New WM resorts

[Bill4728]

Here is a quote fro StreetTalk

REDMOND: Trendwest’s outlook for 2007 has some outstanding vacation experiences on the horizon. New resorts are scheduled to open in Canmore, Alberta, Canada; Red River, New Mexico; West Yellowstone, Montana; and due to the high demand, another resort in San Diego and another in Las Vegas.

In Las Vegas, Trendwest has acquired the 212-unit Cypress Point Vistas apartment complex, at 5275 W. Tropicana Ave., for $30.74 million, or about $145,000 per unit. The property was never listed on the market and had a 120-day escrow period.

The complex is spread over 20 separate buildings. Trendwest is already in the process of renovating Cypress Point, according to published reports.

More details to follow, no doubt…

I thought WM owners might be interested.

 

[CaliDave]

$145K per unit to buy

They will charge about $500K per unit to sell

 

[cotraveller]

$30.74 million to buy. $145k per unit.

$??? million to renovate, $?? per unit.

All turned over to WorldMark by Wyndham, free and clear of any debt.

 

[spatenfloot]

It could end up being a FF rather than a WM.

 

[cotraveller]

It could end up being a FF rather than a WM.

It was announced last October on the WorldMark forum as a new WorldMark resort. There is no indication this one will be shared with Fairfield.

http://forums.trendwest.com/ubb-threads/ubbthreads.php?ubb=showflat&Number=24385&page=1#Post24385

The Wyndham expansion in Steamboat Springs, where there is also an existing WorldMark resort, will be a 50-50 split with Fairfield. 142 units total, 71 units each. We could easily see more of that shared arrangement in the future.

Wyndham, which includes the Fairfield resorts, is the developer for WorldMark.

 

[LisaH]

I just don't quite understand the demand in Las Vegas for timeshare. WorldMark already have two resorts there. Is it really necessary to get a third one?

 

[cotraveller]

I just don't quite understand the demand in Las Vegas for timeshare. WorldMark already have two resorts there. Is it really necessary to get a third one?

Las Vegas is one of the top travel destinations in the U.S. With a large number of west coast WorldMark owners, and low airfares from other areas, it is a very popular WorldMark destination. The two existing WorldMark Las Vegas resorts operate at high capacity. I suspect the third one will run at the same high occupancy rate although there will probably be some bonus time opportunities for the first months it is open.

 

[mtngal]

I'm looking forward to the new complex opening - it's in a more convenient location for me to visit family. The two existing resorts are often booked, and the new resort looks pretty nice (I drove past it a couple of weeks ago - the demo portion of the renovation was going full blast). And I would expect it to be pretty fully booked, just like the existing resorts are.

 

[PerryM]

Such a deal!

Assuming TW/Wyndham makes all 52 weeks red and charges 11,000/12,000 WM credits per week each 2BR week that means 52*12,000*$1.80 = $1,123,200 in sales for each 2BR condo. Assuming TW throws in $25k per condo to fix them up and bring the resort up to WM standards that’s a gross profit of $1.1M - $145,000 - $25,000 or $953,200 on an investment of $145,000 + $25,000 = $170,000 or 460%.

Not bad; TW pays nothing to WM for the access to the existing 60+ WM resorts on that 460% gross profit – this is a really good deal for TW/Wyndham. Additionally they force existing WM owners to spend 1,000 to 2,000 more WM credits to stay at the new resort (The original 10,000 WM Credits for ANY 2BR in red season). That’s an additional $1.50 (discounted price to WM owners) * 2,000 or $3,000 from folks who want to go there and don’t buy resale (93% of the existing WM owners don’t buy resale). Assuming half of the 212 units will have existing WM owners going there that means a additional maximum profit of 106 * $1.50 * 2,000 * 52 or $16.5 M PER YEAR from existing WM owners to stay there.

Not bad at all; and we get the deeds free and clear – what a deal!

 

[Steamboat Bill]

93% of the existing WM owners don’t buy resale.

Now that is a shocking quote....where did you read this?

You could make all sorts jokes like...How many WM owners does it take to change a lightbulb?

I don't know, but 93% of the people got ripped off from buying directly from the developer....

 

[BocaBum99]

Assuming TW/Wyndham makes all 52 weeks red and charges 11,000/12,000 WM credits per week each 2BR week that means 52*12,000*$1.80 = $1,123,200 in sales for each 2BR condo. Assuming TW throws in $25k per condo to fix them up and bring the resort up to WM standards that’s a gross profit of $1.1M - $145,000 - $25,000 or $953,200 on an investment of $145,000 + $25,000 = $170,000 or 460%.

Not bad; TW pays nothing to WM for the access to the existing 60+ WM resorts on that 460% gross profit – this is a really good deal for TW/Wyndham. Additionally they force existing WM owners to spend 1,000 to 2,000 more WM credits to stay at the new resort (The original 10,000 WM Credits for ANY 2BR in red season). That’s an additional $1.50 (discounted price to WM owners) * 2,000 or $3,000 from folks who want to go there and don’t buy resale (93% of the existing WM owners don’t buy resale). Assuming half of the 212 units will have existing WM owners going there that means a additional maximum profit of 106 * $1.50 * 2,000 * 52 or $16.5 M PER YEAR from existing WM owners to stay there.

Not bad at all; and we get the deeds free and clear – what a deal!

Perry,

You need to subtract out the 50% cost of sales and marketing to calculate the true gross profit.

 

[PerryM]

Now that is a shocking quote....where did you read this?

You could make all sorts jokes like...How many WM owners does it take to change a lightbulb?

I don't know, but 93% of the people got ripped off from buying directly from the developer....

Bill,

Only 7% of all timeshare sales are resale (ARDA stat). I used that for adding more credits too since no other stat is available that I know of.


BB,

I know that the industry, and TUG, use 50% of sales is selling related - since TW is so cheap on their gifts (and TW salesreps too) I'd use a much smaller number - maybe 20% or less. But, in any case, all that money goes into TW and how they spend it is up to them.

P.S.
Over the lifetime of the new resort, existing WM owners will be paying dearly for staying at the new resort - $16 M * 40 years = $640 M maximum additional margin on their $30 M - what a deal (for TW that is)

And why does TW not pay us for access to our 60+ resorts? I know the "theory of equal" says that they are supplying something comparable - but they are NOT - it costs 2,000 more WM credits to stay (10,000 versus 12,000) - why are they getting this profit from existing WM owners? Instead of charging $1.80 per new WM credit sold they should easily be charging $3.00+ to keep the "theory of equals" in balance - they are not. Instead, they are asking more money from existing owners to use a comparable 2BR unit.

 

[BocaBum99]

Bill,

BB,

I know that the industry, and TUG, use 50% of sales is selling related - since TW is so cheap on their gifts (and TW salesreps too) I'd use a much smaller number - maybe 20% or less. But, in any case, all that money goes into TW and how they spend it is up to them.

Then you should have used Gross MARGIN. You used Gross PROFIT. You can't count revenue and not direct expenses and still call it profit.

 

[PerryM]

Then you should have used Gross MARGIN. You used Gross PROFIT. You can't count revenue and not direct expenses and still call it profit.

BB,
Oopps you are correct.

 

[cotraveller]

Bill,

- it costs 2,000 more WM credits to stay (10,000 versus 12,000) -

Have you seen any numbers for the credit values for the new Las Vegas resort?

 

[PerryM]

Just a WAG

Fred,

I've not seen anything official - just my WAG of TW's reaction to their survey that WM owners are willing to pay much more credits to use new WM resorts. After all, TW is just giving WM what it deserves.

I'm sure our WM BOD has the stats and determined that the excess credits we must pay are worth it; and that the $1.80 TW is charging new owners is just right.

Of course the "theory of equals" demands that ALL new 2BR condos be charged 10,000 WM credits in Red season. Breaking this law is necessary since TW finds it much easier to charge just $1.80 per credit versus the $3.00+ that they should be charging. This is based on real estate inflation for the first 10 WM resorts since they were built/aquired. $1.80 only allows for an inflation of 3% per year since WM's inception; it should have been 5% - 7% to keep up with resort areas.

The excess credits, whether 1k or 2k, are a penalty fee that we, the existing WM owners, must pay the Wyndham's stockholders to keep them happy.

 

[cotraveller]

I'll take that as a NO in answer to my question.

 

[PerryM]

My prognostication

Fred,

Let’s see how good I am at guessing TW’s desire to enhance Wyndham’s shareholder’s wallets.

WM LV charges 11,000 WM credits for a 2BR Red week. I am predicting at least that and I’m really guessing 12,000 WM credits. LV is now II’s #1 demanded destination, with Maui in #2 slot.

Of course, we WM owners will be the last to know; just behind our WM BOD who will probably get an eMail alerting of the rates after TW has placed the units into inventory.

Anyone want to bet that our WM BOD hasn’t a clue what TW has up their sleeves?

 

[Bill4728]

...New resorts are scheduled to open in Canmore, Alberta, Canada; Red River, New Mexico; West Yellowstone, Montana ....

This was the main reason I posted this article because I'd heard of the new SD and LV resorts but not these.

 

[cotraveller]

...New resorts are scheduled to open in Canmore, Alberta, Canada; Red River, New Mexico; West Yellowstone, Montana ....

This was the main reason I posted this article because I'd heard of the new SD and LV resorts but not these.

No guessing required for those, they have been covered in announcements.

Canmore was announced on October 12, 2006. It is currently scheduled to open in the spring of this year.

Red River was announced September 14, 2006. Scheduled to open this summer.

West Yellowstone was announced September 23, 2005. Unlike the other two which were purchases of existing resorts, it is new construction. It is also scheduled to open this summer.

Edit to add - Here's some other New WorldMark resorts that have been announced but not mentioned in this thread.

Taos, New Mexico - Just recently announced, scheduled to open this fall.

Anaheim, California - Announced in March of 2005, groundbreaking in September of 2006, scheduled to open in late 2008.

Long Beach, Washington - Announced in August, 2006. Scheduled for opening in late 2008.

 

[Steamboat Bill]

WM LV charges 11,000 WM credits for a 2BR Red week. I am predicting at least that and I’m really guessing 12,000 WM credits. LV is now II’s #1 demanded destination, with Maui in #2 slot.

Althought I am not a WM owner...I follow thess threads with great interest....and may one day buy a contract.

Even with a worst case scenerio....an extra 2,000 WM credits will cost $140 extra per week stay (based upon 7c per credit). That is a $20 per day increase.

I would assume that if WM or TW was offering a BETTER product, newer resort, more ammeneties, improved locations....I would be happy to pay that price as it is still a great deal as compared to other resort options.

I had no idea that Las Vegas is now the #1 in demand destination. Where did you read this?

I would like to get a list of the top 10 in demand locations if anyone has access to that type of information.

 

[PerryM]

Goldmine

Bill,

LV #1 and Maui #2 were on a printout the salesrep, here at the Sands of Kahana, had in his notebook – I couldn’t believe it myself but the link at the bottom of the page was from II. I just looked and did a Google search – no luck. The salesreps may have access to some pages that we don’t have. The article was current, printed Jan '07. Tomorrow I’ll try to get the link from the salesrep.

If anyone stumbles on this, I’d like a link too.

If TW charges 12,000 WM credits for a 2BR in the new LV resort it means that they are screwing the existing owners and charging too little for their credits they generated from the new resort.

WM was built on the founding principle that 10,000 WM credits bought back in 1990 (or thereabouts) for a 2BR Red week, will ALWAYS get you into a comparable 2BR in Red season for the life of the club. The owner who spent $1.00 per WM credit back in 1990 must have access to a 2BR Red week in the latest resort TW builds. This allows for a 3% inflation factor compounding over the years.

In reality, the units TW built/acquired in 1990, for instance, should have been compounding at 5% - 7%. That $1.00, TW charged back in 1990, should now be $2.29 in 2007 dollars at 5% inflation and $3.15 at 7% inflation. This is what TW should be charging new owners.

I’ve used Zillow.com to estimate the WM resort area growth and it seems to be 7% for the mainland and 9% in Hawaii.

What does this mean? TW’s salesreps find it much easier to sell $1.80 WM credits than $3.15 credits – it doesn’t take a Marriott type of super salesrep (Who makes $200k+) just a local real estate agent happy with $40k per year. Since TW isn’t about to give up profit for their master (Wyndham today, who knows tomorrow) they want existing WM owners to buy 2,000 more WM credits from them at a discounted $1.50 or $3,000 gross sales minus a commission and expense for a salesrep.

I doubt that most WM owners are into renting WM credits; they might borrow ahead and be short 2,000 credits next year. TW probably has programs that monitor this and when you borrow you can expect that salesrep ready to sell you “an exciting offer”.

Although TW turns the deeds over to WM paid in full, any charge over 10,000 WM credits per 2BR Red week is just a goldmine for TW – they get upgrade sales from existing WM owners. This would not be necessary of TW were charging $3.15 per new WM credit as they should be – they broke their commitment to the “theory of equals” and we are paying dearly for that.

 

[cotraveller]

WM was built on the founding principle that 10,000 WM credits bought back in 1990 (or thereabouts) for a 2BR Red week, will ALWAYS get you into a comparable 2BR in Red season for the life of the club.

Can you provide a reference to that statement? I cannot find it in any of the founding documents and I believe I have a complete set.

The credit values for the resorts that were in the system when I became an owner have not changed. That is what I was promised.

 

[cruisin]

Perry, 12k for 2BR at Las vegas red all year sounds right, Canmore is online right now with 12K 2 BR redweeks, 10k 1br, an 8k studios. How can the #1 Las vegas be less than this!! Also loved your advice on the perfect cup of coffee. Hey that must make this the official coffee shop

 

[PerryM]

No numbers while on vacation...

Crusin,
Thanks, yes the days of TW coffee in their cyberspace sales gallery are hopefully gone forever. (Inside joke for WM owners)


Fred,

Of course it’s not in writing – if it were we would be staying in Marriott quality WM resorts and new members would be paying $3.15 per WM Credit. This is where we should be today – not minimum II 5-star resorts. This is the “Big lie” that TW is pulling on WM and the TW dominated BOD. We should be reaping the benefits of the “Theory of Equals”, we are not.

The “Theory of equals” has been discussed in much detail here and on WMowners.com – it’s the foundation of any club based upon “like for like” usage.

Without getting into a mind numbing set of numbers here is what a club like WM is based upon:

Back in 1990 TW buys a condo for $100k and with 7% inflation for the resort area that same condo is worth $315k today.

That means that TW must buy/build a new condo worth $315k today to deposit that deed into the WM Master Trust and thus have access to the 60+ resorts.

I’m on vacation and don’t have the Auditor’s Report, but take any WM resort from the early 1990’s and figure the cost per condo. Compound that cost forward to 2007 with 7% real estate appreciation and you will see that the miserable $145k that TW paid for a condo is no where near what it should be adding to the Master Trust to have access to our 60+ resorts. TW should be paying much much more for new condos – much better quality resorts and closer to where the action is. Just a guess but TW should easily be paying $273k for a 2BR condo - Marriott quality.


When I get back from Maui next week I will supply mind numbing details which I have done many times before. Trust me, TW is making out like a bandit and to top it off they are charging more than the 10,000 credits for a 2BR Red week that all of this was built.

The reason TW can do this is very simple – the WM BOD had NEVER, did I mention NEVER, called for a real estate appraisal of the 60+ resorts – it should be Billions, we have no idea what it’s worth and thus TW can pull this stuff. A simple audit would stop this devaluation in it’s tracks – the exact reason why the WM BOD has never called for an audit of the Master Trust.

So although TW deposits a deed "Free and clear" it doesn't mean that TW is living up to it's end of the bargain - just what it wants to make with the littlest of work.