Roadkill Cafe August 14, 2010
August 14, 2010: WHAT’S ON THE MENU THIS WEEK?
THE PAYOFFOUT: Who’s worse, an organization that uses donated funds to support Democratic and Republican political candidates without telling the donors? Or a company that fails to pay its employees wages owed? Take your pick.
In this corner we have ARDA. ARDA has its Resort Owners Coalition (ARDA-ROC), which it hails as “the first line of defense against legislation that may negatively impact timeshare owners and their well-being.” ARDA-ROC receives “donations” from timeshare owners as part of the regular bills paid to their property management companies, generally in small amounts of $3 to $10. And ARDA-ROC has a political action committee (ARDA-ROC PAC) that is used for the usual PAC activities. Money from ARDA-ROC goes into that PAC.
The thing is, ARDA-ROC PAC was recently fined by the Federal Election Commission for “misstating financial activity, receiving prohibited corporate and foreign national contributions and improperly soliciting contributions. Under the agreement, ARDA-ROC PAC’s total liability in the form of penalties, fines and restitution is over $900,000.” You can read all the sordid details here: ARDA-ROC PAC Fined by FEC
In the other corner we have Central Florida Investments (aka Westgate Resorts). The issue CFI faced was different, but coincidentally the final amount owed was very similar.
In CFI’s case, the US Department of Labor’s Wage and Hour Division investigated the company and determined that employees who scheduled tours of timeshare properties for the company (OPCs) were not paid at least the federal minimum wage for all the hours they worked. Additionally, premium pay for the workers did not include commissions, and overtime work was incorrectly computed. The company also failed to keep accurate timecard records.
The amount CFI has to cough up to make it right: $868,443!
Add attorney fees, etc. to both of those cases and we’re talking some real money…
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MO’ MONEY: According to Reuters, Diamond Resorts International sold $425 million in a sale of senior secured notes on August 10. The notes were sold in the 144a private placement market, and Moody’s rated the debt B3 according to an Aug. 6 ratings notice from the company (B1, B2 and B3 ratings denote a lack of characteristics of a desirable investment). The S&P rates them as B-Minus.
DRI appointed Credit Suisse, Bank of America Merrill Lynch and Guggenheim Capital Markets as the joint bookrunning managers. The notes, with an issue price of $97.513, carry a coupon rate of 12.0% (interest paid per year), and are due to mature on August 15, 2018. The yield is 12.50%.
I wonder if some of those millions are pointed at the DRI/ILX Resorts purchase? Remember, DRI has offered to purchase the assets of ILX for $29,672,251, which is composed of $5,856,913 in cash and the assumption of the Debtors’ obligations under the Textron Loans. The company will also assume liabilities with respect to loans made by M&I Bank to Sedona Vacation Club and Premier Vacation Club, along with other obligations.
Is 12 points a pretty high interest rate to pay, or is it the norm these days?
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GETTING BIGGER: Club La Costa Resorts & Hotels plans to open a brand new resort in Kusadasi, Turkey next summer. Located on the coast of the Aegean Sea, Kusadasi Golf & Spa will comprise a mixed use residential development complete with its own 18-hole, par 72 golf course, spa, shops, sports and on-site restaurants. This kind of development is a first for both Turkey and Club la Costa.
The resort is set on a hilltop, close to the spectacular stretch of coast called “Long Beach”, and is just 11 km from Kusadasi.
The new resort is designed as a self-contained “village”. Ultimately it will comprise 2,000 luxury accommodations, the golf course, a spa with Turkish bath, swimming pools, an aqua park, sports facilities, restaurants and bars, as well as shops. It’s CLC’s second project in Turkey; Apollonium Spa & Beach Resort on Bozbuk Bay opened in 2009.
Yes. Getting BIGGER!
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WHICH IS IT? Sterling Holiday Resorts is one of Asia’s leading Vacation Ownership companies, claiming more than 115,000 members and 13 operational resorts “in some of the most scenic holiday locales in India”. So far so good. But recent news about the company is confusing.
One online publication, Moneylife Personal Finance Magazine, calls Sterling a potential buyout target, mentioning that in November 2009, the Securities and Exchange Board of India (SEBI) directed Sterling to dematerialise about 300,000 shares of the company in the name of GIIC immediately since it had borrowed Rs50 million and repaid only Rs2,50,000.
But Business Week (via Bloomberg) says the company plans to spend about 500 million rupees ($10.8 million) to develop a new property and expand its hotels, and that they are searching for a location for the resort even as we speak. This article says Sterling is expanding to tap a 25 percent increase in demand for timeshare vacations.
So which is it? Is Sterling getting BIGGER, or are they ripe for a takeover? Or both???
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100% FAITH: Condo-hotels have not fared well since the economy collapsed, but Kerzner International has FAITH. To the tune of 100% ownership and control of the Reef condo-hotel project (known as the Residences at Atlantis) on Paradise Island, The Bahamas. Kerzner has acquired the stake held in the $200 million development by its joint venture partner, Turnberry Associates. The price was not revealed, but is assumed to have been a 50% equity interest.
About 60 per cent (290 units, plus or minus) of the existing Reef inventory, has been sold, leaving only 40% (190 units) left for sale as of last June. Both rates and occupancy have been improving this year, so Kerzner sees it as a good investment opportunity. From the company’s mouth to God’s ear, as they say, and may other condo-hotels follow suit!
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STRUTTING THEIR STUFF: Pueblo Bonito’s Oceanfront Resorts and Spas in Mexico are still on top of their game. Their Pacifica and Sunset Beach resorts have been voted among the Top 20 resorts in Mexico by the readers of Travel + Leisure Magazine. The publication asks its readers to cast their votes each year for the world’s best hotels. This is the debut year for Pueblo Bonito Pacifica which ranked #6 in the top 20; Pueblo Bonito Sunset Beach continues to be a favorite on the list.
Other recent respected and sought-after awards accorded Pueblo Bonito Oceanfront Resorts and Spas include: Condé Nast Traveler Readers Choice Award to Pueblo Bonito Sunset Beach, Pueblo Bonito Pacifica and Pueblo Bonito Emerald Bay; the Condé Nast Traveler Gold List to Pueblo Bonito Sunset Beach (2007-2009) and Pueblo Bonito Pacifica (2007-2009); Spa Magazine’s Silver Sage Award (2008-2009); 
and the prestigious AAA Four-Diamond Award 2010 to Pacific Bonito’s Pacifica and Sunset Beach resorts, and to several of Pueblo Bonito’s restaurants including Fellini’s at Pueblo Bonito Rosé, two consecutive years, and the renowned LaFrida at Pueblo Bonito Sunset Beach.
KUDOS!
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A SIGN OF THE DIGITAL TIMES: The Timeshare Association, also known as TATOC, has launched a new website dedicated to its magazine, Sharetime. Previously printed and distributed to just its member resorts, Sharetime will be available to all timeshare owners through the dedicated website, sharetimemagazine.com.
So what, you ask? In future the quarterly magazine will only be available on line in digital format using page flip technology.
In case you’re wondering, TATOC represents over 80 resorts throughout Europe and has access to over 250,000 timeshare owners. The aim of the magazine is to provide a positive image of the industry to both timeshare owners and the general public, protect consumers from scammers and to secure the future of a legitimate industry for its members to continue to enjoy. They feel the new digital format allows this message to be spread even further.
Personally I find the page flip technology annoying to use, but that’s beside the point. This is just one more print publication moving 
exclusively to an online format. The paper world is going digital, one publication at a time. Save money, save a tree.
Email: woodysvpg@gmail.com (or leave a comment below)
PEOPLE: Michael Oprish has been appointed General Manager at Vail, Colorado’s The Sebastian, a luxury resort and residence club debuting December 2010. In this role, Oprish will direct and oversee all daily operations and ensure the highest levels of standards are maintained at The Sebastian, Timbers Resorts’ newest property.
Formerly the vice president and general manager of The Bernardus Lodge in Carmel, California, Oprish brings more than 25 years of experience in the luxury hotel and travel industry.
Christopher B. Perrotti has been named as resort manager at The Wyndham Bay Voyage Inn in Jamestown, RI. He is responsible for administration and operations, budget forecasting, restaurant management, guest satisfaction, quality assurance and training. He is also responsible for managing Wyndham’s Newport Overlook, a condominium timeshare and rental property in Jamestown.
Perrotti previously held the position of director of operations/ chief operating officer for the O’Neill Property Group New England owned Carnegie Abbey Club in Portsmouth. He also served a 21-year tenure at the Newport Yachting Center, where he held the positions of general manager and operations manager.
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THOUGHT FOR THE DAY: Handle every stressful situation like a dog. If you can’t eat it or hump it, piss on it and walk away.
Email: woodysvpg@gmail.com (or leave a comment below)
DEAD SKUNK IN THE MIDDLE OF THE ROAD AWARD: The state of the economy is the dead stinking skunk this week. Have you given much thought to the quality of the tours you’ve been getting, and their ability to pay? Especially if you’re working at an offsite hauling local tours (are there any such even still operating these days?) you’ll need to wonder about it no longer.
The following map traces unemployment in the USA on a monthly basis from January 2007 through March 2010. The video plays through in about 30 seconds, and there is no sound so you can put down the headphones. Be warned: It is not for the faint of heart.
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!
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