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Timeshare R-S07302011

After Market for Grupo Vidanta Brand Resorts

July 30, 2011

We asked the question of ourselves - is it realistic to expect returns from renting timeshare weeks?

Aggressive sales personnel would tell you that the developer will buy back weeks, the weeks will pay for themselves in the open market, demand is high because supply is limited, etc, etc.

At the same time, during the closing process, conservative developers ask all purchasers to sign something like a New Member's Verification Statement. Our's references thirteen clauses in our contract and cover page. Clause 9.1.B of one of our contracts specifically states "The Company will not rent or resell my weeks. The Company makes no representations regarding the market for vacation ownership rentals, resales or their value as an investment…." We all sign this document, but 50% of us harbor the secret thought that we will actually gain tangible value from our ownership in spite of what we signed.

We conducted our first market survey and came away with some pretty interesting preliminary findings.

Some highlights are:
  • Number of companies offering to rent or sell Grand Luxxe units: 30 and counting.
  • Number of Grand Luxxe units offered for rent or sale: 275 and counting.
  • Percentage of Grand Luxxe Villa and Grand Luxxe units to the total: 35.64% and 64.36%, respectively.
  • Number of companies offering to rent or sell Grand Bliss units: 11 and counting.
  • Number of Grand Bliss weeks or contracts offered for rent or sale: 106 and counting.
  • Number of companies offering to rent or sell Grand Mayan or Mayan Palace units: 36 and counting.
  • Number of Grand Mayan or Mayan Palace units offered for rent or sale: 9,067 and counting.
  • Percentage of Grand Bliss, Grand Mayan or Mayan Palace units to the total: 1.16%, 39.88% and 59.94%, respectively. Two units were offered as Mayan Resorts and not included.
  • The cost to list weeks or contracts ranges from a fixed price to a percentage of the sale price.
  • So far, we have uncovered one site that lists contracts that the site claims have recently sold. This company is called Buy A Timeshare.com and is located at https://www.buyatimeshare.com. Of the 1,551 total listings that recently sold, 10 were associated with Grupo Vidanta, and all were Mayan Palace units. The average listing price for these 10 units was $3,024. The highest offering price was $8,000 and the lowest was $500.
  • Here is a list by the parents of resorts of listed timeshare weeks or contracts that have recently sold on Buy A Timeshare.com:

Resort Number of Units Max Price Min Price Ave Price
Wyndham
258
34,000
0
6,251
Marriott
244
324,000
100
16,752
Hilton
54
22,000
60
9,156
Holiday Inn Club
37
15,995
10
5,655
Sheraton
36
2,700
100
5,360
Bluegreen
31
12,900
1
3,658
Westin
30
49,000
1,500
19,417
Disney
30
25,000
60
12,811
Hyatt
26
45,500
2,250
12,936
Pueblo Bonito
19
55,000
950
8,886
Liki Tiki Village (A Club Navigo/Island One Resort)
14
12,000
1
5,443
Mayan Palace
10
8,000
500
3,024
Harborside Resort at Atlantis
8
38,000
500
18,863
Paradise Village (Nuevo Vallarta)
7
12,000
3,500
7,986
Total
803


Even though we have not completed our study, we feel the first results are a good reflection of what is happening in the market and represents a good sample of the total number of contracts that are currently offered for rent or sale. We will know more as we expand our survey.

It seems the percentage of units available at any one time is pretty large. This suggests there is a market for listing rentals and sales, and we might be able to arrive at a fair approximation of a pricing matrix .

Granted, there may be multiple listings on Buyatimeshare.com that one person has paid for. Regardless, the number of Grand Mayan and Mayan Palace resort members who would like to rent or sell their weeks appears to be substantial.

To remain profitable, the developer must continue to attract new members. How does he increase exposure of his product to new prospects while there is a fairly large number of weeks and contracts that are already available to the public? How does he increase exposure of his product to new prospects and not upset current members?

All developers of timeshared units face these challenges. Marriott is spinning its timeshare division into a new public entity. Wyndham is encountering difficult financial times. The list goes on.

So, what can you take away from these findings?
  • The market for rentals and sales seems large and active.
  • We have pretty sound evidence that representatives of companies that claim to be willing to pay $6,300 per week are outrageous and likely to be scams.
  • Grupo Vidanta paid vacations (Timeshare Weeks or Contracts) are available. These can lower the cost of prepaid vacations, which is the essence of a timeshare.
  • Representations of high returns on rentals and sales by overly aggressive sales staff are not realistic.
  • It is possible to buy from sources other than the developer, if one so desires. One caution: the cost may be less expensive, but we have learned that some well known developers, such as Disney, are countering the "buy from third parties" option by not extending the same privileges granted to purchasers from the developer to those who buy on the open market.
Please understand we present this information because we thought you would be interested in what we found. Although we conducted the survey using techniques that we are comfortable with, the information itself should be viewed as a general overview at one point in time and based upon information that we cannot verify. We do not warranty the accuracy of the data presented.

We look forward to expanding our market knowledge and passing it along. Timeshare ownership is great, so long as it is seen in the cold light of day.
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