Friday, June 22, 2018

Welcome to Summer, While a Soggy Florida Braces for Hurricanes

RedWeek just returned from a long road trip where we attended industry conferences in sunny Las Vegas and supposedly sunny Orlando, but as soon as we got to Orlando, we got the word: Rained Out.

Not really, but the Sunshine State turned into the Soggy State during our visit, just in time for the start of Summer, which in Florida rhymes with Hurricane Season (June 1 to Nov. 30).  The region deserves a break, because it's still recovering and rebuilding from the last two years of hurricanes.  The sticky weather took a huge bite out of Florida and Caribbean tourism and timeshares in 2016 and 2017, and it looks like the weather gods are hungry for more.  Meanwhile, big brand hotel and timeshare resorts are rebuilding while independent timeshares are still negotiating with, or suing, their insurance companies to cover repairs from 2016 and 2017.  Welcome to 2018, ready or not.

Only thing we could tell from our visit, empirically, is that the Gators are doing just fine in the Orlando canals while visiting Families, soaked to the bone, plunged ahead to consummate their trips to Sea World and Disney, come hell or high water (excuse the pun).  Don't think Sea World offers an official Monsoon Ride, yet, but kids are getting a taste of it, anyway.

But that's not what this posting is about.  Florida's turbulent weather is just a backdrop for the annual weather report on the timeshare industry, issued this time each year by the American Resort Development Association (ARDA).

ARDA's CEO, Howard Nusbaum, delivered the highlights at the Timeshare Board Members Association meeting in Orlando, where 150 HOA board members and resort managers huddled to address the big and small issues that challenge the sustainability of their resorts.

ARDA's key messages: timeshares are still great; long live timeshare!

In addition to being the eye of hurricane season, Florida is home-base for 373 timeshare resorts, dwarfing #2 California (131), South Carolina (110), Hawaii (94) and Colorado (75).  There are 1,570 timeshare resorts in the US, averaging about 200 units per resort.  Timeshares exist in 47 states, with only Alaska, Kansas and North Dakota still on the outside looking in.  Hawaii and South Carolina are the key growth states.  Nevada, thanks to its mega-resorts, has the largest timeshares in the country.

Retail sales volume, among developers, rose 4 percent in 2017.  Annual sales hit $9.6 billion and are expected to exceed $10 billion in 2018.  ARDA does not track sales in the secondary market, but if it did, or could, the annual sales numbers would be a few hundred million dollars higher.  Maybe even a billion or more.  Since 2013, timeshare sales have increased 26 percent.

"We're almost back to where we were at the beginning of the downturn (in 2008)," Nusbaum said.

Timeshare occupancy hit 81.4 percent in 2017.  As Nusbaum pointed out, that's a number the hotel industry, with 66 percent occupancy, would covet.  The average selling price for a new timeshare interval (one week equivalent) was $22,180, a 6 percent jump from 2016.  Maintenance fees rose 1 percent to an industrywide average of $980 for a two-bedroom unit.

Timeshare rental income, meanwhile, increased 20 percent to $2.3 billion.

"This is where the Internet is our friend," Nusbaum said. "Rentals are (part of) your sales arm.  That's where people kick the tires (of a timeshare vacation)."

At the mega-macro level, timeshares are huge contributors of the US economy, Nusbaum added.  The industry employs 511,000 people, pays $10 billion a year in taxes and generates $9.8 billion in consumer spending.  Timeshare travelers also tend to spend more on their trips, with the resort community, than typical hotel travelers.

ARDA launches PR campaign to fight back against negative image of timeshare

In addition to touting the industry's economic contributions, Nusbaum exhorted TBMA members to join him in a campaign to "take back the narrative" and tell positive stories about timeshare.
TBMA members are a diverse group --- professionals and amateurs with admirable careers (mostly) behind them.  But there is one thing that unites them: as representatives of resorts that are trying to stay competitive, find new buyers and provide meaningful vacations to owners, they are sick and tired of Internet and radio ads, along with occasional feature news stories on travel, that portray  timeshares as a terrible ripoff.  They’re also aggravated by the seemingly endless string of “exit” companies that solicit owners to cancel their contracts based upon the idea that they were defrauded, 10, 20 or 40 years ago, by a developer that is no longer in business.

The antidote for this angst?  Nusbaum is the #1 advocate for the developer industry and, beyond that, for all legitimate segments of the timeshare universe that feel victimized by bad press.

Nusbaum delivered a rousing “we’re not going to take it anymore” speech to the TBMA attendees in Orlando, and they appeared to love it.

He said developers have been called bums and worse.  “We need to start talking about exiting responsibly.  There is a whole cottage industry hoodwinking people…”

Several major timeshare “relief” companies are being sued by major developers for alleged interference with customer contracts and encouraging owners to default on their payments.  Nusbaum is the point man in the industry’s effort to portray longtime owners --- and developers --- as victims of these companies.

“Whether owners love developers…or dislike developers, we are conjoined twins.  We are in this together (and) we have to make sure we can support each other,” Nusbaum said.  He also offered these nuggets for the TBMA attendees to remember him by:
A pet peeve?  #1: Lawyers who file "drive-by" lawsuits against resorts and others who solicit owners to cancel contracts. #2: The industry's reputation, which Nusbaum is paid to promote.
On lawyers: "We passed a bill in the House of Representatives that banned frivolous lawsuits (against resorts) … but we can't get it approved in the Senate. There are too many lawyers in this country and they can't make money, so they have to scam people.  I am jaded on the subject."
On fixing the reputation of timeshare: "Some developers have blood on their hands," Nusbaum said.  "I am an advocate for resort developers.  We are pro 'good' developers.  We want a robust platform but also that every single consumer is protected from lies and deceitful behavior.  These publicly traded companies (that now dominate timeshare) are the tide that is rising all of the boats in the industry.  They are bringing up practices that others have to follow."

For more on these subjects, visit our Ask RedWeek column for June.

Friday, May 04, 2018

Industry Tries to Debunk 6 Myths about Timeshare Owners

Timeshare owners are a mixed bag: younger, older, wealthy and educated

Younger.  Smarter.  Wealthier --- and tougher to fool.  That's the new look timeshare owner for 2018, according to surveys commissioned by the timeshare industry's trade and lobbying group.

In a recent column posted in Developments Magazine, Howard Nusbaum, president of the American Resort Development Association, debunks 6 "fluffy myths" about timeshares that have haunted the industry's public persona for years.

The results of ARDA's survey are interesting but not always conclusive.  But they should trigger many spirited conversations around your resort’s hot tub.

Here are the top six myths that Nusbaum wants to eliminate:

MYTH #1: Most timeshare owners are old, if not senior citizens.  According to Nusbaum, 67 percent of all timeshare owners are between the ages of 18 and 54. 

OUR TAKE: We’ve attended many timeshare sales presentations but have never seen a teenager in the room, much less buying a timeshare whose average price is $20,000 or more per weekly interval.  ARDA's survey also reveals that 33 percent of all timeshare owners are at least 55 years old.  This group, incidentally, is also most likely to purchase additional timeshares, since they already know the ups and downs of ownership.   FYI, a standard sales presentation contract says participants must be between the ages of 25 and 75 and have a household income of $50,000.  Which leads us to...

MYTH #2: Timeshare owners come from lower economic brackets.  According to ARDA, the mean household income for owners is $93,000 while the median income is $81,000. 

OUR Take: We’ve never seen a timeshare purchaser who appeared to be broke or penniless, so we’re not sure where this “lower economic” myth came from.  Anyone attending a brand-name timeshare presentation has already spent a considerable sum just to get in the room (e.g. $1,000 roundtrip per person airfares from the mainland to Hawaii).  The economics are different at 40-year-old legacy resorts, where (usually older) owners can be lured to an update sales presentation for coffee and a donut.

Myth #3: Retirees are the single-biggest group of owners.  According to ARDA's survey, only 19 percent of all owners are retired.  The overwhelming majority of owners, 67 percent, are either employed full-time or self-employed.

OUR Take: Assuming ARDA's numbers are accurate reflections of the people they surveyed, this means that another 14 percent of all owners aren't retired and don't work.  Don't know what to make of this group, unless they are spouses depending on the other categories?   This 14 percent needs more explanation.  But since they are not part of the workforce, we'll add them to the 19 percent of retirees, which means that 33 percent of all owners are either former workers or non-workers.

Myth #4: Timeshare owners are not highly educated.  According to ARDA, 42 percent of owners have a college degree while 21 percent hold graduate degrees.

OUR Take: If 63 percent of all timeshare owners are college-educated or better, then 37 percent stopped their formal education after 12th grade in high school.  We have no problem with that, except to wonder how they were able to get a good-enough paying job to afford buying a timeshare, which probably came after they had already gotten a job, bought a car or two, bought a house and had several kids.  This 37 percent group must include an amazing numbert of achievers who became successful without a college degree.  More power to them.

Myth #5: Most timeshare owners want to get out of their contract. ARDA's surveys show that 70 percent of all owners would recommend timeshare ownership to others, while nearly 75 percent would recommend their home resorts. 

OUR Take: Every time ARDA touts a figure like the 70-percent-satisfaction number, it begs the fact that 30 percent of all owners apparently would NOT recommend timeshare.  Another 25 percent would not even recommend their home resort to others.  Those are big numbers.  They also but suggest that these non-recommending owners would be happy to get out of their contracts.  We also know, from separate studies on "regret and remorse" issues commissioned by ARDA, that 15 percent of all buyers rescind their purchase within days of their sales presentation.  This group could be called "short-term buyers" who bailed after reconsidering their purchase for a few days.
It is also our informed opinion that 100 percent of all timeshare owners will, one day, want out of their contract, for all kinds of legitimate reasons --- health, age, divorce, death in the family, bankruptcy or other money problems that curb vacations, problems with kids, estate or inheritance issues, etc.  This is not a bad thing; it's natural and predictable.  Far as we can tell, no timeshare owners have ever outlived their "in perpetuity" contracts.

Myth #6: Timeshare owners believe the sales process is high pressure.  ARDA's surveys show, contrary to this widely repeated notion, that 71 percent of all owners "found their buying experience to be either excellent or good."

OUR Take: Historically, high-pressure sales tactics are synonymous with timeshare presentations and a key part of the industry's overall public reputation going back 30 years.  In our experience, reputations are earned, not accidents or bad luck. For example, there are several lawsuits pending in US courts, right now, alleging that well known timeshare companies used high-pressure sales techniques to persuade buyers into signing purchase contracts.  While not taking a stand on the veracity or legitimacy of these cases, their existence (as well as the private settlement of similar cases) suggests that the old high-pressure myth still has some currency among some timeshare owners and, most certainly, persists among the industry’s critics and those who promote more legal consumer protections for timeshare buyers.

What do you think about these myths?  Post your comments here.  All opinions welcome.

Sunday, February 11, 2018

2018 Starts Off with a Bang as Timeshare Universe Adapts to Major Changes in Travel Industry

Forget January.  February 2018 is a great start for the new year.  All maintenance fees should be paid by now, and if you want to go to your Hawaiian timeshare next winter, now is also the time to make that 12-months-in-advance-of checkin reservation at your home resort.

But it's also a good month for most timeshare football fans, and they tend to go together, based upon our experience watching NFL games from swim-up pools and hot tubs in all the places that snowbirds escape to during winter months. The Eagles surprise Super Bowl victory over the Patriots was a win for all underdogs, which pretty much takes us all back to our roots as regular people struggling to make our mark in the world.

Speaking of embracing challenge, traditional timeshare developers and vacation clubs are ramping up their efforts to adapt to an Internet-based world where travelers can book timeshares, instantly, for rental rates that match maintenance fees.  For travelers of all ages, this means you don't have to own a timeshare to use one. The companies are also rapidly trying to get younger so they can appeal to new and monied travelers who, historically, shy away from lifetime timeshare offerings.

Here's a snapshot of the US timeshare world provided to RedWeek by the American Resort Development Association (ARDA), which serves as the trade association and national lobbying organization for all brand-name timeshare developers and their cottage-industry service companies, including realtors, title companies, lenders, etc.

According to ARDA's industry surveys, developers racked up $9.2 billion in sales in 2016 (and probably more in 2017) in the US, and an estimated $19.7 billion worldwide.  These numbers don't include resale transactions, which are not clearly tracked by any major industry group.  The industry employs 500,000 people in North America with many based in sunny Florida, which is the WW headquarters for most timeshare companies and home to 50 percent of all US timeshare resorts.  More than 9.2 million US households own one or more timeshares.  FYI, all major timeshare companies are sloughing off that word --- timeshare --- and using "shared vacation ownership" instead.  Years of largely negative news stories about timeshares have taken their toll on the value of the word --- so watch it continue to disappear in 2018 as marketers promote shared ownership and "alternative accommodations."

On the advocacy front, the industry continues to fight transient tax increases in states (Hawaii, et al) that prey on timeshare owners who have no local political representation.  It also lobbies regulators and lawmakers to crack down on timeshare scams usually perpetrated by self-styled "transfer and relief" companies that solicit owners (for thousand-dollar upfront fees) with phony guarantees that they will help owners get out of their timeshare contracts.  On a related front, individual timeshare companies (Welk, Westgate and others) launched a concerted legal campaign last summer to sue some of these companies that offer exit strategies to owners.  While these cases wind through the federal court system, owner lawsuits against timeshare companies are also increasing with claims alleging elder abuse to misleading sales practices.

The industry's published goals for 2018 include more expansion, particularly into the Asia-Pacific and urban markets, more anti-fraud campaigns, developing successful messaging to reach new and younger potential buyers, and "telling our story" to combat negative myths about the industry.  It's a full and ambitious load of goals, which we will track for owners as the year unfolds.

CNBC Story Paints Vivid Picture of Industry Resale and Inheritance Issues

CNBC news, a national news organizations headquartered just outside Manhattan, published an in-depth news story Feb. 6 that provides a vivid and comprehensive picture of the major issues confronting timeshare owners.  Written by Strategic Content Editor Barbara Booth, the story focuses on the "inherited timeshare conundrum" that confronts owners who are unable to sell a timeshare and cannot give it away to their children or heirs (usually because the kids don't want to inherit the annual maintenance fee bills that come with timeshare ownership).  It is a very thorough and balanced piece of journalism that also discusses resale issues, timeshare scams, rental alternatives for owners and corporate exit programs.  Booth used RedWeek as a source for some of her material, so we're happy to recommend this article to anyone looking to off-load their timeshare.

Wednesday, October 25, 2017

Stayin' Alive: High Drama at Two Lake Tahoe Resorts During Timeshare Election Season

Most people know that fall and football go together.  But only a handful know that fall is also election season at timeshare resorts across the country, where very few people vote and, in all likelihood, even fewer care about the outcomes.  All owners generally care about is #1 reservations and #2 maintenance fees.  HOA board member elections probably rank way down there, like #41.

Not this fall.  While thousands of timeshare owners worry about their vacations and resorts in hurricane-ravaged areas of the country, others are paying attention to all the home-grown issues at their own resort.

In fact, from California to Kauai, Idaho to Orlando, RedWeek keeps hearing from timeshare owners who are getting more involved in the governance of their resorts.  At a handful, owners are starting to organize themselves to take greater control of management issues.  At others, owners are simply getting rid of board members who have overstayed their welcome --- and failed to fulfill their fiduciary duties to make the best decisions on behalf of all owners.

In this spotlight on legacy resorts, we will focus on two aging but desirable timeshares where owners banded together, in dramatic fashion, to prevent their resort from being taken over, or at least controlled by, major timeshare companies. 

Both happen to occupy prime real estate around Lake Tahoe, which is a hotbed of timeshare resorts, old and new. Marriott, Diamond, Wyndham, Hyatt, and Welk have major presences and appear to be looking for more.  It's also a smorgasbord of older independent resorts facing major renovations, rising defaults, plus rental and resale issues that not only threaten their economic existence, but make them ripe takeover targets for well-financed timeshare companies or investor groups.  Some of these aging resorts, according to real estate folks in the area, will eventually fall into the hands of new developers who will invest and re-purpose the timeshare into a modern hotel or other business that is more profitable than a struggling timeshare.

The rest of this blog is about two Tahoe resorts caught in the middle of this struggle.  Simply put, they are just trying to stay alive.

PART I: Tahoe Beach and Ski Club Owners Re-elect Board Member Who Cast Key Vote Against Diamond's Potential Takeover, But Tensions Remain

SOUTH LAKE TAHOE, CA --- Sedric Ketchum, the swing vote on a divided board that decided to reject Diamond Resort's takeover moves three years ago, won re-election to another term in September, but it wasn't easy.  Recovering from serious surgery, Ketchum barely made it through the obligatory candidate forum, then retired to his room at Tahoe Beach and Ski Club as soon as the votes were cast.

Sedric Ketchum won re-election to Tahoe Beach and Ski Club Board despite a no-confidence vote from Diamond Resorts.

He won re-election handily, despite a defection from one of his fellow board members and a decision by Diamond, which owns 23 percent of all timeshares at the beachfront timeshare, to vote for no one.  Right up until the vote was announced, no one knew what Diamond planned.  The company wanted to dump Ketchum, but couldn't find a suitable candidate to back, so it sat on its votes.
Tahoe Beach and Ski Board President Al Fong urges owners to stay vigilant against Diamond.

Not exactly a vote of confidence for Ketchum, who was key to the board's rejection of Diamond's perceived takeover bid in 2014.  Diamond played cat-and-mouse with the owners in 2017, just as it did in 2016 (when it was also declined to announce its intentions). 

In months leading up to the vote, Diamond asked first-year board member Bill Costa to find a replacement for Ketchum, but his recruitment efforts fell short.  (Most owners had no knowledge of Costa's activities, and they also seemed to like Ketchum, so why vote against him?)  During the past year, Costa also worked on his own to broker a deal between TBSC and Diamond to settle litigation that Diamond initiated in 2015. So it was not much of a surprise that Costa also worked with Diamond on a possible alternative to Ketchum.

We interviewed Ketchum and Costa about their split.  It seems to be more personal than professional, so we'll leave it at that.  We also interviewed other owners who were brought into the schism, including one owner who was recruited to oppose Ketchum, but they seemed puzzled about it as well.

Ultimately, the tensions within the board did not matter. With more than 175 owners huddled together under a beachfront revival tent on a cold, blue sky day, Ketchum collected 1,985 votes, including 39 voted by the board (Costa abstained).  Diamond had 1,750 votes, but kept them in the corporation's pocket for another day.  No Diamond representative even showed up to address the crowd --- a far cry from a year ago, when a Diamond VP rankled the audience with a tone-deaf explanation of the benefits of Diamond's presence and points-and-trust program.

"Never take your ownership for granted," warned a somber but jubilant Board President Al Fong after the vote. "Diamond is a sleeping giant.  They are waiting for you to fall asleep."

Diamond started buying foreclosed TBSC units at auction several years ago as part of its bid to increase its presence in South Lake Tahoe, where it already operates several timeshares, including the majestic Lake Tahoe Vacation Resort, which is right next door to Tahoe Beach and Ski Club.  Diamond was well on the way to becoming the dominant majority owner of TBSC when the board, awakening like a slumbering giant , refused to accept Diamond's purchase of several hundred intervals in December 2014.  That HOA action triggered threatening letters from Diamond, and eventually a lawsuit --- which continues to this day.

Since then, the TBSC-Diamond story has devolved into an "us-against-them" fight where owners rallied to elect board members, in three straight years, who are dedicated to keeping Diamond at bay.  The anti-Diamond board members ran annual grassroots campaigns, with beachfront owner-update meetings on Mondays and Thursdays, to energize owners about the perceived threat that Diamond, one of the largest and most acquisitive timeshare companies in the world, posed to their traditional legacy resort.  So far, they've succeeded in warding off the giant.

Barring a major change in direction, next year's HOA election will put two more anti-Diamond board members onto the same hot seat that Ketchum just occupied.  President Fong and Treasurer Jake Bercu, Diamond's most vocal critics, will face re-election while promoting the dividends of maintaining the independence of Tahoe Beach and Ski Club.  No matter what else happens, they already know that at least 23 percent of the owners --- Diamond --- will vote against them.

Diamond is not the only major timeshare company seeking a larger footprint in Lake Tahoe.  Wyndham, the largest timeshare company in the world, is also seeking a bigger stake.  But its plans for a smooth transition --- takeover or otherwise --- just ran into an owner revolt at the Olympic Village Inn.

'PART II: Gang of Four' Owners at Olympic Village Inn Fire Longtime HOA Board Members who Hired Wyndham to Run Resort in 2016
  • Rebels promise to review Wyndham's contract and end foreclosure agreement
SQUAW VALLEY, CA --- A ballot box rebellion at Olympic Village Inn (OVI), a bucolic Alpine resort in North Lake Tahoe, triggered a palace revolt in October that resulted in the ouster of four HOA board members who agreed, one year ago, to turn the resort's management and all defaulted units over to the Wyndham timeshare conglomerate.

Standing Room Only at annual board election for Olympic Village Inn in Squaw Valley. 
Gang of Four rebels routed incumbents who hired Wyndham to manage resort.
In a record turnout on a spectacular fall-colors October Saturday, the so-called "Gang of Four," led by a hard-nosed and proudly profane prosecutor named Bob Bone, dumped four longtime board members who, despite having their own misgivings about contracting with Wyndham, turned the keys to the resort over to Wyndham's management company in 2016.  Bone and his co-conspirators, all of whom proudly own the Gang of Four appellation that was hung on them by a hostile board member, immediately fired Board President Alan Traenkner --- Wyndham's primary champion --- and board counselor Joan Wright.  They also agreed to dismiss a legal fight, launched by Bone months ago when he was just a fledgling activist, to force the HOA to disclose owner rosters (including emails) to members for campaign purposes.

Elected in a landslide, the new majority at the seven-member HOA is composed of Bone, who replaces Traenkner as president, and fellow activists Julie Feldman, Sandy Farrow and Greg Rankin.  They replace former board members Connie Gast, Ron Spiller, Wayne Hooper and Mike Harper (who also opposed Wyndham's hiring but ran afoul of Bone months ago).  Holdover board member and CFO Brad Hartman also opposed Wyndham's contract, so he could be considered a potential "Gang of Five" member in the future. The other holdover, Larry Grace, faces the same fate as Traenkner --- obscurity at the end of the HOA bench.  In many ways, the election represents a generational pivot as well as a policy change.  In with the new, out with the older.

New Board President Bob Bone (top) led a multimedia campaign to oust four longtime board members. 
Bone's first move was to fire former Board President and Wyndham advocate Alan Traenkner (bottom)

When the results were announced, the 200 OVI members who shoe-horned into an overfull hotel conference room erupted in applause and shouts --- as if their favorite football team had just scored a touchdown.   A record 58 percent of all OVI members voted (in the industry, 20 percent would be normal, 30 percent a milestone). Bone got 2,017 votes, followed by Rankin, 1,997, Farrow, 1,992, and Feldman, 1,818.   The incumbents received 139 to 149 votes each, plus 436 votes cast for each incumbent by Wyndham.

Afterwards, the defeated incumbents --- all longtime board members --- exited muttering while Traenkner took stock, shaken if not stricken by his landslide loss in an election that was a total referendum on his move to hire Wyndham.  Then with a wave, he was gone.

"I'm not the Gang of Four," Traenkner said, his face flushed. "My job is to make the transition as smooth as possible. We represent the whole association.  That's important for people to know."

Several Wyndham executives attended the SRO meeting, wearing casual business outfits and frowns.  They said afterwards that they would work with the new board to resolve all issues of concern.  But their furrowed brows told the story: Wyndham's experiment with OVI was going south.

Moral of this Election is: Don't Mess with Bonus Time --- or Bob Bone)

Olympic Village Inn, set in an elbow pasture at the base of Squaw Valley's majestic ski area, is probably one of the last places one would expect to morph into a launching pad for timeshare-owner activism.  The resort came to fame decades ago as the US host of world-class skiers and other Winter Olympians in 1960.  While the Lake Tahoe resort area grew, OVI stayed the same: laid-back and serene, it was a tiny 90-unit timeshare getaway with 3,300 owners and 4,590 intervals that catered to skiing families from the Bay Area. OVI was stable for years; its financials were OK, maintenance fees stayed low ($800)  and default rates (from owners) hovered in the single digits.  But then things changed.

In April 2015, Traenkner and the OVI board hit a wall: the resort's longtime general manager (who had taken care of everything for 32 years, according to Traenkner) announced he would retire in July 2016.  That triggered a search for replacement that forced the board to look outside its local circle of associates.  Traenkner attended Timeshare Board Members Association meetings to meet and interview management companies.

Traenkner and other board members talked to several companies, then picked Wyndham, which offered a management deal that no other company came close to matching: Wyndham would spend $1.25 million on renovations, pay $10 for 253 HOA-owned units (and pay all of the maintenance fees for those units), launch a rental and resale program, and fold OVI into Wyndham's global reservation system.  In addition to the management contract, Wyndham, a timeshare giant with worldwide experience managing 200 resorts, offered to take responsibility for all future OVI units that go into default (thereby guaranteeing those maintenance fee payments as well).  No surprise, the board said YES.  As a result, Wyndham took over in August 2016.

Traenkner said recently that he thought he was doing OVI members a great service by hiring Wyndham.  Unfortunately for him and his fellow board members, it all went awry.

Olympic Village Inn on a perfect summer day at base of Squaw Valley ski area.

At first glance, this sweetheart deal appeared to take care of all OVI problems: Wyndham would run all resort operations, pay up all late dues, plus guarantee payment of maintenance fees on all future defaulted units.  In return for its oversight, Wyndham would gradually acquire an increasing share of the intervals at OVI --- and, potentially, gain voting control oF the board.  As of this writing, according to Traenkner, Wyndham owns 436 intervals, or approximately 10 percent of OVI. (Wyndham executives say the company has no plans to take over the board or the resort.  At other comparable legacy resorts around the world, Wyndham has used its ownership stake to install corporate execs on the HOA board to protect the company's investment.)

The deal might have worked out famously, in fact, if Wyndham had delivered a gold-medal performance during the transition period.  Instead, it stumbled, repeatedly.  Wyndham installed a new GM with no timeshare experience who, for various reasons, irritated owners and board members, including Traenkner, Wyndham's champion.  Over the next year, Wyndham installed three additional GM's or interim GM's. The company also fired most of the housekeeping staffers because they were not legal residents.  Wyndham's reservation team also took over, which surprised owners who knew nothing about the changes. Owners used to calling OVI at Squaw Valley suddenly found themselves talking to Wyndham operators back East.

While Wyndham had some (predictable) hiccups implementing changes, the OVI board overlooked a key issue, and it turned into a fatal mistake: The board failed to tell owners about Wyndham until after the deal was done.  Bone, for example, knew nothing about Wyndham's presence until November 2016, when he tried to use his "bonus time" privileges to reserve rooms at a discount so he could bring his ski-oriented family to the resort on winter weekends.  Instead of securing an easy last-minute weekend reservation, Bone discovered, from a Wyndham operator, that the bonus time rules had changed.

That innocuous first contact with Wyndham's presence at OVI started a chain reaction that, over months, led to the revolt that deposed four OVI board members, including three who approved of the Wyndham deal.  Here's how it all fell apart.  Bone, a very outspoken lawyer from Santa Rosa, complained to Traenkner and other board members about the bonus time changes, then started digging into other things that were shifting at OVI --- including the unannounced staffing changes that left the housekeeping team in shambles.  Bone, contentious by nature, also had conflicts with the new GM and other Wyndham corporate executives.  Over time, an exasperated Bone mounted a very public campaign against the board based on what he perceived as the board's negligence and Wyndham's negative presence at the resort.  His efforts not only stirred up other owners, but helped persuade the board to abort the HOA-default foreclosure agreement in March.  In June, Bone successfully sued the board in small claims court to secure the membership roster so he could communicate his displeasure about the board and Wyndham with other owners.  Instead of turning over the rosters, the board fought the lawsuit.

The campaign got personal in a hurry.  Bone called out Traenkner on many occasions and offended other board members as well.  He accused the board of election fraud and sent a stream of combative emails demanding documents and explanations of board policy.  At the same time, Bone's "gang" launched a phone bank to contact owners and created a ""website where they posted information about the board's actions, attacked Wyndham's motives and generated support from owners.  The outreach campaign was critical, because Traenkner and the incumbent board never responded in kind.  (In fact, after the vote, Traenkner lamented that he never mounted much of a campaign and, worse, conceded having no insight about why owners voted against him.)

"Thanks to this board, the resort is falling apart," said the hyperbolic Bone, an owner since 2012 who primarily uses his timeshare for bonus time. "Wyndham is trying to run the resort into the ground for the sake of consuming it.  But I don't really view Wyndham as an evil empire.  I'm more concerned about HOA boards that are filled with individuals who don't read documents when they are charged with the responsibility of protecting a public trust."

Greg Rankin, a Gang of Four member and original sales manager at OVI, said he decided to run because "the board made a terrible mistake in selecting Wyndham.  And, despite overwhelming evidence over the past year,...they refuse to admit and acknowledge their mistake.  The board's unwillingness to provide meaningful oversight of Wyndham...has result in rapid deterioration of the property and a significant decline in both the level of service and overall quality of experience our owners have enjoyed over three decades."

Traenkner, interviewed several times about the transition over the past year, is understandably defensive about hiring Wyndham. "They put money into the association to help with remodeling, so we were able to reduce dues from $840 to $800," he said. "And their rental program has been good."  Still, he admitted having numerous "startup issues" with Wyndham that created consternation on the board and within the membership.

Wyndham Very Experienced Running Resorts, but Stumbled at Olympic Village Inn

We interviewed two senior vice presidents at Wyndham about the controversy.  They conceded making some mistakes during the transition, but otherwise defended their contract and intentions at OVI.  They said Wyndham, which now owns an estimated 10 percent of the intervals OVI (436 intervals) has no plan to take over the board or the resort.  In separate interviews over many months, Traenkner and other board members also voiced dissatisfaction with Wyndham's first GM and other aspects of Wyndham's transition, but otherwise defended their decision to bring in a major company that, in their eyes, would ensure the longterm financial stability of OVI.

Consultants familiar with the timeshare industry say there are many ailing legacy resorts in the US that probably need a Wyndham or similarly equipped timeshare-and-management company to advise boards and run resorts.  But OVI, they said, did not need Wyndham, because its financials were in generally good shape (thanks to the work of the former GM, who appeared to handle everything.)  What OVI needed, these consultants said, was a robust rental and resales program to monetize units that were going into default due to the resort's aging owner base.

In a post-election moment of calm, Bone said: "We ran on a simple pledge of transparency and openness.  We also pledged that we would immediately engage in oversight of the new General Manager Wyndham Resort Development Corporation.  We promised our fellow members that we  would not do what the prior Board did by entering contracts in secret Board meetings where there are no meeting minutes in violation of the resort governing documents and the law."

Bone, who contended all along that OVI didn't need Wyndham, plans to make Wyndham's management team prove their value --- or pack their bags.  The company's management contract comes up for renewal in 2019, unless Bone and company take moves to shred it in the meantime.  The 2019 year is also when Bone and the Gang of Four will stand for re-election --- and face the same kind of referendum that ended Traenkner's reign as president in October.

NB: this is not an unusual story; most if not all major developers are collecting deeded-week inventory from legacy resorts, frequently at zero-dollar prices, to replenish inventory for their trust associations, which then re-sell the legacy inventory as points, instead of weeks, for a retail price average of $20,000 or more per week.  For the major developers, this is smart business, and it also relieves the financial pressure on legacy resorts, such as OVI, that are losing 100 or more owners per year, every year.  Wyndham's timeshare business, which will be spun off into a stand-alone public company in 2018, reported $2 billion in sales for 2016.  It has 900,000 owners and owns or operates 221 timeshare resorts in the US, Canada and the Caribbean.  OVI, while extremely important to owners, is just a twinkle in the constellation of Wyndham's timeshare universe.

What IS unusual about this story is the unprecedented activism of owners at Olympic Village Inn, rank and file timeshare owners who banded together to initiate changes at their resort.  We'll report on the outcomes of their efforts in future installments of  'Staying' Alive.'

Monday, September 11, 2017

Call Your Company or Resort for Hurricane Updates and Reservation Cancellations

The horrendous hurricanes in Texas and Florida have taken a huge toll in human life and billions of damages in property losses across several Southern states and the Caribbean.  To help timeshare owners assess what is going on, RedWeek contacted several companies for updates on their resorts and how to handle cancellations, etc.   While the situations are continuing to unfold, here is a quick handle for timeshare owners to monitor the hurricanes and their aftermath.

1. Call your home resort or timeshare company, owner services, to get updates on damages, reservations, and cancellations.  Many independent resorts update their Facebook pages with their status faster than they can update their websites, so be sure to check. Most reputable companies are bending over backwards to help travelers rearrange their schedules or, in some cases, get refunds if applicable.  We also encourage owners to post their own messages, in the forums on your resort's page on RedWeek, to help inform other owners.

2. Call your preferred airlines as well to determine their policies.  All airlines have posted updates about Harvey and Irma on their websites, usually referring people to hotlines for real-time information.

3. The devastation at many Caribbean resorts will probably require many months for reconstruction and resumption of anything close to "normal" vacationing.  Owners on St. Martin resorts, for example, may be unable to use their intervals for months, if not years.  Here are some examples of what companies are communicating to timeshare travelers.

4. The Vistana timeshare company (formerly Starwood) sent members an email urging owners at Florida's Vistana Beach Club, Sheraton PGA Vacation Resort, Sheraton Vistana Resort, Sheraton Vistana Villages and Sheraton Broadway Plantation to seek updates on  Vistana's crisis hotline reported that the Westin St. John on the US Virgin Islands would suspend all near-term incoming reservations until further notice --- since the airport and all local ports are damaged and closed.

5. Marriott Vacation Club's owner services department offers a crisis hotline that is updated every morning at 9 a.m. EST. The Sept. 11 update said Marriott's Frenchman's Cove resort in St. Thomas was closed until further notice while damages are being assessed for "heavy" landscape losses and water intrusion. Marriott also reported no injuries or loss of life at the resort, and said the resort would reopen "as soon as possible." Marriott posted a more positive outlook for the St. Kitt's Beach Club, which is also closed. The resort suffered "no significant damage" and reported that guests are safe.  Marriott also urged travelers to contact their travel insurance companies and exchange companies, if applicable, to find out their options.

TimeSharing Today, the industry's only independent site (other than RedWeek) for national timeshare news,  just released a number of hurricane-related stories that are worth review.

Please post your hurricane-related stories here.

Wednesday, August 16, 2017

MAJOR NEWS: New York Attorney General Settles Case Against Manhattan Club and Promises $6.5 Million Restitution to Owners

AUGUST 16, 2017 --- MANHATTAN.  After more than three years of investigation and litigation, the New York Attorney General's Office today announced the settlement of the Big Apple's most notorious timeshare case.

The AG announced that hundreds of owners at The Manhattan Club will share in a $6.5 million settlement approved by the long-troubled operators of the swank timeshare near Central Park.  While details of the settlement are still to emerge, it is clear that this is not only a victory for the AG, but for thousands of TMC owners who paid top dollar for timeshares that, over time, they could not easily use.  As part of the settlement, the operators of TMC agreed to sell the club to a new company that, presumably, will restore some order and confidence for club members.  RedWeek talked to attorneys who represent owners and will share their comments as more details emerge.  For the meantime, please see the complete announcement from the AG's office.

A.G. Schneiderman Announces $6.5 Million Settlement With Midtown Manhattan Timeshare That Scammed Purchasers

The Manhattan Club, Timeshare In Midtown Manhattan, Will Pay Restitution To Hundreds Of Purchasers That Were Misled About Their Ability To Reserve Rooms And Resell Shares
Settlement Is The Largest In Recent History Of The AG’s Real Estate Finance Bureau
Schneiderman Reminds New York Residents To Be Wary Of High-Pressure Sales Traps Utilized By Some Timeshare Companies
NEW YORK – Attorney General Eric T. Schneiderman today announced a $6.5 million settlemnt with the owners and operators of the Manhattan Club, a timeshare building in Midtown Manhattan, over the sponsor’s repeated false promises to potential and current share owners.
The settlement is the largest in recent history for the Attorney General’s Real Estate Finance Bureau. Under the terms of the settlement, the operators of the Manhattan Club, at 200 West 56th Street, acknowledge that they repeatedly misled shareowners about the club’s reservation process, their ability to sell back their shares, and the details of the club’s state-approved offering plan.
“The owners of the Manhattan Club lured thousands of timeshare buyers with false promises and shady sales tactics that violated New York law,” said Attorney General Schneiderman. “While timeshares can be legitimate enterprises, scams like this one are common. To avoid becoming a victim, always be wary of high pressure sales tactics.”
The club bills itself as a “unique” “residence-style boutique hotel” that blends “a vacation ownership retreat with a luxury suite hotel” and that offers “a hard-to-find haven in the midst of this active city.” The website appeals to people who “frequently visit New York City to enjoy Broadway theatre, fine dining and shopping, [and] classical performances.”
The owners and operators in this case are T. Park Central LLC, O. Park Central LLC, Park Central Management, LLC, Ian Bruce Eichner, Leslie H. Eichner, Stuart P. Eichner, Scott L. Lager, Hospitality Advisors, LLC, New York Urban Ownership Management, LLC, and Manhattan Club Marketing Group LLC.
In addition to the $6.5 million restitution to eligible timeshare owners, the settlement requires:
  • The owners and operators to be barred from the timeshare industry
  • The owners and operators will sell their stakes to a third-party purchaser and relinquish management control
  • Remove all sponsor-appointed current officers and directors from their positions as members of the Board of the Timeshare Association.
Eligible timeshare owners will be contacted by a Claims Administrator at a later date about disbursement of the restitution.
The Office of the Attorney General (OAG) began investigating the Manhattan Club in 2014 after receiving repeated complaints from shareowners who paid tens of thousands of dollars to become Manhattan Club “owners,” but were unable to make reservations due to a claimed lack of available rooms by the hotel’s operators. At the same time, rooms in the Manhattan Club were being rented over the internet to the general public, in violation of the timeshare’s offering plan.
In Spring 2014, OAG sent undercover investigators to record the Manhattan Club’s “Vacation Ownership Experience” sales presentation. Investigators found evidence indicating that the Manhattan Club’s sales tactics amounted to a bait-and-switch scheme.
Prospective purchasers were baited by a relentless sales pitch that included a number of misleading promises, including that ownership in the Manhattan Club is “better than money in the bank.” Prospective buyers were also told that the club does not rent rooms to the general public, that reservations were easy to make, and that few restrictions apply to reservations by owners.
But these promises were false. For example, contrary to the club’s explicit promises in its offering plan, room availability to owners was greatly limited because rooms were being rented out to the general public. That means that all reservations are subject to availability and owners, in some cases, were unable to use any of the time they purchased. Further, the owners’ annual common charges jumped approximately 200% in the last ten years – to about $2,000 per ownership interest per year for the smaller units – on top of the upfront purchase costs that ranged from just under $10,000 to over $40,000 per ownership interest. Some frustrated owners have sold their ownership interests back for a mere $1, just to escape the burdens of paying these charges.
In July 2014, pursuant to General Business Law section 354, a provision of New York’s Martin Act that confers broad powers on the Attorney General to investigate and halt fraud, a Manhattan Supreme Court justice barred the Manhattan Club from selling timeshare interests, preventing them from withdrawing money from certain bank accounts, and stopping them from foreclosing on Manhattan Club purchasers during the pendency of the investigation.
For information about how to protect yourself from timeshare, home improvement and vacation scams, click here for the Attorney General’s brochure “Don’t Get Burned: Attorney General’s Guide To Protecting New Yorkers From Summer Scams.”
This case was handled by Louis M. Solomon, Chief of Enforcement in the Real Estate Finance Bureau, with assistance from Assistant Attorneys General Nicholas Minella and Kimberly Ver Ploeg in the Real Estate Finance Bureau, as well as Matthew Woodruff, Senior Enforcement Counsel, Assistant Attorney General Tanya Trakht, and paralegals Natalya Fadeyeva and Pascual Noble in the Investor Protection Bureau with notable contribution by Jonathan Werberg, Senior Data Scientist, Research & Analytics. This case was investigated by former Supervising Investigators Luis Carter and Michael Ward, Supervising Investigator Sylvia Rivera, Investigators Karon Richardson, Elsa Rojas and Former Sr. Investigator Richard Friedman, under the direction of Deputy Chief John McManus and Chief Dominick Zarrella of the Investigations Bureau. Former Assistant Attorneys General Serwat Farooq and Elissa Rossi also assisted on the case. The Real Estate Finance Bureau is led by Bureau Chief Brent Meltzer and overseen by Executive Deputy Attorney General for Economic Justice Manisha M. Sheth.

Wednesday, July 05, 2017

US Timeshare Industry Posts 7th Straight Year of Sales Growth

Last month, in our Ask Redweek forum, we posted an article about positive trends in the resale market.  For the first half of 2017, resale closings tracked by RedWeek rose 46 percent compared to 2016.  As a follow-up to our feature on resales, we’ll now give you a snapshot of industry-wide stats just released by the American Resort Development Association (ARDA), the industry’s trade association and lobbying arm in Washington.

The Recession in Retail Sales is Officially Over

In a strong rebound from the Great Recession of 2008, the US timeshare industry continued to show steady sales growth in 2016, making it the seventh consecutive year of expansion for an industry that is still undergoing major changes, including mergers and consolidations, while adapting to new competitors who are using alternative business models to lure timeshare travelers to their programs.

In a report released June 29, ARDA said that sales volume increased 7 percent in 2016 while rental revenues rose 5 percent.  Overall sales increased from $8.6 billion in 2015 to $9.2 billion in 2016.  Rental income rose from $1.8 billion in 2015 to $1.9 billion last year.  Average timeshare occupancy was 79 percent, which compares very favorably to a 65.5 percent heads-in-beds rate for hotels.

“Seven straight years of growth is a testament to the strength of the vacation product we offer,” said Howard Nusbaum, ARDA’s president and CEO.  “Timeshare offers more space and privacy, tremendous use-value over time, and over 5,300 resorts worldwide to choose from.”

According to ARDA’s resort-count, there were 1,558 US timeshare resorts in 2016 (for 206,080 units). A whopping 70 percent of those units offered two bedrooms.  The average unit size, moreover, exceeded 1,000 square feet.  Florida continues to have the most timeshares, by a lot, while beach resorts command the most popularity.  Inland resorts, such as Colorado, still claim the highest occupancy rates.

ARDA’s survey of member companies also showed how timeshare and other hospitality companies are adapting to the explosion of new technologies to serve customers. At least 35 percent of all resorts now offer mobile applications (primarily cell phone) to owners for reservations, check-ins, concierge services and onsite communications.

Time for Everyone, Owners and Resorts, to Adopt Tech Solutions

The rush to go-mobile and embrace high-tech communications is no accident.  All brand-name timeshare companies are adopting customer-friendly tech programs as fast as possible --- not only to assist customers, but to offset competition from start-up travel clubs and reservation companies that offer products never envisioned by the old-school timeshare companies.  Fast-growing travel agencies such as VRBO, AirBnB and others are the vanguard of a new travel industry that seeks to offer more travel options, more adventures, more cruises, instant reservations and, most importantly, more treasured experiences for consumers.  That latter idea, special experiences, used to be the preferred domain of timeshare operators at sales presentations.  No longer.

At recent industry conferences, CEO’s of the biggest brand-name timeshare developer companies debated the impact of these new players in travel.  The newbies include those who offer one-night-at-a-time, sleep-on-a-couch-in-Manhattan stays to entities that offer extended travel excursions to Europe, Africa and China. But there was no agreement among the majors on how to adapt timeshare-in-perpetuity models to millennium-aged travelers who reject long-term commitments and seek shorter, immediate reservations.

One thing all execs conceded, readily.  They are hiring millennial-aged marketers (ages 25-40, roughly) as fast as possible to catch up with a travel generation that appears, already, to be way beyond the traditional lifetime contract timeshare era.  They are also refocusing sales presentations on the benefits of vacation experiences, rather than vacation cost-savings, to appeal to the potential next generation of timeshare buyers.  They are also confident, perhaps as a wish fulfillment, that millennial travelers will eventually switch to timeshares when their lifestyles dictate that a two-bedroom, two-bath, full kitchen condo is much better than a one-bedroom hotel studio for four.

ARDA’s PR and marketing teams recognized this probable shift a couple years ago.  That’s when they started promoting industry-wide statistics which showed that timeshare owners have more sex on vacations than “regular” travelers who stay in hotels.  Tough if not impossible to argue with that.