June 19, 2010: WHAT’S ON THE MENU THIS WEEK?
OLD NEWS NEVER GOES AWAY: Never think you can outrun your past or negative news now that we have the Internets. Remember way back in 2005 when Las Vegas-based Braglia Marketing Group took it on the chin for for calling hundreds of thousands of names on the Do-Not-Call list to market timeshare vacations on behalf of Flagship Resort and Atlantic Palace in New Jersey? The Braglias were practically a marketing institution in Vegas at the time, and the FTC’s severe punishment caused quite a stir within the timeshare community.
I only bring this up because they got mentioned again in a recent article about FTC enforcement in the SF Examiner. The article pointed out that though the FTC fined telemarketers more than $44 million as of last year, it collected less than $20 million of the fines, partly because the law considers parties’ ability to pay. That’s where the Braglia mention came in. BMG was fined $526,939 but only had to pay $3,500 after Frank and Kate Braglia showed they didn’t have enough cash to pay.
The article kind of makes it seem like they got off easy, but the money wasn’t the only part of the settlement of that case. BMG/ Frank and Kate Braglia were permanently banned from (1) owning more than five percent of a telemarketing operation; (2) directing a telemarketing operation; and (3) assuming responsibility for TSR (and Do Not Call) compliance for a telemarketing operation. Pretty severe, IMO.
I haven’t been keeping track in ensuing years, so reading that report made me wonder what the Braglias have been doing during the half decade since that punishment. Are they still in Vegas? Still doing anything timeshare or marketing related? Have they moved on to bigger and better things? Does anyone know (or care)?
HAWAII ROBS PETER TO PAY PAUL: Beginning July 1, Hawaii’s transient accommodations tax will jump another percentage point to 9.25 percent. The increase will be applied to taxes on all hotels, timeshare and other short-term room rentals. For timeshare owners the increase will likely be tacked onto next year’s maintenance fees? It’s unclear to me right now whether those owners visiting their home resort in Hawaii after July 1 will have to pay the increase on the spot, and whether exchangers will have to pay it when they check out.
Lawmakers and proponents argued that targeting tourists was the least painful way to boost tax revenue. But hoteliers and other visitor industry members in the islands are upset about the increase, saying will cost more than it generates because it will make Hawaii seem just too expensive and will turn potential visitors away. Also, the hotels are already offering greatly discounted prices to entice visitors, and they say they will have to discount further to accommodate the new tax in order to keep their offerings affordable.
Keith Vieira, senior vice president and director of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia, was quoted as saying, “We understand the situation with tax revenues being down, but this tax increase is coming right after the worst economic period in our history. Visitors may cut spending or, worse yet, chose another location.”
So the hotels, already hit hard by the recession, will essentially end up eating the new tax even as the money it generates makes its way into Hawaii’s General Fund.
Peter, meet Paul.
AND THE POINT IS: Both RCI and Marriott Vacation Club hit the news this last week with new Points programs.
Once MVCI introduced a points plan for its Asian resorts a few years ago, it was only a matter of time before points made its way to the big time in North America and the Caribbean. And now it has arrived, with MVCI making the official announcement on June 21, 2010.
Called Marriott Vacation Club Destinations, the system follows the general outline of other points programs by allowing owners/members to book multiple, shorter stays rather than a single, full week. The system also includes adventure packages, cruises and related offerings. And MVCI crosses its heart and hopes to die if any current weeks owner is ever forced to enroll in the program or is inconvenienced in any way. (Of course, they will make enrollment as attractive as possible to encourage a cross over…) And of course owners who bought on the resale market after June 20, 2010 will be out of luck.
Is it a good thing or a bad thing for current MVCI owners? The best discussion on the subject can be found (naturally) at The Timeshare Users Group’s forum (TUG). You’ll need to get a cup of coffee and a snack and settle in for a long read, but you’ll get quite an education if you care to wade through it all.
RCI Points Platinum is another critter altogether. Apparently not satisfied with the revenue from their current points program, RCI’s new PLATINUM program will offer “opportunities for automatic upgrades, priority exchange privileges and a myriad of exciting new travel and lifestyle benefits…” in the USA and Canada. Preferred this and preferred that, go straight to the front of the line, do not pass GO, etc. If you Regular Joe RCI Points members don’t want to suffer the indignity of picking up the Platinum members’ leftovers, why a mere $55 extra per year will bring you, too, to the exalted Platinum level. And when everyone has become Platinum, what then? What comes after Platinum? What new fee can we think of that will benefit not only RCI but all of Wyndham Worldwide’s massive holdings?
Oh, I’m such a cynic. By the way, RCI will be following this with an RCI Weeks Platinum membership, too. I can hardly wait.
UNHAPPY OWNERS IN MESQUITE, NV: Back on June 12 I mentioned that Black Gaming, working its way through bankruptcy in Mesquite, NV, will be demolishing the Oasis Resort Hotel & Casino later this year. Only building 1 and the timeshare buildings (Grand Destination Vacation Club at the Oasis Resort) will remain. As it turns out, that isn’t necessarily happy news for owners at Grand Destination.
Here’s the deal, as reported to me by one of those owners. You see, when this owner (and many others) purchased there many moons ago it was the amenities at the Oasis that sealed the deal. Those amenities are now gone, done for, kaput. It’s midnight at the Oasis.
My mom bought in 1995 and the reason why she bought was that it was “part” of Oasis –like 8 swimming pools, tennis courts, gyms, casino, Peggy Sue’s 50s Diner, etc. They had a mini-lake where you can look out your balcony and this was part of the “charm” of buying. Black Gaming bought out the Oasis (as well as buying other casinos in which he held a monopoly on the little town). Over the last year, he closed the Oasis and every pool but one. Basically the timeshare buildings are still “available” but we cannot even bring ourselves to visit this “empty shell” of a timeshare where we spent so much time and have so many memories. Now he is tearing down Oasis Resort, pools, etc. and the two timeshares will be left with one small pool. If you saw what we were presented at purchase and what we have now it would make you cry.
I feel for them, I really do, but I doubt there’s much they can do about it. However, if there are any other disillusioned Grand Destination owners out there who would like to get together to discuss their situation, give me a shout at the email address below and I’ll see if I can put you all together.
OUCH: Paula and Martin Meads recently sold a four-bedroom, 4.5-bath in North Las Vegas for $300,000. Unfortunately, according to Block Shopper, they paid $753,832 for the property in Nov. 2005 when it was brand new. That was well before the top of the market was reached; I can only imagine what the appraised value might have been, say, in 2008.
This is only relative because Ms. Meads is the Florida Caribbean business manager at Diamond Resorts International. At any rate, that’s a seriously precipitous drop in value. It must have been painful.
GETTING BIGGER: India. Yup. While most of the rest of the timeshare universe has pulled in its horns to ride out the global recession, India is seeing some solid growth.
For one thing, RCI India is eyeing 100% growth over the next five years, besides expansion of its presence in Jammu and Kashmir and north-eastern states. RCI also recently introduced RCI Points to India through Cambay Family Holidays Club, part of Neesa Leisure Ltd. The RCI Points program will be available to all Cambay Family Holidays Club timeshare owners of the following resorts: Cambay Spa & Golf Resort – Gandhinagar, Cambay Golf Resort, Jamdoli – Jaipur, Cambay Spa & Resort, Kukas – Jaipur, Cambay Palm Lagoon, Kollam – Kerala, Cambay Spa & Resort – Udaipur.
RCI Managing Director Radhika Shastry says the overall timeshare business in the country generates around Rs 450-500 crore*, growing annually at about 18-20 per cent. The target audience in India is mostly from the 35-65 age group, of which up to 70 per cent seek domestic exchange.
Then there’s Mahindra Holidays & Resorts India Limited, owner of Club Mahindra. The company’s profits have jumped 41% in 2009-10 to Rs 118 crore on revenues that have been higher by 20% at Rs 468.7 crore. Over the past few years, memberships at Club Mahindra have grown by a compounded rate of 31%.
Never a company to rest on its laurels, MHRIL wants to extend its reach to travellers looking at shorter holidays and, therefore, at destinations that are closer to where they live. To that end they have started scouting for properties that are not too distant from the metros and will soon be opening a 150-unit Club Mahindra resort in Lonavala near Mumbai. Next on the cards are resorts that are short distances away from New Delhi and Chennai. A major change in the company’s strategy has been made to accommodate the needs of senior citizens. Typically, MHRIL’s packages are for 25 years, but they will now be made available to senior citizens for ten years. That’s a good move, IMO, and US companies that sell points could take a hint there.
(*A crore rupee is ten million rupees [Rs], with 1 rupee equal to US $0.02. You figure it out.)
IT’S GOOD NEWS WEEK: Standard & Poors Ratings Services is reporting that delinquencies on timeshare loans packed into asset-backed securities fell to 4.04% in the first quarter, the lowest level since August of 2008.
According S&P, the timeshare securitization market is showing continued momentum this year, following a steady stream of new issuance in 2009. Issuance of such ABS passed the $1 billion mark in 2009, though volume in 2009, far ahead of the 2008 total, though still lagging far behind the record of $1.77 billion in 2007.
That’s good news for timeshare, and heaven knows we need all the good news we can get!
SURF’S UP DOWN UNDER: Wyndham is getting BIGGER, too. The company is expanding its hotel brands in the South Pacific with the announcement of the latest addition to its portfolio – Wyndham Hotel Surfers Paradise. How does that relate to timeshare? Well, besides being the Hotel Division’s first Wyndham branded hotel in Australia, it is also the first mixed-use property resulting from the partnership between Wyndham Hotel Group and Wyndham Vacation Resorts Asia Pacific. In addition to acquiring the property management rights from Gold Coast developer Azzura Corporation, Wyndham has contracted to acquire 40 of the 192 apartments, and they will be transferred into the WorldMark South Pacific Club!
You can get more details about the building, location, etc. at e-Travel Blackboard.
THERE IS LIFE AT THE DEAD SEA: According to the Jordan Times, local investors Sama Jordan, Real Estate and Tourism Development and Jordan Agriculture Engineers Association (JAEA), are developing a $100 million, 1,000 suite resort project in Jordan along the Dead Sea, based on Islamic architecture and social values, and they will be timesharing it out.
Dubbed “Al Buhayra”, the project will have a lagoon measured at 40,000 sq.m, making it the largest lagoon in the region. There will also be private swimming pools for ladies in addition to adopting a conservative policy inside the resort that goes in line with Middle Eastern values and principles. In addition to the swimming pools there will be other areas designated exclusively for women and children as well as restaurants, cafes and playgrounds. The resort is licensed by the Ministry of Tourism as a non-alcoholic 4-star hotel.
Construction of the first phase of the project, which will include 200 suites, will start next month. The whole project will be ready to receive guests by the beginning of 2012.
According to the Islamic Sharia-based system called “Hisas Al Masha,” or shares in common, a person can pay to stay in a certain suite in the resort for a week or a certain number of weeks every year for a specified amount of money to be paid once only and then the person can own the suite permanently; it can also be inherited.
PEOPLE: Carisa Azzi has been promoted to Vice President and Chief Financial Officer for Welk Resort Group, Inc. and Welk Resort Properties, Inc. Carisa has five years of tenure with Welk Resorts and will now be responsible for managing the accounting and finance staff.
Carisa has over 15 years of experience in real estate and banking in San Diego, CA. Prior to joining Welk, Carisa was a Vice President and middle market lender for a commercial bank in San Diego. She holds a California Real Estate license and an MBA from the University of San Diego.
DEAD SKUNK IN THE MIDDLE OF THE ROAD AWARD: Hmmm. Is this a dead skunk or just a wounded one? At the very least it seems like a conflict of interest that has a certain aroma sticking to it.
Apparently the BBC1 series Rip Off Britain recently dropped a segment that focused on complaints from “dozens of unhappy customers” of timeshare giant Club La Costa. Investigative reporters Andrew Penman and Nick Sommerlad did their investigations, prepared their report, interviewed people and were ready to go. Sandy Grey’s Timeshare Consumers Association was even interviewed on camera about CLC by Rip-Off Britain — but then the BBC decided not to air it.
Why? Well, the suspicion is that it was pulled because Rip Off Britain presenter Jenny Bond, a well known and much liked TV celebrity, promotes Club La Costa. She is quoted on the CLC website saying: “Club La Costa’s exclusive club really is in a class of its own.”
When questioned about it by the Daily Mirror, a BBC spokesman said: “It is common for various story ideas to be considered for a series of this nature and clearly not everything makes it into the programme.”
Mmmmm… Mountain? Molehill? Was there a quid pro quo involved in Bond’s endorsement? Stinky???
And that’s it for this week’s Roadkill. See ya next weekend, and keep your eyes on the road… Oh, and if you enjoyed this, tell a friend!
Published every Saturday.
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