An open letter to the DC industry...

PerryM · 04-01-2008, 07:44 PM

(On the off chance that someone who has some influence in the DC industry reads posts here I have some comments for you)

Someday I want to buy into a DC – that day is not here yet. My ideal DC already exists – it’s called WorldMark (WM) and it’s a timeshare. Using the WM model DCs could explode on the scene.

The DC model used right now is very simple (applies to 95% of existing DC memberships)

“DC members buy a rich guy a condo and then pay him rent to use it and get back 80% of their money when they leave”.

That model is fine during the startup phase of DCs but it’s never going to go very far. There are 4,000,000 timeshare owners in the US. If we assume that the top 10% (400,000 folks) easily spent $125k to buy 4 high end timeshares, which means that the existing 6,500 DC members account for just 1.6% of a very viable market.

We need a Wal-Mart type of company to enter and dominate the DC industry. A company that believes its job is to provide the management skills needed to make the DC work and allow the real investors, the DC members, to profit from real estate appreciation.

Later this week I’ll post how the ultimate in DCs could easily be created over a weekend and force the existing DCs to scurry around consolidating and trying to postpone bankruptcy.

One thing that is VERY obvious with DCs is the old fashioned idea of a week at a condo. Timeshares went thru that and most new timeshares now sold are able to use a currency system of usage (Points) in one manner or the other. This could be a Point system like Disney, THE top timeshare in the world, or exchange companies like RCI Points.

We use a currency to buy into a DC (US dollars for instance) yet then get stuck with clunky weeks – this needs to be changed to another form of currency – Points. Points lets a DC member make reservations at one DC, exchange into another DC, book a jet to take the member to the resort and finally Points for reserving watercraft like yachts, jet skies, you name it.

As I get time this week I’ll post more, if you have questions I’d be glad to answer them; time permitting.

DC4MS · 04-01-2008, 07:58 PM

Quote:

Originally Posted by PerryM

(On the off chance that someone who has some influence in the DC industry reads posts here I have some comments for you).

Executives from every major Destination Club read these forums, but most do not post for legal reasons (at least that is what they told me).

Your idea for a points based system certainly has merit and has even been briefly explored here, but most members did not like the idea
Creating the perfect Destination Club reservation process

There has even been a thread comparing Destination Clubs to Timeshares purchases
Joining a Destination Club vs Buying a Timeshare

Let's keep a focus on Perry's original post about creating a points type system rather than debate Timeshares vs Destination Clubs.

--------------

Note to Perry - Most DCs allow flexible bookings vs the fixed week system you described. However, most DC weigh nights equally and this is where a point value could come into play. (i.e. a February weekend night in Colorado is worth more than a mid-week night in May)

3DH · 04-01-2008, 08:36 PM

Quote:

Originally Posted by PerryM

We need a Wal-Mart type of company to enter and dominate the DC industry.

Yes, taken out of context, but that one sentence scared the

out of me!

Kagehitokiri · 04-01-2008, 09:05 PM

1. i currently have 14 clubs listed here, not including ciel >
Destination Clubs and Member Numbers

9/14 (64%) have equity options

5/14 (36%) do not have equity options, and offer these refunds >
- lusso collection - 100% (equity option offered until 1 month ago)
- quintess - 100% in first year / 80% after
- high country club - 100% in first year / 80% after
- markers club - 90%
- exclusive resorts - 80%

2. im interested in destination clubs for luxury travel savings, not profit
3. im not interested in a points system. from "perfect reservations" thread >

Quote:

Originally Posted by Kagehitokiri

to me >
#1 ciel
#2 lusso
#3 solstice

hideaways club is a point based DC (season/length) >
The Hideaways Club Destination Points

theres also this fractional club (point based) that includes homes >
Home - Limited Edition

Quote:

Originally Posted by Kagehitokiri

Distinctive Holiday Homes has some properties that cost more or less than 7 nights per week. LTTravel also said they occasionally have promos where they reduce the number of nights required.

4. TSs have nothing to do with DCs / high end fractionals
5. walmart has nothing to do with luxury
6. ultra high end sales are not affected by market cycles / forces

PerryM · 04-01-2008, 11:42 PM

Sounds like DC folks don’t take kindly to Point systems – this is funny, since points makes their world work (currency). DCs are nothing but high end timeshares or fractionals – they are just fractional usage of a condo. I’m not trying to say that a DC is a timeshare but simply both address the market for folks who want to stay at something beyond a Motel 6 and has a feeling of a second home but without all the hassles.

Points are currency to spend – but an order of magnitude greater than owning 4 weeks of usage. What makes Points so great is flexibility – in the case of WorldMark I can take my WM credits (Points) and reserve a studio, 1BR, 2BR, 3BR or 4BR penthouse unit for 7 days (in high demand time) to 3 months or more.

But where currency really shines is where DCs should be headed – the ENTIRE vacation experience; from the personal jet that whisks the family to the condo to the ability to mix and match different things to “rent” with that currency.

There is no reason under the sun why a DC can’t have 1BR units to 4BR+ units, from ultra expensive condos to cabins – this all works if a currency (Points) is used to “rent” the unit. The limitation DCs have now is that a retired couple is forced to reserve a 4BR unit and occupy just 1BR out of that; this is nuts.

Also, the ability to rent a 3BR unit for 3 weeks is easy to do with Points and seems to be 3 vacations in a week based DC.

Lastly, the real DC market is in the $100k - $125k membership area with 30 days of usage per year (or the equivalent in Points) 1/10 ownership of the average condo in the club. With Points the membership really becomes a matter of “How much vacation do you want to buy?” 1/10 ownership make no sense in this case.

With points members simply buy the amount of vacation they want in that particular DC. ALL DCs to my knowledge use the wrong paradigm when it comes to pricing membership costs and how members get to use them. There are 2 important numbers to calculate the correct membership cost and how much the members can use that membership at various condos.

The first number is the appraised value of the condo.
If a condo appraises out to $1M then that should be the value added to the Club when it is added to the stable of condos in the club. This number is, of course, ridiculously easy to calculate – costs about $400 to have an licensed appraiser tell the club what each condo is worth each year.

The second number is the daily rental rate of the condo.
This is not hard to calculate – probably the condo/house next door is being rented and a rental calendar is calculated for EACH day of the year. Typically holiday weeks are 50% - 100% more than the weeks in front of the holiday and after wards.

Lets say that totaling up the condo tallies out to be 20% of the appraised value, or $200k in this case ($1M condo). If we base our Points on rental values (1 Point = $1) then if 10 members buy into the condo each pay $100,000 to join and each gets 20,000 Points to use per year. How the member spends this Points is left up to his vacation needs. Each Point costs $5 and if a retired couple just needs 5,000 Points they pay $25k for them.

Unused Points roll forward to next year and Points can be rented to other DC members for whatever the market bears.

Anyway, that’s how I see the ideal DC – currency based and extremely flexible.

Kagehitokiri · 04-01-2008, 11:50 PM

PerryM,

equity options / refunds >
1. any comment on the data in the 1st point of my previous post?

points >
2. any comment on the aspects of hideaways club, distinctive holiday homes, or limited edition, that are mentioned in the 3rd point of my previous post?

3. any comment on banyan tree private collection's (sort of a DC style fractional) pricing structure of ~$120K / $3K per week?

4. any comment on exclusive resorts offering properties that might have hotel rates of up to ~$10K per night at a cost of $775 per night (based on elite plan annual dues divided by elite plan annual nights)?

about me >
5. im not particularly interested in condos, unless they are large units managed by luxury hotels/resorts.

ladavis · 04-02-2008, 12:09 AM

Perry,

If you're so happy with your WorldMark timeshare, why are you so concerned about the DC market?

Those of us who are members obviously appreciate the management involved or we would not have paid the initial deposit and subsequent annual dues. If you don't find one that suits your taste, don't join...it's that easy.

PerryM · 04-02-2008, 12:29 AM

Quote:

Originally Posted by Kagehitokiri

equity options / refunds >
1. any comment on the data in the 1st point of my previous post?

points >
2. any comment on the aspects of hideaways club, distinctive holiday homes, or limited edition, that are mentioned in the 3rd point of my previous post?

3. any comment on banyan tree private collection's (sort of a DC style fractional) pricing structure of ~$120K / $3K per week?

4. any comment on exclusive resorts offering properties that might have hotel rates of up to ~$10K per night at a cost of $775 per night (based on elite plan annual dues divided by elite plan annual nights)?

about me >
5. im not particularly interested in condos, unless they are large units managed by luxury hotels/resorts.

After I describe my ideal DC, I'll get to the various "points" later during the week.

Quote:

Originally Posted by ladavis

Perry,

If you're so happy with your WorldMark timeshare, why are you so concerned about the DC market?

Those of us who are members obviously appreciate the management involved or we would not have paid the initial deposit and subsequent annual dues. If you don't find one that suits your taste, don't join...it's that easy.

Correct, that's why I can't join an existing DC - they are structured wrong from the get-go. I'm describing something that would instantly ignite a torrent of sales and I'd be a member then.

I'm NOT comparing our WM units, which I normally exchange for Marriott villas, to DCs - just saying the way WM is structured is 90% of what my ideal DC would have; but with much nicer units.

Since the WM structure already exists, a slight "tweaking" is all that is needed for Wyndham to enter this market tomorrow and instantly dominate it. If not Wyndham then Starwood or Hyatt or Marriott or Trump or.....

Kagehitokiri · 04-02-2008, 12:32 AM

it is impossible to create an "ideal" for an industry without analyzing the industry.

one can create an "ideal" for oneself simply by analyzing oneself.

Bourne · 04-02-2008, 12:33 AM

Quote:

Originally Posted by PerryM

The DC model used right now is very simple (applies to 95% of existing DC memberships)

“DC members buy a rich guy a condo and then pay him rent to use it and get back 80% of their money when they leave”.

....

Later this week I’ll post how the ultimate in DCs could easily be created over a weekend and force the existing DCs to scurry around consolidating and trying to postpone bankruptcy.

I may have posted this before but would repeat it again...

Please include the following in your plan...

1. Management fees. No one is going to create a DC as a non-profit organization.

2. Staff pay
3. Operation cost..
4. Marketing...
5. Real Estate tax and Home owners dues/insurance( its a condo )

Reason I am bringing this up is that I have seen the statement made above multiple times. In each instance, these salient points of running a business were missed.

Looking forward to the plan.

PerryM · 04-02-2008, 12:36 AM

Quote:

Originally Posted by Kagehitokiri

it is impossible to create an "ideal" for an industry without analyzing the industry.

one can create an "ideal" for oneself simply by analyzing oneself.

With just 6,500 DC members the industry is wide open for definition; my main point. The DC industry started off with the wrong model (Weeks) is secretive, has NO regulation by ANY state and has already seen the founding DC go bankrupt.

No, the DC industry of today is probably not going to be the same one 10 years from now - huge changes await it.

PerryM · 04-02-2008, 12:39 AM

Quote:

Originally Posted by Bourne

I may have posted this before but would repeat it again...

Please include the following in your plan...

1. Management fees. No one is going to create a DC as a non-profit organization.

2. Staff pay
3. Operation cost..
4. Marketing...
5. Real Estate tax and Home owners dues/insurance( its a condo )

Reason I am bringing this up is that I have seen the statement made above multiple times. In each instance, these salient points of running a business were missed.

Looking forward to the plan.

Sure, someone have the numbers for an existing DC for me to compare to? Percentages of membership fee or maintenance fee is all I need.

ladavis · 04-02-2008, 12:44 AM

Quote:

Originally Posted by PerryM

Since the WM structure already exists, a slight "tweaking" is all that is needed for Wyndham to enter this market tomorrow and instantly dominate it.

I can't speak for all the DCs, but as far a ER and LUSSO are concerned, an entrance by Wyndham into the market would not make a dent in their membership. There is NO COMPARISON!!!

Kagehitokiri · 04-02-2008, 12:49 AM

PerryM,

1. there are many different DC usage models.
2. many clubs are open, at least with members.
3. many clubs complete independent audits and net asset tests.
4. can you provide examples of club organizations that are regulated?
5. T&H's business practices are irrelevant, as they are not in use by another DC.

04-01-2008, 11:42 PM	#5
PerryM Member Join Date: Nov 2007 Posts: 32	Here's the point.... Sounds like DC folks don’t take kindly to Point systems – this is funny, since points makes their world work (currency). DCs are nothing but high end timeshares or fractionals – they are just fractional usage of a condo. I’m not trying to say that a DC is a timeshare but simply both address the market for folks who want to stay at something beyond a Motel 6 and has a feeling of a second home but without all the hassles. Points are currency to spend – but an order of magnitude greater than owning 4 weeks of usage. What makes Points so great is flexibility – in the case of WorldMark I can take my WM credits (Points) and reserve a studio, 1BR, 2BR, 3BR or 4BR penthouse unit for 7 days (in high demand time) to 3 months or more. But where currency really shines is where DCs should be headed – the ENTIRE vacation experience; from the personal jet that whisks the family to the condo to the ability to mix and match different things to “rent” with that currency. There is no reason under the sun why a DC can’t have 1BR units to 4BR+ units, from ultra expensive condos to cabins – this all works if a currency (Points) is used to “rent” the unit. The limitation DCs have now is that a retired couple is forced to reserve a 4BR unit and occupy just 1BR out of that; this is nuts. Also, the ability to rent a 3BR unit for 3 weeks is easy to do with Points and seems to be 3 vacations in a week based DC. Lastly, the real DC market is in the $100k - $125k membership area with 30 days of usage per year (or the equivalent in Points) 1/10 ownership of the average condo in the club. With Points the membership really becomes a matter of “How much vacation do you want to buy?” 1/10 ownership make no sense in this case. With points members simply buy the amount of vacation they want in that particular DC. ALL DCs to my knowledge use the wrong paradigm when it comes to pricing membership costs and how members get to use them. There are 2 important numbers to calculate the correct membership cost and how much the members can use that membership at various condos. The first number is the appraised value of the condo. If a condo appraises out to $1M then that should be the value added to the Club when it is added to the stable of condos in the club. This number is, of course, ridiculously easy to calculate – costs about $400 to have an licensed appraiser tell the club what each condo is worth each year. The second number is the daily rental rate of the condo. This is not hard to calculate – probably the condo/house next door is being rented and a rental calendar is calculated for EACH day of the year. Typically holiday weeks are 50% - 100% more than the weeks in front of the holiday and after wards. Lets say that totaling up the condo tallies out to be 20% of the appraised value, or $200k in this case ($1M condo). If we base our Points on rental values (1 Point = $1) then if 10 members buy into the condo each pay $100,000 to join and each gets 20,000 Points to use per year. How the member spends this Points is left up to his vacation needs. Each Point costs $5 and if a retired couple just needs 5,000 Points they pay $25k for them. Unused Points roll forward to next year and Points can be rented to other DC members for whatever the market bears. Anyway, that’s how I see the ideal DC – currency based and extremely flexible. __________________ Forget global warming - we need to worry about global cooling - more. Everyone start your cars - quick! Perry

04-01-2008, 11:50 PM	#6
Kagehitokiri Super Moderator Join Date: Nov 2007 Posts: 1,398	PerryM, equity options / refunds > 1. any comment on the data in the 1st point of my previous post? points > 2. any comment on the aspects of hideaways club, distinctive holiday homes, or limited edition, that are mentioned in the 3rd point of my previous post? 3. any comment on banyan tree private collection's (sort of a DC style fractional) pricing structure of ~$120K / $3K per week? 4. any comment on exclusive resorts offering properties that might have hotel rates of up to ~$10K per night at a cost of $775 per night (based on elite plan annual dues divided by elite plan annual nights)? about me > 5. im not particularly interested in condos, unless they are large units managed by luxury hotels/resorts. Last edited by Kagehitokiri; 04-02-2008 at 01:32 AM.

04-02-2008, 12:09 AM	#7
ladavis Junior Member Join Date: Jan 2008 Location: Texas Posts: 24 Club: Exclusive Resorts	Re: An open letter to the DC industry... Perry, If you're so happy with your WorldMark timeshare, why are you so concerned about the DC market? Those of us who are members obviously appreciate the management involved or we would not have paid the initial deposit and subsequent annual dues. If you don't find one that suits your taste, don't join...it's that easy.

04-02-2008, 12:32 AM	#9
Kagehitokiri Super Moderator Join Date: Nov 2007 Posts: 1,398	it is impossible to create an "ideal" for an industry without analyzing the industry. one can create an "ideal" for oneself simply by analyzing oneself. Last edited by Kagehitokiri; 04-02-2008 at 01:32 AM.

04-02-2008, 12:49 AM	#14
Kagehitokiri Super Moderator Join Date: Nov 2007 Posts: 1,398	PerryM, 1. there are many different DC usage models. 2. many clubs are open, at least with members. 3. many clubs complete independent audits and net asset tests. 4. can you provide examples of club organizations that are regulated? 5. T&H's business practices are irrelevant, as they are not in use by another DC. Last edited by Kagehitokiri; 04-02-2008 at 01:32 AM.

04-01-2008, 07:44 PM	#1
PerryM Member Join Date: Nov 2007 Posts: 32	An open letter to the DC industry... (On the off chance that someone who has some influence in the DC industry reads posts here I have some comments for you) Someday I want to buy into a DC – that day is not here yet. My ideal DC already exists – it’s called WorldMark (WM) and it’s a timeshare. Using the WM model DCs could explode on the scene. The DC model used right now is very simple (applies to 95% of existing DC memberships) “DC members buy a rich guy a condo and then pay him rent to use it and get back 80% of their money when they leave”. That model is fine during the startup phase of DCs but it’s never going to go very far. There are 4,000,000 timeshare owners in the US. If we assume that the top 10% (400,000 folks) easily spent $125k to buy 4 high end timeshares, which means that the existing 6,500 DC members account for just 1.6% of a very viable market. We need a Wal-Mart type of company to enter and dominate the DC industry. A company that believes its job is to provide the management skills needed to make the DC work and allow the real investors, the DC members, to profit from real estate appreciation. Later this week I’ll post how the ultimate in DCs could easily be created over a weekend and force the existing DCs to scurry around consolidating and trying to postpone bankruptcy. One thing that is VERY obvious with DCs is the old fashioned idea of a week at a condo. Timeshares went thru that and most new timeshares now sold are able to use a currency system of usage (Points) in one manner or the other. This could be a Point system like Disney, THE top timeshare in the world, or exchange companies like RCI Points. We use a currency to buy into a DC (US dollars for instance) yet then get stuck with clunky weeks – this needs to be changed to another form of currency – Points. Points lets a DC member make reservations at one DC, exchange into another DC, book a jet to take the member to the resort and finally Points for reserving watercraft like yachts, jet skies, you name it. As I get time this week I’ll post more, if you have questions I’d be glad to answer them; time permitting. __________________ Forget global warming - we need to worry about global cooling - more. Everyone start your cars - quick! Perry

04-02-2008, 12:55 AM	#15