WYND costs

[HitchHiker71]

Wyndham could offer a resale to developer conversion package for a limited time.

Interesting idea - how do you see this working?

 

[Richelle]

Interesting idea - how do you see this working?

I would assume they would take away the resale designation from one or more resale contracts with the purchase of new points. They did that in the past I believe, but that was a long time ago. I am not sure Wyndham would go that route because it would mean someone who spent $1 on 300,000 points, can turn around an buy 105,000 points and end up with Advantage VIP status for the price of 105,000 points. It’s one thing to do it with PIC, which has been around since the Fairfield days. Its been around a long time and not a big secret. It is published in the directory many new owners do not bother to read. This would be a policy change. A policy that has been in place for many years. A policy that has given owners a reason to pay full retail if they wanted VIP. It would be like any company giving away a product or service people spent a lot of money for. It’s possible they would do it if they were REALLY hurting. They would do a lot of things to stay afloat. If they’ve gotten to the point where they have to reduce the value of their product that much, it may not be a good idea to invest anymore money because they are in serious financial trouble.

 

[cbyrne1174]

Why dont they just do what Marriott and Hilton have done and make the transfer fee a lot higher. Marriott charges a minimum of $4,500 to transfer the smallest point allotment you can own.

 

[Eric B]

Why dont they just do what Marriott and Hilton have done and make the transfer fee a lot higher. Marriott charges a minimum of $4,500 to transfer the smallest point allotment you can own.

Interesting idea, but there might be contractual issues with it. I'd have to go back and look over my contracts to see if they specify the transfer fees - that's included on some of my other TS. Raising the transfer fee from $299 to something like $4,500 would probably result in quite an uproar from current owners that sell their contracts, though it's probably a small percentage based on some earlier threads. Raising barriers to resales might result in increased defaults on MFs and get them over the coals with the HOAs, too.

 

[cbyrne1174]

Interesting idea, but there might be contractual issues with it. I'd have to go back and look over my contracts to see if they specify the transfer fees - that's included on some of my other TS. Raising the transfer fee from $299 to something like $4,500 would probably result in quite an uproar from current owners that sell their contracts, though it's probably a small percentage based on some earlier threads. Raising barriers to resales might result in increased defaults on MFs and get them over the coals with the HOAs, too.

Is that why Marriott MF are so much higher? I thought they just put more $$ in their units and resorts.

 

[Eric B]

No idea - I don't own any Marriott, primarily because the MF are so much higher.

 

[paxsarah]

Interesting idea, but there might be contractual issues with it. I'd have to go back and look over my contracts to see if they specify the transfer fees - that's included on some of my other TS. Raising the transfer fee from $299 to something like $4,500 would probably result in quite an uproar from current owners that sell their contracts, though it's probably a small percentage based on some earlier threads. Raising barriers to resales might result in increased defaults on MFs and get them over the coals with the HOAs, too.

I'd be surprised if it's contractual, because they raised it from $99 to $299 around 9 years ago without issue. If there was some sort of contractually specified transfer fee, it would have come up at that point.

 

[dgalati]

Interesting idea, but there might be contractual issues with it. I'd have to go back and look over my contracts to see if they specify the transfer fees - that's included on some of my other TS. Raising the transfer fee from $299 to something like $4,500 would probably result in quite an uproar from current owners that sell their contracts, though it's probably a small percentage based on some earlier threads. Raising barriers to resales might result in increased defaults on MFs and get them over the coals with the HOAs, too.

Why would anyone pay a $4500 transfer fee for a resale ownership that is worth less then $100. It would be easier to walk away and use non-judicial anti-deficiency laws. These laws were intended to protect timeshare consumers from a high transfer fee like this. Wyndham also counts on resale buyers to pay maintenance fees. A higher transfer fee would create a problem for HOA's WHEN OWNERS WALK AWAY AND STOP PAYING MAINTENANCE FEES.

 

[dgalati]

I'd be surprised if it's contractual, because they raised it from $99 to $299 around 9 years ago without issue. If there was some sort of contractually specified transfer fee, it would have come up at that point.

I personally feel the $299 transfer fee is to high. A $4500 transfer fee would be equal to the beating the Transfer companies are giving the owners. It would also help Ovations take back more free deeds.

 

[cbyrne1174]

Why would anyone pay a $4500 transfer fee for a resale ownership that is worth less then $100. It would be easier to walk away and use non-judicial anti-deficiency laws. These laws were intended to protect timeshare consumers from a high transfer fee like this. Wyndham also counts on resale buyers to pay maintenance fees. A higher transfer fee would create a problem for HOA's WHEN OWNERS WALK AWAY AND STOP PAYING MAINTENANCE FEES.

Marriott doesn't have any difference between resale and developer. You can get point discounts with resale points., up to 30%. This discount is only if you own 10,000 points, which has an annual MF of $6,300. It's the MF cost that drives people away from Marriott more than the buy-in. A 2 bedroom for a week at Grande Vista (analogous to Bonnet Creek) costs around $1900 a week in their "prime season" using points. It's $1486 using a deed and not paying exchange fees. A 2 bedroom at Bonnet Creek in the prime season costs $1545 using CWA points.

I don't know exactly why their MF are so high compared to Wyndham. It could be subsidizing defaults or high maintenance costs. They also don't charge reservation transactions, housekeeping credits or guest certificates to help offset MF costs. If I were to ever buy DC trust points, it would be for the sole purpose of short stays because of not having to worry about housekeeping. Lakeshore reserve is the best Orlando timeshare property in all systems including DVC in my opinion. The theming is beautiful and you have access to JW and Ritz-Carleton amenities.

I'm just saying if Wyndham needed to change the resale rules to stay afloat, they should charge a per point "validation" fee and allow current resale owners the ability to book Club Pass and make any new owners pay it as well. They could give non VIP benefits to "validated" resale points. I don't think they should let resale points count towards VIP, but I don't think they'll step on too many toes of VIP members to let resale owners use Club Pass. It's not like we can't just buy WM resale to bypass the block. I would still probably just buy a small WM account anyways just because renting points from other owners is really easy using WMowners.com, but if they changed the rules about renting actual points from other owners, I would probably eventually spend the couple grand to have full access to WM with a CW membership just because it's easier to keep track of just 1 membership and all the rules vs 2 memberships. WM is nothing like CW and it takes a lot of reading and researching to understand how to efficiently be a member of both clubs.

WM has a completely different system with how to calculate MF. It's calculated based on how much you own in intervals of 2,500 credits. So when you are buying credits, 8,000 credits have the same MF as 10,000 credits, so you have to be really careful the amount that you buy. Cleaning every unit size costs exactly 1 housekeeping token and you only get 1 token per 10,000 credits you own. The cash cost to clean each size does vary though. I know it's $66 for studios and $87 for one bedrooms, but I don't have any other numbers memorized. So if you stay 2 nights in a 3 bedroom or 2 nights in a studio both cost 1 token, but it's about $100 more in cash to clean the 3 bedroom. I think a lot of resale only owners would fork over some money to have access to Club Pass for convenience over being a member of 2 clubs and having to learn all of their differences.

 

[cbyrne1174]

Why would anyone pay a $4500 transfer fee for a resale ownership that is worth less then $100. It would be easier to walk away and use non-judicial anti-deficiency laws. These laws were intended to protect timeshare consumers from a high transfer fee like this. Wyndham also counts on resale buyers to pay maintenance fees. A higher transfer fee would create a problem for HOA's WHEN OWNERS WALK AWAY AND STOP PAYING MAINTENANCE FEES.

I'm pretty sure resale owners can "walk away" anyways with resale only memberships. Wyndham doesn't have our SSN on hand to easily ding our credit.

 

[Richelle]

I'm pretty sure resale owners can "walk away" anyways with resale only memberships. Wyndham doesn't have our SSN on hand to easily ding our credit.

I'm not sure about CWA, but with Wyndham select, there is a deed involved. If the member doesn't pay maintenance fees, it gets foreclosed on. Even if the member doesn't have a loan, defaulting on maintenance fees can result in foreclosure. It's called an HOA foreclosure. They can put the foreclosure on your credit if they choose to do so. They don't need your SSN to ding your credit with a foreclosure. A foreclosure is a legal process and can get added to your credit report. None of my doctor's offices have my SSN, but I forgot to pay an x-ray bill and five years later it showed up on my credit report. Thankfully, paying it off got it removed, but it would have been my fault if it didn't. It sounds like it's sporadic with timeshares and not everyone gets a dinged. Maybe it varies by resort. Maybe the people who didn't get a ding were defaulting on a timeshare that wasn't Wyndham. It's hard to say, but I wouldn't take the chance. Not when there is Ovation. If they have a loan, they CAN ding your credit for both missed payments and foreclosure. Whether they do it or not can be a crapshoot.

 

[cbyrne1174]

I'm not sure about CWA, but with Wyndham select, there is a deed involved. If the member doesn't pay maintenance fees, it gets foreclosed on. Even if the member doesn't have a loan, defaulting on maintenance fees can result in foreclosure. It's called an HOA foreclosure. They can put the foreclosure on your credit if they choose to do so. They don't need your SSN to ding your credit with a foreclosure. A foreclosure is a legal process and can get added to your credit report. None of my doctor's offices have my SSN, but I forgot to pay an x-ray bill and five years later it showed up on my credit report. Thankfully, paying it off got it removed, but it would have been my fault if it didn't. It sounds like it's sporadic with timeshares and not everyone gets a dinged. Maybe it varies by resort. Maybe the people who didn't get a ding were defaulting on a timeshare that wasn't Wyndham. It's hard to say, but I wouldn't take the chance. Not when there is Ovation. If they have a loan, they CAN ding your credit for both missed payments and foreclosure. Whether they do it or not can be a crapshoot.

Don't doctors offices have access to that info with your insurance provider?

 

[Richelle]

Don't doctors offices have access to that info with your insurance provider?

Nope. Insurance providers do not provide doctors office with SSN.

 

[Family_travel]

If they’ve gotten to the point where they have to reduce the value of their product that much, it may not be a good idea to invest anymore money because they are in serious financial trouble.

The resale package should not be done as a last ditch effort, but soon after re-opening for a very limited time. Alot of people are expecting travel to be heavily discounted once travel resumes. So post-pandemic deals would not be warning sign to investors.
I do not follow the WYND financials like many on the site, so I have not idea what the break-even would be to make this profitable for Wyndham.

 

[HitchHiker71]

I would assume they would take away the resale designation from one or more resale contracts with the purchase of new points. They did that in the past I believe, but that was a long time ago. I am not sure Wyndham would go that route because it would mean someone who spent $1 on 300,000 points, can turn around an buy 105,000 points and end up with Advantage VIP status for the price of 105,000 points. It’s one thing to do it with PIC, which has been around since the Fairfield days. Its been around a long time and not a big secret. It is published in the directory many new owners do not bother to read. This would be a policy change. A policy that has been in place for many years. A policy that has given owners a reason to pay full retail if they wanted VIP. It would be like any company giving away a product or service people spent a lot of money for. It’s possible they would do it if they were REALLY hurting. They would do a lot of things to stay afloat. If they’ve gotten to the point where they have to reduce the value of their product that much, it may not be a good idea to invest anymore money because they are in serious financial trouble.

I like the idea on the surface. If we accept the numbers that were shared with us about resale contracts were accurate, which was around 20k resale contracts (I question contracts vs accounts that hold resale contracts), then this wouldn't have a broad impact overall, so I'm not sure they would go for it as a result - but it's worth a mention. I would certainly consider converting my 689k resale points if this option were to be offered up to me. That would take me from Champion to Founders under the new Privileges program. If they did this as @needhelp said - I would only offer it for a limited time - like through 12/31/2020 for example.

 

[dgalati]

I like the idea on the surface. If we accept the numbers that were shared with us about resale contracts were accurate, which was around 20k resale contracts (I question contracts vs accounts that hold resale contracts), then this wouldn't have a broad impact overall, so I'm not sure they would go for it as a result - but it's worth a mention. I would certainly consider converting my 689k resale points if this option were to be offered up to me. That would take me from Champion to Founders under the new Privileges program. If they did this as @needhelp said - I would only offer it for a limited time - like through 12/31/2020 for example.

If they are as strapped as the finacials say I would imagine Ovations is not taking back much inventory. I will start a new thread on this to see if anyone has returned inventory the last 2 months.

 

[dgalati]

I'm pretty sure resale owners can "walk away" anyways with resale only memberships. Wyndham doesn't have our SSN on hand to easily ding our credit.

@Grammarhero may have more info on the statistics of owners walking away and if their non payment reported or affected their credit score.

 

[Grammarhero]

@Grammarhero may have more info on the statistics of owners walking away and if their non payment reported or affected their credit score.

Out of seven (7) Wyndham defaults as reported on TUG, two (both mortgages) got their credit affected. The MF defaults seem to be in the clear.

 

[dgalati]

Today Wyndham released their Q1 2020 results, here's a link to the full press release:

https://s22.q4cdn.com/457996430/files/doc_financials/2020/q1/WYND-1Q-2020-Earnings-Release.pdf

Here's the bullet points from the release:

• Net VOI sales of $90 million; gross VOI sales of $413 million(1)
• Diluted loss per share from continuing operations of $1.54 (adjusted diluted loss per share of $0.98)
• Net loss from continuing operations of $134 million and negative adjusted EBITDA of $44 million
• In anticipation of increased defaults due to the impact of COVID-19, a $225 million provision charge impacted revenue, resulting in a $170 million negative impact to adjusted EBITDA
• Completed a $325 million private securitization in April
• Net cash provided by operating activities from continuing operations of $57 million (negative adjusted free cash flow of $78 million)
• Expect net cash provided by operating activities from continuing operations and adjusted free cash flow to be positive in the first half of 2020
• Cash and cash equivalents of $1.0 billion at the end of March
• The Company's Board of Directors reaffirmed its dividend policy and intends to declare the second quarter cash dividend of $0.50 per share in mid-May

So what can we glean from the numbers? Their cash position deteriorated by 78 million during Q1 2020. Cash is king during downturns like this - so don't pay much attention to the net losses and so forth since those are all GAAP based calculations. At the end of March, they had $1B in cash and cash equivalents. Here's the commentary on their cash balances:



Here's the chart version:

View attachment 20288

It's difficult to decipher the financials embedded in their statements and the GAAP methods of reporting leave gaps where it's harder to figure out the actual cash burn of a company. The above listed chart is scoped only to a subset of "operating activities" and is not truly representative of the cash burn. On the surface it looks like they're only burned 78MM net negative cash flow for all of Q1 2020 - but that's not really the case. We know Wyndham had 355MM in cash and cash equivalents at year end 2019, and we also know that Wyndham only had 1B in cash and cash equivalents on hand as of the end of March - and that includes the 1B drawdown on their credit line. This means that Wyndham burned through at least 355MM in cash on hand between end of year and end of March, plus whatever actual cash they brought in during Q1 2020. I would estimate a cash burn of 150MM/month based upon the new data. So the numbers I originally provided get a bit better since my initial cash burn assumption was 200MM/month. With roughly 1.3B on hand - that gives them about 8.5 months - assuming revenue stays neutral which is unlikely. Since the lockdown didn't really negatively impact Wyndham until March 2020, I think Q2 2020 will actually deliver worse financial results than Q1 2020 did. Q2 2020 results will tell the tale. Hopefully by then we're seeing some real economic recovery - but I think there's still a lot of uncertainty surrounding any substantive economic recovery in the short term especially in the hospitality sectors.

Hertz files for U.S. bankruptcy protection as car rentals evaporate in pandemic

With nearly $19 billion of debt and roughly 38,000 employees worldwide as of the end of 2019, Hertz is among the largest companies to be undone by the pandemic.

www.cnbc.com

 

[Eric B]

Hertz isn’t collecting maintenance fees from car owners whether or not they use them.

 

[dgalati]

Hertz isn’t collecting maintenance fees from car owners whether or not they use them.

Hertz is a car rental company not a fractional ownership. You only pay for the time you use it. Does Wyndham make any profit on HOA'S collecting for maintenance fees?

 

[Jan M.]

Hertz is a car rental company not a fractional ownership. You only pay for the time you use it. Does Wyndham make any profit on HOA'S collecting for maintenance fees?

Wyndham does get the program fee portion of our maintenance fees. I've never seen an accounting of how often and how much Wyndham turns over to the individual resorts. I would guess that Wynhdam is able to make some interest off those monies while they are holding them.

 

[Eric B]

Hertz is a car rental company not a fractional ownership. You only pay for the time you use it. Does Wyndham make any profit on HOA'S collecting for maintenance fees?

... so what you're saying is that the posting of a news article about Hertz declaring bankruptcy was a red herring completely off the topic for this thread? Interesting, in a way.

On the thread's topic, Wyndham does collect some income from the management of some of the resorts for the HOAs. I couldn't speculate how much of that is profit for the company. They also get the program fee portion of what owners pay for use in running Club Wyndham. Similar revenue streams exist for the other systems they run (e.g., WorldMark).

 

[dgalati]

... so what you're saying is that the posting of a news article about Hertz declaring bankruptcy was a red herring completely off the topic for this thread? Interesting, in a way.

The current COVID-19 scenario is something that is incomparable to anything else in Wyndham's history. If this drags on and we see spikes and reinfections that further limit travel over the longer term - meaning many months into the future - which is a real possibility - I predict Wyndham will enter Chapter 11 bankruptcy by the end of the calendar year 2020. Why? Let's look at Wyndham's numbers from last year:

View attachment 20190

So Wyndham made 507MM on revenues of 4.043BB, with expenses of 3.299B. How does Wyndham's revenues break down? 46% VOI (Vacation Ownership Interests - developer sales), 40% fee based revenues (MFs, Program Fees, RCI booking fees, etc.). 14% from "other" revenue sources. So the majority of revenues are sourced from sales, which has tanked completely as we all know. However, their expenses have not tanked. Expenses net a cash burn of 3.3B/12 = 275MM per month. Let's assume for a moment that Wyndham can reduce their cash burn by 30% - which is quite aggressive in reality - that puts 275MM*0.7=~193MM per month. Let's round it up to 200MM/month for ease of analysis. At the end of 2019, Wyndham total cash and cash equivalents of 355MM on hand. In March, Wyndham drew down on a 1B credit facility, and they just secured additional 325MM at 85% draw - or 276.25MM. At the end of Q1 2020 - Wyndham stated, after drawing down on their 1B credit line, they had "a little over 1B in cash and cash equivalents on hand." That means they burned through whatever revenues they pulled in Q1 2020 - plus the majority of the 355MM they had on hand at year end - which makes sense as they would have burned through 275MMx3=825MM in Q1 2020. Let's assume they started paring back operations in March in a big way - so their burn would probably decrease to 750MM during Q1 2020. Point being, they have about 1.2BB in cash and cash equivalents including the credit facility drawdown and the 325MM securitized facility. At a 200MM/month burn rate - with no sales revenues to speak of, that gives them six months maximum before their coffers run dry. Even if we assume partial normalcy - a new normal - that's not going to be anywhere close to the old normal any time soon - and I don't see anyone buying luxury items in the foreseeable future with unemployment close to 20% realistically - and GDP taking a 4.8% hit in Q1 2020 - with a worse number expected for Q2 2020. Wyndham is in trouble IMHO, along with every other debt laden organization out there with notable declining revenue to support the debt:

View attachment 20192

It was in reply to previous posts and how the pandemic has affected all the travel industry finances. As @HitchHiker71 posted above "Wyndham is in trouble IMHO, along with every other debt laden organization out there with notable declining revenue to support the debt:"