Must Read Post From An Insider on Timeshare Talk!

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

vuja de

Gee this sounds like something I read on another TS4Ms post:

http://www.timeshareforums.com/showthread.php?t=9843

Of course, the topic got into many other aspects, as usual.

The only way CASH could work is if a TS owner saw the VALUE in the figure. As in cash in the pocket or cash equivalent that equalled or surpassed the annual maintenance fee. And of course, RCI won't be sending out any checks to anyone! If there is a cash factor it will be in the ever popular credit account.

But until and unless RCI is willing to show INVENTORY and how it is USED, no one will trust RCI with their weeks unless the money is really good!

I think RCI is actually on the road to decimating the timeshare idea entirely....and it is going to be a great opportunity for independents to grow.

RCI -- in seeking to act (as BB refers to it) as a "market based" entity will only confuse the whole market...and move old-timers and confused newbies into discouragement. In the short term (as where I understand a market based mentality likes to live) it will be great for RCI, in the long term, it will be bad for everyone on all 3 sides (seller, buyer and RCI).

Once you put $$$ into the equation, folks wake up and smell the coffee and then they truly know when they have been screwed.

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

Hard To See How They Price The Rental Fees

OK - here are two random prices for January 7, 2007:

Kitty Hawk - Rate Range: $89.00 - $120.00

Orlando - Blue Tree Avg. Nightly Rate* Standard Room $166.67

Just one example but looks like Orlando is up to 86% higher. It would be much worse if you head south. I'll bet that holds almost all year long. There may be 3-4 months where they are close but the majority goes to FL. If the real world gets to value units it won't be pretty for the seasonal folks.

Here are some samples from RCI's Extra Vacation. I think it is hard to see how they price these units. Is it location? Is it size of the Unit? Is it Gold Crown? Or supply and demand?

Vacation Village at Weston #5773
1 Bedroom 4 / 4 Full 01/07/2007 01/14/2007 $62.00 $439.99

Radisson Hotel Miami #8751
Hotel 4 / 2 None 01/06/2007 01/13/2007 $157.00 $1,099.00

Fishermen's Village Resort Club #4851
2 Bedrooms 6 / 4 Full 01/06/2007 01/13/2007 $122.00 $859.99

Orange Lake Country Club #0670
2 Bedrooms 8 / 6 Full 01/05/2007 01/12/2007 $70.00 $494.99

Club Intrawest-Sandestin #6738
1 Bedroom 4 / 4 Full 01/07/2007 01/14/2007 $102.00 $719.99

Walt

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

Walt,

I vote for location and supply without demand.

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

OK - here are two random prices for January 7, 2007:

Kitty Hawk - Rate Range: $89.00 - $120.00

Orlando - Blue Tree Avg. Nightly Rate* Standard Room $166.67

Just one example but looks like Orlando is up to 86% higher. It would be much worse if you head south. I'll bet that holds almost all year long. There may be 3-4 months where they are close but the majority goes to FL. If the real world gets to value units it won't be pretty for the seasonal folks.

We have been through this before. You want to compare low season on the OBX with high season in Orlando. How about we compare now on the OBX with hurricane season in Orlando like September?

$89 on the OBX this time of year might get you the roach motel off of the beach on weeknights.

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

Rents don't lie

We have been through this before. You want to compare low season on the OBX with high season in Orlando. How about we compare now on the OBX with hurricane season in Orlando like September?

$89 on the OBX this time of year might get you the roach motel off of the beach on weeknights.

January 7 is high season in Orlando? On what planet? It is the single slowest week every year. If that is high then there is no low in Orlando. I am comparing two random searches using Travelocity for the exact same use week in 2007. I admit that even that week was 68% occupied at my resort in Orlando in 2006 but that was the lowest number of the entire year. Based on advanced bookings for the rest of 2006 it will remain the lowest. I used Bluetree as I know they have less occupancy then their neighbors to be fair. If you want I'll try the same thing in May and September. I don't expect to see anything different. Off season is off season in seasonal areas and nothing can change that for more than a week or two in a month.

I agree that in June to mid-August prices in OBX will be at least slightly higher than Orlando. But the rest of the year it isn't even close REGARDLESS of the so called oversupply. It doesn't matter if there are 1 or 100 OBX units in January. No one wants them. Thats why the rental value is near zero. While there are plenty of Orlando units, and demand is about as weak as can be seen all year, there is still more rental value than OBX and other coastal areas. Also remember that rentals aren't necessarily stuck in weeks of use. Once the units are broken into rentals they may be sold for higher value on weekends and lower during the week. So the net result is a good return in "overbuilt" Orlando but remains near zero on the coast. Thats why trying to say trading 1 for 1 into Orlando under the now discredited weeks system was in fact an upgrade and not a fair trade as has been claimed. Rental values, unlike secret values, points assignments you feel to be unfair or VEP, don't lie. It is what a buyer will freely pay to obtain use of that resort in that area. for 8 months or more each year FL buries most other areas, 2 months may be a tie and 2 may actually favor the seasonal areas by a small amount.

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

As far as comparing which area has the most months with oversupply between Orlando and southeastern beaches, I would refer you to former RCI employee Candid's ''Pink Weeks'' post overyonder. He identified more months in Orlando that RCI had oversupply than at eastern beach resorts. He should know, and Bootleg's posts on the subject back that up.

You might want to drive down the Outer BAnks beachfront on a late fall weekend and look at all of the No Vacancy signs at motels.

January 7 is high season in Orlando? On what planet? It is the single slowest week every year. If that is high then there is no low in Orlando. I am comparing two random searches using Travelocity for the exact same use week in 2007. I admit that even that week was 68% occupied at my resort in Orlando in 2006 but that was the lowest number of the entire year. Based on advanced bookings for the rest of 2006 it will remain the lowest. I used Bluetree as I know they have less occupancy then their neighbors to be fair. If you want I'll try the same thing in May and September. I don't expect to see anything different. Off season is off season in seasonal areas and nothing can change that for more than a week or two in a month.

I agree that in June to mid-August prices in OBX will be at least slightly higher than Orlando. But the rest of the year it isn't even close REGARDLESS of the so called oversupply. It doesn't matter if there are 1 or 100 OBX units in January. No one wants them. Thats why the rental value is near zero. While there are plenty of Orlando units, and demand is about as weak as can be seen all year, there is still more rental value than OBX and other coastal areas. Also remember that rentals aren't necessarily stuck in weeks of use. Once the units are broken into rentals they may be sold for higher value on weekends and lower during the week. So the net result is a good return in "overbuilt" Orlando but remains near zero on the coast. Thats why trying to say trading 1 for 1 into Orlando under the now discredited weeks system was in fact an upgrade and not a fair trade as has been claimed. Rental values, unlike secret values, points assignments you feel to be unfair or VEP, don't lie. It is what a buyer will freely pay to obtain use of that resort in that area. for 8 months or more each year FL buries most other areas, 2 months may be a tie and 2 may actually favor the seasonal areas by a small amount.

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

Most timeshare owners I know buy the number of weeks they expect to vacation and appreciate the convenience of clean week for week trades. They don't obsess over whether they are trading up or down as long as they get some place they want to go, and they don't care for the nitpicking aggravation of a system that you sometimes have to find something more to give and sometimes have something left over.

With a system like this proposal, why not have the full freedom of the cash market and just dump your timeshares so you have full flexibility of the overall rental market? It makes no sense to tie your vacation dollars up in this small subset if it is all on a cash basis anyway.

If RCI points value grids are any indication of how this system will work, you are wrong on who will be most affected. Those grids undervalue the best weeks in each grouping and overvalue the worst weeks. That is the nature of overaveraging. So it is the worst weeks in each grouping that will be hanging around and the best weeks (both seasonally and as to resort desitability) that will be departing.

Not at all. Rigging the numbers is viable only when people don't have a realistic option to do anyting else with their week. Rigging numbers when people can see what the numbers and relate it to another viable option kills the rigging.

******

It's like exchanging money in a foreign country. When the governmnet pegs the exchange rate and effectively prohibits people from people from exchanging outside the official rate, they can and do goose the exchange rate.

But as soon as people have the option to go to a second exchange market, or to exchange into a secondary currency, the pheny exchange rate collapses.

Same thing here. By pegging the exchange to a dollar value that can be compared directly with an open market rental rate, people will simply take their weeks elsewhere if they don't like the exchange rate they are offered. RCI and developers can manipulate it to their hearts content, but if they're not realistic in what they offer to owners, they won't get the business, simple as that.

*****

To beat this horse's corpse a bit more, let's take Joe and Jill Blow, typical weeks timeshare owner. Let's offer them two options to do Weeks Exchanges:

1. The current model. They give their week to an exchange company, and put in an exchange request. They don't know if their week is good enough to complete the exchange, and they don't know how their week compares with any other weeks they might consider. They are completely at the mercy of the exchange company's secret valuation of what their week is worth in relation to other weeks, and until an exchange is completed they have no way of knowing whether they are even asking for anything feasilble.
   
   
2. The model being discussed. They contact the exchange company and they are told what their week is worth. They ask about other weeks they would be interested in receiving if they were available and they are told what those weeks are worth. They are offered the option to kick in a bit of money if they want a week worth more than their week, or to create a balance in their account if they take a week valued at less. Since they are told what dollar value the exchange company puts on their week, they can also decide if they would prefer to rent the week on their own (probably for more money, since I doubt the exchange company isn't going to offer them full value for their weei), and use the rental proceeds to secure the week from the exchange company (or another source).

Come on, Steve. If you offered those two options to timeshare owners, do you really think msot owners would pick the first alternative? I can't see it - I would expect that at least 80% of owners would pick the second option if given a free and unfettered opportunity to choose between those two models.

*****

This is all about choice, and you've been a champion of choice for owners. If owners don't like the big exchange company, use an independent. If a system such as this were implemented, owners would have even more choice.

And you are totally correct that it would be a boon to the independent exchange companies. This program would help many people seek out alternatives to RCI and II as soon as they realize how little value their weeks really have. As they do so, they will seek out the independents.

******

I also think that owners of the lowest value weeks will be the ones affected most greatly. Those owners are likely to aggressively seek out alternatives. and when they find DAE they will immediately hook up there. That rushing sound you hear will be the prime weeks getting sucked out of DAE and being replaced with near worthless off season weeks.

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

Most timeshare owners I know buy the number of weeks they expect to vacation and appreciate the convenience of clean week for week trades. They don't obsess over whether they are trading up or down as long as they get some place they want to go, and they don't care for the nitpicking aggravation of a system that you sometimes have to find something more to give and sometimes have something left over.

With a system like this proposal, why not have the full freedom of the cash market and just dump your timeshares so you have full flexibility of the overall rental market? It makes no sense to tie your vacation dollars up in this small subset if it is all on a cash basis anyway.

If RCI points value grids are any indication of how this system will work, you are wrong on who will be most affected. Those grids undervalue the best weeks in each grouping and overvalue the worst weeks. That is the nature of overaveraging. So it is the worst weeks in each grouping that will be hanging around and the best weeks (both seasonally and as to resort desitability) that will be departing.

So, as nearly as I can parse your response to my question, you are saying that:

1. You believer that more owners will pick the first model I put forth over the second one.
   
2. It's not a good idea for an exchange company to let owners know what value the company assigns to their week and ther weeks and to offer owners a direct path to convert money (or a money equivalent) is not a good idea.

[bigfrank Administrator Find all posts View Profile Close bigfrank]

I wonder if the value they give to the week owned will be greater than the MF paid for that unit. If it is not then why shell out the extra money to buy the TS? This should not be based on just the value of the MF but also the value of what the week is worth minus depreciation.

[Ryne08 Senior Member Find all posts View Profile Close Ryne08]

Looks like a week value will drop in Williamsburg,VA with the addition of a new t/s development next year.

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

Boca:

RCI probably read too many posts from you and Perry. Now, we will see if they copycate any of the method posted in Tug.

Jya-Ning

Jya-Ning,

LOL. What makes you think that I post my best ideas?

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

If RCI does implement such a system, it will be interesting to see how they determine the worth of the various timeshares.

Would they conclude that all gold star 1 or 2 bdrms, etc., were worth a certain amount? Or would they use demand for each timeshare from the previous year? Would they consider actual week in a season, or perhaps the view, or size of the unit?

I bet no matter what they would use to determine the value of the timeshare, some people would be unhappy.

Ah, this is the secret sauce. My idea for solving this problem is something I am not posting because I might try it. TS4M users may be the beta customers.

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

As long as they are bound by the space and time limitations of a paper and ink publication format, it is not possible for them to have a fair system, because it will have to be based on overaveraging, like RCI Points values, and will not be dynamic.

If it's dynamic, it doesn't need to be in a book. My idea doesn't require a book and will save a ton of money on printing costs. It is dynamic reflecting REAL supply and demand, not just some arbitrary formula created by an exchange company to placate its developers.

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

I couldn't agree more. It is just a rumor.

What would RCI do for those TS companies which bulk bank and charge all their members a set fee/points for a week? Companies like HGVC and Club Intrawest?

There is no question that RCI would have trouble pulling this off. 4 things would prevent them from doing it. 1) Their current customers would revolt, 2) They are filled with people who don't know what they are doing, so in essence their execution would fail 3) their developer relationships wouldn't allow it and 4) their current systems would be in conflict with it so their own employees would be the antibodies fighting the program.

The way for them to get it is to buy it from me. Right now, the pre-construction price is $10M. But, it's only that price if you buy it TODAY. After all, timesharing is a today business. Price goes up with every new customer.

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

I think Boca is a unpaid idea person for RCI. They better pay him as I am going to bill him for that $26 per week charge idea of Boca's that RCI now charges to deposit a week into our RCI Poinrs acount.

Boca, you now owe me $1,066 for the 41 weeks we have put into RCI points so far this year.

Bruce

Who says I am unpaid? LOL.