Question regarding 'Point Systems'

[ArtsieAng Super Moderator Find all posts View Profile Close ArtsieAng]

I am still debating the pros and cons to owning a 'point based' timeshare. I am aware of the obvious advantages such as being able to stay for shorter stays, and the ability of using your points to make a reservation at any of the available locations, etc.

My question is this........If I purchase a point package today, lets say one that operates where 126,000 points currently would get me a two bedroom at the top locations. What happens in years to come if the number of points needed to get a two bedroom in newer locations increases?

Is it conceivable that the number of points needed today to get me a two bedroom, will only get me a one bedroom down the road. It seems to me that the cost of inflation, and general increases in construction/real estate would force a point devaluation.

I am wondering if one would need to continue to purchase more points if they wanted to stay in a two bedroom at new locations in years to come?

Or, is there something in place that I am unaware of, to balance out these increases over time?

Thanks for any input.......

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Angela,

This is an excellent question. The simple answer is that all point systems jack up the cost of points over time for newer resorts while leaving the exisiting point values pretty much the same. They claim that they need to do it because the development costs are higher for new construction. It turns out that this is, for the most part, a bogus argument. There is some justification for adding newer resorts with higher point values if and only if the current market value for the new property is a lot higher than the current market value for the existing properties. If they set point values using this methodology, then higher point values for newer resorts are okay and the system will not be harmed and owners will not be diluated by point inflation.

Without getting too deep in the math, let me see if I can provide some simple insights to illustrate what is important.

This very subject is a hot discussion topic on the WorldMark boards at this very time since they just announced a new urban resort called WorldMark San Diego. What is new about this resort is that they now have a point value of 15,000 credits (which are WorldMark points) for a 1 bedroom unit there. A typical one bedroom unit is WorldMark is only 8000 credits.

This difference in credit value for a 1 bedroom unit is only justifiable if the market value for the new property is about double the market value for the existing 1 bedroom units and so people are willing to reserve WorldMark San Diego at that higher rate rather than skipping that resort and staying at the lower priced resorts. That's because adding this resort to the WorldMark trust creates new points that must be used to book available reservations. If that resort is NOT fully booked, then those credits generated compete for existing resorts, thereby making it more difficult to book and resulting in a quicker than normal stock out situation. This is a very bad scenario and results in what we call dilution of ownership.

So, point values must be set at all resorts in a way that the RELATIVE point value for each season is roughly constant over time based on the underlying market value of the property. If that is done, then supply and demand for resorts will remain in balanced across the entire system and everyone benefits from the introduction of new resorts. The developer and the owners alike.

This begs the question of what to do if one particular area gets more popular over time. Let's say that an area like Denver all of a sudden has a 10 year boom in real estate due to a much richer population that wants to visit there. And, let's say that there were resorts in Denver in a point system. If the market value for the Denver resort increases significantly vs. the rest of the resorts, then an adjustment should be made to the point values. Otherwise, supply and demand will be out of balance and the Denver resort will stock out too quickly.

So, I would be in favor of setting point values according to some formula of relative levels based on market value of underlying real estate or average rentals in the area for various seasons. And, I would make the adjustments once every 3 years. In that way, supply and demand is optimally balanced and the resort group can grow very effectively. More importantly, the deveoper doesn't grow at the expense of current owners by diluting their ownerships.

This is all very complicated stuff. The bottom line is that you must trust the resort developer. They become the central bank for this vacation currency and they can easily take actions that result in point inflation that hurts everyone. Conversely, they can take actions that help the currency become stronger as well.

In many ways, vacation club currency and money face the same issues. It shouldn't be surprising since they are both mediums for exchange and all exchange is based on perceived, not fixed value.

[Bill4728 Super Moderator Find all posts View Profile Close Bill4728]

Is it conceivable that the number of points needed today to get me a two bedroom, will only get me a one bedroom down the road. It seems to me that the cost of inflation, and general increases in construction/real estate would force a point devaluation.

This is happening, now. What you're seeing is that the older resorts are keeping their point structures. so points for a 2 bd will still get you a 2bd. But at the new resort, that number of points will not get you a 2bd. You already gave the reasons why this is happening and it's a good thing. It doesn't make sense that a 2bd at an old resort should be worth the same as a 2bd at a brand new resort.

PS, Boca 15K points for a 1 bd in San Deigo, WOW!!

[ArtsieAng Super Moderator Find all posts View Profile Close ArtsieAng]

BB

"This very subject is a hot discussion topic on the WorldMark boards at this very time since they just announced a new urban resort called WorldMark San Diego. What is new about this resort is that they now have a point value of 15,000 credits (which are WorldMark points) for a 1 bedroom unit there. A typical one bedroom unit is WorldMark is only 8000 credits."

BB,

Hmmm....are the WorldMark owners OK with this dramatic increase in points.....did they perceive this adjustment when they originally purchased into the World Mark system?

Bill

"This is happening, now. What you're seeing is that the older resorts are keeping their point structures. so points for a 2 bd will still get you a 2bd. But at the new resort, that number of points will not get you a 2bd. You already gave the reasons why this is happening and it's a good thing. It doesn't make sense that a 2bd at an old resort should be worth the same as a 2bd at a brand new resort.

PS, Boca 15K points for a 1 bd in San Deigo, WOW!!"

I'm not so sure it is a good thing. I wonder if people who purchased points through a particular system wrongly assumed that as the company grew, they would benefit from the new resorts, without having to purchase additional points. If they need 2 bedrooms, and originally bought enough points to get them that 2 bedroom, it has to be tough to either purchase more points, or down grade to a 1 bedroom.

What brought this question to mind in my case, is that I noticed a discussion regarding the devaluation of hotel points that is currently being anticipated. People are suggesting that you use your points to purchase future vacations now, because in the near future, you will need many more points for the same deal. I couldn't help but wonder how the 'point systems' in timeshares will be affected.

I have another question.....I believe that with most 'point systems' you have the choice of taking your deeded week vs points, if you choose to do so....Is that correct?

If so, then is it conceivable that you could reserve your deeded week, and use it to make a trade into a 2 bdrm within the same system, or an outside company?

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

BB,

Hmmm....are the WorldMark owners OK with this dramatic increase in points.....did they perceive this adjustment when they originally purchased into the World Mark system?




I'm not so sure it is a good thing. I wonder if people who purchased points through a particular system wrongly assumed that as the company grew, they would benefit from the new resorts, without having to purchase additional points. If they need 2 bedrooms, and originally bought enough points to get them that 2 bedroom, it has to be tough to either purchase more points, or down grade to a 1 bedroom.

What brought this question to mind in my case, is that I noticed a discussion regarding the devaluation of hotel points that is currently being anticipated. People are suggesting that you use your points to purchase future vacations now, because in the near future, you will need many more points for the same deal. I couldn't help but wonder how the 'point systems' in timeshares will be affected.

I have another question.....I believe that with most 'point systems' you have the choice of taking your deeded week vs points, if you choose to do so....Is that correct?

If so, then is it conceivable that you could reserve your deeded week, and use it to make a trade into a 2 bdrm within the same system, or an outside company?

The WorldMark owners at www.wmowners.com are for the most part up in arms about this credit increase for a 1 bedroom.

Regarding your question about the deeded week, that only works in systems where you have access to your underlying deeded week. In essence, you are somewhat protected because you can always reserve your week for use, rental or exchange with another exchange company. You won't need to compete in the future for your week.

This type of access to your deeded week is built into the Bluegreen Vacation Club. So, you get that protection in that club.

In WorldMark, you do not have that protection. Credits are credits.

[gophish Super Moderator Find all posts View Profile Close gophish]

Basically what has been said here about Worlkmark is true for most points systems.
We own points in Fairfield. The points charts set for existing resorts cannot be changed (and I believe this is actually a legal requirement). So as stated before the points you are charged for a 1BR or for a 2BR at existing resorts will continue to be the same.
The two things that can change are the coast per point from the developer and the points charts for new properties. Fairfield has reciently opened up a few new resorts and the points charts reflect this rise in values (ie at the new FF Waikiki Beach Walk a 2BR Delux goes for between 250,000 points to 500,000 points for a week depending on the week whereas with many of the resorts with already established points charts a 2BR will go for between 100,000 points and 254,000 points depending on the week and season. Keep in mind that Hawaii is Red all year, but, they still have different values on different weeks and some of the other stateside resorts have red, white, and blue weeks.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Remember, inflation occurs when there are too many dollars chasing too few products. The same is true in a vacation currency. When new resorts have an artificially high value when added to the system, that is in effect printing new money. If the underlying asset that is inserted into the system is not worth the credits that are generated, then point inflation results.

Another important note is that just because there is general real estate inflation, that does NOT mean that there is necessarily point inflation. Let me illustrate this by creating a theoretical point club where all units are exactly the same value of say 10,000 points. The developer adds new resorts every 5 years for the exact same 10,000 point value.

Even if there is 10% inflation per year in real estate, this is okay for the developer and for the owners because the place where the inflation has an effect in on the value of the points. In other words, 10,000 points sold for $1.00/point in 2000 would be worth $1.10 in 2001, $1.21 in 2002, $1.33 in 2003, etc. So, there is indeed inflation, but it is reflected in the value of the points, not in the number of points required for booking a week.

When a developer creates point inflation by artificially setting too high point values for new resorts, then what happens the prices of the points stay low relative to the real estate inflation rate. So, the new owners get a better deal by coming in later. This is very easy to do in a point system. So, you should stay away from point systems that articifically inflate new resort prices by more than they should.

And, it's a relative value that matters, not the absolute value.

[ArtsieAng Super Moderator Find all posts View Profile Close ArtsieAng]

BB,

If I remember correctly, you own Bluegreen, so you will always have your week, no matter what occurs.

I am not 100% certain, but I think I like the type of system that Starwood
offers....You are buying a deeded week, that you can choose to use, exchange with an exchange company, or change to points. It appears to be offering the best of both worlds without considerable risk to your future vacations. I am seriously considering buying into this system.

I have heard rumors, and speculation that Marriott might be considering such a system in the future. If I knew that to be true, I might consider waiting, since I also love Marriott.

After giving this matter some thought, I would personally be leery of system that does not deed you a particular week.

PS......does anyone have an opinion about SVN -STAROPTIONS ? Is it a good system, are you satisfied, etc. How has the point option worked for you?

Thanks.....

[ArtsieAng Super Moderator Find all posts View Profile Close ArtsieAng]

BB,

"Regarding your question about the deeded week, that only works in systems where you have access to your underlying deeded week. In essence, you are somewhat protected because you can always reserve your week for use, rental or exchange with another exchange company. You won't need to compete in the future for your week.

This type of access to your deeded week is built into the Bluegreen Vacation Club. So, you get that protection in that club."

BB,

Thank you for responding......as I mentioned above, my husband and I are considering purchasing a Starwood timeshare. We currently own at the Sheraton Plantation, however, we bought retail and it does not qualify for the point options. I believe Westin Kierland Resort, Scottsdale AZ automatically qualifies for the point option, even purchased resale. that is what we are considering purchasing.

Would you know if the Starwood system and the Bluegreen system are similar. I noticed that you said you also have the option to rent, use, or exchange?

Thanks again.......

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

BB,

Thank you for responding......as I mentioned above, my husband and I are considering purchasing a Starwood timeshare. We currently own at the Sheraton Plantation, however, we bought retail and it does not qualify for the point options. I believe Westin Kierland Resort, Scottsdale AZ automatically qualifies for the point option, even purchased resale. that is what we are considering purchasing.

Would you know if the Starwood system and the Bluegreen system are similar. I noticed that you said you also have the option to rent, use, or exchange?

Thanks again.......

Angela,

I almost bought SVO. I love the Westin Kaanapali and Harbourside Atlantis properties. But, I haven't done it yet. I'm still trying to digest what I already own. And, if I recall correctly, they have a really good hotel conversion program.

But, I do have all of the disclosure documents for SVO. It's been about a year since I read those documents. Let me get them out later this week and I'll review them quickly to give you the highlights. If I forget, remind me.

[timeos2 Senior Member Find all posts View Profile Close timeos2]

At least in FF no inflation of points

Although we purchased our Fairfields almost 10 years ago we have found we have plenty of available points to reserve either the older or the newer resorts as we desire. That wouldn't be true if we only owned one week but with two, at resale pricing, we have plenty. By carefully planning, banking, borrowing and renting those 2 weeks of points there are plenty to stay at various resorts each year and for selecting the unit size, type and locations we desired.

I expect that the newer resorts in the top use times will require more points than our standard weeks do. But the way FF works there is an average cost that you can expect for most unit sizes and seasons. Needless to say the 4 bedroom, penthouse or Presidential suites take more points than a regular 2 bedroom would.

The flexibility offered by points, giving us the opportunity to decide what we want, when and where is well worth the effort needed to maximize the value of those points. Despite the sometimes higher value needed for the newest resorts or largest units it hasn't been a problem for us. No point inflation in the FF system that I've seen.

[ArtsieAng Super Moderator Find all posts View Profile Close ArtsieAng]

Angela,

I almost bought SVO. I love the Westin Kaanapali and Harbourside Atlantis properties. But, I haven't done it yet. I'm still trying to digest what I already own. And, if I recall correctly, they have a really good hotel conversion program.

But, I do have all of the disclosure documents for SVO. It's been about a year since I read those documents. Let me get them out later this week and I'll review them quickly to give you the highlights. If I forget, remind me.

So far, from what I read, SVO appears to be a good system. I am not as familiar with the system as I am with Marriott, since I have been dealing with Marriott for a number of years.

I think their point option is a plus, and I'm hearing that they are going to be building more resorts. Their lack of locations is the only draw back that I can see, compared to others. However, their quality is exceptional.

As I mentioned before, I wish the rumor that Marriott is intending to offer point options in the future were true. If Marriott does go that route, I think they would be tops, because of their quality, and their locations.

We already own Marriott's, and would take advantage of any future offerings from them. For now, I am contemplating purchasing into SVO. I have been looking on ebay and other sites to try to get an idea of a realistic price. Although, right now may not be the best time to purchase. I noticed an increase in price on ebay for a good 4-5 thousand dollars since the winter.....

I would appreciate any information that you could give me regarding SVO.....I need to do a little more to convince my husband, I have him about 90% on board. A few more facts, and I know he will cave.....He hates shelling out the money, but he agrees we could use one more really good timeshare.

Thanks for all the help.....

[EAM Senior Member Find all posts View Profile Close EAM]

Fairfield's system does allow points to change within limits

We own points in Fairfield. The points charts set for existing resorts cannot be changed (and I believe this is actually a legal requirement). So as stated before the points you are charged for a 1BR or for a 2BR at existing resorts will continue to be the same.

Actually in Fairfield points with UDI points, the legalese from Article IV Section 4.02 (a) of the Amended and Restated Fairshare Vacation Plan Use Management Trust Agreement states:

"from time to time the Trustee [currently Fairfield] may adjust the number of symbolic points required to reserve an Accomodation in such Vacation Units in order to respond to actual use patterns and changes in use demand. Any increase or decrease in the total number of points required to reserve such Vacation Units shall also result in a pro-rata increase or decrease in the number of Points allocated to the Members that own such Vacation Units (including Fairfield or such other applicable third party if all undivided interest have not yet been sold.) However, such adjustments made by the Trustee shall not result in a redistribution of the symbolic points assigned to undivided interest Vacation Units from one season of a year to another season in excess of a cumulative point total of twenty percent (20%) unless approved by a majority of the Members. Any such increase or decrease shall not alter or change the total number of symbolic points available for sale by Fairfield, a Member or any Third Party."

For fixed weeks assigned to Fairshare Plus, "Any increase or decrease in the number of points required to reserve such re-evaluated Accomodation shall also apply to the Member that subjected such Accomodation to the Trust Agreement."

I vaguely remember that Fairfield once changed the point values for a new resort slightly, allegedly because the first printing of the point values was in error. Except for that incident, I don't think Fairfield has ever changed point values for an existing resort. Instead, they increase the number of points needed to reserve the same size unit at newer or higher demand resorts. This is Fairfield's version of trading power.

And within Fairfield, you are allowed to make an ARP (advance reservation priority) reservation for a week at your home resort at 10-13 months before checkin, before others Fairfield owners can reserve there. If you own a fixed week converted to points, you can reserve that same week and unit and no other. If you own UDI points, you may reserve any available unit at your home resort at 13 months before checkin as long as you own enough UDI points at that same resort to make the reservation, i.e. you would not be able to use non-UDI points or UDI points from another resort.

[ArtsieAng Super Moderator Find all posts View Profile Close ArtsieAng]

BB,

"Even if there is 10% inflation per year in real estate, this is okay for the developer and for the owners because the place where the inflation has an effect in on the value of the points. In other words, 10,000 points sold for $1.00/point in 2000 would be worth $1.10 in 2001, $1.21 in 2002, $1.33 in 2003, etc. So, there is indeed inflation, but it is reflected in the value of the points, not in the number of points required for booking a week."

This would seem to make the most sense....it is the equivalent to paying higher prices for a newer, fixed or floating week.

The example below by EAM makes me wonder if in time, some point owners will find themselves in a situation where the newer locations will be completely out of their reach without the purchase of more points.....

EAM

"I vaguely remember that Fairfield once changed the point values for a new resort slightly, allegedly because the first printing of the point values was in error. Except for that incident, I don't think Fairfield has ever changed point values for an existing resort. Instead, they increase the number of points needed to reserve the same size unit at newer or higher demand resorts. This is Fairfield's version of trading power."

PS....I did a lot of reading on another board regarding SVO, last night, and I do not believe they are really a 'point' system. It just gives you the option to convert to points if you choose. I really like this option....I just hope that with future resorts, they will choose to increase the price of the timeshare, and NOT the number of points you need to trade into it.

[4ARedOctober Super Moderator Find all posts View Profile Close 4ARedOctober]

Thanks for the enlightening thread.

First I would like to thank you all for this thread.....it really helps analyze points. Especially BB...thanks.

This is the part that concerns me the most....I am supposed to trust the developer, and point values can change depending upon......any number of reasons pretty much at their discretion (within reason )

Another issue is I have is the incestuousness of the industry....Cendant owns WM and FF.....and RCI....so it can get so convoluted.

I have also looked at several WM properties while they are more than adequate in quality and layout....I would much prefer other timeshares in an area which are more spacious, in a better location, and have more amenities (WM Kona vs Kona Coast II for example).....now Marriott and Sheraton now we are talking...but that takes $$$....and they are not 'true' points resorts??

I did have a brief fling with a mini-system points resorts....Palm Canyon in Palm Springs (which is sold)...and the points system really made sense especially for someone not restricted to school vacation times or weekends because of work......one could stretch one week into more than two weeks if Friday and Saturday nights were skipped. It was hard to book an entire week to deposit for exchange sometimes as the weekend were booked for an extended time period....one had to plan way ahead of time if they planned to book a week for exchange.....and that was pretty much the same as the weeks program....no last minute change of mind advantage.

I am not trying to bash points, WM, or FF here.....just the discussion here still makes me wary of these points programs. I like several attributes of the points programs and may participate in the future but just not now as the weeks program has so far met my needs. They do work for many people and I think that is great and they should enjoy and take full advantage of them....everyone has different needs and wants.

Always learning with you fanatics who really get into the nitty gritty of the subject....thanks again.

The bottom line is that you must trust the resort developer. They become the central bank for this vacation currency and they can easily take actions that result in point inflation that hurts everyone. Conversely, they can take actions that help the currency become stronger as well.