Weeks Purists Theory: does this ring true?

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

If it was a genuine question, then I guess you just don't understand the difference is a short term sale - a few days in that situation - and a long term undercutting of the market by dumping a lot of inventory over a long period at a cheap price.

All jokes aside, let's get back onto the serious economic topic.

I have claimed that cheap RCI rentals cannot last forever. There are many factors that will limit its continued practice including: revolting depositers, lawsuits and the threat of lawsuits, loss of profit leading to management changes, competitive alternatives for deposits, etc.

And I have further claimed that cheap RCI rentals will NOT kill the timesharing industry. In fact, I have asserted that cheap rentals will draw more market participants into timesharing and will help to foster more growth in the industry.

I claim that timesharing is currently booming and will continue to boom over the next decade or more. I'd like to see if you agree or disagree with me on these points.

It was odd to me that you would promote such a fire sale for what appears to be a signficant amount of airline seats and not even raise the possibility that this could be damaging the European airline industry. When it seemed like it was such an important argument in your case against RCI rentals.

So, I'd really like to understand what you actually believe. I'd like to understand if you believe:

a) that RCI rentals will last long enough to kill the timesharing industry. RCI dumping of inventory is different than the European airline because it is sustain and ongoing. If you believe this, I'd like to understand roughly how long you think that will take and we can measure the accuracy of that prediction on a year over year basis to test your hypothesis.

or

b) that RCI rentals will not last forever and will be more like the one-time discounted tickets that are being offered by this German airline.

Do you believe A or B?

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

Oops. It looks like they found two examples. Is that enough to prove your assertion wrong?

The only RCI Points example was of the ''seems to me'' variety. Not much evidentiary value. Perhaps some further research is in order.

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

If RCI's rental prices were only offered for a few days, like the airline sale, it would not be a concern. The more time the offer is open, the more it can threaten others in the market, and cheap RCI rentals have already been sustained by RCI over a lengthy period with no end in sight.

Again, a short term sale has little or no market impact.

Sustained low cost dumping can kill a market. Ask the US textile industry.

How long it will take to seriously damage the timeshare market depends on a lot of variables, that I would not have the info to make an edcuated guess, but resorts are already starting to see bailouts from it, although not yet enough at any resort I am familiar with to threaten the resort yet. How much this will increase with next year's m/f bills is anyone's guess.

All jokes aside, let's get back onto the serious economic topic.

I have claimed that cheap RCI rentals cannot last forever. There are many factors that will limit its continued practice including: revolting depositers, lawsuits and the threat of lawsuits, loss of profit leading to management changes, competitive alternatives for deposits, etc.

And I have further claimed that cheap RCI rentals will NOT kill the timesharing industry. In fact, I have asserted that cheap rentals will draw more market participants into timesharing and will help to foster more growth in the industry.

I claim that timesharing is currently booming and will continue to boom over the next decade or more. I'd like to see if you agree or disagree with me on these points.

It was odd to me that you would promote such a fire sale for what appears to be a signficant amount of airline seats and not even raise the possibility that this could be damaging the European airline industry. When it seemed like it was such an important argument in your case against RCI rentals.

So, I'd really like to understand what you actually believe. I'd like to understand if you believe:

a) that RCI rentals will last long enough to kill the timesharing industry. RCI dumping of inventory is different than the European airline because it is sustain and ongoing. If you believe this, I'd like to understand roughly how long you think that will take and we can measure the accuracy of that prediction on a year over year basis to test your hypothesis.

or

b) that RCI rentals will not last forever and will be more like the one-time discounted tickets that are being offered by this German airline.

Do you believe A or B?

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

Sustained low cost dumping can kill a market. Ask the US textile industry.

It just moves the industry from a more expensiive location to a cheaper location. Just like when textile mills in the Carolinas dumped inventory to force New England textile mills out of business.

If you were a mill owner in New England, it was predatory pricing. If you were a mill owner in the Carolinas, you were building a market.

It all depends on the perspective.

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

The only RCI Points example was of the ''seems to me'' variety. Not much evidentiary value. Perhaps some further research is in order.

No, it is not a hypothetical - it was 43,000 points in 2004 and 35,000 points in 2005/2006. THAT is a significant adjustment by any measure.

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

But if you deliberately kill off resorts whose business plans are tied to the deHahn business model of exchanging, with no practical way to change it (amendment requirements in Declaration of Covenants virtually impossible to
meet as a practical matter), who is RCI supposed to be benefiting? With fewer resorts and members, it would not seem to be benefiting themselves.
Do you think they may be trying to kill as much of the competion to the developer chains Cendant has bought up, as they can?

It just moves the industry from a more expensiive location to a cheaper location. Just like when textile mills in the Carolinas dumped inventory to force New England textile mills out of business.

If you were a mill owner in New England, it was predatory pricing. If you were a mill owner in the Carolinas, you were building a market.

It all depends on the perspective.

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

No, it is not a hypothetical - it was 43,000 points in 2004 and 35,000 points in 2005/2006. THAT is a significant adjustment by any measure.

Well, someone FINALLY comes up with a measley ONE example. Is this the proverbial exception that proves the rule? Or is it a correction of a typographical error in a previous chart? One change, for whatever reason, is a tiny drop in the bucket of the overall points charts in the system. It is clearly a rarity in the stagnant points numbers racket.

Even a few isolated changes do not make a system dynamic. If that is all there are, it certainly suggests that they occured for some reason other than review and adjustment of the system, which would of necessity involve much more extensive adjustments.

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

But if you deliberately kill off resorts whose business plans are tied to the deHahn business model of exchanging, with no practical way to change it (amendment requirements in Declaration of Covenants virtually impossible to
meet as a practical matter), who is RCI supposed to be benefiting? With fewer resorts and members, it would not seem to be benefiting themselves.
Do you think they may be trying to kill as much of the competion to the developer chaings Cendant has bought up, as they can?

No resort anywhere, DeHahn vintage or newer, has any business building a sales/ ownership model on RCI or any other weeks exchange company as it is not part of the sale/ownership. Many points based programs ARE part of the sale as fully disclosed in the documentation a buyer gets. In fact an argument can be made that the points program addresses the need to have an outlet for all of the available time at a resort - good, bad and ugly, while the weeks model left those poor weeks to the whims of the suckers, er buyers that were (maybe) promised low cost upgrades to more desirable times elsewhere. If they chose to drop the membership in weeks exchange, as is their right, the "value" of that time goes to nearly zero. Since the points purchase requires membership and has already taken the proper discount for the low value of the use period (ie less points assigned) the resort is better protected by points than weeks. That is most likely one of the big reasons new resorts are almost all points based (not necessarily RCI Points of course) not the old week model anymore.

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

The DeHahn model had a very good way of dealing with off season weeks that were in oversupply, and also their close cousin weeks from overbuilt areas that were in oversupply. It was the 45-day window. Using distressed inventory with a low shelf life meant the real value at that juncture was equivalent. That plan worked. Now Cendant comes along and shunts a lot of that inventory into rentals and allows Points members to take multiple weeks from the 45-day window for one week of points, depleting the 45-day window.

I have done a little of what in politics would be called opposition research and gone to a few points presentations. They don't push the off season points weeks on the basis of ''put several weeks of points (and maintenance fees) together to make one'' or '' get part of a week for a whole week'' because they seem to have figured out that those dogs don't hunt. What they push heavily in trying to sell those low point weeks is using them for 9000 point crossover trades in the Weeks 45 day window. Because of that sales approach, I suspect that Points is more dependant for value of its off season inventory on the Weeks 45 day window than are Weeks resorts. When RCI finally does finish off killing it, the Points resorts are likely to suffer more than Weeks resorts.

Whether a trade is equal of not depends on supply and demand factors. Thats why a blue week from Cape Cod trading into hurricane season in Orlando is an even trade. Both have big excesses of supply over demand. That's also why a 45-day window trade is an even trade, no matter what the week may have been worth earlier. Last minute deposits are given lower trade value, so common sense tells you that unclaimed last minute inventory still lying around in the exchange bank also has a lower trade value.

Developers designed the business models of resorts, and RCI was part and parcel of the sales under that theory as they provided sales materials such as films that explained how the system worked. HOA's have inherited that, with little leeway to change it, for better or worse. The sea change in exchanging wrought by RCI now threaten to pull the financial rug out from under their affiliated resorts.

Fortunately, many resorts have alternative markets for off season weeks. Just looking at the OBX, for example, Outer Banks Beach Club I and II have done a good job promoting their off season weeks to locals who buy to have yearround access to the amenities. Seascape is adjacent to a golf course where owners have golf priveleges and they have used that succesfully to market off season weeks to golfers. Ocean Villas has used the fact that there are duck blinds on the federal reserve which are open to the public just a few miles away to market winter weeks to duck hunters. The original developer of The Windjammer targeted Canadians for sales of winter weeks, and the HOA has followed through on that. To them, the OBX in January was warmer than home. For many resorts these markets exist where they do not have to rely on exchanging. Many off season weeks have been owned through the years by non-exchangers, and the trick is now to market weeks that exchangers abandon due to the RCI changes to these markets as quickly as they are turned in. The better led resorts will roll with the punches if they are in a market where this is feasible. In some areas, they may lack alternative markets. At some resorts, the leadership may not be on top of things and events may overtake them.

If at some time in the future, RCI decides to, or is required to, properly assign points values and the overpointed resorts in places like the overbuilt areas are ever assigned values that reflect the real market, then we will really see the bursting of a bubble.

The reason that points systems appeal to developers of multiple resorts is that it allows them to oversell their most appealing locations by giving buyers underlying deeds to resorts elsewhere, arguing that ''points are points''. They can keep their sales operations churning at such resorts long after that resort is sold out.

No resort anywhere, DeHahn vintage or newer, has any business building a sales/ ownership model on RCI or any other weeks exchange company as it is not part of the sale/ownership. Many points based programs ARE part of the sale as fully disclosed in the documentation a buyer gets. In fact an argument can be made that the points program addresses the need to have an outlet for all of the available time at a resort - good, bad and ugly, while the weeks model left those poor weeks to the whims of the suckers, er buyers that were (maybe) promised low cost upgrades to more desirable times elsewhere. If they chose to drop the membership in weeks exchange, as is their right, the "value" of that time goes to nearly zero. Since the points purchase requires membership and has already taken the proper discount for the low value of the use period (ie less points assigned) the resort is better protected by points than weeks. That is most likely one of the big reasons new resorts are almost all points based (not necessarily RCI Points of course) not the old week model anymore.