If you could ask a question of a Timeshare Executive, what would that question be?

[Patri]

I listened to it as well, while working on a jigsaw puzzle. Nice conversation. The offer was that TUG could join ARDA? You couldn’t before? And that they would refer people to us. That is great.

 

[dioxide45]

I listened to it as well, while working on a jigsaw puzzle. Nice conversation. The offer was that TUG could join ARDA? You couldn’t before? And that they would refer people to us. That is great.

I haven't listened yet, but I recall that TUG was a member of ARDA many years ago and dropped out.

 

[TUGBrian]

TUG has never been a full ARDA member . My father was given complimentary press admission to ARDA world conferences for many years and that was extended to me after I took over for a year or two, however after I was personally banned from attending the resale forum at one event by a previous ARDA chairman, I have never returned.

im sure that thread still exists somewhere on here as i reported what was happening in real time...but it has been many MANY years.


ha, had to really dig to find that...2010!

TUG banned from ARDA resale discussion forum in Vegas: overturned!

So, the entire reason I came out here was to attend the discussion forum session about the resale market. This discussion is specifically to discuss arda's new "model resale act" they are presenting to the lawmakers as a guideline to enact and enforce new laws regarding timeshare resellers...

tugbbs.com

 

[dioxide45]

Breathing life back into this topic to provide the results to the TUG community and the Industry!

I spoke with Jason prior to making this post when we discussed doing a joint interview together! We decided to kick this off with an initial video to cover a few of the most common questions here and even covering those alone pushed this interview out to 90 minutes!

We both had a fantastic time and hope to make this a series where two people who took VERY different paths in the Timeshare industry 20 some odd years ago now are able to come together to give everyone in the industry a different perspective on these polarizing questions! We hope everyone that watches it enjoys this unique interview and PLEASE feel free to provide feedback in the comments to help us improve the series going forward!

PS. also be sure to watch till the end when Jason extends a very surprise offer to TUG!

I'm just getting around to watching. What did you use for the embedded on screen subtitles? Did you use CapCut or something else?

 

[TUGBrian]

part of the latest version of camtasia called dynamic captions.

interface is somewhat clunky as its such a small section of text within the editor itself but it works fairly well for it being a free feature! they sell a much slicker/easier version for editing pauses/caption spelling called audiate and im guessing they prefer you buy that vs use the built in editor.

 

[kupool]

What is the 1 yr+ churn? If developer sales were to stop how long would cash reserves and MF support the business? In the spirit of transparency, would you support legislation that would require all TS developer sales to include buy back process and amount or % of original sales price. Do you see a connection between the owner experience and the resale value of the TS? If so, what is it? If not, why not? Would you support legislation that would include felony criminal fraud charges for sales persons misrepresenting your resort (note: similar legislation exist for real estate and banking/lending)?

 

[dioxide45]

What is the 1 yr+ churn? If developer sales were to stop how long would cash reserves and MF support the business? In the spirit of transparency, would you support legislation that would require all TS developer sales to include buy back process and amount or % of original sales price. Do you see a connection between the owner experience and the resale value of the TS? If so, what is it? If not, why not? Would you support legislation that would include felony criminal fraud charges for sales persons misrepresenting your resort (note: similar legislation exist for real estate and banking/lending)?

Many companies operate without doing any developer sales. They simply manage timeshare resorts. Churn would just be new owners taking over for old owners that sell on resale market. The biggest issue would be resorts that take back ownership via foreclosure and can't resell or rent out those units.

There is no other industry that is forced to buy back a product at full price, why should timeshare be any different. I think the problem with timeshare is that it is marketed as a real estate product but is a vacation product. While it is legally real estate, it doesn't work like real estate in the traditional sense.

 

[kupool]

Many companies operate without doing any developer sales. They simply manage timeshare resorts. Churn would just be new owners taking over for old owners that sell on resale market. The biggest issue would be resorts that take back ownership via foreclosure and can't resell or rent out those units.

There is no other industry that is forced to buy back a product at full price, why should timeshare be any different. I think the problem with timeshare is that it is marketed as a real estate product but is a vacation product. While it is legally real estate, it doesn't work like real estate in the traditional sense.

Your point is a good one that most TS sales are marketed as Real Estate and an investment. Hence, I would like to see a disclosure that the buyback program will cost you an additional 20% (example) of purchase price or if the developer pays to take it back it might be 15% of purchase price paid.
I have a hunch that WG, BlueGreen, Vacation Village, and a few others could not survive without new developer sales. I could be wrong but that is my hunch.
Too, I would like to see felony criminal charges when the TS sales are egregious enough.

 

[TUGBrian]

i really liked the idea of a prorated deedback solution based on how many years of mf you had paid already etc. (id even be ok if retail/resale purchase price was factored in, but at this point why make it more complicated)...

IMO a 20+ year happy owner should not struggle to exit a paid off ownership...anywhere.

 

[TUGBrian]

on a side note, I rarely if ever see actual legitimate numbers for resorts in terms of defaults/foreclosures/etc...but on FB a small resort that is regularly talked about here (and has its own issues, so i doubt its a fair example for ALL resorts...but still)...posted some details on their efforts to combat their issue of so many owners requesting deedbacks.

"We have 1400 owners with deeds in default. Most of 5 years or more. This is revenue not coming in and expense going out. Others just don’t want to own anymore and that’s understandable as well. We are offering a service to clear up defaults, clear up deeds, and the files. "

"most are even pre-Covid. "


"they’ve gone through the Blackwell collection process with no success in recovery. Most are 5+ years with no payments. We’ll be taking these over to foreclose but are hoping to reach out first (by mail, email, phone, and social notice in case they see this or people get word to them by sharing) to offer deedbacks."

super kudos to the resort for trying SOMETHING and making that effort public!


admin edit: Ive no idea how many total owners this resort has, so 1400 might not seem like alot but I didnt get the impression this was a very large resort overall so that number might be far more significant.

 

[DRH90277]

I would single out one great beach property like Ocean Watch and ask what the end game is at the 40 and 60-year marks for the week owners?

May I have a second question? What happens when the maintenance fees on the silver week owners become so outrageous that these owners walk away from their owned weeks and the resale market dries up for these?

 

[dioxide45]

on a side note, I rarely if ever see actual legitimate numbers for resorts in terms of defaults/foreclosures/etc...but on FB a small resort that is regularly talked about here (and has its own issues, so i doubt its a fair example for ALL resorts...but still)...posted some details on their efforts to combat their issue of so many owners requesting deedbacks.






super kudos to the resort for trying SOMETHING and making that effort public!


admin edit: Ive no idea how many total owners this resort has, so 1400 might not seem like alot but I didnt get the impression this was a very large resort overall so that number might be far more significant.

The only issue I see is that just because a week becomes reaquired by the HOA, it doesn't instantly make it a performing week. It still brings in no revenue. The nonperforming weeks are probably not in a desirable season or they would likely be performing in some way. In many of these cases, these resorts are simply no longer viable as a timeshare property.

 

[DRH90277]

To enlighten all of us with respect to reservation potential using points, I would like to know the percentage of weeks owned by the Trust for each property by season. This would enable a fair view of the worst-case (and likely) prospect for a reservation at a particular property.

 

[pedro47]

i really liked the idea of a prorated deedback solution based on how many years of mf you had paid already etc. (id even be ok if retail/resale purchase price was factored in, but at this point why make it more complicated)...

IMO a 20+ year happy owner should not struggle to exit a paid off ownership...anywhere.

TUGBrian, can you ask this question to the ARDA President?

 

[4TimeAway]

I would ask what they see as the reason for the big discrepancy between the developer price for a property vs the aftermarket price, and why should someone interested in timeshare ownership consider buying from a developer vs the secondary market.

To me, the secondary market reflects the true value of timeshares. Any uplift in prices to what the developer sells at needs to be supported by something tangible. So for Vistana, the ability to convert StarOptions into StarPoints (e.g. hotel points), is absolutely a benefit vs banking StarOptions. As a one-time fee (at purchase), it's worth $5K to me over the life of a timeshare to be able to stay in a high quality hotel somewhere where there isn't a timeshare option (San Diego, CA for example for Vistana). If they offered me a bunch of "bonus" hotel points and or airline points, I would value them at the same rate the overall industry rates them, so they would have to offer a boatload of Starpoints or Delta miles for me to pay $50K vs $5K for a timeshare, and there would have to be no expiration date on those points (if they gave me 1M Delta miles with a 2 year expiration, I would have a hard time using them in a useful way).

I feel that the industry preys on ignorance, pressure tactics, and impulse buying to sell their product. But maybe it needs to be that way to support the business model. Could Westin have bought and built the Kierland in Scottsdale selling timeshares for $15k each instead of $50K+? I don't know the answer to that, but maybe they have to sell to "suckers" to make the business model work, and as the saying goes, there is one born every minute.

This is along my thought.

A peak week is probably worth more, but others not so much. If they averaged at say $15,000 week. I could see it costing double that new due to selling expense (30% say $9,000) and a bit of extra profit. Hapimag does something like this.

I think they need to look at cost to buy a unit vs the cost to build/sell a unit. They could offer resale weeks instead of terrible small contracts that are almost worthless.

That said there needs to be a buyer for those and the system relies upon those overly expensive MFs and initial prices to feed the system. I think resale week owner probably are paying 50% less MFs because of that one service the developers provide and the lack of ROFR also makes the selling process lower by 50%. I don’t think the later is intentional and at some point, Developers will use point systems to require more of these deeds as the cost to acquire is less than building. On the other hand, I could seem them repositioning resorts with current owners to a bit higher end through higher MFs and then converting over to this strategy in the future.

I do feel sorry for those people and if they were on TUG some would be able to game the system to their advantage, but if everyone were to there would be no capacity. In a way it a tragedy of the commons.

 

[dioxide45]

I think we see somewhat what an unfettered deedback program can do to a system. Look at Marriott Vacation Club trust points. They took back a lot of weeks people didn't want. People who owned weeks that had decent resale value sold them. Weeks that were harder to get rid of because they were off season were sinmply deeded back. These had high MF to point ratios driving up the maintenance fee on MVC Trust Points.

Sure a deed back program sounds great, but even for small independent resorts it doesn't solve the problem for anyone but the individual owner who gets out. All the other owners are still holding the bag for an nonperforming week that is just now owned by the HOA.

 

[TUGBrian]

TUGBrian, can you ask this question to the ARDA President?

I mentioned it in the video. though he has no say in individual resort systems and how they implement or run deedback programs.

 

[buzglyd]

I think we see somewhat what an unfettered deedback program can do to a system. Look at Marriott Vacation Club trust points. They took back a lot of weeks people didn't want. People who owned weeks that had decent resale value sold them. Weeks that were harder to get rid of because they were off season were sinmply deeded back. These had high MF to point ratios driving up the maintenance fee on MVC Trust Points.

Sure a deed back program sounds great, but even for small independent resorts it doesn't solve the problem for anyone but the individual owner who gets out. All the other owners are still holding the bag for an nonperforming week that is just now owned by the HOA.

Well said.

 

[Fido Chuckwagon]

I think we see somewhat what an unfettered deedback program can do to a system. Look at Marriott Vacation Club trust points. They took back a lot of weeks people didn't want. People who owned weeks that had decent resale value sold them. Weeks that were harder to get rid of because they were off season were sinmply deeded back. These had high MF to point ratios driving up the maintenance fee on MVC Trust Points.

Sure a deed back program sounds great, but even for small independent resorts it doesn't solve the problem for anyone but the individual owner who gets out. All the other owners are still holding the bag for an nonperforming week that is just now owned by the HOA.

This is a flaw in the weeks system in general though and part of why a pure points system (like most of Wyndham or DVC) is fairer. In a pure weeks system, where the weeks don't float 1-52, the owners of the lesser weeks are really subsidizing the owners of the prime weeks since they're all paying the same MF. That type of system is always doomed to fail in the end because the silver owners eventually get wise and default.

 

[rickandcindy23]

I agree with @dioxide45

 

[dioxide45]

This is a flaw in the weeks system in general though and part of why a pure points system (like most of Wyndham or DVC) is fairer. In a pure weeks system, where the weeks don't float 1-52, the owners of the lesser weeks are really subsidizing the owners of the prime weeks since they're all paying the same MF. That type of system is always doomed to fail in the end because the silver owners eventually get wise and default.

DVC and perhaps WM are the only true points systems like this. Even Wyndham is like MVC. They are enrolled/converted deeded weeks. Many people have points with very high MF per point and others have low ones. This makes CWA not as good. If they load the CWA trust up with a bunch of junk weeks or resorts with high fees, then the MF per point will go up too.

DVC also has some issues in that it isn't a complete point system. Some resorts are better than others, but a bad resort with high fees like the Cabins won't cause issues for the other resorts.

 

[rickandcindy23]

Wyndham has CWA, which is basically the same thing. Anything deeded back is put into a big pot of points and sold as CWA. The fees are higher than deeded weeks that are converted to Wyndham.

The maintenance fees on the Abound Trust are high and are a good reason not to buy Marriott points direct, even if offered an opportunity to enroll deeded weeks into the system.

I think our Abound points are around 39.5 per point in maintenance fees, and I have been looking at the opportunities for discounted stays in CO and think we will be using at least "some" of our Abound points at some point. I am unsure how to go about it, actually, but I have the SO's thing down now. I need to do some research.

 

[Fido Chuckwagon]

DVC and perhaps WM are the only true points systems like this. Even Wyndham is like MVC. They are enrolled/converted deeded weeks. Many people have points with very high MF per point and others have low ones. This makes CWA not as good. If they load the CWA trust up with a bunch of junk weeks or resorts with high fees, then the MF per point will go up too.

DVC also has some issues in that it isn't a complete point system. Some resorts are better than others, but a bad resort with high fees like the Cabins won't cause issues for the other resorts.

Yeah, I agree CWA is problematic for the same reason. I meant resorts like Bonnet Creek, which are pure points (as far as I know).

 

[gravityrules]

@rickandcindy23 did you once say that a CO weeks resort you were on the board had different MFs for ski season vs summer and/or mud season weeks? Is state law different in CO compared to other states? I have the impression this isn't allowed in most states. It seems like an obvious solution to not having owners of lower demand weeks 'subsidizing' MFs for owners of higher demand weeks.