Who will get Sunterra Europe?

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

Sunterra's decision to sell its European operation may be reaching the final stages. From discussion on other boards, it appears that the competition has boiled down to three prospective buyers, one European, one American, and one Asian. There has been recent reports of ''two yanks'' touring Sunterra Europe resorts. All along the apparent European frontrunner has been said to be Club La Costa, which at one time was thought to have sown up the deal. Recent word has been that the American entity in the final group may be Bluegreen, but there is no information on who the Asian group may be.

Sale of Sunterra Europe is a real body blow to Sunterra, but would be a feather in the cap of Bluegreen if they bought it. From the statistics I have seen, Sunterra Europe might present some challenges in merging with some other programs. Over half of its members are weeks-based but with a large minority of points members. I suspect that those points members might find their choices were remaining members of a declining orphan points program or paying a hefty conversion fee to ''upgrade'' to some other points program run by the acquiring company. The weeks based owners, of course, would not face that difficulty. They could just rock on with what they have.

One impact may be European availibility in the various exchange companies. Sunterra is II, but both Club La Costa and Bluegreen are affiliated with RCI. Club La Costa also has a close working relationship with DAE. Because of the DAE connection, personally, I am hoping that Club La Costa prevails.

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

Things can't change that much

Steve - I'm not really up on Sunterra Europe inner workings but from my limited exposure some (all?) of the points members are actually in a Trust. If that is the case then they can't be forced to buy into something else as the Trust holds the properties for them. The Trust may or may not choose to affiliate or buy into another system such as Bluegreen. At worst the members have access to all holdings within the Trust which is all they ever had supplemented by any affiliations with other groups of inventory. Same for the weeks owners. They only had the week(s) they owned and whatever affiliation the link to Sunterra gave them (internal trades, II/RCI, whatever). So in the end if it is sold the weeks owners at worst have their week - the Trust owners still have the time that has been put into the Trust. It is no better or worse for one group than the other.

Now what the new buyer might care to dangle in front of the former Sunterra Europe owners is up to them and most likely would cost the owners more money. It's that right to sell to a known group of buyers that is the real attraction to purchasing the system. It has the potential to further fracture the ownership into even smaller groups. But if that happens or not is under control of the owners in either the Trust or weeks. It cannot be forced on them if they don't wish to change. But the whole thing is disconcerting and rightfully makes anyone involved nervous I'll bet.

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

You seem to forget the example of the orphan points program, Peppertree/Equivest points. Once left on its own, it was faced with declining membership, declining exchange possibilities, rising fees and the selloff of the underlying weeks it was based on.

Sunterra's trust does not have independent trustees elected by the members does it? Isn't a buyer just going to substitute its own nominees for trustee in places of Sunterra's? Whose interest are they really going to look out for; the members or the developer? Isn't the developer going to be motivated to run down the existing program to ''encourage'' conversion (oh, excuse me, ''upgrading'') to its own program, at a cost?

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

A trust really does have to watch the candy store

You seem to forget the example of the orphan points program, Peppertree/Equivest points. Once left on its own, it was faced with declining membership, declining exchange possibilities, rising fees and the selloff of the underlying weeks it was based on.

Sunterra's trust does not have independent trustees elected by the members does it? Isn't a buyer just going to substitute its own nominees for trustee in places of Sunterra's? Whose interest are they really going to look out for; the members or the developer? Isn't the developer going to be motivated to run down the existing program to ''encourage'' conversion (oh, excuse me, ''upgrading'') to its own program, at a cost?

The Peppertree/Equivest were not Trust based - they were small groups of resorts that were linked to create a "system". You are correct that they were/are orphaned and the owners must be PO'd. They were royally screwed over. The original weeks owners in the old FF system that didn't convert to FF Points are in a similar situation. They get to trade only amongst themselves or through RCI - so being orphaned isn't exclusive to a points system.

I have met the Trustee for the Sunterra European Trust - or at least the person who held that spot back in 2005 - and while he was a company man he also clearly understood that his loyalty had to be with the tens of thousands of owners he (and the Board) represented. I was impressed that he was not afraid to buck the needs of sales if it was for the good of the Trust members. Since I don't belong I don't know if he and his fellow Board members still hold the same positions but from the actions I've noted it looks like those in charge still understand their duties. In theory those people are elected but again I have no way to know what the process actually is.

If I were a member of the Trust I would certainly keep an eye on what is happening and also do whatever I could to ensure that a qualified Trustee remains in charge. The current regime seems to be on the owners side and if that continues they should be fine no matter who the buyer is.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

I don't know how the Sunterra Europe trust is set up.

The Hawai'i trust is set up so that the trustee is completely separate from Sunterra. I believe the trustee is the institutional/trust department of one of the major Hawai'i banks, and thus has fiduciary duty only to the owners.

In practice, there undoubtedly is/will be collaboration between the two entities; I'm sure that Sunterra can count on the trustee's support for renewal of Sunterra's management contract, short of major Sunterra malfeasance or ineptitude in resort management. But trustee fiduciary duties liabilities are big enough these days that I don't think they can afford to get too cozy.

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

You might want to read some of the many posts about the two ''owner representatives'' in the Sunterra Europe system over on TimeshareTalk before assuming someone put in office by the company will do anything other than toe the company line. They probably will not do anything blatant to screw the owners, but there are a whole lot of grey area moves that could be made that would negatively impact owners. The Hawaii situation would give a great deal of independence, but the best solution is election by the owners.

The other interesting issue here is the impact the change will potentially have on exchange company inventory, the main reason I am pulling for Club La Costa to buy up Sunterra Europe.