Worldmark abandoning their business model

[BocaBum99]

My view on this subject is as follows. Trendwest operates just like every other timeshare developer of a multi-site timesharing plan. They build or acquire timeshare resorts and put them into a trust so that accommodations are available via a reservation system.

Their business model requires them to have 50% sales and marketing costs, so they need to find ways for consumers to buy from them without fully evaluating their alternatives.

As a result, there is a huge disconnect between developer prices and resale prices. So, the resort developer needs to take actions that enable continued sales. Part of it requires them to implement developer only features such as VIP programs along with propaganda campaigns meant to put fear, uncertainty and doubt as to the viability of a resale purchase.

So, WorldMark and Trendwest are just acting in a business as usual situation for timesharing. This has worked for many years even though the industry is subsidized by the vast majority who originally bought from the developer.

One of the natural outcomes of this business model is that the resort developer attacks the existing owners and devalues those current timeshares in order to continue selling new units. This further exacerbates the gap between resale and developer purchases until something like ROFR is instituted to articifially prop resale prices to make them appear stronger than they actually are.

What is different here is that a small group of highly motivated owners is trying to seize control of the board to flip that business model into something different. Theoretically, it could be better for owners. But, there are no large scale timeshare businesses around that have proven that a business other than the current one is viable for a resort developer.

So, achieving Board independence could actually hurt the club.

Only time will tell.

For me, I'd like to see WorldMark with an independent board. The timeshare industry needs a new business model and this could be the start of it.

 

[RichM]

The spin and moan continues. Read that section 8 again that everyone here seems hard over about.

neither Declarant nor Club is obligated to develop or annex any additional property.

WorldMark has never developed any property nor have they annexed any property. As stated in the Vacation Program Agreement those functions have been preformed by Trendwest. Trendwest places those properies in the WorldMark system which is a right they are guaranteed by that agreement. The founders knew what they were doing, that guarantee is solid.

The point of that section is that if Trendwest (Declarant) wants to develop new property, the Club is not obligated to accept it, nor is Trendwest obligated to do so. The process of adding something smaller to a larger, whole is called "annexation" - WorldMark does this any time property is added to the Club.

However, if you understand the context in which all of this language actually takes place, you'll realize that each Declaration really applies only to the instant property to which it relates. So, in effect, all Section 8 means is that even if there were plans to develop additional units or future phases of an existing resort on adjacent land at the time the original phase was turned over, Trendwest isn't obligated to complete and turn those phases over as a result of the original Declaration. It's more clear in Recital E:

E. Phases. The Property may include an unlimited number of
Units and/or additional Property, whether fixed or mobile, to be
added in additional Phases by a Declaration of Annexation or
Additional Declaration under Restriction 8 below.

.. which once again references the same Section 8 regarding bilateral non-obligation.

Nevertheless, the part of this whole document that makes it obvious that WorldMark, in general, need not simply take anything Trendwest gives it is the fact that WorldMark must sign, as co-Declarant, any of these Declarations. Plus, common sense would say that one corporation is not required to simply accept property from another corporation, including the property tax liabilities thereof, without any say-so.

___________________
WorldMark Owners' Community -

- www.wmowners.com

 

[cotraveller]

Personally, I don't care what the resale price is and it has no bearing on my disappointment with the possibility of all future resorts having higher credit values than what seemed to be the model for the Club since inception.

If you truly want "all kinds of places to go", then it would seem you might care about this issue, also, unless you plan to continually upgrade your account size to keep up with rising credit values, otherwise we'll be stuck with dwindling availability at the existing lower-cost resorts.

A bigger concern for all shoud be that a few are hard over on following a course of action that could place WorldMark in violation of the governing documents. A course of action that at times has advocated taking legal action against WorldMark, Trendwest, or both. That is a sure lose-lose scenario for all owners.

Nevertheless, the part of this whole document that makes it obvious that WorldMark, in general, need not simply take anything Trendwest gives it is the fact that WorldMark must sign, as co-Declarant, any of these Declarations.

The Vacation Program Agreement is very clear on that point. You phrased it correctly, they must sign the Declaration. There is no mention of WorldMark having the legal right to refuse to sign.

 

[PerryM]

Termites!

Mtngal,

I’m not sure I understand your post #73 – so I’ll recap my attitude as a WM owner.

WM is a great timeshare – I would have sold our credits long ago if it wasn't. I recommend WM to many folks all the time.

WM has many problems that are eating away at it’s foundation – kind of like termites:

1) One of them is the WM BOD – it’s infested with TW employees who have little interest in WM – they get their paycheck from TW.
2) No CEO of the $1,500,000,000 real estate holdings we own – no employees to represent 230,000 WM owners
3) TW has found guilty of violating California State laws and these same clowns are taking on fiduciary responsibilities for the 230,000 WM owners
4) TW has violated the “Theory of Equals” and is degrading the value of our Club
5) TW is in a struggle to depress our resale value of our WM credits – to make more profit for TW stockholders. TW can introduce add-ons that will directly affect 230,000 WM owners holdings
6) TW is the sole management company – we need to foster competition and allow our own employees to takeover many of those tasks on a permanent, in-house, way. The remaining tasks need to be let out for competitive bidding.

To address these problems we need to:
1) Control the WM BOD with non-TW paid owners
2) Hire a CEO and management team that work for the 230,000 WM owners
3) Immediately stop all new construction for a 5-year period while we rebuild our Club with our own employees. If it should happen faster then acquisitions could continue in less than 5 years

Just as the TW salesreps force the new owner to bypass due diligence in the 90-minute sales tour, so has TW forced WM owners into not doing due diligence when it comes to the operation of WM the Club - there are NO WM EMPLOYEES to stand up for us.

WM is unique in the timeshare universe and new frontiers await WM owners as we break free from the TW strangle hold which is depressing our investment. The simple fact that WM resale credits sank from 80¢ to 70¢ while TW increased their sales price from $1.55 to $1.80 is a testament that WM owners have lost confidence in the status quo.

This is a horrific loss of real estate value for the WM owners. TW increased their price by 16% while our resale price decreased 13% for a net relative loss of 29% in just 3 years! I don’t know how long we can keep this hemorrhaging going on.

What makes WM owners think that the arrogance TW showed towards California laws is not shown towards WM owners daily?

 

[T_R_Oglodyte]

A bigger concern for all shoud be that a few are hard over on following a course of action that could place WorldMark in violation of the governing documents. A course of action that at times has advocated taking legal action against WorldMark, Trendwest, or both. That is a sure lose-lose scenario for all owners.



The Vacation Program Agreement is very clear on that point. You phrased it correctly, they must sign the Declaration. There is no mention of WorldMark having the legal right to refuse to sign.

So, if I'm following your logic, the statement in Setion 8 that neither Declarant nor Club is obligated to develop or annex any additional property is tantamount to they must sign the Declaration.

 

[bogey21]

I have read the entire 4 pages of this thread. Why, I don't know but it kind of sucked me in. Facinating!! When I was finished, I said to myself "Now I know why I sold my four Marriotts and bought seven 'el-cheapos'". If things start heading in a direction I don't like with one (or even all) of my Weeks, I just sell it on Ebay or donate it to charity, buy another "el-cheapo" and move on!!

GEORGE

 

[T_R_Oglodyte]

I have read the entire 4 pages of this thread. Why, I don't know but it kind of sucked me in. Facinating!! When I was finished, I said to myself "Now I know why I sold my four Marriotts and bought seven 'el-cheapos'". If things start heading in a direction I don't like with one (or even all) of my Weeks, I just sell it on Ebay or donate it to charity, buy another "el-cheapo" and move on!!

GEORGE

Yep - it makes me glad we rescinded before getting too involved. It makes Vacation Internationale increasingly attractive.

 

[RichM]

So, if I'm following your logic, the statement in Setion 8 that neither Declarant nor Club is obligated to develop or annex any additional property is tantamount to they must sign the Declaration.

Thanks for pointing that out.. saves me the keystrokes.

Let me clarify since Fred's "spinning" my words.

Without a WorldMark representative's signature on the Declaration, the property cannot be accepted by WorldMark. However, there's no evidence in any of the documents I've seen that states that every Declaration offered must be blindly accepted.


___________________
WorldMark Owners' Community -

- www.wmowners.com

 

[Sydney]

Yikes, I'm in the process of buying Worldmark. Maybe I should just forget about it.

 

[ragtop]

OK, I'm meeting with John Henley today, I'll ask him. But even if not, you can ask them yourself or anyone who attended that board meeting (Jim Pappas, Gil Bellamy, Nena Gray). It will be next week before I can post the email if I get permission, I'm in Seattle for the Worldmark board meeting.

Thank you - by the way I don't know how anyone can disagree with the principle that the WM Board should be independent of TW/Cendant/Wyndham; I don't disagree!

 

[cotraveller]

Thanks for pointing that out.. saves me the keystrokes.

Let me clarify since Fred's "spinning" my words.

Without a WorldMark representative's signature on the Declaration, the property cannot be accepted by WorldMark. However, there's no evidence in any of the documents I've seen that states that every Declaration offered must be blindly accepted.

No spinning here, I'm just quoting the documents. The section 8 that you have been refering to with the statement "neither Declarant nor Club is obligated to develop or annex any additional property" is in the declaration for an inividual resort.

I am referring to the Vacation Program Agreement, a higher level document which defines the relationship between WorldMark and Trendwest. As I previously posted, it states

"Club, as the legal owner or ultimate lessee of the Property in the Program and subject to the provisions of Section 8 of the Declaration, hereby agrees to execute and join in a Declaration of Vacation Owner Program or a Declaration of Annexation imposing upon all of the property in the Club (including, but not limited to any additional Units purchased by Declarant and conveyed to Club) the mutual and beneficial restrictions, covenants and conditions of the Program."

Seems pretty clear, club agrees to execute and join in a Declaration of Vacation Owner Program . . . There is nothing in that statement that provides for exceptions. Failure of WorldMark to execute and join in the Declaration by not signing it would be a violation of the Vacation Program Agreement.

 

[cabobill]

Comparing apples to oranges...

No spinning here, I'm just quoting the documents. The section 8 that you have been refering to with the statement "neither Declarant nor Club is obligated to develop or annex any additional property" is in the declaration for an inividual resort.

I am referring to the Vacation Program Agreement, a higher level document which defines the relationship between WorldMark and Trendwest. As I previously posted, it states

"Club, as the legal owner or ultimate lessee of the Property in the Program and subject to the provisions of Section 8 of the Declaration, hereby agrees to execute and join in a Declaration of Vacation Owner Program or a Declaration of Annexation imposing upon all of the property in the Club (including, but not limited to any additional Units purchased by Declarant and conveyed to Club) the mutual and beneficial restrictions, covenants and conditions of the Program."

Seems pretty clear, club agrees to execute and join in a Declaration of Vacation Owner Program . . . There is nothing in that statement that provides for exceptions. Failure of WorldMark to execute and join in the Declaration by not signing it would be a violation of the Vacation Program Agreement.

Thank you Fred for your clarification! It is easy to search out outdated governing documents to individual resorts or RC Programs to bolster a mis-leading argument. The ONLY document that is updated regularly and takes precedence over individual resort declarations is the Master Vacation Program Agreement you are quoting from.

 

[RichM]

We're still quoting the same document. That "hereby agrees" is talking about that one document, which applies to that one property. Just because that one document says that the Club "hereby agrees to execute a Declaration..." for the property mentioned in said Declaration doesn't mean the Club, therefore, agrees to execute a like Declaration for any and all future, unnamed properties.

In fact, the Club doesn't even agree to execute that Declaration until such time as it is actually executed (i.e. signed). And, as clearly stated in your quote, execution of that Declaration is again subject to Section 8 which does not obligate any further development or annexation either by Trendwest or WorldMark.

I guess I could just quote Gene Hensley from tonight's meeting:

Can the Board refuse a resort on behalf of the Club? Yes. Have we. Yes.

___________________
WorldMark Owners' Community -

- www.wmowners.com

 

[PerryM]

Point…Point…

In my official capacity as a Referee/Judge of Tae Kwon Do I award RichM 1 Point each against a tag team of 2 opponents – 2 Points total awarded for heavy body blows to your opponents – well done.

(I will be a Referee at the World Martial Arts competition in Milwaukee on 11/11/06 – this is a shameless plug for a sport I love)

Just how many other concepts/ideas float around with WM that are completely bogus in nature? “Opponents to your respective corners” we shall see in more rounds to come…..

 

[BocaBum99]

The Vacation Program Agreement is very clear on that point. You phrased it correctly, they must sign the Declaration. There is no mention of WorldMark having the legal right to refuse to sign.

Property rights cannot be transferred without the transferree and the tranferror agreeing on the transaction. And, that must happen on a transaction by transaction basis.

The question is whether or not a pre-existing agreement that specifies that one party must take anything the other party wants to give it is enforceable. I actually doubt that it is.

If tested in the courts, I'll bet that one clause would be struck down.

 

[cotraveller]

We're still quoting the same document. That "hereby agrees" is talking about that one document, which applies to that one property.

Nope, don't think so. The "hereby agrees" statement is in Section 3.1 of the Vacation Program Agreement which applies to the relationship between WorldMark and Trendwest, not to any specific property. The Section 8 that keeps coming up is in the Declaration, which does apply to a single resort.

Yes properties have been rejected - before Trendwest developed or acquired them, including the cruise ship a few years back. But not after the fact.

Instant replay has overuled the referee, the score remains tied. Who decared this a game with referees anyway? I must say that is nicer than the previous declaration of war or suggestions of legal action.

 

[BocaBum99]

Yikes, I'm in the process of buying Worldmark. Maybe I should just forget about it.

Sydney,

The stuff we are talking about on this thread are esoteric arguments about a club that actually operates quite well as you have seen.

Nothing here is new. All Points systems have the same types of issues.

It's just that WorldMark owners are more vocal about their club than others are.

If the WorldMark board continues to be dominated by Trendwest, it will operate just like most other point systems. And, it will continue to operate much as it does today. It's true that Trendwest is diluting our ownerships when they add new resorts. But, that's par for the course for every point system.

If owners take control, all bets are off. I doubt that WorldMark will expand much because I don't believe any developer would work under the conditions that an independent board would support. It would be hard to generate new sales.

 

[PA-]

...If owners take control, all bets are off. I doubt that WorldMark will expand much because I don't believe any developer would work under the conditions that an independent board would support. It would be hard to generate new sales.

I disagree strongly with this statement.

Trendwest has threatened to walk away if the relationship changes. They paid $900,000,000 for Trendwest, they'll not leave unless it's kicking and screaming all the way.

If they did, the owners could develop new resorts without Trendwest's 75 percent premium for cost of sales, marketing, admin and profit by pre-selling credits to owners.

Developers would line up to take over Trendwest's lucrative position.

 

[ragtop]

Developers would line up to take over Trendwest's lucrative position.

This is undoubtedly true, but it begs the question: would any of them do any better than TW? Despite some slip-ups, it seems like TW delivers real value to WM when it brings new resorts in New Mexico, San Diego, Solvang, Indio and other nice places in a relatively short time. Would any other developer do better without getting compensated in some fashion about as much as TW gets?

 

[PA-]

This is undoubtedly true, but it begs the question: would any of them do any better than TW? Despite some slip-ups, it seems like TW delivers real value to WM when it brings new resorts in New Mexico, San Diego, Solvang, Indio and other nice places in a relatively short time. Would any other developer do better without getting compensated in some fashion about as much as TW gets?

Maybe, maybe not. We've seen on this thread that a case could be made either way. But regardless of all else, the club is comprised of Worldmark, the management company and the developer. It would definately be in the owners interest for at least the club to be represented by owners. My point is that Trendwest isn't voluntarily going to leave, and that even if they did, there are other options that would be as good, if not better.

 

[BocaBum99]

I disagree strongly with this statement.

Trendwest has threatened to walk away if the relationship changes. They paid $900,000,000 for Trendwest, they'll not leave unless it's kicking and screaming all the way.

If they did, the owners could develop new resorts without Trendwest's 75 percent premium for cost of sales, marketing, admin and profit by pre-selling credits to owners.

Developers would line up to take over Trendwest's lucrative position.

Name one major point system that has an owner controlled board. Why do you think that is?

It is more likely that Trendwest will fight until the bitter end to prevent an independent board. When owners take control, that $900M investment probably becomes worth less than half. That's why they are fighting so hard.

It is an untested theoretical exercise to believe that the market is ready for a large scale point system with an owner controlled board and even a larger leap of faith that pre-selling credits to current owners would be profitable enough to interest a resort developer. It might be interesting to some builder that is NOT in the timeshare industry who is simply a general contractor of resort condos.

If you do win that battle for an independent board and I were the CEO of Wyndham, I would seriously consider taking my loss, selling out to some other developer and building Wyndham Vacation Resorts with a developer controlled board. And, I would eliminate the loop hole of potentially enabling an owner controlled board. That may have a higher return than catering to an owner controlled board.

Wyndham won't want to take a balance sheet write down if that happens, so they will perfume the pig and try to "sell" it to someone else and cover up the loss.

I believe this has a higher probability than Wyndham taking orders from a group of non-industry timeshare owners.

Don't get me wrong. I am in favor of an owner controlled board. I just think that Wyndham will be more likely to sell their position in WorldMark resort development than catering to the needs of that owner controlled board.

You could be right, but I could be right, too. For me to be right, Wyndham just needs to find a buyer of the asset. For you to be right, you need to have a resort developer who only knows one way to sell timeshares agree to try an untested marketing strategy and take orders from a handful of owners who aren't on the Forbes 400. I just don't see it.

 

[roadsister]

Ragtop,

Let me give you the facts about the makeup of the Worldmark Board of Directors:

1. They are ALL owners.
2. Peggy Fry currently works for TW and gets a check from TW.
3. John Henley was a Worldmark Owner 2 years BEFORE he went to work for TW. He currently gets a check from TW South Pacific and lives in AUS.
4. Jack McConnell is retired from Cendant and does NOT work nor get a check from TW, never has.
5. John Walker does not work for TW nor does he get a check from TW.
6. Gene Hensley is retired and does not get a check from TW as he stated publicly at the Owner's meeting.
None of the board members receive paychecks from Worldmark The Club. They are not compensated.
These are the facts.

The perception by some is that these board members don't have brains; because they worked for a company they are incapable of making a decision on their own for the good of the club; they love screwing themselves and all Worldmark owners in the a_s by voting exactly the way TW would have wanted -- any reasonable person would know better. But the 'spin' is put on it all the time....i.e. they are all TW, the board is infested with TW employees, they only look out for salespeople, etc.

 

[PA-]

Name one major point system that has an owner controlled board. Why do you think that is?

It is more likely that Trendwest will fight until the bitter end to prevent an independent board. When owners take control, that $900M investment probably becomes worth less than half. That's why they are fighting so hard.

It is an untested theoretical exercise to believe that the market is ready for a large scale point system with an owner controlled board and even a larger leap of faith that pre-selling credits to current owners would be profitable enough to interest a resort developer. It might be interesting to some builder that is NOT in the timeshare industry who is simply a general contractor of resort condos.

If you do win that battle for an independent board and I were the CEO of Wyndham, I would seriously consider taking my loss, selling out to some other developer and building Wyndham Vacation Resorts with a developer controlled board. And, I would eliminate the loop hole of potentially enabling an owner controlled board. That may have a higher return than catering to an owner controlled board.

Wyndham won't want to take a balance sheet write down if that happens, so they will perfume the pig and try to "sell" it to someone else and cover up the loss.

I believe this has a higher probability than Wyndham taking orders from a group of non-industry timeshare owners.

Don't get me wrong. I am in favor of an owner controlled board. I just think that Wyndham will be more likely to sell their position in WorldMark resort development than catering to the needs of that owner controlled board.

You could be right, but I could be right, too. For me to be right, Wyndham just needs to find a buyer of the asset. For you to be right, you need to have a resort developer who only knows one way to sell timeshares agree to try an untested marketing strategy and take orders from a handful of owners who aren't on the Forbes 400. I just don't see it.

Vacation Internationale was the first points based timeshare, a few years before Worldmark. Not only did Trendwest copy their program, they even copied their locations (though VI built in high demand areas, TW built 15 miles from all the VI locations). For example, VI built in Sun River, TW bought Eagle Crest. VI built in Sun Valley, TW in McCall. Building 1 at The Village at Steamboat is VI, building 2 is worldmark. Some units at Valley Isle are VI, some are worldmark. VI is in the whistler village. Worldmark is in the whisler village, and also in a horrible building 1/2 mile away. etc.

The development company that controlled VI sold out to Sunterra, which proceeded to implement the same strategy as Trendwest is now engaged in. They absolutely ran VI into the ground. When VI finally succeeded in booting Sunterra (after a protracted court battle), the independent board spent the next few years analyzing the carnage wreaked by Sunterra and doing all the deferred maintenance, etc.

VI is now finally on the road to recovery and adding new resorts, with VRI as their management company. They absolutely have total control of their own affairs, and VRI is satisfied with the arrangement.

VI, at this point, is smaller than Worldmark, but still one of the largest points based timeshares around. And totally run by an independent board. They had a superior product prior to Sunterra, and have a good product now, on their way to once again having a great product.

You need to understand that the Trendwest of today is not close to the Trendwest that built Worldmark.

 

[roadsister]

Quote:
Originally Posted by Sydney:
Yikes, I'm in the process of buying Worldmark. Maybe I should just forget about it.

Quote:
Posted by BocaBum:
Sydney,

The stuff we are talking about on this thread are esoteric arguments about a club that actually operates quite well as you have seen.

Nothing here is new. All Points systems have the same types of issues.

Sydney,
Boca is correct in his post above, none of this is new...and most of the arguments/discussions have been around for years. As you have owners continually come on board, the same ideas surface again.

And PA is correct, the Trendwest of today is not close to the Trendwest that built Worldmark - the one thing that needs to be understood is in the old days it was very slow going in getting new resorts, units were part of another timeshare or complex, and the resorts were very small. The previous developer sold out because they did not want to be in the timeshare business. I was an owner at that time and remember it well...

Another thing that needs to be pointed out is that there are more resorts that AREN'T near VI resorts than are. I'm not sure the model was exact in that our resorts are debt free....not sure VI units were.

Gee, I also remember hulahoops, the Ed Sullivan Show, and transformers for my kids....times change.

 

[PerryM]

3 things need to be done

Ragtop other others,

WM has many problems which result from the simple fact that WM has NO employees – it’s a hollow $1.5 B organization. We need to hire a CEO and a management team who can then decide how to expand the club.

With 60+ resorts, WM needs to grow up, assume the mantle of responsibility for those 60+ resorts, and not pawn those responsibilities off to the hired construction contractor. The current BOD is deaf and blind to this fact. And why the heck is the BOD involved in day-to-day operations of our Club?

Once a WM CEO is hired and a complete staff to handle the day-to-day operations of an organization equal to ANY timeshare developer out there we can start to address WM’s future.

To ignore the fact that NOT ONE single WM employee exists is folly – any decisions based on TW lackeys for our survival dooms us to the manhandling we currently are experiencing from TW. TW exists solely for the benefit of their stockholders - WM is far down on the list of things to worry about.

To me there are but 3 important items to accomplish:

1) Elect 100% WM owners, to the BOD, who have NO connection to TW – none, zip, zilch – who view TW as the hired help
2) Hire a CEO and build a management team
3) 5 year moratorium on new construction while we rebuild our club – TW can find other things to do in those 5 years while we free ourselves from their deplorable practices and tactics that are currently killing our club

Should folks consider WM as a timeshare resource? My opinion is yes, there are many areas that WM is superior to ANY timeshare out there. These superior areas far outweigh the turmoil that we are currently going thru.

Of course, it goes without saying, that buy your WM credits resale and save 60% for the SAME IDENTICAL timeshare. You don't need TW at this stage - why do we need them at ANY stage of ownership?