BigMac
Guest
<> Right. So look, I want to make sure we touch on the notion of construction and development of inventory. How much inventory do you have? Do you need to do some building this year or have some building occur this year in order to shape out your inventory?
> Yeah, no, I mean, we didn’t have anything under development on our balance sheet, right, even plan for 2020. We were actively pre-COVID-19 looking for new deals to bring on new flags, et cetera. Obviously in the near-term, we’ve put a pause on that. Coming into the year to answer your question, David, we had over two years of inventory based on call it a $1.6 billion annual contract sales space, obviously that has slowed down. We’ll see how that recovers, but that just extends out our need for inventory. We’ve got some commitments still on our asset light deals first quarter of next year, assuming we don’t look to push these out. If we don’t need the inventory contractually, we have roughly $140 million do in the first quarter of next year, which would be taking down the remainder of New York, some more of our San Francisco asset light deal, as well as two smaller international deals, one in Costa Rica and some units out in Bali at a New Renaissance that’s getting delivered there, which is just going to be a fabulous resort. So with that, we’ll still plan to open sales centers in Costa Rica and Bali as we open those new sites, if you will. But for now, we still have the ability to repurchase inventory on the secondary market and Waihekes and other one, but that was always slated to be built as a capital efficient deal and most likely not get delivered or pay anything until, call it end of 2022, 2023 timeframe. So, once we get a better sense and the other opportunity that could come out of this would be some distressed properties, right. Specifically, if you look at some of the deals that we’ve done on the development side in some of our urban locations, like Washington, where we took a floor out of the Mayflower Hotel, there could be some opportunities where just given where owners are and maybe excess capacity that they’d want to potentially take some money off the table and we could co-locate if you will, at an existing resort somewhere. So, we’re going to continue to get back into development longer term. It’s just right now, we’re – we don’t, we’re not, I wouldn’t say have too much inventory assuming sales start to ramp back up here, but we’ve got some time to given the near-term slow down before we start committing ourselves to new deals.
<> If I can follow that up for a minute and just talk about geographies in particular by Hawaii is a discussion, frankly, that touches an awful lot of our coverage universe. And in many respects is arguably the ideal timeshare location, except when it’s not, what is your strategy for Hawaii today? Do you look to be opportunistic with the expectation that it returns to normal or do you look elsewhere and just take a bit more of a wait and see, because there may be opportunities that show up that are compelling under the current circumstances, right? <> Yeah. Yeah. Clearly nothing, Dave – I mean, once I think we get past this, it might for Hawaii, it might take a little bit longer, but I think when we look at our owners and we’ve done some surveying of our owners and their propensity to fly on their next vacation and not surprisingly, like I mentioned in St. Thomas and St. John, where we have resorts that are open, owners are coming back, people want to go on vacation and I don’t see Hawaii longer term losing that desirability of where our owners want to go. So yes, there were – clearly there were opportunities in Hawaii, Maui those types of locations that absolutely those would be things that we’d be taking a hard look at. And that’s where I go back to my earlier statement; some of those things, not necessarily Hawaii, but in other market the question becomes, yes, are there some interesting opportunities because of longer term issues with an existing property, et cetera. So we’ll obviously keep an eye on it, but there’s nothing that we’re hearing or seeing that would lead us to believe that Hawaii as a destination isn’t going to continue to be highly sought after.
> Yeah, no, I mean, we didn’t have anything under development on our balance sheet, right, even plan for 2020. We were actively pre-COVID-19 looking for new deals to bring on new flags, et cetera. Obviously in the near-term, we’ve put a pause on that. Coming into the year to answer your question, David, we had over two years of inventory based on call it a $1.6 billion annual contract sales space, obviously that has slowed down. We’ll see how that recovers, but that just extends out our need for inventory. We’ve got some commitments still on our asset light deals first quarter of next year, assuming we don’t look to push these out. If we don’t need the inventory contractually, we have roughly $140 million do in the first quarter of next year, which would be taking down the remainder of New York, some more of our San Francisco asset light deal, as well as two smaller international deals, one in Costa Rica and some units out in Bali at a New Renaissance that’s getting delivered there, which is just going to be a fabulous resort. So with that, we’ll still plan to open sales centers in Costa Rica and Bali as we open those new sites, if you will. But for now, we still have the ability to repurchase inventory on the secondary market and Waihekes and other one, but that was always slated to be built as a capital efficient deal and most likely not get delivered or pay anything until, call it end of 2022, 2023 timeframe. So, once we get a better sense and the other opportunity that could come out of this would be some distressed properties, right. Specifically, if you look at some of the deals that we’ve done on the development side in some of our urban locations, like Washington, where we took a floor out of the Mayflower Hotel, there could be some opportunities where just given where owners are and maybe excess capacity that they’d want to potentially take some money off the table and we could co-locate if you will, at an existing resort somewhere. So, we’re going to continue to get back into development longer term. It’s just right now, we’re – we don’t, we’re not, I wouldn’t say have too much inventory assuming sales start to ramp back up here, but we’ve got some time to given the near-term slow down before we start committing ourselves to new deals.
<> If I can follow that up for a minute and just talk about geographies in particular by Hawaii is a discussion, frankly, that touches an awful lot of our coverage universe. And in many respects is arguably the ideal timeshare location, except when it’s not, what is your strategy for Hawaii today? Do you look to be opportunistic with the expectation that it returns to normal or do you look elsewhere and just take a bit more of a wait and see, because there may be opportunities that show up that are compelling under the current circumstances, right? <> Yeah. Yeah. Clearly nothing, Dave – I mean, once I think we get past this, it might for Hawaii, it might take a little bit longer, but I think when we look at our owners and we’ve done some surveying of our owners and their propensity to fly on their next vacation and not surprisingly, like I mentioned in St. Thomas and St. John, where we have resorts that are open, owners are coming back, people want to go on vacation and I don’t see Hawaii longer term losing that desirability of where our owners want to go. So yes, there were – clearly there were opportunities in Hawaii, Maui those types of locations that absolutely those would be things that we’d be taking a hard look at. And that’s where I go back to my earlier statement; some of those things, not necessarily Hawaii, but in other market the question becomes, yes, are there some interesting opportunities because of longer term issues with an existing property, et cetera. So we’ll obviously keep an eye on it, but there’s nothing that we’re hearing or seeing that would lead us to believe that Hawaii as a destination isn’t going to continue to be highly sought after.