June 5, 2010: WHAT’S ON THE MENU THIS WEEK?
HEADS UP EVERYONE: The old Independent Contractor vs Employee issue is roaring back to life with a vengeance and it could have big consequences for the timeshare industry. On June 4, 2010 in Pennsylvania, a Philadelphia County judge issued an unprecedented ruling granting class action status for a lawsuit against a timeshare developer who wrongly classified his salespersons as independent contractors. I don’t use the word “allegedly” because the Plaintiffs in the case (following a ruling by the IRS on the subject) have already successfully convinced the defendants to change their policy of paying these persons as “independent contractors”; the defendant employers began paying their sales persons as employees on January 1, 2009 – after the lawsuit was filed in August 2008.
At issue now is whether or not approximately 275 people (the “class”) can get reimbursement for taxes they contend were overpaid due to the misclassification, along with compensation for benefits they did not receive from June 2005 until December 2008 in the total amount in excess of $2,100,000.
Attorneys Mark A. Kearney and Timothy T. Myers of Elliott Greenleaf in Blue Bell, PA, filed the case in 2008 on behalf of the lead plaintiffs, Albert Whitehead and Austin Miller-Orteneau of Philadelphia, against Vacation Charters Ltd. and W. Jack Kalins, owner of the Split Rock Resort in Lake Harmony and several other timeshare resorts. The trial is expected to take place sometime later this year.
The case is WHITEHEAD ETAL VS VACATION CHARTERS LTD. Plaintiffs’ attorney Mark Kearney can be reached at 215-977-1016.
Watch Inside the Gate for more information on this, because I have it on good authority that a comprehensive article is already in the works… UPDATE: See IC vs Employee Status: And the Winner Is…
NOSEBLEED DROP? When Westgate Resorts/CFI’s grand poobah, David Siegel, put his unfinished 90,000 sq. ft. mansion up for sale last month the asking price was $100 million. Since then he has had time to think about it, and he has reduced the price to a mere $75 million.
But that’s the “as is” price. If any buyers want Siegel to finish the place to their specifications, the asking price is still $100 million– and if a buyer wanted something really special, like solid gold faucets, for example, well that would be extra.
The home, which sits on 1,250 feet of waterfront on Lake Butler in Central Florida, has 66,800 sq ft under climate-control, with 13 bedrooms, 23 bathrooms, a 20-car garage and three pools. Under construction for several years, it still has an estimated 12 to 18 months’ worth of work before anyone can call it home.
Maybe it’s just me, and maybe I’m indulging in stereotypes here, but for some reason I imagine some uber-rich oil sheik or UAE real estate mogul being attracted to the ornate mansion. Or someone like Imelda Marcos. Slap me if I’m out of line, I’m just saying that not everyone would want to live in a place designed after the Palace of Versailles. (See the May 8 edition of Woody’s for more details about the Siegel mansion)
Just for the sake of comparison, though the Siegel mansion is really really big it is far from being the biggest house in the world. That honor goes to the Sultan of Brunei, whose “Istana Nurul Iman” (“Palace of the Faith Light”) is the largest residential palace in the world and the world’s largest residence of any type.
It contains 1,788 rooms, 257 bathrooms, and a floor area of 2,152,782 square feet (200,000 m²). Amenities include 5 swimming pools, and an air conditioned stable for the Sultan’s 200 polo ponies, a 110-car garage, a banquet hall that can be expanded to accommodate up to 4,000 guests, and a mosque accommodating 1,500 people.
Everything is relative…
JUSTICE FOR ALL? In October of 2008 the Pennsylvania Attorney General filed consumer protection lawsuits against Bluegreen Corporation, Bluegreen Resorts, Bluegreen Vacations Unlimited, Inc. and Great Vacations Destinations, Inc. The AG accused Bluegreen of illegally marketing vacation packages, using “free” airline ticket offers (certs) and other worthless prizes to lure consumers into aggressive and deceptive timeshare presentations.
You all know the back story of that kind of thing, so I won’t go into detail. Fast forward to June, 2010. AG Tom Corbett announced a settlement with Bluegreen wherein Bluegreen has agreed to cancel contracts and pay refunds to consumers who have filed valid complaints about their timeshare purchases. Corbett said, “Those complaints include consumers who were unable to use their timeshare, false promises about when or where consumers could travel and situations where timeshare purchasers did not receive extra services or discounts that were promised during the sales presentation.” And so on.
You can get all the details here: AG Reaches Settlement With Bluegreen Corp., and it’s likely to cost Bluegreen a pretty penny (which they had probably already set aside for such a possibility). But that’s not really my focus here, because I got to wondering about something else.
When the original lawsuits were filed, Corbett said “free” gasoline and meals that consumers were promised turned out to be coupons or certificates with lengthy terms and conditions. For instance, consumers who were promised $40 in free gas were required to submit written requests to obtain a series of gas coupons. The coupons required consumers to pay for their gas first and then mail a receipt for reimbursement, with each coupon limited to a $5 purchase, with no more than one purchase per month.
My real question about the whole thing is this: Why is it always the timeshare company using all those worthless certs that gets sued and has to pay up, as opposed to the companies that produce and provide the certs? In most cases those certs are purposely designed to be nearly impossible to use. That’s how the “premiums” companies make their profit, by making sure that few of the “vouchers” are ever redeemed. In the interest of justice (snark), doesn’t it seem that those companies ought to get equal attention from law enforcement? Hmmm?
CERTS AND TRAVEL CLUBS: What a great combination, yeah? Well, the Tucson, AZ BBB has a warning out (its third such since last December) about Southwest Travel Inc., a company owned by Jack R. Keefe, according to corporation documents. The BBB says it has received 1,661 inquiries and 16 complaints about the company since December.
It’s the usual story. The company sends out mailers or robocalls like the following:
“I’m pleased to inform you that you have qualified for an award of 2 roundtrip airline tickets. Congratulations. These tickets are valid for travel anywhere in the continental U.S. The retail value of this award is up to $1,400….”
In other variations of the letter, consumers are offered free Wal-Mart rebate certificates, dinner cards, “food certificates,” retail gift cards or other enticements to get them in the door. The company’s most recent marketing tactic is a robocall campaign. Local consumers call the toll-free number in the letter or in the phone message and – according to those who attend – the following chain of events ensues:
They are invited to a 90-minute presentation at Southwest Travel offices, 4811 E Grant Road. They are told they will receive their airline ticket vouchers and other various prizes just for their time. Those who attend tell BBB the company is a private, discount travel club that promises steep discounts on an array of travel, including cruises, packages, timeshares, special events and more for a fee. Consumers say the up front cost of the program is $8,995, plus an additional one-time $399 “documentation fee” and an annual membership fee of $199. Other packages for lesser prices are offered.
Do I need to tell you where it goes from there? Right. Just TRY to redeem any of those “gifts/prizes”. And guess what? The promised discounts aren’t living up to the sales pitch, either. What a surprise! (Not!) Been there, done that, got the tee shirt…
You can get a lot of detail from this article in AZBiz.com If you want to…
TIME OUT IN TENNESSEE: Last month’s floods in Nashville have subsided, but an awful lot of damage was done. Among the properties damaged is Wyndham Vacations Resorts- Nashville, located just a mile from the legendary Grand Ole Opry and the immense Opry Mills outlet mall. This resort has essentially lost its whole summer season, with reservations cancelled through July 16, 2010 and no new reservations being accepted for arrivals prior to September 1. Of course Wyndham is working hard to rearrange things for those with confirmed reservations, and they’re trying to keep everyone apprised of developments as they go along.
Meanwhile, nearly $1 million worth of flood rehabilitation permits have already been issued to get repairs underway. Ten permits were issued to Bacar Constructors, for $94,145 each.
Will Wyndham’s insurance cover the costs, or will there be a special assessment? Just wondering out loud…
HAPIMAG GETTING BIGGER: Hapimag’s much anticipated new resort in Dresden, Germany is moving right along. The company celebrated the topping-out ceremony for the building in mid-April and is now looking forward to the opening ceremony this coming November.
Called the Stadt-Palais Hapimag resort, the building is of special historic significance because it is being constructed on the site of the former Palais Beichlingen, called the British Hotel, which was destroyed during the fire bombing that leveled much of Dresden in 1945 during World War II. A cellar vault was the only thing that remained intact from the 1945 bombings, and the new, old British Hotel is being reconstructed on top of it.
It’s always good to see new product being developed during these rough times.
(See Hapimag On Schedule With New “British Hotel” in Dresden for details of the project)
SPEAKING OF WHICH: Hapimag is not the only company getting bigger. In Central Florida the relationship between The Family of Orange Lake Resorts and Holiday Inn Club Vacations has been a win-win situation. You may remember that Holiday Inn founder Kemmons Wilson was also the founder of Orange Lake Resort (the largest single-site timeshare resort in the world), so it was a natural progression to develop timeshare using the Holiday Inn name.
Anyway, it’s apparently been a big success so far. The affiliation has been so effective that Orange Lake had a better 2009 than they did in 2008 — and they had great sales in 2008.
In fact, while many companies were laying off staff, Orange Lake has doubled its local work force in the past four years. They did it by growing their company, and not just via the very profitable Holiday Inn Club. The company has added five other resorts around the country, with Orange Lake being the “corporate hub”. In the process they’ve grown from about 1,200 “team members” in Orlando to about 2,500 now. The first four months of this year they hired some 700 people.
OK IN ASPEN: The Aspen Club and Spa’s long effort to develop timeshares on its Ute Avenue property has finally been approved by the Aspen City Council, but I wouldn’t say the Council sounds very happy about it.
A grudging 3 to 1 vote gave The Aspen Club permission to construct about 90,000 additional square feet that includes 20 condominiums that will be sold as timeshares, 14 affordable housing units and an underground parking garage with 41 spaces.
Permission came with strings, of course. Among them: The Club has pledged a 0.25 percent assessment to the sale of any of the shares for the purpose of creating a fund that can be used for the enhancement of health and wellness in the community. That fund will be administered by local nonprofit Aspen Community Foundation, with oversight from City Council and the Aspen Club, and will sunset after 25 years.
The club has also pledged to spend $5 million on capital and programming improvements and is also committing that once the expansion is built and operating, the number of cars coming up Ute Avenue to the club will not increase over current levels.
The land-use approval is good for five years, more than the usual three years and less than the seven the club was requesting. And the city did not get the guarantee it sought that the athletic club would remain open to the public.
ARDA DO-GOODERS: ARDA-Hawaii gets a nod this week for its charitable efforts. They participated in the 31st Annual Visitor Industry Charity Walk on Maui and handed out 1,000 ARDA-Hawaii reusable shopping bags along with water bottles to walkers at its aid station along the 5-mile route. Maui raised the most money in the statewide event, with 1,863 walkers collecting $331,421.
Kudos go out to the ARDA-Hawaii Chair, Daniel Dinell, and all of those who participated.
And here are some factoids for you all: ARDA-Hawaii is the local chapter of the American Resort Development Association. Hawaii’s timeshare industry generates close to 10,000 jobs in tourism, construction, and allied industries. The state’s 8,800 timeshare units account for 10 percent of the State’s visitor lodging inventory and thousands of jobs. Timeshare owners and guests generate $3 billion in direct timeshare-related spending in Hawaii. ARDA-Hawaii Maui members include Ka’anapali Beach Club; Kahana Falls; Kauhale Makai, Village by the Sea; Marriot’s Maui Ocean Club; Maui Schooner Resort; Valley Isle Resort; Westin Ka’anapali Ocean Resort Villas I and II; and Worldmark at Kihei.
And one more factoid: Timeshare resorts in Maui County pay the highest property taxes in the county. Why does Maui hate us…?
DEAD SKUNK IN THE MIDDLE OF THE ROAD AWARD: This is not timeshare related and it’s going to sound political, but it isn’t meant to be political. At least not on my end. But a skunk is a skunk, and I was so offended by this vile little tirade by Glenn Beck on his radio show, wherein he made fun of Malia Obama (who is 11 years old), that I can’t restrain myself. And I’m not apologizing for this; it’s good to know I haven’t lost my capacity for outrage.
You’ll have to listen to it, because it’s so disgusting that a transcript doesn’t do it justice. In fairness, Mr. Beck apologized the next day for mocking Malia but I don’t think he meant it. He was sure enjoying himself (giggling like a school girl) while he was doing it.
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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