posted 06-01-2005 13:17               

I confess, I've never read the 'fineprint' on our Worldmark The Club (whatever that not-for-profit-beneficial California corporation means to me)....but I've paid close attention to all that's written on TUG & WM Forum and WM official comments....that our deeds are supposed to be safe & separate from Trendwest (the developer).

Has anyone actually looked into it further?

I have no reason to suspect nor speculate on any problems, but the Cayman example prompts me to rethink all that advice I so quickly ignored ("prefer to own the deed; not some "RTU") in seeking to buy WM. If TW in the future went bankrupt, is it true that:

a) our condos aren't collateral on any TW loans?

b) our condos can't be confiscated for any reason, (i.e. to settle TW debts?)

c) our club could continue more or less as is, in theory, following a TW debacle? (of course we'd have to hire a new management company.)

d) we needn't worry that we each individually don't hold a deed? the Club is safely holding them?

Separately, what about our $10's of million in M/F reserve funds? Are they safe/separate?

I recall reading here on TUG 2 yrs ago that the Leisure Suites developer/manager took for themselves an unsecured 'loan' of the HOA's reserve funds at one or more or all resorts. When they squandered that and went bankrupt, the HOA was stuck w/ the loss (that they apparently had no knowledge of nor approved)...and existing owners lose and have to make it up w/ future special assessments.

posted 06-01-2005 14:29            

In some of my searching around, I have found WorldMark named in property tax rolls which suggests they hold the deed, right?

There has been some discussion of this over on www.wmowners.com - One of the issues brought up is that of partial resort ownership, like SouthShore, Seaside, Depoe Bay, Dolphin's Cove, New Orleans, that high-rise one in Florida where WM acquired a floor or two, etc. Due to sharing it with Fairfield or Residence Club owners, WorldMark does not necessarily hold a deed to the entire property but perhaps only to the portions or fractions thereof which it owns, right? What about common buildings and areas? Who "owns" those? Trendwest has sales offices in some resorts, are those areas of the property still owned by Trendwest or rented/leased back to Trendwest?

As far as the reserve fund, I would hope that it is safe. There is an independent audit done each year that indicates how much is taken from/added to that fund.

Good questions!

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WorldMark Owners' Community - - www.wmowners.com

posted 06-01-2005 15:20               

If you truly want to shield most risk, create an LLC and put all of your timeshare assets into it. Then, your maximum liability is what you put into it from a cash and asset point of view. Once your buying, selling and renting returns surpass your cash in, then your home free and even if timesharing collapses, it's all upside for you.

posted 06-01-2005 20:21            

quote:

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Originally posted by Hatrack79:
(c) our club could continue more or less as is, in theory, following a TW debacle? (of course we'd have to hire a new management company.)

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You can "ask Gene," but I'd bet the record would show that the TW management agreement for WM is pledged as collateral for borrowing by TW. So if TW defaults on those loans, the lender would take over the agreement and pick a new management company for WM.

posted 06-01-2005 20:59               

The possible “worst case” scenarios that you present are the reasons we have 80% of our TW/WM holdings in deeded weeks at SouthShore. We paid a little more but we have deeds to our weeks and exchange usage for TW Trade Points which are basically interchangeable with WM credits.

Unless an independent CPA firm answered every question you asked and dozens of other variations of them we must settle on the good name and intentions of TW. WM is just a dupe of TW.

Your pointed questions are the number one reason that WM should be much more independent of TW.

This is the very reason that when TW skates on thin ice by breaking state laws they cause their “good name’ to become tarnished and thus erode confidence. Does the average person paying $1.70 per credit know of these potential pitfalls? Heck no – they are just worried about paying the 14.9% finance charge for 10 years.

I don’t think TW is any different than Club IntraWest or FF or even Disney – we must rely on their good name and hope that the Enron mentality has not set in.

posted 06-02-2005 08:59               

quote:

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Originally posted by BocaBum99:
...timeshares need to yield 20% or greater annual return on capital to justify its considerable risks as an investment alternative....payback period is less than 3 years. .

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posted 06-02-2005 10:08               

quote:

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Originally posted by RichM:
... What about common buildings and areas? Who "owns" those? Trendwest has sales offices in some resorts, are those areas of the property still owned by Trendwest or rented/leased back to Trendwest?

As far as the reserve fund, I would hope that it is safe. There is an independent audit done each year that indicates how much is taken from/added to that fund.

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RichM...you remind me....I do recall some discussion a couple years back. Someone was raising the question as to what 'property' is conveyed to WMTheClub ....does it include just the condos, or does it include the ammenities?

posted 06-02-2005 10:12               

quote:

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Originally posted by cotraveller:
In my grand scheme of things, this whole issue falls in the category of those things that are just not worth spending much time worrying about. I don't consider my ownership an investment in the normal sense of that term. I treat it more like an expense, and the value I receive in terms of the enhanced travelling experience is well worth what it has cost.

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posted 06-02-2005 10:20               

quote:

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Originally posted by PerryM:
...The possible “worst case” scenarios that you present are the reasons we have 80% of our TW/WM holdings in deeded weeks at SouthShore. ...Your pointed questions are the number one reason that WM should be much more independent of TW.

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Thanks, Pear-Man ,

When I first investigated WM, "the Club" part of the name struck my interest. I dreamed of a "club" controlled by 250,000 owners in our own Homeowners' Association. We could enlist the services of a developer like TW, who would be our partner to build/develop new resorts at cost, plus a reasonable profit margin, where/when we (owners) wanted them. It could be a mutually beneficial arrangement....as long as one "partner" didn't take advantage of the other....all would "win". I dream of an independant Board that acts in the interest of the 250,000 WM existing owners and thousands more future owners. The independant WM board would still seek a win-win partnership with TW and wouldn't take advantage of TW, but the independance would ensure the owners' voices are heard over the potentially conflicting of interest of TW.

Again, I don't spend a lot of energy worrying about it....but it sure doesn't work like an owner-controlled HOA. TW set up a "boondoggle" for themselves.....and it's working nicely for them.

Hat

posted 06-03-2005 11:24            

quote:

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Originally posted by Hatrack79:
....but it sure doesn't work like an owner-controlled HOA. TW set up a "boondoggle" for themselves.....and it's working nicely for them.

Hat

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posted 06-03-2005 18:30               

As to a deed being safer, I don't know. We own a week in Panama City beach, which was damaged beyond repair 10 years ago by Hurricane Opal. The short version of the story is that the developer used the already insufficient insurance settlement to pay of debts of another project, as well as "selling" non-performing loans to the HOA, which was at the time populated by his cronies.

Fast forward 10 years, and our resort is set to reopen (yes, it's been closed 10 years!) later this month. In order to afford this, we had to assess each owner $3000. A large percentage of owners deeded their weeks back to the HOA, and we sold them as a block to another developer, who is allowed 1 seat on the board until the majority of those weeks are sold. Those who stuck with it will shortly receive a legal settlement, which will go only to those who paid the assessment (the new developer doesn't get a cut).

So, yes I guess the deed did offer us a small advantage, but not much. If we hadn't been able to find a developer interested in the HOA inventory, I'm not sure we would have been able to rebuild. The only collateral the HOA had was the deeds to 40% of the non-existant units, and no ability to secure financing. Some of those 40% left because they know they could use the $3000 to purchase another week elsewhere that they could use right away, rather than wait and hope for a settlement against the original developer.

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Melinda Towne

posted 06-04-2005 14:03               

Fairfield bought Equivest in 2002. At the time, Cendant issued a press release saying that Equivest would be fully integrated into Fairfield. That has never happened. Fairfield stopped selling Equivest points and has doubled the club fees, resulting in a runoff in members. The resorts are average, but fees are the same or higher than for a new 5 Star Marriott. For example, enough points to reserve a 2 BR summer week in North Myrtle Beach would have fees in excess of $750.

posted 06-04-2005 15:06               

You are correct but does anyone here really believe that WorldMark doesn’t dance to the Cendant puppet masters?

We WM owners are now and will probably always be a slight annoyance to Cendant and TrendWest – they just yank our chain and we heel obediently.

I would classify WM as a subsidiary of Cendant – that’s what we really are. I don’t think we are really going to be hurt in such an arrangement but I just don’t see a truly independent WM “the club”. The arrangement that TW has with us, the turning over of fully paid resorts at no cost to us demands that in return we are the little puppy yapping in the wind.

IMHO.

posted 06-04-2005 17:51               

quote:

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Originally posted by PerryM:
...The arrangement that TW has with us, the turning over of fully paid resorts at no cost to us demands that in return we are the little puppy yapping in the wind.

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Just for the benefit of others reading this, Perry, Trendwest isn't a benevolent Santa Claus, giving us 'free' resorts. When they add another 100-unit resort(s), they create the number of credits that correspond to a year in 100 units (something like 5000 timeshare weeks....maybe 40million credits .... Trendwest "trades us" the 100 condos for the 40million credits. They then get to sell those credits at $1.65 each.

Because those 40million credits mean there are another 5000 families competing for our existing 55 resorts (as well as the new one), the old WM owners have in effect "sold off" something like 2% or 5% of our old resort portfolio and traded it for an interest in the new resort(s). It's not a gift. It's just like a public company issuing new stock on a secondary offering, or in a merger. Old owners are diluted and the company raises capital or gets other assets in return for the new shares.

And its' a different subject than whether they control our WM BOD. They don't control us because they give us the allegeded "free resorts". They control us because WM owners don't vote for an independant board. They call the shots and we "buy" the resorts from them at the location and price (expresed in # of credits) TW decides. If they get 11k for a 2br/red (instead of 10k), we paid 10% premium for that resort. That may be perfectly fair and reflect costs in that market, or maybe a rip-off...I'd just like an independant WM BOD reviewing/approving before we agree to the terms at which we the owners are "buying" that resort for.

We could be an independant, owner-controlled HOA of WMTheClub. We could call all the shots, set all the fees, choose our own management contractor. Then, we could still contract a developer to build us a new resort, at a mutually beneficial location and price and design/amenities, and give them 40 million credits for it.

Control of the WM Board and the idea that we "buy" the new resort with our newly created credits are separate items.

Hope that this helps some other WM owners to unravel the myth of the Santa Claus 'gift' of a new resort.

posted 06-04-2005 19:58               

quote:

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Originally posted by RichM:
Fairfield doesn't manage WorldMark, Trendwest does. Fairfield, like Trendwest, is owned by Cendant and both Fairfield and Trendwest are part of CTRG (Cendant Timeshare Resort Group).

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I use the term loosely, but just remember who is heading up the Timeshare Group. Franz Hanning is the former president of Fairfield and was sent out west to take control of Trendwest. He now is in control of both groups. He is the same guy that said Equivest had high quality resorts and would be integrated into Fairfield.

posted 06-04-2005 20:50               

Let’s say the WM has 40 resorts, each about the same number of units. (I know they have 55+ but some are composed of just a few condos). Let’s say that you really like to use only 10% of them – that’s 4 resorts that you really want to book year after year. Further assume that these are very desirable resorts and the demand is double that of an average WM resort.

When TW “gives” WM another resort, making 41 of them, how does that new one affect me? Let’s assume that the new resort is in the middle of Ohio, overlooking a steel plant – I have no desire to visit the new Ohio resort. (At least it wasn’t another Oregon resort) However the resort allows TW to sell millions of new credits and some of those folks will want to go to some of the 4 resorts that I use each year.

Here’s the numbers:

Say that there are 225,000 WM owners using 40 full resorts or 5,625 owners per resort. That means that the new resort will have another 5,625 new owners competing for all 40 full resorts. Now some resorts, like Kihei, are in much more demand than others, like Ohio. OK say that 10,000 owners compete for each of my 4 resorts. Take the 5,625 new owners and divide them over my 4 resorts equaling 1,400 more folks competing each year for weeks at my desired resort.

That amounts to 11,400 owners competing instead of 10,000 or an increase of 11%.

If I add 11% more credits to my account each tiem TW "gives" WM a new resort I should stay on par – I can buy enough credits to reserve a day in front of the desired check-in date and still get to my resort. If I have 40,000 credits in my account and reserve 4, 7-day 10,000 credit 2BR reservations I need to add 4,400 each time TW adds a new resort. At 80¢ a resale credit that equals $3,520 needed to stay par for each new resort.

In the last year TW has “given” WM a number of these full resorts and that’s why we have added 50% more credits to our WM account.

Conclusion, as Hat accurately points out the “free” resorts “given” to WM do cost you money if you wish to stay at very desirable WM resorts.

On the other hand if you convert 10,000 credits into an II certificate or just 4,000 credits to be used at the 59-day II window the new resorts don’t affect you at all.

====================

Compare this to a Marriott and you get an entirely different perception. When Marriott adds a new resort to its collection of resorts it has very little impact to existing Marriott owners – they now have the ability to exchange their week into II and try pot-luck and get to the new resort (fat chance in the first 3 years).

Our WM owner, on the other hand, can get to the new resort with the same number of credits in their account, granted it might be in the off season, or for a small fee (11% for each new full resort) stand a good chance of getting to the new resort in a prime week.

Of course the WM owner could just borrow credits from next year and not buy more credits until next year.

Make no mistake about it, new resorts do dilute your interest in WM – you need to keep up. But at least we aren’t forced to buy WM credits at $1.70 each to keep up we can buy them for 70¢ to 80¢ each resale.

I favor the WM, point based approach, over the Marriott week approach.

But that’s just me.

Perry
P.S.
In the case of San Francisco, those new WM credits will probably DECREASE the competition at my favorite 4 resorts!

posted 06-05-2005 07:06               

Well, that's one way of quantifying the dilution you're experiencing when TW builds new WM resorts. You and I see it....I hope others do to.

We both agree that:

a) they are not "gifts" from Trendwest

b) theoretically, old WM owners arent' "paying" for the new resort (something like 5,625 new WM members buy credits at $1.70 from TW and pay for the new resort)

c) each new resort is a "merger"; if it's a comparable resort location to what we already have, comparable construction/amenities, comparable credit values, then the club appears to expand and the "merger" is more or less 'nuetral' to existing owners.

d) if new resorts are better than the old resort portfolio in your eyes, you'll 'gain' value in the "merger".

e) if new resorts are in steel-town Ohio or Mugwamp Swamps, and/or have equal/lesser quality than our current portfolio, and/or have equal/greater credit values per unit, and/or have the red/white/blue season 'fudged' to hype the credit values per condo, then its a 'bad merger' for existing owners.

Hat

posted 06-05-2005 07:22               

You like the existing 55 or 60 WM locations...you buy a 10k membership, all is well. You travel 1 week/yr in a 2br/red at Depoe Bay, OR.

Pretend that over 5 or 6 years, Trendwest hasn't been adding new resorts to WM. Instead, they've gone out and built 55 resorts in steel-town Ohio & Mugwamp swamps and called it SteelSwampWorldTheClub.

He proposes to merge the two clubs. They're both equal in size...it would be a 50/50 merger. Instead of 1 week per year in prime Depoe Bay, you're really now entitled to every other year in Depoe Bay, and every other year in Ohio.

All of the SteelSwamp owners are excited....they can't wait to play 'first-come first served' and get at your Depoe Bay inventory. Are you excited to go to Ohio?

Pretend it comes up for a vote of all WM owners....do you want this merger? How are you going to vote?

What if you don't get to vote?....what if Trendwest has control of your WM Board and they can approve this merger without your say?

Well?!?!?? Isn't that what is potentially happening one resort at a time?

Did they ask you if you wanted the last 10 resorts? Did you want to trade inventory on the west coast for Galena, Branson, Grand Lake OK?

posted 06-05-2005 09:45               

I've long appreciated your analytical approach and discussions. Interesting that this current serves to support a bias I've held since getting into timesharing: I'll not purchase an RTU, and I'll not purchase a points based club that is not backed up with a deeded property. I've heard and understand the counterarguements, but gut level disagree. I purchase deeded property where I want to travel (viewing exchanges/trades as a plus), and a deeded Aus week for working within the RCI points program as long as it suits my needs.

posted 06-05-2005 14:22               

quote:

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Originally posted by huestous:
...I had been seriously considering WM based on Perry's very positive comments, esp relative to Marriott. However, the concern that you two have recently raised has eliminated that from consideration.

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huestous,

I'm still a happy Worldmark owner....it's working well and I always know I can resale my membership in 7days on Ebay if it stops working well. I didn't mean to scare anyone off.

To the contrary, I was hoping by my original post that another WM owner would confirm I have nothing to worry about (as for the deeds)

Separately, half way through this thread, I got a little disgruntled about some of the new resorts and point values. I've got my dandruff up enough to complain about it here to my TUG friends...but it's not worth losing sleep over. I'm not selling because of it, and don't mean to sound like chicken little.

posted 06-05-2005 15:36               

There is NO perfect timeshare solution for everyone – you must look at your vacation needs and find the closest match.

That closest match can be just deeds at resorts you want to vacation at each year and that’s fine, or it can be a mixture of week and point based resorts. That choice is yours to make and may just work for you and no one else.

I still love WM and believe it belongs in just about everyone’s timeshare portfolio. Just like stocks, a mix of stocks can add diversity and give you a more satisfying portfolio that meets your particular needs.

Inflation is inflation and it comes in many forms. We all know about the 3% inflation that is constantly hammering away at everything around us.

So is there “timeshare inflation”, the resorts are getting older each year and newer, flashier, new resorts are constantly being built. Those new resorts and simple things like internet in the room or wireless WI-FI are a form of inflation that eats away at the value of the units we own.

Another way to think of this inflation is to look at your kitchen in your home – is it the latest, greatest kitchen with all those industrial strength appliances (oven, microwaves, refrigerators, etc) and industrial strength counter tops (granite for instance). If not, your kitchen has been affected with a form of inflation that makes your entire home worth less.

I personally look at TW adding more resorts as inflation and just buy more WM credits to keep up. I still think that WM has one of the most robust solutions to timesharing out there. I’m not suggesting that it is THE perfect solution – just a great “jack of all trades” that will allow you to do some amazing things with your portfolio.

Marriott’s, for example, are affected with this timeshare inflation and the solution is not that simple as adding 10% - 15% more Marriott’s in a year – that is impossible. Buying another old Marriott isn’t going to get you to Maui any easier than having the first 20 year old Marriott.

Buying 10% - 15% more WM credits and using some clever reservation techniques virtually guarantees you Maui every year – even high demand holiday weeks.