posted 04-14-2005 12:07               

What interest do you think there would be in forming the following type of "vacation club" (ala RHC or MROP).

1) Anyone wanting to join deeds their property to a non-profit corp. that holds the deeds. (this is the tough part for someone who paid too much)

2) The "value" of the week(s) they deed to the corp determines their ownership stake in the club. If you put in a Marriott week, you obviously expect more ownership stake in the club (presumably in the form of points).

3) The total maintenance fees of the resorts owned by the corp. are divided by the number of outstanding points to determine each member's maintenance fees for the year. So if you give up a high value week, your fees may be lower, and the converse is true.

4) Of course, open for debate is whether restrictions are placed on what the corp will accept. Perhaps only Gold Crown/5star, or case by case basis decided by the board of directors.

5) Reservation windows. There are many ways to handle this. You could do like Shell Vacation Club, and split the type of ownership into regions (or if you prefer, activities, like Ski, Beach, Disney, etc.). Then you get 1 window for the type of region or activity you own, and a different reservation priority or window for other weeks owned by the corp.

6) Floating weeks - If someone deeded over a floating week, it would be up to the corp to make sure and reserve a decent week every year.

7) Up for debate is whether it's a lifetime deal, or if the owner can take possession of their deed at some future point (or whenever they want) for the cost of closing costs.

8) If a given resort is charging a special assessment, we could have arrangements to split the cost, or charge it back to the original owner, however it's decided to handle it.

I know there are a number of TUGGERS with many weeks, I wonder if we could start the club on our own. This would be an interesting way to bypass the exchange companies, and take advantage of each other's propensity for buying weeks too cheap. In other words, if someone paid more than average for a property, they're less likely to join. If they paid too little, they are more likely to join. So the net result is a combining of high value, low cost weeks into one group ownership that is shared.

posted 04-14-2005 12:15               

You are taking basically a direct exchange company..
I was thinking of something similar to "owners trades".. for Marriott.. but include all the top timeshares and not restrict it to Marriott Only.. Hyatt, Hilton, Marriott, Starwood, Royals, DVC, 4 Seasons.. It'd be a mini trading system, with access to all the top resorts in the world

posted 04-14-2005 12:19               

People who accidentally own good weeks, but are terrible at managing them, and never get the good weeks, etc. would be good candidates. But those people paid full boat for their timeshare and probably don't trust anyone when it comes to timeshares.

The good thing about starting it within TUG is that we all (kind of) know each other, at least those of us who are very active.

posted 04-14-2005 19:26               

One obvious potential problem: TUGGERS are far more savvy than the general timeshare owning public. TUGGERS all want...and in most cases expect...to get something better in trade than the week they have given up.

In RCI, II, etc., the vast majority of members are not as savvy as TUGGERS and after their first attempt or two at exchaning they often lower their expectations to far below what most TUGGERS expect. This helps the savvy few, ie TUGGERS, get the great trades.

In an exchange system made up exclusively of savvy TUGGERS, who is going to trade down in order to allow the others to trade up? For example, what DVC owners and Royals owners are going to happily trade for Foxrun? What Four Seasons owners are going to trade for Harbour Point? What Orange Lake owners are going to trade for a week in South Africa?

Balancing the exchange system may be just a wee bit tricky. If you go to points, I doubt you'll have many takers. And if you do, you could still have a problem. Suppose someone gives up five South Africa weeks to get enough points for a Four Seasons week. Then your Four Seasons week is gone, and you're still stuck with five South Africa weeks that nobody wants.

Sorry to be so negative, but I just don't think this idea will fly.

posted 04-14-2005 19:33               

Surely you don't think any club I helped come up with would be so stupid as to allow any SA weeks to participate, do you? That's funny, was it meant to be?

Yes, it's a far fetched idea. However, Royal Holiday Club and MROP are nothing more than large scale implementations of this EXACT idea. So it obviously CAN be done. Instead of turning in a deed to join, those clubs bought a few deeds (and acquired them in other ways) and then sold the right to belong to the club for more than they spent on the deed, so obviously that was an even WORSE deal than giving up a deed.

posted 04-15-2005 12:00               

quote:

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Originally posted by PA:
What interest do you think there would be in forming the following type of "vacation club" (ala RHC or MROP)....

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I'd have a lot of interest in this, but only if the club allowed me to deposit my weeks into exchange companies.

I love the "thrill of the hunt" in exchanging. So far I'm still new and have only done a couple of exchanges, but they've been great deals. The problem is, to get good trades I need a different resort for each exchange system. I bought an off-season II resort to exchange into Disney. I bought a completely different resort for RCI Points. These both trade poorly in RCI Weeks, so I'd like to maybe buy a SoCal studio for RCI Weeks. Oh, and maybe a high end resort for SFX. An oh yeah, I go to Europe every year or so, maybe I should buy into RHC or Hagimap. And how about maybe a cheap SA week or something for DAE?

The problem is, I only vacation about three weeks a year! I can't use all these weeks! What would solve my problem is a club where I could select a Foxrun spring week one year, a SoCal studio the next, etc. Of course, the club could also own some weeks that were in places club members actually wanted to stay -- there would be no requirement to trade one's week.

This would be a lot like MROP, except that MROP has a lot of weeks (spring in Park City, summer in the desert) that aren't very desirable. The "TUG Club" (or whatever it was called) would make sure to acquire only weeks that were good deals and that its members really wanted. It would have the advantages of RHC, but without RHC's huge marketing expenses, high transfer fees, complex banking rules, and poor customer service.

I think letting peeople buy in by deeding existing timeshares over to the club would be a great advantage. That way, members could join without buying yet another timeshare. Of course, it would be fine to let members buy in with cash, too -- both methods could be available.

A points-based system would make this work very smoothly. The club would only accept timeshares that gave *very* good value for the amount of annual fees that they cost. In exchange for deeding over a timeshare, a member would own a number of points equivalent to the dollar price of the resort on the resale market. If someone gave a Marriott week worth $5000 resale, that person would receive a 5000 point membership in exchange. A person could deed over a SA timeshare that only resells for $500, but in exchange, the member would only receive a 500 point membership. If that SA owner wanted to get a 1000 point membership, he or she could kick in another $500 to purchase the additional 500 points.

Points would be awarded annually (and maybe could be banked for one year.) Members would pay annual dues based on the number of points that they owned. The points cost to reserve a particular week from the club would depend on some formula that took into account both the week's purchase price and its MF. Once a member had a week, they could do whatever they wanted with it. There seems to be no problem with MROP and RHC depositing their club weeks into member's II and RCI accounts, so there shouldn't be a problem with this club, either.

posted 04-15-2005 15:08               

Your idea has a lot of merit. Who better than a bunch of knowledgable TUGGERS than to form our own Home Owners' Association.

It might help folks to distinquish that it's not a purely "exchange" orgainization you propose (i.e. we're not talking about exchanging a FoxRun for a Marriott, and too much competition for upgrading), the Club would own a couple FoxRuns and a couple Marriott weeks and you'd own a 'floating' usage (Points) to choose amoung the available inventory. You own exactly what you're entitled to vacation in, no more/no less....provided the points chart is equitable.

We have a lot of happy Worldmark owners on TUG. The Club you're proposing PA would be a lot like WM except that you'd own a sampling of weeks/units in TS's around the world that aren't all wholly owned by the club nor managed by the Club. (in that respect it is like MROP, but perhaps not that many folks know how clever MROP is.

MROP has the advanatage in that you own an undivided interest in all 7000+ timeshare weeks that are in that 'club/hoa'. You select form a list of 'floating weeks' per your entitlement (sometimes you own 'red' every year and some own a rotating red/white/blue). It has many of the benefits of a Worldmark type network of 50+ resorts, except (a) you don't use points, (b) you're restricted to weekly stays, (c) in the case of MROP (but not the PA-ROP), its a network of 'standard resorts' vs. the goldcrown style (and cost) of WM.

Good idea.

posted 04-15-2005 17:22               

quote:

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Originally posted by Judy321:
....This would be a lot like MROP, except that MROP has a lot of weeks (spring in Park City, summer in the desert) that aren't very desirable. The "TUG Club" (or whatever it was called) would make sure to acquire only weeks that were good deals and that its members really wanted. It would have the advantages of RHC, but without RHC's huge marketing expenses, high transfer fees, complex banking rules, and poor customer service.
....

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BINGO!!!!

posted 04-15-2005 18:01               

quote:

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Originally posted by JeffV:
Fun mental exercise, but odds are that it will never happen. I don't think you realize how much administrative work is involved and legal hurdles to be crossed.

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Your first sentence is correct. Your second one isn't.

posted 04-15-2005 18:58               

quote:

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Originally posted by PA:
Hey, here's another thought I had. What if you could claim the usage of your week that you used to own up to xxx (fill in the blank) months before checkin, and nobody could take it from you. After that, it's available to anyone. And, you pay the maintenance fees of the resort that you put in the club.

That takes away some of the negative of giving up your ownership; while still giving you the benefit of owning at multiple resorts.

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Now I'm very interested.

Especially given that you're controlling the quality of the weeks and therefore the value of the membership. With the "early claim" rights to usage of your week(s) as suggested above, this membership formalizes a direct exchange process that could offer real benefit.

I would personally prefer not to allow rentals from the pool, but we're not quite that far along yet, are we?

posted 04-15-2005 19:21               

quote:

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Originally posted by JeffV:
Fun mental exercise, but odds are that it will never happen. I don't think you realize how much administrative work is involved and legal hurdles to be crossed.

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With much sorrow, I have to agree. However, I would wish anyone undertaking such an undertaking all the good luck this world has to offer as it will be needed.

It would not take long for the negatives expressed here in these forums about RCI & II to find its way aimed at this refreshing new undertaking. Such is human nature you know.

JMHO of course

frenchieinme

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Visit our webpage at http://userpages.prexar.com/rhoude

posted 04-15-2005 19:34               

Do you agree that this is similar to the business model that RHC employs?

Given that RHC has the worst service on the planet, why do you presume that the idea is ok, but not likely to be practical? Don't you realize who you're dealing with here? Do you think us tuggers less intelligent than the brainiacs who run RHC? I do this full time for a living. Many others here, who perhaps don't do this full time, have equal or superior intelligence to the people who run that club. AND, that club is typical of timeshare marketing orgs, in it for the initial quick$, without regard to how it works long term for the user.

I'm not saying I'm ready to jump in with both feet. BUT, if this germ of an idea were to be fully fleshed out, I think it could possibly succeed.

And I assure you that, were I to decide to pursue it full force, I would make sure that it was fleshed out (to the best of my ability) and would make sure that it provided good value to the owners long term.

posted 04-15-2005 20:14               

You bring up some very interesting ideas, but I think the ownership structure you are envisioning is too complicated and the administrative nightmare and politics will kill the idea very quickly.

You can accomplish the same end result with a much cleaner structure by simply establishing a Real Estate Investment Trust. Set up several General Partners who get to make the decisions on what is bought, sold and rented and put into the Vacation Club and the point structure and then let in a lot of passive investors who profit from the venture, but don't get a vote on how its run.

I would be interested in a) investing in such an endeavor, b) being on the Board of Directors and c) contributing technology to help run it.

posted 04-15-2005 20:44               

quote:

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Originally posted by BocaBum99:
...Based on what I know about Timesharing today, I believe we could generate a 25% return on invested capital by buying, renting, selling and exchanging timeshares in a Vacation Club format.

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posted 04-15-2005 22:47               

quote:

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Originally posted by frenchieinme:
..It would not take long for the negatives expressed here in these forums about RCI & II to find its way aimed at this refreshing new undertaking. Such is human nature you know...

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I'm not sure this is true. There are several timeshare systems that seem to have mostly satisfied customers -- Worldmark and the DVC, for starters. RCI gets a lot of complaints because their system has no transparency, leading members to strongly suspect that they are being ripped off.

quote:

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Originally posted by BocaBum99:
...You can accomplish the same end result with a much cleaner structure by simply establishing a Real Estate Investment Trust. Set up several General Partners who get to make the decisions on what is bought, sold and rented and put into the Vacation Club and the point structure and then let in a lot of passive investors who profit from the venture, but don't get a vote on how its run....
I would be interested in a) investing in such an endeavor, b) being on the Board of Directors and c) contributing technology to help run it.

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Boca, I'd like more details on Real Estate Investment Trusts, too. I suspect that there would be some people who would be very interested in making this work, and others who would just want to be members without getting involved in setting this up. So, your idea of two types of participants makes sense.

I would volunteer for the Board of Directors (if there were one), too.

quote:

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Originally posted by Hatrack79:
...the Club would own a couple FoxRuns and a couple Marriott weeks and you'd own a 'floating' usage (Points) to choose amoung the available inventory. You own exactly what you're entitled to vacation in, no more/no less....provided the points chart is equitable....

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I was thinking about how a points chart could work. If the club had weeks of widely varied values, it might be hard to come up with a points value that would take into consideration both purchase price and maintenance costs of a particular week. A very easy valuation system, though, would involve having each week be worth a number of points equal to its actual purchase price. In other words, if a week cost the club $1,200 to acquire, then that week would cost 1200 points to reserve. (Some system of "constant dollars" could be used to adjust inflation, if the club bought weeks over a number of years.) Buying in to the club would also cost $1 a point, which could either be paid in cash, or by giving the club a timeshare (which would be valued at the price a savy Tugger would pay, not at developer's price, of course.)

As for MFs, the easiest thing would be for members to be responsible for the MF of whatever week(s) they selected for that year. Philip, this basically takes your idea of having members be responsible for the MF fee of their own week, and extends it to all weeks that club members use.

posted 04-15-2005 22:59               

quote:

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Originally posted by huestous:
I would personally prefer not to allow rentals from the pool, but we're not quite that far along yet, are we?

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posted 04-16-2005 06:16               

quote:

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Originally posted by PA:

I'm making a lot higher return than that buying and selling timeshares. This isn't totally about making money (though I wouldn't do it if we didn't have an opportunity to build something of value). Seems to me that it would be FUN to build something from nothing, in an industry that I enjoy.

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I totally agree. I would love to be involved in a "for profit" venture in timesharing. I love timesharing and I believe the demographics are ripe for a very bullish future.

Like I said, it's easy to envision making a 25% return on invested capital in timesharing. That's why I don't invest in DVC. With DVC, you are talking about a 10% ROIC or less due to ROFR. Lots of other opportunities in timesharing yield a much higher return. But, if you advertised a REIT with such a ROI profile, you would get tons of investors and more cash than you can possibly invest. That idle cash reduces your ROIC.

Also, I want to point out the fact that just because an individual at the fringes of a market can make 25% at low scale, it doesn't mean that a sizable corporation can do it. In your calculation, I'll bet you are just calculating your gross profits. You also need to include your personal time and all the expenses associated with it. In a sizable venture, you can't do it all and so you need to pay people to do the work, thus reducing your returns.

Moreover, in timesharing, the market is so small, that any individual group of users or a sizable business can change the whole supply/demand balance and change the economics of the entire business. This is one of the things that fascinates me most about timesharing. It's the wild west. So, the opportunities that were available when you are small are not available when you are big. Kind of like the Warren Buffet effect in stock investing.

posted 04-16-2005 06:24               

quote:

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Originally posted by PA:
Boca

Interesting. Can you explain in more detail, slower, and with smaller words (fewer syllables)?

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Here is a good definition of a REIT, it's applicability to your idea should follow:

A method of pooling investment money using the trust form of ownership. In the 1960s Congress provided favored tax treatment for certain business trusts by exempting from corporate tax certain qualified REITs that invest at least 75 percent of their assets in real estate and that distribute 95 percent or more of their annual real estate ordinary income to their investors. As an alternative to the partnership or corporate methods of investing in real estate, the REIT offers some of the flow-through tax advantages of a partnership or syndication while retaining many of the attributes and advantages of a corporate operation.

posted 04-16-2005 07:06               

I'm guessing the answer is yes, it would. I guess Congress' intent is to get it into the investor's income, so that they'll pay taxes on it each year, rather than keeping it in the company, since they provided special lower taxes for those REITs?