Points and the RCI rentals class actions

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

One of the frequent defenders of RCI over yonder posted some information that IMHO is critical to the success of the class actions against RCI and from what I have seen is missing from the Chace lawsuit and may be from the Murrillo suit as well. That is how RCI uses the Points/Weeks interface to feed rentals. Unless the Points/Weeks interface is succesfully attacked, RCI may be able to defend their rentals.

Here is the key. It was posted that in Cendant's 2005 Form 10-K filing with the SEC, they explained how they take inventory from Weeks to rent to pay for Points Partner inventory. They stated ''RCI has the right to recoup the expense of providing the services by renting the use of vacation properties for which the subscribers [i.e. members] could have redeemed their points''

This means that RCI can cherry pick the Weeks inventory in order to pay for Points Partner reservations in the Points system, and indeed make a big profit doing so. The most undervalued inventory availible to them is by using the unfair generic crossover grids to grab the best weeks and locations from the Weeks system. When all resorts in a broad region of the same award status are averaged together (overaveraged), the best ones are going to be systematically substantially undervalued. Similarly when all red weeks are averaged together for one generic value, the prime weeks are going to be systematically substantially undervalued.

Since RCI controls the system, which inventory are they going to grab for themselves? The most potential profit is in that inventory that is most undervalued in the system they have contrived. That inventory is the prime weeks/locations in the Weeks system.

The crossover trades are the heart of the problem, and are just as much a ripoff of the Weeks system if a Points member uses it as when RCI grabs weeks for rentals. Why should Weeks subsidize the Points Partners program when Weeks members have no access to Points Partners? Why should Points members have open access to Weeks inventory when Weeks members do not have open access to Points inventory?

Now, RCI may be taking other weeks even beyond this for rentals, and if so, the plaintiffs may still prevail. But the main engine generating rentals is so open to attack, it is amazing that it is not clearly in their gunsights. Perhaps the lawyers have not fully thought through how all of this fits together.

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

I understand what you are saying, but if I were RCI, I feel pretty confident that I could design an objective algorithm that would result in a "fair exchange" of inventory from the spacebank to the the rental pool.

All RCI needs to do is produce the algorithm and then prove mathematically that the algorithm results in a fair exchange of inventory. And, that they religiously follow the algorithm.

Whether or not it actually does create a fair exchange is subject to subjective interpretation and the optimization criteria for the algorithm.

The natural result of that review would be reasonable doubt that the algorithm was actually designed to pilfer the system. That's because a jury would have no clue as to what both sides were talking about. They would have to rely on expert opinions each of which would totally contradict each other.

Your description certainly provides circumstantial evidence and motive for misdeeds. But, it doesn't prove that either a) RCI actually did anything wrong or b) RCI planned to do anything wrong. Now, if there were an internal memo discovered that described a plan to pilfer the system, then someone would need to go to jail. Maybe they will find that "smoking gun."

One of the things that I have never seen you post is the possibility that perhaps the weeks exchange system may be flawed and the increasing lack of availability may be due to the fact that many people are growing discontent with a flawed system and have chosen to either use or rent their weeks rather than exchange. This along with the fact that mini-systems have negotiatied great deals with the exchange companies may just mean that the nature of the beast is that it will inevitably decline when truly tested by all market forces including that of competion from minis and non-exchange company rentals.

Are you willing to concede that the weeks based exchange system could all by itself result in reduced deposits of prime weeks?

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

Here is something else on the points/weeks interface that bears mentioning (once again).

Nearly all points systems have negotiated a special relationship and interface into RCI and II. I feel pretty confident that at the negotating table the mini system representative focuses a lot of attention on the potential weeks that can be deposited into the exchange company, whether or not those weeks are prime. The exchange company wants those deposits, especially if it's a branded hotel chain, because those deposits result in a ton of exchange activity. So inevitably, they get very high trading power for their owners. And, most of them get to choose the weeks they deposit into the exchange. This enables them to hold more desirable weeks for owners of the mini-system. I am sure that this behavior results in fewer prime weeks being deposited into II and RCI.

The internet has made it easier for owners to rent their weeks. They could always go to their resort and rent through an internal program. But, additional options allow more renting. So much so that a full 12.3% of all US timeshare intervals are rented according to a study commissioned by ARDA.

Add to that direct exchanges and the emergence of focused exchange companies like SFX that focused on prime weeks only, it's no wonder that JLB's data continually declines over time for availability in SW Florida and on the beach in Florida.

I claim that everything I've mentioned on this post is totally legitimate timeshare transactions and the majority of timesharers would NOT want any of the minis, rentals or independents to be removed from the industry as participants.

So, even if RCI stopped renting and killed off RCI Points and the crossover grid, there is nothing that can stop the continual and persistent reduction of good deposits available for exchange into RCI. And, as more timeshares get developed and the prime weeks get hoarded by certain entities, that leaves more and more of the less desirable weeks for exchangers. That's not necessarily bad if you like to travel off season. There, your options will probably get even richer.

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

No, I don't work for RCI or any other timeshare company. But, I did stay in a Holiday Inn express last night.

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

This will be my first foray into this subject, and I will approach it from pure self-interest.

I am reasonably certain that no one has searched a specific timeframe and area more frequently, or documented it better than I have the past nine years~~~SW Florida for January. Beginning with January 2006, none of the better resorts that I used to see have been available.

A well-placed RCI manager has assured me that I am seeing everything and that those resorts/weeks are among the most desireable in the entire system. Typical rental would be in the $2000/week range.

It seems like there is an assumption that all prime weeks that are no longer available are being rented for a lot of profit. My question is, with as many folks as are scouring the rental sites, and as widely as I have publicized my search Over Yonder, why have none of them been found anywhere?

Secondly, if they are not being rented, but there is another reason they are not available, and only RCI knows that, doesn't that make it a pretty tough nut to crack?

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

Jimbo,

I agree that you have great data. Why don't you take a crack at explaining what happened based on the evidence you see? I have no problem with objective analysis of data. I'd like to know you what your data says.

It could very well be that RCI is stealing from the spacebank. The motive and the opportunity is certainly there. Can you reasonably conclude that RCI is stealing from the spacebank? Or, do you think that some of the other theories I and others have posed provide any possible explanation for at least part of it?

I actually don't have a vested stake in the answer being either one way or another. I just want to know the truth of what is going on.

I don't like that RCI has a clear conflict of interest in operating an exchange company and a rental company at the same time. Even if they aren't doing it, it appears that they are and people will always suspect it. I just think that is bad business.

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

This May Be True Now!

"Are you willing to concede that the weeks based exchange system could all by itself result in reduced deposits of prime weeks?"

BocaBum99


There may be truth in this statement now as RCI members wise up to RCI and their many rentals programs (Snap Travel etc.)!

However, it does not explain my example about the Maui Embassy on Ask RCI. Weeks at the Maui Embassy were available. But they were only available for rentals. There were no Exchanges available during this time frame to anyone. What else was this if not Cherry Picking the best weeks for rentals?

http://www.tugbbs.com/forums/showthr...highlight=Walt

Walt

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

"Are you willing to concede that the weeks based exchange system could all by itself result in reduced deposits of prime weeks?"

BocaBum99


There may be truth in this statement now as RCI members wise up to RCI and their many rentals programs (Snap Travel etc.)!

However, it does not explain my example about the Maui Embassy on Ask RCI. Weeks at the Maui Embassy were available. But they were only available for rentals. There were no Exchanges available during this time frame to anyone. What else was this if not Cherry Picking the best weeks for rentals?

http://www.tugbbs.com/forums/showthr...highlight=Walt

Walt

Walt,

As I've said before, maybe you should submit your evidence to the class action attorneys. Perhaps, it is concrete evidence that RCI is doing wrong.

Do you think you may have the smoking gun that proves RCI is illegally renting spacebank weeks? If so, I think you should submit it as potential evidence. If they are, I hope someone goes to jail.

If there are potential alternate explanations, I'd like to hear those as well. I do know that the resorts I own end up on rental sites and I don't have access to exchange for those weeks. I just accept the fact that it's different inventory that I don't have access for exchange. It happens all over. So, that doesn't necessarily bother me. Perhaps your resort offered them up for rent and didn't tell you. Maybe a wholesale broker created a rental program for owners and those weeks were offered to RCI to rent. There are plenty of possible answers.

I'd do the legwork to find out for myself, but I just don't care enough about the issue to do anything about it. It's good that you care enough to check. I've got no problem with that either.

It's just that I continue to believe that timeshare rentals are good for the industry and any short term situation where weeks are rented far below the maintenance fees is only short term in nature and will self correct itself over time. Last year 12.3% of timeshare units were rented. I believe that number will increase over time as timeshare owners learn how to do it. And, I believe this will help the industry, not hurt it.

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

I guess I am Jimbo, so I will answer.

If I recall, I made a similar statement Over Yonder, that I didn't know what has happened to what I used to see for SW Florida, and someone accused me of saying (tongue-in-cheek) that RCI was renting them. Wasn't that you?

Your question here appears to be accusing me of that again.

My statements above stand without any hidden meaning. When I say why have none of them been found anywhere? what I mean is why have none of them been found anywhere?

I have tapped all my sources and have not found one HGVC resort on the beach anywhere. I would be surprised of the attornies for the classaction suits have either. I haven't got the foggiest idea what has happened to those weeks, but I keep asking, waiting for someone to show me where they are.

All I have is possibilities of what happened to them. You know, when I said that to the classaction investigators, they didn't seem to want to talk to me any more.

As for the rest of your statement, I agree. Having a company with a history of a lack of scruples like Cendant both renting and exchanging from the same pool of deposits is like having the fox guard the henhouse.

In a perfect world, the guv would step in and stop that, because of the near-monopoly situation the exchange companies have with their affiliates. Before anyone cries foul, for me saying monopoly, because there other alternative exchange companies, ask yourself why RCI has been so free with those breach of contract lawsuits with resorts that want to change exchange company affiliation.

Or just ask Mr. Seagull.

At the very least, the exchange companies exert undue influence over their affiliates, demanding exclusive agreements and having the power to make or break many of them.

Jimbo,

I agree that you have great data. Why don't you take a crack at explaining what happened based on the evidence you see? I have no problem with objective analysis of data. I'd like to know you what your data says.

It could very well be that RCI is stealing from the spacebank. The motive and the opportunity is certainly there. Can you reasonably conclude that RCI is stealing from the spacebank? Or, do you think that some of the other theories I and others have posed provide any possible explanation for at least part of it?

I actually don't have a vested stake in the answer being either one way or another. I just want to know the truth of what is going on.

I don't like that RCI has a clear conflict of interest in operating an exchange company and a rental company at the same time. Even if they aren't doing it, it appears that they are and people will always suspect it. I just think that is bad business.

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

JLB,

One of my best friends names is Jimbo. I called you that affectionately. Just referring to you as JLB was getting so impersonal. And, I had no accusatory tone or intent in my message. So please don't read any into it.

I am actually interested in what you think the data says. I had no hidden meaning in my post. Just legitimate interest. Really.

I was wondering if the timing of when the weeks disappeared had given you any clues. Like if it were systematic or random. If it were whole resorts going missing in a given year and then others following, then perhaps there was some reason to believe that foul play was the cause. Or, on the other hand, if it was just consistently random reductions in availability, then that could suggest something else. Those are the types of insights I am looking for. I am thinking the pattern should suggest something. That's all.

As for the tango we had over yonder, guilty as charged. I thought you were trying to say one thing, but imply another. If I was wrong about that, my apologies.

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

Hgvc

I called HGVC today for a different reason but just for jollies I asked the councilor about availability for SW Florida for January of 2007. A few full weeks were available on Marco Island for a checkin date of January 5th and Jan 12th but nothing after that. No availability all month on Captiva or Sanibel.

Reviewing the HGVC website regarding Hurricane closures, it looks like all the resorts on Captiva have been closed since Hurricane Charley in August of 2004 reopening in late March of 2006.

Some of the resorts on Sanibel and Marco were closed after Charley in 2004/2005 and after Wilma in 2005/2006.

HGVC is most likely holding on to everything it has for internal member use. RCI most likely will only see a few nonHGVC member deposits.

Short

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

If the mini-system happens to be owned by RCI's parent, Cendant, how can that possibly be considered an arms-length transaction in negotiating special deals? If the system involved in the special deals is RCI Points, it is even more incestuous.

Branded hotel chains are not what generates tons of exchange activity. It is deposits in areas of high demand and low supply. I would bet that non-branded Allen House, for example, runs rings around just about any branded resort in that regard.

The internet does not really have the numbers on member rentals. I have posted before that looking at the actual numbers of weeks on the two most popular member rental sites, Redweek and MyResortNetwork, shows that member rental numbers on the internet are UNDERWHELMING to say the least. This is NOT an explanation of where weeks went. Heck, the local timeshare rental/resale agency on the OBX, which operates the old fashion way with brochures, telephones, and a storefront, has more OBX listings for rental than Redweek and MyResortNetwork have combined for the whole state of North Carolina.

Here is something else on the points/weeks interface that bears mentioning (once again).

Nearly all points systems have negotiated a special relationship and interface into RCI and II. I feel pretty confident that at the negotating table the mini system representative focuses a lot of attention on the potential weeks that can be deposited into the exchange company, whether or not those weeks are prime. The exchange company wants those deposits, especially if it's a branded hotel chain, because those deposits result in a ton of exchange activity. So inevitably, they get very high trading power for their owners. And, most of them get to choose the weeks they deposit into the exchange. This enables them to hold more desirable weeks for owners of the mini-system. I am sure that this behavior results in fewer prime weeks being deposited into II and RCI.

The internet has made it easier for owners to rent their weeks. They could always go to their resort and rent through an internal program. But, additional options allow more renting. So much so that a full 12.3% of all US timeshare intervals are rented according to a study commissioned by ARDA.

Add to that direct exchanges and the emergence of focused exchange companies like SFX that focused on prime weeks only, it's no wonder that JLB's data continually declines over time for availability in SW Florida and on the beach in Florida.

I claim that everything I've mentioned on this post is totally legitimate timeshare transactions and the majority of timesharers would NOT want any of the minis, rentals or independents to be removed from the industry as participants.

So, even if RCI stopped renting and killed off RCI Points and the crossover grid, there is nothing that can stop the continual and persistent reduction of good deposits available for exchange into RCI. And, as more timeshares get developed and the prime weeks get hoarded by certain entities, that leaves more and more of the less desirable weeks for exchangers. That's not necessarily bad if you like to travel off season. There, your options will probably get even richer.

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

Such an algorithm might be feasable within one system, but not with two different valuation systems like Points and Weeks. And why should Weeks members be subsidizing Points Partners when Weeks members do not even have access to Points Partner inventory?

What if RCI designed an algorithim that dealt with ''fair'' takings from the Weeks system? This would prove that the all-red-is-the-same (of same unit size, major region, and award status) generic grids for Points to Weeks crossover trades for Points members were NOT fair. That would put RCI in a box with no way to turn, getting shot down on either one issue or the other.. If the class action lawyers do not actively challenge the crossover grids for members as well as rentals, they are fighting with one hand tied behind their back.

The non-exchange company rentals are not a significant share of the market. RCI ran several of the minis into the arms of II when they rolled out RCI Points, so the minis have even less impact on RCI than they did a few years ago.

I understand what you are saying, but if I were RCI, I feel pretty confident that I could design an objective algorithm that would result in a "fair exchange" of inventory from the spacebank to the the rental pool.

All RCI needs to do is produce the algorithm and then prove mathematically that the algorithm results in a fair exchange of inventory. And, that they religiously follow the algorithm.

Whether or not it actually does create a fair exchange is subject to subjective interpretation and the optimization criteria for the algorithm.

The natural result of that review would be reasonable doubt that the algorithm was actually designed to pilfer the system. That's because a jury would have no clue as to what both sides were talking about. They would have to rely on expert opinions each of which would totally contradict each other.

Your description certainly provides circumstantial evidence and motive for misdeeds. But, it doesn't prove that either a) RCI actually did anything wrong or b) RCI planned to do anything wrong. Now, if there were an internal memo discovered that described a plan to pilfer the system, then someone would need to go to jail. Maybe they will find that "smoking gun."

One of the things that I have never seen you post is the possibility that perhaps the weeks exchange system may be flawed and the increasing lack of availability may be due to the fact that many people are growing discontent with a flawed system and have chosen to either use or rent their weeks rather than exchange. This along with the fact that mini-systems have negotiatied great deals with the exchange companies may just mean that the nature of the beast is that it will inevitably decline when truly tested by all market forces including that of competion from minis and non-exchange company rentals.

Are you willing to concede that the weeks based exchange system could all by itself result in reduced deposits of prime weeks?

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

At least several thousand people know me as Hey You! When we did shows, that's what my name badge always said. Folks remembered it.

I address possible reasons for the disappearance of the better resorts in posts 24 and 25 here:

http://www.tugbbs.com/forums/showthread.php?t=13540

I have been told that in the past new Spacebank deposits did not always make into the batch to be matched with ongoing searches immediately, so it was possible for those performing manual searches to get stuff that they should not have. He says that has been resolved.

It is the opinion of my source that there are ongoing searches for everything deposited from the better resorts in SW Florida for January. He says he has never matched to any of those resorts himself. His family loves the area.

Bear in mind that it is only the better resorts that have disappeared. The Normal Suspects are still available in about the same numbers as before.

What I think my data says is that the better resorts are no longer available in January, starting in January, 2006, for a reason yet to be discovered.

Sure the timing makes it suspicious. That's why RCI should not be allowed to do rentals. When your parent company has a reputation of being unscrupulous, you shouldn't place yourself in a position to arouse suspicion unless you simply don't care. Then when the suspicions are aroused, if you do care, you should not arouse more suspicions by not giving real answers, by saying the facts are proprietary.

If they are concerned about restoring their reputation and building good will.

Those things are not important to a lot of business people today. It seems like they have been more concerned about keeping their T & C updated to include their most recent watering down of the exchange system.

When I talk about stuff like this, I do so because I know how much time and effort I have put into this study. And I have some sources. If I can't figure out what happened, I am skeptical of others making gross generalizations.

All that said, I also know that weeks deposited into the Spacebank, by owners thinking they will be going to other owners, do not. They get rented instead. Heck, Madge has said that. It is a big deal, but it is no secret.

I've seen stuff, lots of stuff, appear in my daily searches at 14-days out, stuff I hadn't seen in the two years I had been looking, so what's a person to think?

I guess I'm trying to say that the lawsuits look like a shakedown to me, with likely no real evidence. Sorta like me trying to catch Head OF shooting out the streetlight.

Accepted.

JLB,

One of my best friends names is Jimbo. I called you that affectionately. Just referring to you as JLB was getting so impersonal. And, I had no accusatory tone or intent in my message. So please don't read any into it.

I am actually interested in what you think the data says. I had no hidden meaning in my post. Just legitimate interest. Really.

I was wondering if the timing of when the weeks disappeared had given you any clues. Like if it were systematic or random. If it were whole resorts going missing in a given year and then others following, then perhaps there was some reason to believe that foul play was the cause. Or, on the other hand, if it was just consistently random reductions in availability, then that could suggest something else. Those are the types of insights I am looking for. I am thinking the pattern should suggest something. That's all.

As for the tango we had over yonder, guilty as charged. I thought you were trying to say one thing, but imply another. If I was wrong about that, my apologies.

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

If you can sort this out, what do you think the data says? The figures are the highest number of resorts available on any day that month. I don't know how to edit this to make it all line up right. It is until I submit it. The figures should line up from right to left, 2008 back, if that makes sense. If you'll look at the 13 to 22 months out timeframe, that's all you need to know.

Months Out 2004 2005 2006 2007 2008
24 2 2 2
23 6 4 7
22 10 11 6 5 9
21 11 12 9 9 9
20 11 11 8 9
19 12 13 9 8
18 14 12 8 7
17 11 13 5 8
16 11 11 7 9
15 14 11 8 8
14 11 10 8 9
13 11 9 6 8
12 8 6 5 4
11 10 2 4 5
10 7 2 2 6
9 5 2 4 5
8 4 3 3
7 3 2 1
6 1 2 2
5 1 2 1
4 1 1 2
3 2 3 2
2 1 1 2
1 3 1 1