What happens to your TS if HGVC goes bankrupt?

[skepticalone]

???

 

[TolmiePeak]

It depends.

 

[bnoble]

The likelihood of this happening is close to zero--and if it happens, there are probably bigger financial problems to worry about, because it won't happen in a vacuum.

 

[Tamaradarann]

???

I am not an attorney but I will give you my thoughts. Since the legacy HGVC resorts are deeded property you will still own a week at the resort that you own. However, the HGVC exchange system most probably will be defunct and that is what makes HGVC ownership so valuable unless you want to return to the resort you own in the unit that you own every year. The HOA's of the resorts would most probably need to find another management company since they don't want to and most probably can't manage the resort themselves.

 

[ljmiii]

If you own HGVC and not HVC you own what you've always owned - a deeded week in a particular unit, season, and resort. The ability to trade into other HGVC resorts through Club Reservations has always been subject to the continued existence and munificence of HGVC.

As a practical matter, HGVC disavowing the resort at which you own is a greater threat than bankruptcy. I would also guess that acquisition is a greater danger...but one never knows.

 

[dayooper]

The real estate that these resorts are on are worth more than I can imagine. There would be a major company that would buy it up.

Honestly, if HGV goes belly up, most hotel branded timeshares would be in trouble as well. The HOA would probably vote to dissolve the timeshare and it would be sold. After all of the debts are paid off, they would send the pittance out to the remaining owners.

 

[jp10558]

I agree with everyone else here. First, there'd have to be a pretty big change in the market, and something worse than the great recession would have to happen. Anyone buying HGV would most likely do what HGV did and not try and change the existing system much if any for all sorts of reasons.

But lets say somehow it goes under and no one buys it. Then like other people said, you've still got a deed for a week at a unit at a resort. Presumably suddenly you'd be able to use your own RCI, II, SFX, whatever exchange company account - though DEX probably dies with HGV. The HOA will look for someone to manage the resort - and it seems like it would have to be collapse of the entire US economy for someone like Vacation Village or Capital Vacations to not take the contract, in which case I would guess you'd be offered their internal exchange system also?

And if all else fails, and the resort can't operate independently, I guess dayooper is right, though I would probably expect at least in the thousands pay off after selloff of HGVC properties.

 

[Janann]

Timeshare bankruptcies are rare, and to the best of my knowledge a hotel-affiliated timeshare system has never filed for bankruptcy.

I agree with this though --

I would also guess that acquisition is a greater danger.

I see the worrisome system risks as acquisition, changing point charts, increasing fees, difficulty unloading the contract, etc.

You are going to buy resale, right? If that's the case, your financial risk would be rather small.

 

[Tamaradarann]

The real estate that these resorts are on are worth more than I can imagine. There would be a major company that would buy it up.

Honestly, if HGV goes belly up, most hotel branded timeshares would be in trouble as well. The HOA would probably vote to dissolve the timeshare and it would be sold. After all of the debts are paid off, they would send the pittance out to the remaining owners.

The way you word this makes me a little upset! Those timeshare owners that are delinquent on their maintenance would get what they want. They would no longer be required to pay their mainteance. I would hope that the pittance that they send out to the remaining owners doesn't go to those that were delinquent on their maintenance.

 

[dayooper]

The way you word this makes me a little upset! Those timeshare owners that are delinquent on their maintenance would get what they want. They would no longer be required to pay their mainteance. I would hope that the pittance that they send out to the remaining owners doesn't go to those that were delinquent on their maintenance.

When timeshares do go belly up (there have been cases of independent resorts that have gone bankrupt), they only paid those that were up to date. The bigger issue is those new board members of the HOA assessed outrageous special assessments to encourage owners to turn in their units for little or no money. The new owners would reap the benefits of more shares or more money paid to the HOA.

 

[Tamaradarann]

When timeshares do go belly up (there have been cases of independent resorts that have gone bankrupt), they only paid those that were up to date. The bigger issue is those new board members of the HOA assessed outrageous special assessments to encourage owners to turn in their units for little or no money. The new owners would reap the benefits of more shares or more money paid to the HOA.

The issue of Special Assessments is interesting and controversial. As I mentioned above our Condo has a very high contribution to the reserve every month. We do this to avoid Special Assessments and to plan for the repairs to the Condo that we anticiapte in future years. However, some onwers would like a much lower contribution to the reserve every month and Special Assessments as needed. Your example above is an interesting reason for NOT having special assessments. Furthermore, a large special assessment expenditure that can't be budgetted for is certainly upsetting to most owners. I am for adaquately funding the reserve rather than having special assessments.

 

[pedro47]

I cannot foresee this happening unless the whole United States economy hit rock bottom. IMHO.

 

[TolmiePeak]

The way you word this makes me a little upset! Those timeshare owners that are delinquent on their maintenance would get what they want. They would no longer be required to pay their mainteance. I would hope that the pittance that they send out to the remaining owners doesn't go to those that were delinquent on their maintenance.

This does bring up an interesting question. When many of those high rise condos on the beach in Florida go bankrupt and sold to developers how are they going to handle the people that didn't pay the special assessments?

 

[JIMinNC]

Also remember that in most bankruptcies the company does not cease operations. Operations continue as usual, but the bankruptcy allows them to reorganize their debts and capital structure. As an example, ALL of the three largest US airlines - American, Delta, and United - have filed for bankruptcy at least once. Some multiple times. Operations continued. Their creditors wound up with pennies on the dollar and shareholders were largely wiped out, but the company stayed in business and wound up with new owners and new creditors.

Having said that, sometimes the situation is so bad, reorganization isn't possible. Using the airline example again - that's how Eastern Airlines and Braniff ceased to exist. They were so far gone they couldn't reorganize.

HGV is nowhere near that point. While they are facing some earnings shortfalls when compared to the expectations, they are still expecting to earn a $1 billion profit in fiscal 2024. Their capital position is also still strong enough that they are planning to repurchase at least $600 million of stock over the next two years to add value for their shareholders.

 

[TolmiePeak]

Also remember that in most bankruptcies the company does not cease operations. Operations continue as usual, but the bankruptcy allows them to reorganize their debts and capital structure. As an example, ALL of the three largest US airlines - American, Delta, and United - have filed for bankruptcy at least once. Some multiple times. Operations continued. Their creditors wound up with pennies on the dollar and shareholders were largely wiped out, but the company stayed in business and wound up with new owners and new creditors.

Having said that, sometimes the situation is so bad, reorganization isn't possible. Using the airline example again - that's how Eastern Airlines and Braniff ceased to exist. They were so far gone they couldn't reorganize.

HGV is nowhere near that point. While they are facing some earnings shortfalls when compared to the expectations, they are still expecting to earn a $1 billion profit in fiscal 2024. Their capital position is also still strong enough that they are planning to repurchase at least $600 million of stock over the next two years to add value for their shareholders.

Excellent post. Which brings up the question why is a private equity firm buying up stock in Southwest Airlines? The airline industry is a terrible place to invest your money. Who has ever made serious money in the airline industry. I can't think of a worse business to be in. Maybe the grocery business?

 

[dayooper]

HGV is nowhere near that point. While they are facing some earnings shortfalls when compared to the expectations, they are still expecting to earn a $1 billion profit in fiscal 2024. Their capital position is also still strong enough that they are planning to repurchase at least $600 million of stock over the next two years to add value for their shareholders.

Yes, I completely agree. One bad quarter where they didn’t meet their earnings potential isn’t cause for bankruptcy or closure of the company. They still made money, and a fair amount of it.

Not to speak for the OP, it I took their question more as a what if they bought HGVC and the worst happened. The discussion just branched from there. If I’m wrong, I’m sorry.

 

[brp]

Excellent post. Which brings up the question why is a private equity firm buying up stock in Southwest Airlines? The airline industry is a terrible place to invest your money. Who has ever made serious money in the airline industry. I can't think of a worse business to be in. Maybe the grocery business?

"If you want to be a Millionaire, start with a billion dollars and launch a new airline."
- R. Branson

Cheers.