Observations from my leadership of the KBV ownership transitions committee
Quote from my previous post: “If the results had come back demonstrating the shortcomings of that alternative, then pursuit of renewal of the Wyndham foreclosure agreement would have been the only identified option. ALL OWNERS SHOULD CONSIDER WHY STUDY OF THAT OPTION WAS HALTED”
The current BOD statement cited the results from the 2018 surveys as part of the justification for awarding the resort management contract to Wyndham.
A recent owner survey indicated some owners want to divest themselves of their intervals for a variety of reasons. If you have tried to sell or even give away your interval, you have discovered it has no value on the resale market and there are few individual buyers. For this reason, the BOD has contracted with Wyndham Destinations to offer a solution to these owners that will allow them to exit their ownership at no cost to themselves or their family members. This solution also could go away if your BOD is removed.
A deeper discussion of those results might be useful to interested owners.
Partial results were shared
here on TUG in Feb 2019 in a 24 page pdf file. When interpreting the results, it is important to remember that survey respondents were volunteers and not a random sample of all owners. The file opens with the following statement: “This document contains partial results from the December 2018 survey. Some information has been removed for one of two reasons: (1) all comments have been removed; (2) questions which were only seen by owners who answered an earlier question a certain way.”
https://www.tugbbs.com/forums/index...r-2018-survey-results-initial-release.286527/
Page 2 indicates that about 79% of respondents own only one unit with the majority of those being an every-other-year unit.
Page 5 indicates that an equal 30% either almost always use their ownership to stay at KBV or almost always exchange to somewhere else. It has been reported that a bit under 10% of KBV occupancy is by owners; the way that under 10% is calculated excludes RCI Points and Wyndham club KBV owners who choose to stay at KBV.
Page 6 indicates that 29% of respondents are facing circumstances now that keep them from using their ownership.
My pre-election outsider’s (i.e. not privy to same info as board members) analysis of various rates of ownership transitions begins on page 7 of the pdf of my 2018 campaign position paper
Goodstein_KBV_BOD_2018 attached to post 101 at
https://www.tugbbs.com/forums/index.php?attachments/goodstein_kbv_bod_2018-pdf.6144/
Another bit of information in that pdf is the observation that the 45 KBV apartments not in the PAHIO timeshare had a market value equivalent of at least $5,000 per week while the timeshare units had a negative or negligible value.
I used other survey data not in the posted results file and resort manager reports generated for board members to update and calibrate an excel stock and flow model useful for what-if / sensitivity analysis. The model also includes a time profile of how those rates are likely to change in the future. While I shared that with the entire board, I suspect that I had the most understanding and appreciation of its utility as a decision support tool. Without going into detail, I discovered that while my campaign estimate of owners transitioning out (wanting to exit) was in range, the number of new owners coming in was overstated.
The following statement appears on page 10 of my 2018 campaign paper: “In order to address root cause 110, the KBV BoD should develop and deploy a marketing plan to identify characteristics of potential buyers likely to appreciate KBV (segmentation) and focus communications to reach them (targeting).”
Based on the survey comments, owners have many reasons for wanting to exit. Some are lifecycle events such as age, health and financial reversals. The solution of mutual benefit for those owners and the IOA is to have the aftermarket perceive those units having a positive value.
The leading non-lifecycle issues were the cost and stress of the long flight to Kauai for a short one week stay. The question occurred to me whether the ability to shift year of use either forward or backward with more lead time than submittal of reservation requests to enable a two week stay every two or four years would appeal to folks whose interest is to use. I have rented at a number of places on Kauai. I find the maintenance fees at KBV (ignoring the non-recurring initial purchase cost) to be a very fair deal compared to what I have to pay elsewhere (there are often cheaper deals for either last minute or lower tier places).
I developed a detailed illustration of a concept that I believe complies with Hawaiian regulations to enable flexing year of use by either one or two years depending on whether ownership was every year or every other year. While KBV governance documents do not currently permit it, that is something that could be changed provided the case could be made that this feature would appeal to a sufficiently large market segment to generate demand that equals or exceeds the rate of owners wanting to exit. Hence the motion approved at the May 2019 meeting.
C. Transition Committee Report - On motion of Director Goodstein, seconded by Treasurer Harrington, the Board Resolved that Grand Pacific should investigate and report the feasibility of developing and implementing the flex concept illustrated in the most current revision of file: Flexing Year of Use Concept rev [most current] to the Board. Deliverables include, but are not limited to: (1) an assessment of additional changes to the flex concept that may be required to assure compliance with Hawaiian regulations; (2) an assessment of its potential appeal to existing Owners who have only one annual or one every other year unit. This resolution does not authorize expenditure of funds for actual development, test or implementation of software. Progress to date shall be reported at every Board meeting. Additional more frequent updates via email are desirable but optional.
I dialed into or attended in person every schedule board meeting since May primarily to hear Grand Pacific report on progress as required in the motion. No such report ever occurred. I asked Larry Warner in person about it at the October board meeting. He verbally acknowledged telling them to postpone any effort on it.
Grand Pacific possesses the marketing tools to assess the appeal of the proposal. Excluding the backlog of IOA owned inventory and units currently in default (the combination of the two is substantial), the quantity of annual equivalent units needing to be transferred to new owner increases over the years and probably ranges between about one hundred currently and two hundred within a decade. The easiest folks to target with such an offering would be exchangers and renters experiencing KBV. There would be several obstacles to address in implementation of such a strategy. Without the results of the authorized but blocked assessment, there is no data on which to evaluate whether it would be worth pursuing.
Had the study not been blocked and the results indicated insufficient appeal, I might have concurred with the BOD contract with Wyndham: “. . . the BOD has contracted with Wyndham Destinations to offer a solution to these owners that will allow them to exit their ownership at no cost to themselves or their family members.” It certainly is a good deal for Wyndham to acquire additional inventory for their full retail sales division at essentially zero cost.
I continue to wonder why that simple marketing study was blocked. This is not the only approved board motion that the current president ignores. For instance,
https://www.tugbbs.com/forums/index...ahio-at-kauai-beach-villas-kbv-exists.282380/ documents “. . . The KBV BOD accepts the TUG expectation that the KBV BOD promote the use of the KBV Forum within TUG to all KBV IOA members in KBV’s email and US Postal mail communications. . . .” None of the communication from the Board since May 2019 (and little from prior to May) includes any mention of this forum. I reminded Larry of the commitment after the October board meeting. I consider its omission from the November 22, 2019 Letter from your KBV Interval Owners Association to be deliberate and not an oversight.
This was long. Mahalo to those who have read it in its entirety.
Jack Goodstein
p.s. There were two other options discussed. One was bulk purchases by one or more vacation clubs. The study of that option was authorized by a board motion in October 2018; Larry Warner expanded its scope without authorization (until May 2019) to replacement of the resort management contract. The other option involved de-annexation of units which upon analysis appeared to solve a problem KBV did not have now or in the foreseeable future.