It's Official - WKORV-III (Nanea) is "on hold"

[nodge]

According to this article dated today (Nov. 21, 2008) the WKORV-III (Nanea) project is on an indefinite "hold."

David Matheson, vice president of corporate communications for Starwood Vacation Ownership Inc., has had a very busy week.

Maybe if we owners obtain some press credentials, he'll even talk to us someday too. For now, I suggest that if he shows up on your doorstep . . . . run!

-nodge

 

[Sea Six]

Smart move - now is not the time to spend that kind of maoney. Maybe later.

 

[nodge]

SVO first announced this project on June 25, 2008 (a few days before the end of the second quarter 2008), and officially killed the project today, less than 5 months later.

Either the economy has tanked that much in those less than 5 months, or SVO knew when it announced the project a few days before the end of the second quarter that it didn't have any financing in place and no hope of getting that financing, but announced it anyway to make its less then optimal Q2 results appear a little better with a promise of more inventory in the pipeline.

SVO appears to be using the bad economy to hide its bad senior management decisions.

-nodge

 

[jerseygirl]

Never thought I'd defend SVO management, but the world is a very different place today than it was on June 25th. If I could turn the clock back, there are more than a few stocks I would sell!

 

[myip]

\
Either the economy has tanked that much in those less than 5 months, or SVO knew when it announced the project a few days before the end of the second quarter that it didn't have any financing in place and no hope of getting that financing, but announced it anyway to make its less then optimal Q2 results appear a little better with a promise of more inventory in the pipeline.

SVO appears to be using the bad economy to hide its bad senior management decisions.

-nodge

Stock market tanked in less than 5 months.... I can see why SVO changes its mind.

 

[WalnutBaron]

Never thought I'd defend SVO management, but the world is a very different place today than it was on June 25th. If I could turn the clock back, there are more than a few stocks I would sell!

Well said. In June, we were still being told that the stimulus package would work and that the economy had nothing more than a stomach ache. But everything changed in October. The stock market--not just here but worldwide--melted down and has not found its bottom. Currency markets have not seen swings like this in more than fifty years. The credit markets froze and some of the most venerable financial institutions in American economic history have either disappeared (Lehman Brothers) or been absorbed by other companies (Merrill Lynch).

Starwood management made a prudent business decision, pure and simple. Instead of being upset that they've shelved a development expansion, I am wondering about the long-term viability of the SVO system itself if this recession lasts into 2010 as is now being predicted.

 

[nodge]

Fair enough. But hear me out.

It appears that SVO has completed the permitting process and done enough of the earth moving to qualify as initiating the job, thereby preventing the powers that be in Hawaii from changing their minds and preventing another timeshare in Maui etc. So SVO can place the project “on-hold” now with very little risk of being precluded from “starting it up again” should it decide to in the future. This would certainly be a good motivator for SVO to do what it did.

If SVO waited too long to break ground, the laws and politics in Maui could change, thereby rendering the land they purchased next to the sewage treatment plant useless to them for their intended purposes.

I would think that financing issues associated with actually building a $300 million project would have been worked-out BEFORE formally announcing the project. But, the article suggests that SVO was planning to “self-finance” construction. Given the fact that SVO’s gross profits were running around $100 million/year at the time they announced the project, is it really reasonable to conclude that SVO had a genuine intention to complete this “self-financed” project when it announced it, but was forced to change its mind less than 5 months later because of the “economy?”

Don’t get me wrong. I think it would be unwise for SVO to start building WKORV-III now. I just think that it never had any intention of building it in the first place.

As for the economy, some folks had been anticipating its recent demise as early as 2006. It’s just that only now are people starting to take those folks seriously.

-nodge

 

[LisaRex]

Starwood management made a prudent business decision, pure and simple. Instead of being upset that they've shelved a development expansion, I am wondering about the long-term viability of the SVO system itself if this recession lasts into 2010 as is now being predicted.

I agree on both counts.

But once again, I'm sick and tired of reading about these developments from Tuggers who find it in newspapers. SVO should have the class to announce these things to its owners, along with a brief explanation as to why the project was shelved so that we don't have to speculate, even if it's just a blip on the "News" section of MSC.com. (The only relevant article on the site, ironically, is the announcement of the third phase.) It's difficult to be supportive of people who act so secretively.

 

[tomandrobin]

Very smart for Starwood to delay the construction of the resort. Wait a year and half or two and the economy to pick back before restarting the project.

 

[SDKath]

OFD is listed right now on one of the resale websites for $42,000. I saw one come and go for $32,000 last week!!! This is definitely not the time to try to build $70,000 MSRP units in a location where flights are $1000 per person.

I agree with both Nodge and Jerseygirl. They may have been pushing WKORV III for various reasons (remember earnings call last month where they said the silver lining to their horrible performance was the high end TSs that have high profit margins). In any case, I am not surprised that they are not building right now.

Katherine

 

[nodge]

NANEA Update (the SVO timeshare on Maui not the SVO Restaurant on Kauai)

Hi Gang,

Not much press these days on the status of the abandoned construction mess that was to be the third SVO timeshare resort on Maui and called "NANEA."

Since naming the new Maui timeshare and promptly placing the project on "hold," SVO has also named the restaurant in its SVO resort on Kauai "NANEA" which I guess, at best, means that the third property on Maui will need a new name if it ever gets built, or we'll have to start calling 'em "NANEA Timeshare Restaurant" and "NANEA villas that are not even on the same island as the NANEA Timeshare Restaurant let alone in the same timeshare complex, but like the name "New York, New York," we liked the name NANEA so much we used it twice"...

Here is a recent posting giving all sorts of juicy details about the current status of SVO's abandoned construction mess on Maui.

On the plus side, it appears that deals are to be had renting rooms at the fancy condo (Honau Kai) next to SVO's abandoned construction mess because it turns out that most people would prefer to not look out at an abandoned construction mess during their fancy Maui vacation . . . go figure.

The linked report suggests that it will be another 2 years before SVO will HAVE to clean-up the site.

FYI,
-nodge

 

[LisaRex]

One day I'm going to own one of those sweet Honua Kai residences. Hope the weed patch is gone by then!

 

[grgs]

From the same website that Nodge linked to, the Honua Kai owner's take on WKORV/N:

http://www.kaanapali-maui.com/HonuaKaiRentals/westin-kaanapali-ocean-resort-villas.html

 

[Ken555]

From the same website that Nodge linked to, the Honua Kai owner's take on WKORV/N:

http://www.kaanapali-maui.com/HonuaKaiRentals/westin-kaanapali-ocean-resort-villas.html

This line just made me laugh:

The maintenance fees are astronomical in Maui for timeshare owners since Maui socks it to them since they are land owners but hardly ever there to vote against the insane taxes imposed on timeshares.

"Hardly ever there" - as if timeshare owners would register to vote in Maui...last I checked, you may only register in one location...you'd think this author would have a bit more insight into the reason why timeshare owners don't vote.

 

[PamMo]

Along with a poor economy stalling the project, when we were at WKORVN last month, we talked to several locals in the real estate business who told us that Maui county officials are furious with Starwood for joining the fight to reduce timeshare RE taxes. They were taken aback by how personal it became. Their take is that unless things change drastically in county government (doubtful), building restrictions will be so onerous that there is no way the project will move forward. There is some talk that a hotel could be built on the site, but I suspect many locals would prefer it to be open space.