My wife and I just had a great week in Hawaii at a Hilton Property. Naturally, we had to endure a 1 1/2 to 2 hour (it took 3+ hours!) high pressure sales presentation. The pitch was intense and 2+ hours of it was designed to appeal to one's desire for "more family time" and "living the good life". The financial aspect of the deal was limited to the last 20 to 30 min's, after which time we were double teamed to make at decision RIGHT THERE at the table. This is after the slick willy salesman (hi Rick!) promised us that two of the three rules were that they didn't use high pressure sales tactics. BULL!
We were able to walk out with some of the numbers, after we promised to call the sales guy after lunch - I hope he's still waiting for the call.
Here are the basics:
By 4,800 points for $27,300 + a maintenance fee of $1,208 per year. That's a one bed room unit for one week a year plus 40,000 "points" (which were never explained sufficient for one to understand an actual monetary value).
For fun, my wife and I have crunched the numbers. Here are some of the interesting ones:
200 units in the project, if 100% sold (only once w/o reselling units people walk away from) will gross $284,000,000. At an average of 600 sf each unit, that's over $2,300 PER SQUARE FOOT construction costs, and this is a phase II project where all the infrastructure and a $13M pool has already been built!
For those of you not familiar with construction costs, that number is CRAZY high, even assuming Hawaiian pricing it's 5X too high. Add to that the Maintenance fees will gross over $12M annually! The actual cost to run a property like this would likely be around $2M, but double it at $4M and this is still a HUGE money maker. Now granted, they have to pay commissions, fund the "sales center" where the hit rate is likely low, and pay for all the "prizes" they give away... but $12M for a 200 unit project???
Running the numbers on what we'd have to be spending on average for a hotel room (assuming a 20 year usage, and zero resale value- which since you can buy these units on Ebay for under $900 (and in some cases $1) appears to be a good assumption. If you finance the unit and get in the middle of their 12% to 19% interest rate they offer) and the MF on;y goes up 2.5% and the hotel room price rises 3% a year (got to be fair!), we'd have to be spending $418 per night for a hotel room to BREAK EVEN. The problem is that I can go book a room AT THE TWO MOST LIKELY RESORTS we'd go to for $198 and $239 a night!
A deal? Sure for Hilton!
We'll go back, next time with an arm load of information that we'll pull at in the last 20 mins! The sales people should be ashamed of themselves for selling these overpriced disasters to people under such pressure!
Anytime that you can find multiple postings from people who are desperately trying to NOT INHERIT TS units from their dear old auntie you know somethings wrong!
Oh, the 40,000 points... well, when you calculate that 4,800 points will get you a one week trip, and convert the points (that you have to use in 3 years) into room nights, you'll be taking nearly 5 weeks of vacation a year to consume these. How many folks can do that? The vast majority of these points will have to be converted to "Hilton Points" (cost $100 to do so) at which point you're only going to be able to use them for upgrades, or getting the occasional "deal" on rooms that no one wants...
We were able to walk out with some of the numbers, after we promised to call the sales guy after lunch - I hope he's still waiting for the call.
Here are the basics:
By 4,800 points for $27,300 + a maintenance fee of $1,208 per year. That's a one bed room unit for one week a year plus 40,000 "points" (which were never explained sufficient for one to understand an actual monetary value).
For fun, my wife and I have crunched the numbers. Here are some of the interesting ones:
200 units in the project, if 100% sold (only once w/o reselling units people walk away from) will gross $284,000,000. At an average of 600 sf each unit, that's over $2,300 PER SQUARE FOOT construction costs, and this is a phase II project where all the infrastructure and a $13M pool has already been built!
For those of you not familiar with construction costs, that number is CRAZY high, even assuming Hawaiian pricing it's 5X too high. Add to that the Maintenance fees will gross over $12M annually! The actual cost to run a property like this would likely be around $2M, but double it at $4M and this is still a HUGE money maker. Now granted, they have to pay commissions, fund the "sales center" where the hit rate is likely low, and pay for all the "prizes" they give away... but $12M for a 200 unit project???
Running the numbers on what we'd have to be spending on average for a hotel room (assuming a 20 year usage, and zero resale value- which since you can buy these units on Ebay for under $900 (and in some cases $1) appears to be a good assumption. If you finance the unit and get in the middle of their 12% to 19% interest rate they offer) and the MF on;y goes up 2.5% and the hotel room price rises 3% a year (got to be fair!), we'd have to be spending $418 per night for a hotel room to BREAK EVEN. The problem is that I can go book a room AT THE TWO MOST LIKELY RESORTS we'd go to for $198 and $239 a night!
A deal? Sure for Hilton!
We'll go back, next time with an arm load of information that we'll pull at in the last 20 mins! The sales people should be ashamed of themselves for selling these overpriced disasters to people under such pressure!
Anytime that you can find multiple postings from people who are desperately trying to NOT INHERIT TS units from their dear old auntie you know somethings wrong!
Oh, the 40,000 points... well, when you calculate that 4,800 points will get you a one week trip, and convert the points (that you have to use in 3 years) into room nights, you'll be taking nearly 5 weeks of vacation a year to consume these. How many folks can do that? The vast majority of these points will have to be converted to "Hilton Points" (cost $100 to do so) at which point you're only going to be able to use them for upgrades, or getting the occasional "deal" on rooms that no one wants...