Interval Leisure Group to buy SVO

[Julian926]

The company name doesn't mean as much as the market-facing brands they license. I will be curious how market facing the Vistana name actually winds up being.

I am confident the brand management folks understand that Vistana has an overall lack of equity among consumers, and thus it will play a relatively minor role as it relates to this audience.

That might be true from a hotel standpoint, but I don't think this applies to the timeshare industry. Most people immediately identify with the package. My friends would say they are owners in the Marriott Destination Club or Hilton Grand Vacation. If they had to be more specific, they might refer to the location where their deed is.

Moreover, Starwood advertises Starwood Vacation Network. It does not advertise separate units like Sheraton Vistana Village. Why? The value proposition of the network, not the unit, attracts the timeshare buyer. Whereas the hotel renter only cares about where he or she is staying.

There would be a herculean effort to rebrand to "Vistana," in my humble opinion.

Based on my last comments, it's possible that Vistana is a bigger umbrella. If Hyatt wasto fall under Vistana, then it makes sense why they call it Vistana. You'd have conflicting licensing issues if Hyatt were to be under Starwood Vacation Network.

 

[taterhed]

Sounds suspiciously to me like they are changing the name to allow a new 'umbrella' to cover multiple brands with names they'd like to keep..... (oh, say Hyatt, Westin etc...)

who knows.

 

[Julian926]

http://www.marketwatch.com/story/in...ntegrated-shared-ownership-company-2015-10-28

“This transformational transaction creates significant value for the shareholders of both companies and positions us at the forefront of a rapidly evolving industry,” said Craig Nash, Chairman, President and CEO of ILG. “By bringing together ILG and Vistana, two companies with long histories of hospitality brand stewardship and leadership, we are creating a company with strong positions from which to offer highly attractive and complementary product offerings. We will continue to grow our full suite of brands, including Hyatt Residence Club, Sheraton Vacation Club and Westin Vacation Club, and the combined company will maintain an enhanced portfolio of properties, services and expertise to provide guests with the top, high-quality vacation ownership brands and best vacation experiences in the industry. In addition, with an even more diverse offering of leading properties and broader geographic reach and scale, ILG will strengthen its competitive position and ability to capitalize on revenue and profit growth opportunities over time. This combination further reinforces ILG’s balance sheet and conservative leverage profile so we may continue to prudently grow the business.”

I'm not 100% sure, but it sounds like Hyatt and Starwood are now one vacation club. Anyone reading this differently?

 

[margolism]

Change takes time. Owners will likely continue to say they own a Starwood timeshare because the market-facing brand associated with the property is a Starwood equity. A formal legal name change does not mean that consumers will immediately adopt the new name in their vernacular.

 

[SMHarman]

Hyatt and Starwood timeshare companies will be held by the same holding company.

Likely in time it could be more efficient to build a single reservation system etc but on day one nothing changes.

The brand agreements still stand and will be part of thr goodwill / intellectual capital purchased

 

[TFTG]

Hyatt and Starwood timeshare companies will be held by the same holding company.

Likely in time it could be more efficient to build a single reservation system etc but on day one nothing changes.

The brand agreements still stand and will be part of thr goodwill / intellectual capital purchased

On the business side of things and based on the news reports, it appears Hyatt & Starwood will subsidiaries of the main holding company, as you mentioned above.

ILG now is the exclusive global licensee of three top vacation ownership brands and the license agreement for the Westin/Sheraton timeshare brands looks pretty good for Starwood, which Hyatt is rumored to be buying.

From one of the press releases: Under the terms of the license agreement, Starwood will receive an annual base royalty fee of $30 million plus 2% of vacation ownership interest sales.

Now for the timeshare/reservation/points side of things...this will be interesting to see how this all plays out?
Will Interval Intl want to add the Westin/Sheraton brands to their newly announced "Pure Points Program" they discussed on their last earnings call or will that just be for the Hyatt properties or will we see a hybrid system of points that can be used across the brands in the future?

There is some discussion of this new program in the "All Other Timeshare Systems" here on TUGBBS...

 

[SMHarman]

And as I said in the other post somewhere. If Hyatt hotels and Starwood hotels merge then the loyalty programs merge.

As Starwood timeshare owners can convert to hotel points (retro and retail purchase) that convert would go to the combined scheme which could book into both Starwood hotels and timeshares and Hyatt hotels and timeshares.

There is a natural cross progression forced by some currently offered programs.

How they roll that to us resale plebs is another matter.

 

[CeeWoo]

Email I got a while ago from Starwood

Dear Owner,

Earlier this year, Starwood Hotels & Resorts (Starwood) announced its intention to spin off its vacation ownership business into a stand-alone, public company. Today, we are excited to share that immediately following the spin, Starwood Vacation Ownership will be acquired by Interval Leisure Group (ILG), to become one of the industry’s largest providers of world-class vacation experiences. We anticipate this transaction to be completed in the second quarter of 2016, when we officially become a wholly-owned subsidiary of ILG.

ILG is a global provider of non-traditional lodging with a portfolio of leisure businesses, including branded vacation ownership, vacation rentals and resort management, that currently operates more than 200 resort properties around the world. As an Owner, you may be familiar with Interval International® – their exchange subsidiary – and a valued partner with us over the past 15 years. With the combination of our two companies, we will create a stronger, more integrated timeshare and exchange business resulting in a more robust portfolio of vacation offerings for Owners and Guests.

We will continue to be the exclusive provider of vacation ownership for the renowned Westin® and Sheraton® brands, while providing all of the features and benefits of ownership you have come to expect. As an Owner, you will continue enjoying your timeshare resorts as you always have as well as continued access to the industry-leading Starwood Preferred Guest® (SPG) program. Current reservation guidelines and fees, exchange rules, reservation rights, and exchange privileges through Starwood Vacation Network℠, Interval International and other current exchange options will all remain the same.

This announcement reinforces our plans for accelerated growth as ILG is committed to invest in new Westin and Sheraton properties. Most notably, The Westin Nanea Ocean Villas, currently under construction, will be the newest resort on beautiful Kā‘anapali Beach in Maui, opening in 2017. In early 2016, we are also scheduled to begin converting the remaining 96 poolside hotel rooms into vacation ownership villas at The Westin St. John Resort & Villas.

In addition, the five transferring Starwood properties announced earlier this year remain part of the transaction and are anticipated to provide additional inventory for Owners over time, including The Westin Resort & Spa, Los Cabos; The Westin Cancún Resort & Spa; The Westin Resort & Spa, Puerto Vallarta; Sheraton Kaua‘i Resort; and Sheraton Steamboat Resort. You can continue to access these hotel properties through the SPG program.

We believe becoming part of ILG is transformational for our company and holds great value for our Owners. This transaction puts us at the forefront of our industry, offering you and your family even more choices for unique and memorable vacation experiences.

Thank you for your continued loyalty. We are excited about our bright future together and will update you as more details become available. To view today’s press release and for a list of questions and answers, click here.

Best Regards,
Steven Williams
Stephen G. Williams
Chief Operating Officer

 

[sjuhawk_jd]

... I'm not 100% sure, but it soun...clubs, just owned and operated by one entity.

 

[gregb]

Here is a link to the ILG news page. On the right side, under Presentations and Events is a link to "Interval Leisure Group to Acquire Starwood’s Vacation Ownership Business". It is a PDF presentation that discusses the spin off/merger. You may find it interesting.

http://www.iilg.com/phoenix.zhtml?c=223490&p=irol-irhome

As I read it, the old SVO (new Vistana) will continue to operate as a subsidiary of ILG. They will continue to be marketed as Westin and Sheraton resorts.

It will be interesting to see what happens to the SPG points system as Hyatt merges with the Starwood hotels.

Greg

 

[TUGBrian]

bloomberg reporting this today...

http://www.bloomberg.com/news/artic...ng-vistana-timeshare-unit-to-interval-leisure

 

[Julian926]

I guess I wasn't too clear. Based on the press releases, there are 3 vacation clubs:

Sheraton Vacation Club
Westin Vacation Club
Hyatt Residence Club

Sheraton and Westin were, or still is, under one network: Starwood Vacation Network. The 2 "clubs" were able to make reservations under one network.

Is Vistana a network that comprises of Sheraton, Westin and Hyatt? And if so, would that mean SVN people will eventually reserve Hyatt dates and vice versa?

I understand this won't happen overnight. I'm more curious about the end game.

 

[gregb]

ILG stock price is dropping for the day. It closed yesterday at $20.77 and has dropped to $17.93 at this point.

Guess the market doesn't think this is such a good deal.

Greg

 

[gregb]

Is Vistana a network that comprises of Sheraton, Westin and Hyatt? And if so, would that mean SVN people will eventually reserve Hyatt dates and vice versa?

The "old SVN" is now the new Vistana. New name, but same product. The word from the merger documents implies that the SVN/Vistana will continue to operate as it did when part of Starwood. It will continue to include Westin and Sheraton vacation ownership resorts.

No indication that the Hyatt resorts will "join" the Vistana group, at least not yet.

Greg

 

[bnoble]

Yes I am, they will still be different vacation clubs, just owned and operated by one entity.

That's my take too, much as Wyndham, WorldMark, and Shell are all distinct. There might be some increased cross-over opportunities as the Club Pass program does for Wyn/WM, but my guess is that they will tread carefully.

 

[Julian926]

:

The "old SVN" is now the new Vistana. New name, but same product. The word from the merger documents implies that the SVN/Vistana will continue to operate as it did when part of Starwood. It will continue to include Westin and Sheraton vacation ownership resorts.

No indication that the Hyatt resorts will "join" the Vistana group, at least not yet.

Greg

Not disputing you since I'm not sure how accurate this source is

-----
http://www.bizjournals.com/southflor...5-billion.html

Vistana manages 22 high-end timeshare resorts with more than 220,000 owners. The company has about 5,000 employees. Once the merger is complete, its portfolio will expand to 200 resorts and 500,000 owners and will include Sheraton Vacation Club, Westin Vacation Club and Hyatt Residence Club brands. The combined businesses are expected to create $26 million in savings five years after the transaction closes.
----------
This implies Hyatt under Vistana assuming "its" refers to Vistana.

 

[canesfan]

Starwood will also own 55% of Vistana after the deal.

 

[dsmrp]

Thanks to those who linked in some news and finance articles with their posts. It seems IMO with the vertical business structure the new company will have, we'll see these changes in the future:
1a. more ROFR, where contractually allowed, to give more inventory to sell and keep the price points up
1b. maybe a deedback/buy back program for same reasons.
2. higher exchange fees, but more units to exchange.
3. conversion to another reservation currency (long term), where they'll make money in the conversion rates and fees.
4. New programs, aka limitations to reserve at new locations e.g. Cabo San Lucas, Kauai etc and other properties they'll have on drawing board to develop.

Overall I think to make the money they'll want/need to make to pay for the new locations, licensing agreements, royalties and of course profits, they'll have to re-invent themselves and change-shift the current timesharing paradigm. I mean there's only so much $$ you can get out of current strategies. Will be interesting to see if they get enough people on board to buy in to new strategies to truly make a paradigm shift in leisure vacation business. What's going to be in it for us ???

 

[Julian926]

I like this part of the press release (from Starwood CFO)


While Starwood has been focused on executing an asset-light strategy across the company,Vistana will benefit from ILG’s commitment to invest in new properties to drive increased growth. This transaction will better position the combined company for greater long-term growth, which will in turn
create exciting opportunities for our teams.”

 

[Henry M.]

From the Interval International Group's press release it sounds like in the end, Starwood will be the majority owner of the combined company:

The combination will result in Starwood shareholders owning approximately 55% of the combined company on a fully diluted basis, with existing shareholders of ILG owning approximately 45% of the combined company.

Then if Hyatt acquires Starwood, they will own the whole enchilada.

 

[Julian926]

From the Interval International Group's press release it sounds like in the end, Starwood will be the majority owner of the combined company:



Then if Hyatt acquires Starwood, they will own the whole enchilada.

Actually, Starwood shareholders will own 55% of the new entity. Starwood (HOT) is divesting itself of the timeshare industry.

 

[Henry M.]

So you think they'll distribute 55% of the shares of the new entity to HOT shareholders, rather than HOT owning the shares? I don't know one way or the other.

HOT will divest its timeshare business but instead of selling it through an IPO, it will sell it to this new venture. However, it can still own a part of that company. They would not be involved in the day-to-day running of the enterprise. They will just have a few people on the board and be able to vote on corporate matters.

 

[Ken555]

This is awesome! One flacky website (intervalworld) deserves another (mystarcentral). Perfect match!


Sent from my iPad

 

[gregb]

They want to do the transaction tax free. So I expect the IILG shares will be distributed to HOT shareholders.

IILG is down $2.87 (13.82%) from yesterday.
HOT is up $4.69 (6.27%) today and about $11 (~16%) from Monday.

Looks like the market feels Starwood shareholders are getting the better deal.

Greg

 

[krj9999]

HOT trading up on their own potential buyout news.

But the price does seem to be pretty high that IILG is paying, with VAC enterprise value at ~$2.4 billion for comparison.

They want to do the transaction tax free. So I expect the IILG shares will be distributed to HOT shareholders.

IILG is down $2.87 (13.82%) from yesterday.
HOT is up $4.69 (6.27%) today and about $11 (~16%) from Monday.

Looks like the market feels Starwood shareholders are getting the better deal.

Greg