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The auction for Hilton Grand Vacations (HGV)

nuwermj

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Jan 2 -- Apollo remains high bidder for Hilton Grand Vacations, blog report claims. The auction for Hilton Grand Vacations (HGV) is taking longer than expected and one private equity firm has backed out, leaving Apollo Global Management's (APO) bid near $39 per share the highest, according to a report from Street Insider, citing sources. Centerbridge Partners has also bid, though its offer was below Apollo's, according to the report, which added that a final deal "could still be weeks away."

 
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Talent312

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Hilton will rue the day they spun off HGV and failed to retain a controlling interest.
There will be wailing and gnashing of teeth among both Hilton execs and TS owners.
Sad, but true... The lowest common denominator wins.
.
 

seagila

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The Lagoon Tower by Diamond Resorts at Hilton Hawaiian Village or the Diamond Club New York don't quite sound right. On the other hand, Ka'anapali Beach Club by Hilton Grand Vacations or Embarc Vancouver by Hilton Club has a nice ring to it :) Gotta roll with the punches on these things.
 

CalGalTraveler

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Apollo APO must be desperate to want to pay this much... Hope Hilton HLT is still in the game as this merger would bring negative brand connotation and confusion to being a "Hilton Diamond" elite member vs. a "Hilton Diamond" owner :ponder:

OTOH if HLT revokes the brand license, then the deal is worthless to APO and they might as well not buy because they don't need more properties.
 
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bogey21

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Want to guess what changes Apollo will make to Hilton TS Owners? Let me predict they won't be well received...

George
 

escanoe

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There was a thread here starting last August that quite thoroughly explored all rampant speculation of what might (or might not) be in our future. It went on for 22 pages before being put out of its misery by the moderator.

Want to guess what changes Apollo will make to Hilton TS Owners? Let me predict they won't be well received...

George
 

nuwermj

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OTOH if HLT revokes the brand license, then the deal is worthless to APO and they might as well not buy because they don't need more properties.

This is why I expect Apollo has already worked out an agreement with Hilton regarding the branding issues.
 

escanoe

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Or perhaps them working on an agreement is why this has drug out as long as it has. There is no way a sale would become final without this being worked out in advance.

This is why I expect Apollo has already worked out an agreement with Hilton regarding the branding issues.
 

Tamaradarann

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Or perhaps them working on an agreement is why this has drug out as long as it has. There is no way a sale would become final without this being worked out in advance.
I agree with you that if I was the one pulling the strings at Apollo I wouldn't touch this deal if the details with Hilton Hotels were not worked out. However, I am not the one pulling the strings and while I know my net worth is much less than the ones that are pulling the strings I have a lot more confidence in my judgement than theirs. Furthermore, there are details and there are details. They may think they worked out all the important details, however if they haven't walked the walk they don't know all the little things that will make the deal difficult for everyone involved down the line. I am in the HHV right now and since this is a joint timeshare/hotel resort a couple of things were mentioned yesterday that I know they haven't thought of. The front desk staff, bellmen, housekeepers have local 5 union membership that crosses the line between timeshare/hotel portions. What happens if Apollo has a different view, pay standard, benefits etc. There is a directive that mail and packages(add we get a lot while we are here) are going to start to be sent to the Hilton Hotel business office instead of being picked up in the Grand Waikikian. How is that going to work? The landscaping is performed by the Hilton Hotel side of the property. The Gym is in the Kalia Tower which itself is a joint Hotel Timeshare building. In my professional life I had to deal with these types of split relationships at a University. It was a disaster that I didn't enjoy and hurt the delivery of service.
 

tombanjo

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Since in many cases HGVC is the management company, not the owner of the property, and in others, (as indicated above) inextricably integrated into Hilton Hotel properties, (the District, Residences, HCNY come to mind) - a change in ownership seems fraught with peril for a new owner. It's not like buying Applebee's or something, where even if there are company restaurants and franchises, they are all on the same page. HGVC is a sprawl of diverse deals and situations which may (I assume) have the ability of the the board at each location to walk away from the management company. Of course the mantra of "I want profit now" drowns out the long term ability of a company to survive. If Apollo can buy and sell off pieces and destroy HGVC in a few years for a "return", I'm sure they're ok with that.
 

Tamaradarann

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Since in many cases HGVC is the management company, not the owner of the property, and in others, (as indicated above) inextricably integrated into Hilton Hotel properties, (the District, Residences, HCNY come to mind) - a change in ownership seems fraught with peril for a new owner. It's not like buying Applebee's or something, where even if there are company restaurants and franchises, they are all on the same page. HGVC is a sprawl of diverse deals and situations which may (I assume) have the ability of the the board at each location to walk away from the management company. Of course the mantra of "I want profit now" drowns out the long term ability of a company to survive. If Apollo can buy and sell off pieces and destroy HGVC in a few years for a "return", I'm sure they're ok with that.

Wow, I thought that I made a strong case for Apollo not taking over HGVC. The case that you make is really scary. Are you suggesting that Apollo would actually sell off HGVC properties? If the properties are timeshares wouldn't it be the timeshare owners right to sell or not sell the property? HGVC only manages the property after they sell off the timeshares.
 

tombanjo

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I am being a bit cynical. However, there are certainly assets that could be sold. For instance the new properties in New York (Quin and Central) are probably mostly developer owned still. There are certainly examples of buildings like Elara that have more than one group owning. Realistically, they probably want to leverage the Hilton name onto other properties and dilute the value for existing HGVC owners, but boost their value in the larger amount of properties they have under Diamond. Read the 22 pages of supposition for other eye watering scenarios.
 

brp

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I am being a bit cynical. However, there are certainly assets that could be sold.

There are companies that make decisions based on sound fundamentals and the long game for returns. And there are some that, as you say, look for the short term. I know nothing about Apollo, but it will very much depend upon how they lean.

Cheers.
 

jabberwocky

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There are companies that make decisions based on sound fundamentals and the long game for returns. And there are some that, as you say, look for the short term. I know nothing about Apollo, but it will very much depend upon how they lean.

Cheers.

My experience with Apollo is that they tend to be very short-term oriented. They won't want to be in this position for the long run. If Diamond had worked out for them they would have sold it by now - acquiring HGVC is probably part of that exit strategy.
 
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