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Diamond

Diamond Resorts International Hits the Headlines in the USA.

Diamond Resorts International is hitting the news again in the USA, yesterday, 1 August 2016 they announced that they were postponing the release of the second quarter 2016 earnings results. This also led to the halting of trading on the New York Stock Exchange, which also resulted in the price of stocks falling. Apparently the postponement is due to the independent accountants having expressed the view that the figures are not correct and need to be re-evaluated.

dri logo

News has also come from the States that Diamond is being investigated by several law firms representing shareholders, for possible breaches of fiduciary duty. It seems to focus on the deal between Diamond Resorts International and Apollo Global Management.

 

One report suggests that the Diamond Board of Directors did not market the company fairly, resulting in it being undervalued. Obviously the result of this is the shareholders have lost out, Apollo Global have paid around $30 a share, one analyst believes that this is undervalued by around $3 a share. This could be quite a substantial amount lost by many shareholders.

apollo global logo

So could this be the start of lawsuits being initiated by the shareholders, if so what would the impact on the company be? Further reduction in share price, higher management fees for its members? Well, we shall have to wait and see. For a more in depth look into this follow the link to The Street, this will take you to all the stories and latest news.

 

https://www.thestreet.com/quote/DRII.html

 

Inside Timeshare will be following this story along with Irene Parker, who also writes many articles for The Street, as she gets the information we will pass it on to you.

 

My Thought Today: End of July

Another month gone by and even more judgements from the Supreme Court, four within a week of each other, this means CLA have now achieved 15 judgements. CLA also announced a win at the courts in Barcelona, this was against Club Estela Dorada. Again it follows the Supreme Court rulings and the client was awarded over 29,000€ including legal fees and interest.  According to my sources there are around 100 waiting to be heard at the Supreme Court, so watch this space.

legal clipart

One of my American colleagues Irene Parker sent me a link to a comment on TrustPilot, a review website. It was from a customer who had a great Customer Service Experience (although it does not state if he is a Diamond owner or just a non owner booking):

 

I must be the luckiest person in the world if you are to believe the other reviews on this site as my experience has been the complete opposite.

The agent I have been dealing with Lisa Whincap is probably the nicest and most helpful person I have ever had the pleasure to deal with.

I booked a Holiday then later found there was going to be some building work going on during part of our stay so I called and asked if I could change or cancel my holiday and Lisa could not have been more helpful and went well above and beyond to make sure I was entirely happy. Therefore, as far as I am concerned the customer service in their Spanish office is second to none and I would not hesitate hand on heart to recommend them to anyone I know as I got exemplary service.

Thank You (Shane)”.

 

https://www.trustpilot.com/reviews/577158160000ff00096a4000

 

Irene has been writing for quite sometime on the difficulties of getting out of Diamond contracts she sent me this rebuttal:

 

People don’t get it. That’s great that Shane had a positive customer service experience, but if he spent $25,000 dollars or euros and had a heart attack or stroke tomorrow and could no longer travel, in all likelihood his only option would be to voluntary surrender his points (if accepted), despite many other timeshare resorts providing a secondary market. Who in their right mind would spend so much money on something with increasing annual fees and no exit.  Diamond then takes surrendered points and resells them for full value as part of their industry recapture program. When I called today on behalf of an 83 year old owner, the first thing I was told was a voluntary surrender is not guaranteed.

 

She points out that the problem is not one of customer service while on holiday at the resorts, it is a case of needing to be rid of the timeshare/membership when no longer needed. It is not only owners in Europe that have this problem, our cousins across the great lake have the same dilema. The only consolation as Irene put it to me in one conversation, is the way Spain is on the side of the consumer. Those in the US are now looking to see if they can bring in the same legislation on a Federal level. I suppose this does depend on who wins the presidential election!

floating house

On another matter of how the law works, it has been pointed out that some resorts / companies think they have found a new way around the floating week’s ruling. It appears they are now assigning a fixed week number (from the weeks that can´t sell) and calling them “Flexi weeks”. Although there is a week number assigned the owner is not tied to it, and uses it in the same way as the floating. So it looks like the legal eagles are going to be busy with this one in the future.

 

On the point of Mrs B and the Debt Collectors, the Financial Ombudsman has now taken on the case, so hopefully it will be resolved once and for all, without the need to go to court. Once again thank you for the support received by various legal eagles in the UK.

 

For those of you about to embark on your summer holidays, have a safe journey and enjoy yourselves, but do remember to watch out for the latest innovative idea from your resorts.

 

If you have any questions about any articles published or just want to know how to make the relevant checks on any company, Inside Timeshare is here to help. If you have any information about any article or company you have spoken to and want others to be warned, please let us know and we will publish it. Happy Holidays.

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One Foot In The Grave!

“I don’t believe it, I just don’t bloody believe it!” said Victor Meldrew. But yes it is true, the Supreme Court has just issued their fourteenth and fifteenth judgements.

 

Canarian Legal Alliance just keeps them coming in, they announced this news late yesterday 13 July 2016. On Tuesday the court awarded 18,500€ to a UK family and declared their contract null & void because it was longer than the 50 years stipulated by law. The following day Wednesday another UK family had their contract declared null & void and awarded 13,000€, including double the deposit back for payment within the 14 day cooling off period. They had also been sold floating weeks, again in contravention of the laws laid down.

 

The Supreme Court has now consistently ruled that contracts over 50 years, floating weeks and points along with the taking of deposits within the cooling off period, are contravening the laws on the selling of timeshare in Spain. It now has to be asked when other countries are going to enforce these rules which were laid out by EU Timeshare Directives?

 

Spain is obviously leading the field in this area, with these judgements all lower courts must now abide by them.

anfi logo

So, just in the past week Anfi have been penalised for considerable sums, the question now is how long can they sustain this? There are more cases waiting to be heard by the Supreme Court, all because Anfi have taken the decision to appeal rulings by those lower courts. If they had any sense, I would have thought they would pull out of those appeals and just admit defeat.

 

The next question is how long will it be before other companies such as Diamond and Club la Costa have more cases brought against them? Is it the death knell for timeshare in Europe?

 

How will this news affect Apollo Global Management after their takeover of Diamond Resorts International? There are already rumours across the great lake that Wyndham is looking to buy the shares, the price has already been put at around $36 to $39 a share. I hope to get some insight into this from my American colleague Irene Parker who writes for the financial journal The Street, ( see link for her article on Hilton). Inside Timeshare will keep you posted on this as and when the news comes in.

 

Once again Inside Timeshare congratulates these two families and the legal team of Canarian Legal Alliance for their splendid work. They certainly have paved the way for others to follow.

 

If you need any information or advice on any timeshare related matter, Inside Timeshare will do its best to provide you with the best answers.

 

https://www.thestreet.com/story/13636683/1/hilton-worldwide-and-spinoffs-are-good-investments-now-or-later.html

TWO MORE SUPREME COURT RULINGS FOR THIS WEEK

 

 

Warning to Diamond Owners from across the Atlantic.

Since Inside Timeshare published the article on the Apollo Global Management buyout 30 June 2016

 

http://insidetimeshare.com/700-2/

 

We have been informed that Apollo and Diamond have issued a Fraudulent Calls Alert in the United States, this is published below.

 

Fraudulent Calls Alert

It has been brought to our attention that some of our members have been contacted by a company purporting to be representing Apollo Global Management, (Apollo) and referring to the recent merger agreement between them and Diamond Resorts International®. These calls are not genuine; Apollo does not, and will not, engage in any communication directly with any Diamond owner or member. Please be extra cautious when accepting contacts from anyone using any such introduction in which to discuss membership issues, particularly if you have been ‘cold called’ and/or being offered services such as resales and relinquishment options. Various tactics are sometimes used to manipulate timeshare owners into making payments on the pretext of promises made to resell, transfer or relinquish their ownership. Members can be persuaded to pay a significant up-front fee and very often, no service is provided.

 

We are publishing this as a preliminary warning to Diamond owners, no doubt as has happened in the past what goes on across the Atlantic will surely happen in the UK and Europe. The advice is be cautious and do your research before committing to anything. Inside Timeshare would like to thank the American readers for this information.

 

If you are contacted in this manner Inside Timeshare would like to hear from you so we can publish details in order to warn others.

News from across the Atlantic.

Recently Inside Timeshare has been collaborating with Irene Parker, who writes for the online Financial Journal The Street. Irene is a long time Diamond owner and has had many battles over the years, she has highlighted the way members are treated and the continual upgrading resulting in many people having financial difficulties.

 

She has written many articles on the subject of timeshare, mainly showing the financial side regarding the stocks and shares. Thanks to Irene and The Street, Inside Timeshare was able to break the news about the buyout of Diamond by Apollo Global Management. So it would seem that members of Diamond Resorts in Europe are not alone in how they are treated, they do have allies over “The Pond”.

http://www.thestreet.com/story/13624491/1/is-apollo-returning-to-its-junk-roots-with-its-acquisition-of-diamond-resorts.html

collaboration

Scott Miller published an article in Latticework titled My Investment Case for Diamond Resorts International, this appeared to incense quite a few people, so Irene added her questions to it creating the Virtual Interview. This is it, hope you enjoy.

 

Is There a Disconnect Between Timeshare Owners and Venture Capitalists?

My apologies to John Bird and John “subprime” Fortune

 

By Irene Parker

July 7, 2016

I believe there is a bit of a “disconnect” between owners and venture capitalists.

http://latticework.com/my-investment-case-for-diamond-resorts-international/

Mr. Scott Miller, founder of Greenhaven Road Capital wrote the above article in defense of Diamond Resorts International.

The following are my responses to Mr. Scott Miller’s declarations about Diamond Resorts. His instructor was Adam Wyden of ADW Capital. Front Four Capital and ADW sent a letter to David Palmer last year urging a leveraged buyout – or in Wall Street lingo – exploring alternative ways of maximizing shareholder values……

 

My virtual interview with Mr. Miller:  

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Diamond Resorts or A Nightmare on Timeshare Street.

sunterradri logo

Diamond Resorts were unknown in Europe until the takeover of Sunterra in 2007, for many members, they believed it was going to be a new start. Sunterra formerly Grand Vacation Club had a reputation that was to say the least heavy handed, the sales side was aggressive and showed no quarter to those pulled in from the streets. Long standing members with fixed weeks refused to change as they had originally been sold their timeshares as “investments” in property. They also had the right to vote on maintenance fees and other matters which affected the resort they owned.

 

When Sunterra filed in the US for Chapter 11, which is the equivalent to filing for bankruptcy, many owners wondered what would happen to their “investment”. For those on holiday the talk around the pools and bars was what would happen next, rumours abounded. Information was non existent, the sales decks had been closed with all the reps being laid off. There were still a few of the in-house reps but they had no idea what was going on.

 

It was then announce that a new company from the States was looking at taking over from Sunterra. The takeover was announced in the Las Vegas Review Journal 28 April 2007. Steven Cloobeck´s privately owned Diamond Resorts paid around $700 million, and also took on responsibility of Sunterra´s debt of $375 million. Was this the new beginning the owners had been waiting for?

 

Unfortunately, as time has moved on, it has turned into a nightmare for many.

 

The points system was marketed very aggressively, more so than under Sunterra, owners were basically forced into converting. Around 2008 the first additional levy was introduced, Diamond claimed it was due to the state of the Euro to the Pound. This was only the start, in the first three years management fees increased by around 20-25% annually, for many owners this was a huge burden and they wanted out.


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Fractional. What is it?

Fractional Ownership, is it just another word for Timeshare?

 

Well it depends on where you are and what scheme you have entered into. In the United States Fractional is regulated by Real Estate laws.

 

Generally a property is divided up into say  Four, with owners each having 3 months use. These properties may be Freehold or Leasehold with either 50 or 99 year leases. In the US the value of these properties tend to follow the values of the property market. It gives the owners a quality holiday home without laying out for a second home. These properties also tend to be on managed resorts or condominiums, so maintenance fees are usually applicable. The positive side to this is when it is time to give it up, it can be sold and if the market value has increased then thank you I make a profit.

 

The problem now comes with Europe, Fractional Ownership is governed by Timeshare law. It is the resorts that are marketing it, Club la Costa and Diamond being the biggest. So if it is subject to Timeshare laws, then obviously deposits paid within the 14 day cooling  off period applies, as does the selling of it as an investment.

CLCdri logo

During my research I have spoken to many people who have purchased Fractional, all have told me the same thing. They purchased to be rid of their timeshare, and the only way was to take on a fractional, owning several weeks for periods starting at 5 years up to around 20 years. At the end of this period the property would be sold and they would reap the rewards, then being free from their timeshares. Well to me this smacks of what a friend described as “A Pig In A Dress”.

pigdress

The property is going to be sold, but all fractional owners must agree. Did they all buy at the same time and for the same period?

 

If not how can any agreement be reached, also who has the controlling shares?

 

Somehow I cannot see the resorts selling off all the available Fractions, thus losing control.

 

So what happens at the end of this period, does the consumer revert back to their original timeshare?

 

This scheme is still in its infancy in Europe, it looks and sounds great with the slick, smooth, fast talking sales rep. But it does look as though it is not property you are buying but the Right of Use. In other words it seems that it is just another way of selling Timeshare. We have already seen another term take over from that dreaded word, Holiday Ownership.

slicksaleman

On the Club La Costa Members Blog dated 10th July 2012, it states that First National Trust Company who are the trustees of the Fractional Property Owners Club, said that “this model should never be advertised as an investment”. I wonder if the sales staff have been told this in training, or have they been told to ignore it? We have seen this with other aspects of timeshare sales in the past and look where that has led, litigation for misrepresentation and mis selling.

 

http://clcmembers.blogspot.com.es/

 

Is this just another scheme like points or floating weeks to fleece you of your hard earned money?

 

Only you the consumer can answer that, unfortunately by the time you actually find out you may be the loser of thousands.

 

If you have been to a fractional presentation or have purchased, Inside Timeshare would like to hear your story and your views. Even if you are happy with your purchase I am willing to publish your comments, unlike many other blogs Inside Timeshare looks for balance.

balance

Diamond Resorts International: Share Price Falling.

On the 22nd January 2016 The New York Times ( by Gretchen Morgenson) published an article about Diamond Resorts International. Following this article the Share Price plummeted by around 15% on the New York Stock Exchange. So what prompted this plunge?

 

The article highlighted the high pressure sales tactics that Diamond sales staff employ at their sales presentations. A lady called Mrs Mary Ann Gutierrez aged 77, who had been an owner at Lake Tahoe California for around 25 years, visited one of the timeshare units she owns. While checking in she was given a $100 gift voucher to attend a presentation. She was then subjected to 5 hours of hard sell. Before this happened she had to fill out various forms including her credit card details.

 

The pressure she felt was enormous, but she did not give in, eventually the sales staff gave up trying. The next shock came a little later, a Diamond representative gave her a voided credit card voucher for $4,840. This sum had been deducted from her card without her permission, the Diamond sales staff felt that confident she would purchase, they put the transaction through before the end of the meeting.

nyt logo

This was not the only case The New York Times Highlighted. (See link below)

 

http://www.nytimes.com/2016/01/24/business/diamond-resorts-accused-of-using-hard-sell-to-push-time-shares.html?_r=0

 

The Consumer Financial Protection Bureau, is looking very closely at the timeshare industry in the US, and many are calling for tighter regulation and controls. It may be that as in Europe self regulation does not work. Is it time for outside control of this industry?

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