than 7-day reservation – a timeshare is for 7 days a hotel is for less. RCI is renting out 7-day timeshares in a hotel universe of 3-day stays – the reason they must cut their rental rates in half – they picked the wrong market to rent to.

Even our WM resorts require a minimum of 7 days in Red season.

Private residences, on the other hand can rent out any number of days they wish. Look at www.VRBO.com and they have 56,500 vacation homes and condos for rent all over the world. Multiply that by 52 weeks and that one site contains 3 million reservations! Normally they do have minimum stays during the holiday seasons.

All of those folks should be incorporated into an exchange program.

 

[Change the X-change]

Change,

I currently get AC's for two of my weeks, which I really appreciate, considering my weeks are not Five Star, but are high demand times. Would you have an equivalent to this? I love the bonus weeks and we use them every year. We own less weeks because of those bonuses.

I would love to see a new company that would rival RCI and Interval. Having owned timeshare for 25 years, we have gotten very comfortable with our current situation. But I would try it, as long as you can get me to Disneyworld!

LOL! Thanks for stating you would try it out...you won't be dissapointed.

Bonus weeks will be based on high demand areas during high demand times regardless of quality.

 

[Change the X-change]

Re: Stick with 7-day reservations with timeshares

I think RCI made a huge mistake getting into the less than 7-day reservation – a timeshare is for 7 days a hotel is for less. RCI is renting out 7-day timeshares in a hotel universe of 3-day stays – the reason they must cut their rental rates in half – they picked the wrong market to rent to.
.

7 day rentals only...that is the way to go I fully agree.

They did pick the wrong market, you are right. It was done backwards. You bring rental properties to TS owners not TS properties to renters.