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Review of 10-k

Jason245

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I have taken a quick glance of the 10-k.

I don't believe I noticed any significant new or interesting information.

That being said since this question came up during the last few months:

HCNY - Revenue is recognized on a straight line over term of contract instead of at point of sale (this is why they don't like the RTU model and are trying to shift away from it).

Blackstone - They have a specific disclaimer that blackstone can more or less make them do things that are not in the best interest of hilton or the other shareholders due to their influance (spin off of Timeshare biz anyone?)

inventory - 6 years worth (lots of points in the system for them to rent directly). 85% of it is now 3rd party developed (in line with capital light model, but if that is all blackstone developed, kinda interesting).

Revenue - 75% from sales of intervals (as expected). less than 16% from resort ops.... between the management and sales, I think everyone can agree that the money and focus is on interval sales, management is ancellary at best, and only slightly more money then they get from interest on the loans they issue.

Blackstone - while there is only the 2014 example, it looks like they may be forcing the 3rd party developers to be blackstone subs for timeshare construction projects... (Just a reminder in case anyone forgot this)

Future developments:
" As of December 31, 2015, we are committed to purchase approximately $206 million of inventory over a period of four years. The ultimate amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances."

$206M sounds like old news (based on resorts that are comming). Anyone disagree?

"In 2014, we completed the sale of certain land and easement rights at one of our hotels to an affiliate of Blackstone in connection with a timeshare project. ...In 2014, we transferred $45 million of property and equipment to timeshare inventory as part of a conversion of certain floors at one of our owned properties into timeshare units.
"

This sounds like the embassy suites project.. .any thoughts?
 

1Kflyerguy

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I agree with your comments about the floor conversions being the Embassy conversions that have already been discussed.

Are you suggestion that the companies developing Hilton Head, Maui and other new resorts is affiliated with Blackstone or is comment about Blackstone Subs based on the floor conversions?

You may be better at deciphering the 10K than me...
 

Jason245

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I agree with your comments about the floor conversions being the Embassy conversions that have already been discussed.

Are you suggestion that the companies developing Hilton Head, Maui and other new resorts is affiliated with Blackstone or is comment about Blackstone Subs based on the floor conversions?

You may be better at deciphering the 10K than me...
If I had to guess, that developer making the resorts in south carolina is Blackstone affiliate. . As is whoever is doing embassy suits and maybe Maui too..it is a pretty effective way for Blackstone to make money on every side of transaction. . I wouldn't be surprised if they buy 100 percent of hgvc. The business is a cash cow for most part.

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1Kflyerguy

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If I had to guess, that developer making the resorts in south carolina is Blackstone affiliate. . As is whoever is doing embassy suits and maybe Maui too..it is a pretty effective way for Blackstone to make money on every side of transaction. . I wouldn't be surprised if they buy 100 percent of hgvc. The business is a cash cow for most part.

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I don't see development listed as business line for Blackstone, but it may just be too small to list. It would sort of go against the capital light model, but they probably have some relationship with the various developers, even if it just funding.

Personally I expect HGVC to remain a public company once they get spun off.
 

Jason245

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I don't see development listed as business line for Blackstone, but it may just be too small to list. It would sort of go against the capital light model, but they probably have some relationship with the various developers, even if it just funding.

Personally I expect HGVC to remain a public company once they get spun off.
An integrated supply chain with assets of a cash cow shielded from a resource intensive developer..

I wouldn't be surprised if hgvc spins off financing or sources it to another Blackstone company. ..

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