June 17, 2016 — Gossip continues that an amalgamation between two timeshare giants may still be in the works and it would appear, if it happens, that before the dust settles in the U.S.A. there will be fewer active developers than existed a generation ago. From within the battle royals of the emerging ‘sharing’ sphere and regardless of who may become the undisputed ‘World-Timeshare-Champ’, the future for many other individuals and ancillary companies in our industry may only be to discover that the mischievous leprechaun has again moved that illusive pot of gold from the end of the rainbow.
So Here’s The Scoop: Many ITG readers have written to me and to our world famous timeshare blogger (who writes and monitors The GateHouse, which is according to Google the number 1 organically ranked timeshare blog in the Google universe, insisting that either Wyndham or possibly Marriott is looking to perhaps buy/merge with Diamond Resorts International (DRI).
Since the scuttlebutt started it seems that DRI stock has been easing its way upwards, too. And according to a recent article in Seeking Alpha by Chris De Mutha Jr. titled “50% Upside To This Takeover Target”: “To a potential buyer, timeshare operator Diamond (NYSE:DRII) is worth about 50% more than its current market price, even after its run over the past few weeks.”
In another article dated June 13th published on the Franklinindependent.com website it was suggested that: “Out of 6 analysts covering Diamond Resorts International (NYSE:DRII), 6 rate it a “Buy”, 0 “Sell”, while 0 “Hold”. This means 100% are positive.” You can read the whole story here.
I will admit that all this consolidation ‘stuff’ the past decade or so within the Land of Time is beyond my pay grade. And though I think I understand one or two of the benefits for the conquering party and the possible advantage or detriment of the entity being trounced, etc. I’ll leave all that for those of you to ponder who understand such matters far better than I could ever hope to comprehend.
However I do know that since the Great 2008 Recession was in full swing several decently sized independent developers have been gobbled up by other developers while some smaller developers either closed their sales/marketing doors and/or are sort of whistling past the graveyard with their arms and hands behind their backs, fingers crossed perhaps hoping sales will improve or that their companies would be the next to be acquired.
IMO all of this has affected and will continue to affect ancillary companies (suppliers, vendors, etc.) including membership in ARDA (American Resort Development Association) as well as all levels of management, sales and marketing personnel, etc. whose very futures and livelihoods may be in jeopardy.
Those who are oblivious, not paying attention, could care less or fairly new to our industry that may not see the potential near and long term influence; if the consolidation in our industry continues – the writing seems to be on the wall and the next timeshare phase within the USA may be as simple and significant to grasp as Presidential hopeful Donald Trump declaring the impact to be, “It’s Yuuge, That I can tell you”.
And speaking of past mergers, buyouts, acquisitions and/or bankruptcies, etc., remember some of these events over the past years that directly affected many careers and opportunities for vendors in our industry? Here is just a partial list, in no particular order:
Island One – bought by DRI; Pacific Monarch Resorts – bought by DRI; Club Intrawest – bought by DRI; Gold Key Resorts – bought by DRI; Shell Resorts – bought by Wyndham; Trendwest/WorldMark – bought by Cendant, later renamed Wyndham Vacation Ownership; Consolidated Resorts – bankrupt, bought by ASNY (Artie Spector), renamed Somerpointe Resorts; Kosmas Group/KGI Resorts – bought by Festiva; Silverleaf Resorts – bought by Orange Lake; Celebrity Resorts – bankrupt, ended up under Jared Meyers, the son of the original developer, renamed Legacy Resorts; Epic Resorts, bankrupt – bought by Sunterra; Sunterra, bankrupt – bought by Diamond Resorts International.
Naturally all this ‘buy-out’ frenzy is all about the money; for example, if developer ‘A’ acquires developer ‘B’ and if developer ‘B’ has 500,000 members in good standing and ‘if’ each new member has an AMF (annual maintenance fee) of around $900, once the acquisition has been completed developer ‘A’ will pick up a little extra pocket change to the tune approaching ½ a Billion dollars each year just in maintenance fees.
And in that example, developer ‘A’ will also gain the value of all those properties from developer ‘B’ as well as all the ongoing revenue from timeshare sales activities including rental income from all the resorts and so forth and so on.
At the end of the day the money on the table is colossal and when that kind of capital is ‘at play’ you can bet your last centavo that collateral damages, so to speak, is one of the least concerns within the hierarchy of the victorious new timeshare overlord.
And because that is true – and if this gobbling up trend continues, as it may – the time has arrived for anyone still resting on their laurels to take a good long hard look at the unavoidable road ahead and make some serious plans ‘today’.
Good Luck Out There
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