Diamond Selling TS weeks w/o building any more?

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

Has Diamond found a way to continue to sell TS weeks without having to build any new resorts?

I ask this because DRI has lots of resorts and rooms already. They have lots of current owners wanting to sell at all their resorts. BUT DRI sells a product which they don't allow their owners to sell. ( DRI sells memberships in the "club" which isn't transferable. The only thing a current owner can sell is a deed at a single DRI managed resort or a deed in a "trust" of 19 DRI resorts)

Therefore, DRI can obtain inventory by buying back the weeks their current owners at selling for $0.10/dollar. Which is a whole lot cheaper than building new resorts and new units at their current resorts. And DRI is also obtaining weeks by aggressively taking back any weeks which fall behind a few months in their MFs. ( which is much cheaper than foreclosing)
( they aren't foreclosing but taking the week since when owners join the "club" they give up their deeds for memberships which are easily taken back.)

So is it possible that DRI can simply continue to take back their already sold inventory and not build anything new?


PS Yes, I know that many DRI owners still have their deeds. And yes, I'm not a DRI owner. But I'm just wondering about DRI current business model. Is it, get back as many weeks as you can and sell those weeks instead of building more?

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

In a very sick way, this makes sense. Buying back inventory and reselling it is far better than the alternative of building new resorts and adding to the resale over supply.

I believe that certain resort groups are getting saturated and will start to have a much harder time selling developer units. At some point in time, the market must correct where supply and demand works. It is happening in residential real estate, it will happen in timesharing eventually.

The first place to look at cracks in the current sales and marketing model is in Wyndham. Owners are dumping resale units at an unprecedented level. It's hard to imagine that Wyndham will continue to sell at $.12-14/point when resales are going for about $.005/point.

I just picked up over 1.1M Wyndham points for less than $6000 out the door. Somethings got to give. One way for the developer to address this imbalance is to buy back the cheap inventory when the cost is below its development cost. I think they need to seriously consider implementing your plan for a while.

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

Has Diamond found a way to continue to sell TS weeks without having to build any new resorts?

I ask this because DRI has lots of resorts and rooms already. They have lots of current owners wanting to sell at all their resorts. BUT DRI sells a product which they don't allow their owners to sell. ( DRI sells memberships in the "club" which isn't transferable. The only thing a current owner can sell is a deed at a single DRI managed resort or a deed in a "trust" of 19 DRI resorts)

Therefore, DRI can obtain inventory by buying back the weeks their current owners at selling for $0.10/dollar. Which is a whole lot cheaper than building new resorts and new units at their current resorts. And DRI is also obtaining weeks by aggressively taking back any weeks which fall behind a few months in their MFs. ( which is much cheaper than foreclosing)
( they aren't foreclosing but taking the week since when owners join the "club" they give up their deeds for memberships which are easily taken back.)

So is it possible that DRI can simply continue to take back their already sold inventory and not build anything new?


PS Yes, I know that many DRI owners still have their deeds. And yes, I'm not a DRI owner. But I'm just wondering about DRI current business model. Is it, get back as many weeks as you can and sell those weeks instead of building more?

I'm not going to bother to find all the times that this has been mentioned in this forum
http://www.timeshareforums.com/forums/259550-post7.html
http://www.timeshareforums.com/forum...78-post11.html
but if I could buy something for 3 cents on the dollar and resell it at retail, I'd sure try to milk that one. Capitalism, no one forced the retail buyer to buy or sell.

Inventory exchange with Raintree or Vacation Internationale, insignificant, but not read or sold that way and possible expansion through acquisition like BlueGreen, they have lots of things going.

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

In a very sick way, this makes sense. Buying back inventory and reselling it is far better than the alternative of building new resorts and adding to the resale over supply.

I believe that certain resort groups are getting saturated and will start to have a much harder time selling developer units. At some point in time, the market must correct where supply and demand works. It is happening in residential real estate, it will happen in timesharing eventually.

The first place to look at cracks in the current sales and marketing model is in Wyndham. Owners are dumping resale units at an unprecedented level. It's hard to imagine that Wyndham will continue to sell at $.12-14/point when resales are going for about $.005/point.

I just picked up over 1.1M Wyndham points for less than $6000 out the door. Somethings got to give. One way for the developer to address this imbalance is to buy back the cheap inventory when the cost is below its development cost. I think they need to seriously consider implementing your plan for a while.

As has been discussed, when it's points... the developer can sell it as new or do the thing they've been doing for years... oh, $40K is too much, here's a repo/trade in/trade up that I just found in inventory, only $32K.

Wow, that's better than the MB .5M points I just got for $.006/point.

[dougp26364 Senior Member Find all posts View Profile Close dougp26364]

Has Diamond found a way to continue to sell TS weeks without having to build any new resorts?

I ask this because DRI has lots of resorts and rooms already. They have lots of current owners wanting to sell at all their resorts. BUT DRI sells a product which they don't allow their owners to sell. ( DRI sells memberships in the "club" which isn't transferable. The only thing a current owner can sell is a deed at a single DRI managed resort or a deed in a "trust" of 19 DRI resorts)

Therefore, DRI can obtain inventory by buying back the weeks their current owners at selling for $0.10/dollar. Which is a whole lot cheaper than building new resorts and new units at their current resorts. And DRI is also obtaining weeks by aggressively taking back any weeks which fall behind a few months in their MFs. ( which is much cheaper than foreclosing)
( they aren't foreclosing but taking the week since when owners join the "club" they give up their deeds for memberships which are easily taken back.)
So is it possible that DRI can simply continue to take back their already sold inventory and not build anything new?


PS Yes, I know that many DRI owners still have their deeds. And yes, I'm not a DRI owner. But I'm just wondering about DRI current business model. Is it, get back as many weeks as you can and sell those weeks instead of building more?

It's not quite right about joining THE Club. What you're refering to is DRI's trust. THE Club is a voluntary points based reservations system that deeded owners can join without giving up their deeds or their rights as deeded week owners. All DRI can do is cancel their membership in THE Club. They can not take a deeded week without forclosing on that week.

Now, if an owner gives up his deeded week and converts that week into DRI's trust program, THEN DRI can do as you say. But, the owner must relinquish his week to do this.

I have two weeks that are deeded. I paid a fee of $2,995 to join THE Club but, I kept my deeds. DRI would have to forclose on those deeds.

DRI is not the only resort system to buy back units. Many of the larger hotel chain timeshares write into their contracts a Right Of First Refusal clause (ROFR). With this clause they do not have to actively attempt to buy back weeks on the resale market. All resales must be approved by them and, if the price is low enough, they can exercise their ROFR and buy the week for the agreed upon price. Sunterra (now DRI) did not put a ROFR clause in their contracts so they now must compete on the open market for those weeks. IMO, this may be more expensive than having ROFR where all resale contracts must pass through their hands before the deed is transfered.

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

From some of the material posted on Crimeshare, and analysis of published Sunterra numbers, it is apparent that DRI took over a Sunterra Europe that had lots and lots of non-performing inventory. There would be lots of weeks to sell there before they thought about building anything new.

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

Sunterra (now DRI) did not put a ROFR clause in their contracts so they now must compete on the open market for those weeks. IMO, this may be more expensive than having ROFR where all resale contracts must pass through their hands before the deed is transfered.

Sunterra did put ROFR into the sales contracts for the Ka`anapali and Po`ipu properties in Hawai`i.

On the larger issue of developer buyback, I've long thought it made sense for developers to repurchase inventory for resale purposes. If sales and marketing is ~50% gross sales price, then it seems to make sense for developers to buy back if resale prices are less than about 35% of new sales price.

I've also thought that it would make sense for developers in multi-resort sytems to create an program in which annually they would buy back a certain number of units offered by owners at 50% of the initial purchase price. That option would be available only after an owner had owned the property a minimum number of years - probably about five years.

I think such a program would generate good relations with owners, giving distressed owners a way to exit their ownerships easily. In creating such a program the developer is acknowledging that circumstances change and decisions that made sense at one time might no longer sense for owners/members, and the developer is there to help it valuable owners/members make those transitions.

By creating a five year waiting period and pegging the resale offer to original (not current) sales prices, the developer will be buying back at a price that will generate a good profit after resale.

The limit on the number of units that the owner would be committed to buy back is needed by the developer so that they don't accrue a mounting liability on their books. (If the developer makes a commitment to buyback at a future date, the developer must create a balance sheet liability for that commitment. Without a limit on the number of units the developer is committed to buyback, that liability could become quite large.) Of course, if market conditions are favorable, they developer could buy more units than the minimum requirement. And if more owners want to sell back than the developer is committed to buyback owners may have to wait in a queue for several years until their unit is repurchased.

****

Another developer "benefit" from repurchase programs such as this enabling continuing developer control. When the developer repurchases a unit from an owner, the developer has the voting rights for that unit until the unit is resold. By maintaining ownership of sufficient inventory that the developer can vote in a bloc, the developer can maintain control of resort operations even if their overall ownership fraction isn't very large.

DRI does that even better, because DRI converts some of that inventory to trust holdings, and they then use the trust to control resort operations.

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

I've also thought that it would make sense for developers in multi-resort sytems to create an program in which annually they would buy back a certain number of units offered by owners at 50% of the initial purchase price. That option would be available only after an owner had owned the property a minimum number of years - probably about five years.

I think such a program would generate good relations with owners, giving distressed owners a way to exit their ownerships easily. In creating such a program the developer is acknowledging that circumstances change and decisions that made sense at one time might no longer sense for owners/members, and the developer is there to help it valuable owners/members make those transitions.

By creating a five year waiting period and pegging the resale offer to original (not current) sales prices, the developer will be buying back at a price that will generate a good profit after resale.

Here is a copy of a post over yonder which says that Club Intrawest is doing just that. Buying back anyones unit at 100% of the sale price or 40% of the current sale price.

Originally Posted by currituck
Can anyone confirm if Club Intrawest indeed would buy-back the points at original purchase price from the developer after 8 years of ownership? Thanks

Yes, that true but they pay 100 % of the original purchase price or 40% of the current selling price. Which ever is less.

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

Originally Posted by Bill4728
Is it possible that DRI can simply continue to take back their already sold inventory and not build anything new?

The reason I'm bringing up this issue is:
1. that DRI resales are about $0.10 on the dollar. So DRI can buy back at really cheap prices. Making it a reasonable business model to buy back inventory instead of building.
2. Unlike other TS systems which have really cheap resales ( wyndham is one) DRI doesn't seem to be building very much. They just seem to be trying to sell current inventory repackaged as "points in the trust". And by buying trust points from DRI, new owners are getting into the "club".

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

The reason I'm bringing up this issue is:
1. that DRI resales are about $0.10 on the dollar. So DRI can buy back at really cheap prices. Making it a reasonable business model to buy back inventory instead of building.
2. Unlike other TS systems which have really cheap resales ( wyndham is one) DRI doesn't seem to be building very much. They just seem to be trying to sell current inventory repackaged as "points in the trust". And by buying trust points from DRI, new owners are getting into the "club".

It looks to me to be a quite viable business model.

Re new resorts, DRI seems to be more focused on acquisitions than on building their own. Supposedly, the motive for the inventory exchange with Raintree is a pre-acquisition "get to know each other". If Raintree and DRI decide they are comfortable with each other, Raintree will come into DRI.

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

Some recent actions at DRI sales made me question their approach but the resulting corrective actions speak to an ethical and honest operation. While I personally wouldn't give up my deed to them - I want my vote and my property thank you - I have been happy with The Club as a voluntary member and will continue with them unless fees go insane. Since we only pay for the Club portion, now with the unwanted, more expensive and almost useless II Preferred or whatever it's called but not the resorts/trust where the fees are really under upward pressureI think it will remain viable for us.

[idofabric Member Find all posts View Profile Close idofabric]

So Raintree, which when I just looked at, seems to have more resorts in the West US, I did not check on International. And with DRI getting Bluegreen, which seems to have a lot in the East, it would all mesh together to give current owners of all 3 TSs a lot more variety? Or at least if we can equally use all resorts owned by the 3 different companies, it could?

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

So Raintree, which when I just looked at, seems to have more resorts in the West US, I did not check on International. And with DRI getting Bluegreen, which seems to have a lot in the East, it would all mesh together to give current owners of all 3 TSs a lot more variety? Or at least if we can equally use all resorts owned by the 3 different companies, it could?

This from a sales manager, so the usual caveats apply. If DRI does acquire Raintree, the Raintree Resorts would likely enter the system as a new Trust collection. Existing Raintree members would have the option of continuing as Raintree members with their current ownership privileges or becoming a Club member by either affiliating their week with the Club or by converting their ownership to a Trust membership.

If the acquisition does go through, he expected that for a limited time Raintree members would be allowed to join THE Club for a modest fee. When I pressed him he said he expected the initial conversion fee to be "several hundred dollars".

Now this is a sales guy, but the individual is the Regional Sales manager for Hawai'i, so he's in a position to know. Plus the structure he described does make sense operationally. And by creating incentives for a significant number of Raintree members to join DRI Raintree Trust, DRI can quickly establish full control of the DRI system.

*****

There are still many Club Regina memberships around that have not been converted to Raintree Vacation Club. (Think of the relationship between Club Regina and Raintree as being like the relationship between the old Embassy resorts and DRI.) Those members only have access to the three Club Regina resorts. Many of those older Club Regina memberships are due to expire in 2026.

DRI has those Club Regina one-bedroom high season units tagged at 6500 points. Right now I suspect you could get an unconverted Club Regina High season "Club Suite" for $1000 or less. If this plays out as described buying several Club Regina memberships now could be a way to get a large number of Club points pretty cheaply. If the numbers I used above are accurate, you could get three CR units for $3000. Add $1500 ($500 per property) for the "welcome to DRI" conversion fee and you wind up with almost 20,000 Club Points for less than $5000.

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

In Europe Diamond didn't even have to buy the units back. After huge hikes in fees and other problems they very generously offered to take back units in lieu of m/fs. I understand quite a number of people took them up on the offer, so Diamond have actually managed to legally sell the same thing twice.

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

In Europe Diamond didn't even have to buy the units back. After huge hikes in fees and other problems they very generously offered to take back units in lieu of m/fs. I understand quite a number of people took them up on the offer, so Diamond have actually managed to legally sell the same thing twice.

Sounds like a better deal than paying several thousand $ or € to a postcard company!!!

Actually, with right-to-use properties developers have been selling the same thing twice for years.