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letter-from-america

Friday’s Letter from America

It’s that time of the week again, so welcome to this week’s Friday’s Letter from America, this week we publish Part II of Timeshare Debt and Hedge Funds. This article is from Justin Morgan and Michael Nuwer, with the introduction from our very own Irene Parker. But as usual a roundup from Europe.

It has been a very busy week in the courts again with many case being heard, with sentence still to be issued by the judge but there have been a few announced.

gavela

On Monday there were two announcements, the first was the judge of the Court of First Instance in Maspalomas found against Anfi, once again the contract was declared null and void, the client in this case will be returned over 12,000€ plus legal interest. The courts are certainly sticking to the letter of the law.

In the second case that was announced, the Court of First Instance in Tenerife found against Silverpoint (Resort Properties). In this case the judge found that the contract was in breach of the timeshare law 42/98 in that it exceeded the 50 years that is allowed, this should have also been explained to the customer before signing.

The judge declared the contract null and void, ordering Silverpoint to pay the client over £59,000 plus legal interest.

The following day, Tuesday, another sentence against Anfi was announced by the Judge of the Court of First Instance in Maspalomas. Another contract was declared null and void, with Anfi being ordered to return over 26,000€ plus legal interest.

Back in September Petchey Leisure (now MGM Muthu) was ordered to repay over 16,000€ and declared the contract null and void, by the High Court in Tenerife. The client in that case has now had the money transferred to their bank account.

On Thursday, there were three court sentences announced, Once again Anfi have been ordered to return over 20.000€ plus legal interest, this was by the Court of First Instance in Maspalomas. The judge also declared the contract null and void.

In Tenerife the Court of First Instance declared a Silverpoint contract null and void, ordering the return of over 30,000€ plus legal interest.

In the High Court in Tenerife, Regency Resorts was ordered to return £35,200 plus an extra £35,200 as double the deposit taken in the cooling off period, which is forbidden by law. This particular client will now be receiving £70,400 plus legal fees and legal interest. A nice Christmas present for this client!

Today as we this article was being prepared for publishing the following news was issued in a press release:

The Supreme Court in Madrid issued another damning sentence against Silverpoint, the Court ordered the return of the full purchase price plus double the deposit and all legal fees. The contract was also declared null and void. In this case the client will be receiving over £105,000.

All these cases have been brought on behalf of clients by the Arguineguin law firm Canarian Legal Alliance, who are certainly at the forefront in the field of timeshare law.

cla-brochure

Inside Timeshare is still receiving many enquiries regarding “claims” companies and “law firms” contacting owners with the promise that they have cases and can get their money back. Many of these readers don’t even own in Spain, or even upgraded in Spain since the law came into place in 1999, so how can these cases go to the Spanish Courts?

Some of these are also being told that they pay for a relinquishment, then the claim will be filed on a no win no fee basis. This can only mean one thing, an attempt to claim under Section 75 of the Credit Consumer Act 1974. Another aspect to this is the client will also be told at the meeting the only way they can do this is by purchasing another product! Sounds like the classic “bait and switch”!

There is also more news which at present we cannot publish as it has not been verified, so that is it from Europe, now on with our Letter from America.

Timeshare Debt and Hedge Funds – The Developer vs the Member

wall st

By Justin Morgan and Michael Nuwer

November 17, 2017

On Monday Inside Timeshare published an article comparing hedge fund involvement in Puerto Rico to hedge fund involvement in timeshare. Today we examine further how debt affects timeshare with help from Economics Professor Michael Nuwer and private equity investor Justin Morgan.

http://insidetimeshare.com/tuesday-slot-american-perspective-comparison/

Introduction by Irene Parker

As a Diamond Resorts member, I have access to information I would not have about other timeshare companies, so once again Diamond is used as an example with help from Michael Nuwer, also a DRI member, and Justin Morgan, a former DRI member, to explain the mechanics of timeshare inventory valuation and timeshare debt.

I asked Inside Timeshare Australian Contributor Justin Morgan how a company like Diamond can have a $2.2 billion dollar valuation when the entire inventory of points is worthless to the members, given so many complaints about the lack of a secondary market. Of course, there is value to staying at a property, but for discussion purposes, timeshares are a liability on an individual member’s net worth statement. Inside Timeshare has received 196 timeshare complaints from our readers against four major developers. The majority allege they were sold or upsold by deceit and bait and switch. I have interviewed many families devastated, sometimes just weeks after purchase.

In an article I wrote for TheStreet, I expressed concern over inventory valuation irregularities that delayed DRI’s second quarter 2016 earnings report, the last public report before being taken private. Diamond previously reported 11 quarters of consecutive robust earnings growth. After announcing the delay, just after the Apollo acquisition announcement, earnings had to be restated from 2014 going forward.

“After the correction, the change resulted in a decrease in net income of $5.6 million for 2015 and a $1.3 million decrease for the first quarter, in each case from amounts originally reported, according to the second-quarter release. Significantly, second-quarter net income decreased $10.1 million or 28.5% to $25.5 million year over year, compared with a first quarter increase of $8.4% or 32.6% to $34.4 million, prior to the restatement.”

https://www.thestreet.com/story/13702895/1/diamond-resorts-international-s-second-quarter-earnings-reversal-is-worrisome.html

Justin Morgan’s analysis

The whole industry itself uses some quite questionable inventory valuation methods that may be designed, according to some, to target more the financing arrangements that were the traditional model in the industry when GMAC and others were underwriting timeshare sales departments. This is why private hedge fund equity in the industry has somewhat caused a shift in thinking. If private equity is funding the model based upon equity vs loan models, the capital structures underneath begin to change. The same accounting reports will still be drawn upon to make sense of the numbers, but let’s not forget that inventory valuations do have a bit of leeway to move. Even financial reporting itself can diverge from standard reporting models, but it usually is flagged as a change in accounting methodology that would have otherwise tipped off Apollo.

Like Enron, it depends upon who’s looking, and who might be wanting to look away to get a deal done. Even if Apollo did know, it doesn’t mean they’d fess to the knowledge of spotting an irregularity if they believed they were able to profit in the end, and I believe that Michael Nuwer showed the sort of cap structure that Apollo introduced. It largely turned the debt into the membership, so whilst Apollo may have even noticed non-standard valuations, it might have only forced a better price to come from Diamond vs flagging the issue or walking away from the overall deal. Clearly, Apollo are their own beast in these type of private equity deals which reap profits and shift debt restructuring unwittingly into club members. This is a bigger issue. It’s like taking a loan out in someone else’s name and handing them the bill after you’ve taken what you want for the deal. Club members were only ever at Apollo-DRI’s mercy after this.

There are definitely some important and significant value-implied shifts from these numbers since the street uses earnings to make their valuations, but the valuation of inventory is an area that is somewhat suitable itself. The industry bodies know how to make it work and actually fought to use non-standard inventory models. But I’ve not gauged for differences between the pre-order hedge fund industry and the one we’re seeing rise out of the seas today.

I have looked with horror upon the entry of these private hedge funds because I know that they have little interest in the product itself. They are only in it to devour the membership of as much as they can get, and given the legal models, that could be the scariest evolution to date. At least cryptocurrencies attempt to establish some monetary supply rules, but timeshare clubs know that they can just keep raising budgets legally to cover their required rates of returns.

In an industry that generally looks for 30% per annum returns as a rule of thumb, that’s going to cause some high maintenance fee jokes in the future. But I remember the old DRI hiking maintenance close to 25% circa 2007 and then again in 2009. They first blamed a strong economy, whilst the second blamed the weak economy. More like a satyr blowing hot and cold in the one breath! But the disturbing thing to me is how Apollo financed this whole arrangement. They shifted the debt onto the members. They made their money from the start…The rest is just cream…The debt which now pays the Apollonian entities is the debt Apollo created and lumped into the membership at the financing stage.

We must be clear. They created the debt specifically to land it on membership; so really, it is as if the DRI members paid a good chunk of the deal. If the Attorneys General don’t see this, then they’ll miss what chicanery has been done here.

Michael Nuwer

Diamond reports show increasing levels of bad debt accompanied by decreasing membership since the peak in 2013.

chart1

Membership is down 9% since 2013

chart2

One thing that is not clear to me is the economic value of points. It often appears that a developer sells the points (say 10,000 points) for, say, $20,000. But, the next day, if I (the owner) try to sell those points in the secondary market, they are worth, maybe, $1,000. (If Bluegreen points; DRI points are worth $0.) The economist in me thinks the developer originally sold me points for $1,000 plus a club membership for the remaining $19,000. Thus, if my points are foreclosed and resold for the full $20,000, only $1,000 is the value of the points.

So, the question here is: what is the developer selling. Is the sale just vacation points or is the sale a bundle that includes points plus other stuff? I’ve read my DRI contract many times and still can’t tell what it specifically covers.

So what happens when someone buys timeshare points?

Let’s look at this example:

Say Diamond makes a sale for $30,000. The buyer might make a down payment of 20% or $6,000. The remaining $24,000 is a loan. Diamond now has a short term financing problem. They have $6,000 in cash and $24,000 in a non-liquid asset. But Diamond has immediate operating costs. A bit more than $15,000 from the sale is needed for advertising, marketing, and commission expenses. The carrying cost of the inventory must also be paid. Additionally, Diamond faces G&A costs (general and administrative) which need to be paid. All of these are current expenses, but Diamond only has the cash down-payments to cover them.

To pay current expenses, Diamond borrows money from a bank (the jargon is a “warehouse facility”). This facility is a credit line agreement, and, just like my credit card, Diamond’s credit line has a limit. Before Apollo, Diamond’s credit line was $100 million with Capital One.

In short: Diamond must borrow money from a bank to cover the current year’s expenses while it waits 7-10 years to get re-paid on the outstanding loans made to members.

Securitization of the outstanding loans is a way to oil, and thereby speed-up, the lending machine. Once Diamond reaches its $100 million credit limit, it will not be able to offer more loans for the purchase of points. Thus, to overcome this limit, the company bundles outstanding loans into a trust fund and sells shares in that fund as an Asset-Backed Security. The proceeds from selling these shares are used to pay down the credit line and Diamond’s perpetual loan machine continues.

Irene asked how Apollo Global Management will fare in their purchase of DRI. Will the restatement of inventory valuation have an impact?

DRI EBITDA in 2015 was $385 million and thus the valuation multiple ($2200/385) is a mere 5.7. Apollo got the company for a steal. If they can spruce it up and get 10x, the valuation will be $3.8 billion. There’s Apollo’s 30% profit.

trust earned

Thank you to Michael Nuwer and Justin Morgan for their analysis. I have nothing against private equity, but extraordinary investment returns at the expense of timeshare members or Puerto Ricans is not acceptable if so many complaint allegations are true. In addition to 192 Inside Timeshare readers who are timeshare members, I have interviewed ten current and former timeshare sales agents that all confirm predatory sales practices are widespread in this industry. There have been several recent investigations and settlements by Attorneys General including New York, Wisconsin, Missouri, Arizona, Tennessee and Colorado as well as lawsuits too numerous to mention. It is our hope developers will confront the problem and work with member complaints to improve the quality of timeshare sales today rather than continue to deny such practices exists. Contact Inside Timeshare or an Advocacy Facebook if you have timeshare concerns.   

Timeshare self-help Facebook groups

https://www.facebook.com/timeshareadvocategroup/

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

https://www.facebook.com/groups/180578055325962/

https://www.facebook.com/groups/465692163568779/

https://www.facebook.com/groups/1639958046252175/

Thank you to Justin and Michael, also to Irene for her introduction. This week Irene has been very busy dealing with the many enquiries we have received from US owners / members. Within an hour of publishing Tuesdays article, we received 3 pleas of help, these are sent to Irene who then makes contact with the relevant advice and which of our advocacy team can help. Keep up the great work US Team.

If you need any information or help with any timeshare matter and don’t know where to turn, Inside Timeshare is here to help.

Also remember to do your homework before engaging with any company that either contacts you or you find in an advert. This last one rings very true for one UK reader, She found an advert in the Royal British Legion Magazine for a company that said it could help with a claim. Being in the British legion magazine she believed it would be genuine, well we all would! Unfortunately, adverts are not checked for authenticity, they are sold by a marketing company to pay the cost of publication, the same is also true for any newspaper or magazine. So the it proves that you need to do your homework!

On that note, Friday is here, the weekend is once again upon us, so have a great weekend and we will be back on Monday.

friday dog

 

letter from america

Friday’s Letter from America

Welcome to another edition of Friday’s Letter from America, today Irene Parker asks the Florida Attorney General Pam Bondi, What about us? Ms Bondi seems to have a reputation for backing big business rather than the consumer, but more of that in Irene’s article. As usual we begin with what is happening in Europe.

CLA Logo

Some news which was breaking yesterday has now been confirmed, Canarian Legal Alliance issued a press release informing us of the latest Supreme Court victories.

Legal history has now been made with CLA achieving their 60th victory in Spain’s highest court, we say legal history as this is unprecedented. No other law firm has ever managed to get this number of cases through the Supreme Court. This is a fantastic achievement since their first victory in March 2015, in the past two and a half years they have not only made history but have also made law.

Their latest victories have been against Silverpoint, in sentence number 59, the court ordered the return of over 65,000€ plus the payment of First Instance legal fees and legal interest. The client’s contract was also declared null & void, which now makes them timeshare free with no more ongoing maintenance fees.

With sentence number 60, the same court ruled that the contract be declared null & void, ordering Silverpoint to return over 92,000€ plus Appeal Instance legal fees and legal interest. This now makes a total of 21 judgments from the Supreme Court against Silverpoint alone.

Then the following day, the Judge at the High Court Number 3 in Tenerife, followed the Supreme Court rulings declaring another client’s contract with Silverpoint null & void. The judge also ordered the return of over 11,000€ plus legal interest.

Not only must the clients be celebrating, but I will wager there was some celebrating going on in the Lawyer’s office!

amador-galeca-300x191

Following the publication of yesterday’s article on the new fake law firm Amador Galeca Abogados, we received an email from a reader who has already been taken in by them. Unfortunately they have already paid the Procurator a fee, but at least it was not a large sum, yet something prompted them to start checking the internet for information before they paid them next amounts.

As we said yesterday it would only be a matter of time before we found out the new name of the Procurator and the bank account they are using, here it is:

Procurator: Graham Ingum Gorrin

Address: C/ Layanva, Edif Colmenas, Oficina 2223, 38003, Santa Cruz de Tenerife.

Bank: Deutsche Bank Sociedad Anonima Espa, C.P.A. BCN, Ronda General Mitre 72-74 Barcelona.

IBAN: ES3900190172854010033761

As for the address of the procurator, searching on google and google maps it does not exist, so any post sent there will obviously never be delivered.

This reader has also supplied some new and interesting information, Amador Galeca informed them that the directors of their timeshare had pleaded guilty in court and that all their assets had been seized, not bad, it seems that all the directors according to this group of fake law firms plead guilty!

The amount paid was for a relinquishment through the Spanish courts, which needed to be done first before they could go to court for compensation. The strange thing is, once again it seems that the jurisdiction of the Spanish Courts now extends beyond the borders of Spain and encompasses timeshare in the UK!

These readers have been lucky, they have not lost a huge amount, they have also informed their bank who is going to issue an alert to all other banks.

This does prove the point, never believe what you are told, especially when it comes to timeshare,

IF IT SOUNDS TOO GOOD, STOP THINK AND DO YOUR HOMEWORK!

homework

Now on with Irene’s article.

Florida Attorney General Pam Bondi – What about Us?

Irma Iniki and Timeshare

most people

By Irene Parker

Friday September 22 2017

Florida Attorney General Pam Bondi expressed her outrage over price gouging during hurricane Irma. While her dismay is understandable and commendable, why has there been so little effort expended to come to the aid of Florida timeshare buyers alleging they were deceived into buying a timeshare? Nationwide there have been lawsuits and Attorneys General investigations too numerous to mention.

Ms. Bondi has been quick to investigate timeshare resale scams.

Florida Attorney General Pam Bondi has filed a lawsuit against a company she accuses of violating Florida’s Timeshare Resale Accountability Act.

Florida has a specific law covering timeshare resales because it has so many of the properties, whose owners are often desperate to unload them.

In this latest case, Bondi sued Prime Resorts International, based in central Florida. She accuses the company of making telephone calls to timeshare owners all over the country, telling them they have a buyer for their timeshare. She says the company also claimed to be able to guarantee the deal would close.

https://www.consumeraffairs.com/news/florida-sues-another-timeshare-reseller-031116.html

The Berkley Group

Sources tell us Ms. Bondi is investigating The Berkley Group. The Berkley Group owns Vacation Village Resorts. With a BBB rating of F, looking into this company is a start, but acting on only 110 out of 2,360 timeshare complaints filed from April 2012 to April 2014 seems underperforming at best.

https://www.bbb.org/south-east-florida/business-reviews/timeshare-companies/vacation-village-resorts-in-fort-lauderdale-fl-4003645/reviews-and-complaints

Ms. Bondi opened this resale investigation after receiving 85 complaints.

The attorney general opened her investigation after she said her office got more than 85 complaints, claiming to have lost more than $110,000. The suit seeks a permanent injunction against the company, consumer restitution, and a civil penalty of $10,000 per violation.

Inside Timeshare has received 144 timeshare complaints of which 130 allege they were deceived on the front end of the sale. The dollar amount in question concerns well over one million dollars. The 14 not alleging deceit say they seek relinquishment because they say they cannot afford the annually increasing maintenance fees. ARDA and the industry continue to ignore deception exists, and with lawmakers turning a deaf ear, the court of public opinion seems the only avenue open for families reporting how they have been financially devastated by their timeshare plan.

follow money

Timeshare revenue in Florida is a lot of dollars to tamper with.

As the state’s No. 1 industry, tourism is crucial to Florida’s economy – generating 23 percent of the state’s sales tax revenue and employing more than one million Floridians. In 2011, tourism was responsible for welcoming 86.5 million visitors to Florida and generated $67.2 billion in direct economic impact.

http://www.flgov.com/governor-scott-applauds-floridas-tourism-marketing-2/

The industry will be quick to respond that there are nine million who own timeshares. What difference does a couple hundred families make? It makes a world of difference to the families affected who have contacted Inside Timeshare.

Recently, the Finn Law Group took issue with the lack of disclosure provided to timeshare buyers. If feeling deceived, after spending $5,000 to over $500,000 on a vacation plan, families are shocked to learn their timeshare has no secondary market and the contract is perpetual. Contracts are deceptive in that they often state points can be sold. Buyers are not informed about the lack of buyers should they need to sell.

LARGO, Fla.–(BUSINESS WIRE)–An administrative petition has been filed against Florida’s Department of Business and Professional Regulation alleging that the agency’s approval of a request by timeshare developers to make statutorily mandated public offering statements available by providing an online address at the closing rather the furnishing hard copies violates Florida law.

http://www.businesswire.com/news/home/20170905006015/en/Finn-Law-Group-Files-Petition-Florida-Agency

Ms. Bondi appeared on Las Vegas Attorney Bob Massi’s Property Man Show in 2016 explaining how the Florida Attorney General’s office worked with ARDA and the Department of Justice to shut down timeshare resale or release scams. Mr. Massi encouraged timeshare members to contact a member of the Licensed Timeshare Resale Broker Association if they need to sell their timeshare. When I contacted LTRBA about selling our Diamond timeshare points, I was informed by several LTRBA members they know of no licensed LTRBA broker who will even accept a listing for our points due to secondary market restrictions.

https://www.youtube.com/watch?v=VHCdcS2Ds-U

Inside Timeshare has also started hearing from Bluegreen members. One member is Lela Renea, a Bluegreen member and a detective. Lela Renea says she was deceived into buying a timeshare. If a Florida detective, allegedly reports being a victim of deceptive sales, what chance does the average timeshare buyer on the street have?

http://insidetimeshare.com/fridays-letter-america-11/

When I wrote an article for TheStreet, Jim Cramer of Mad Money’s investment news service, challenging what is in my opinion gestapo like tactics demanding Diamond members stay vacationed, Diamond demanded a rebuttal, stating they understood life’s changes could render their product a liability so they were introducing a program called Transitions that would allow qualified members in good standing a way out. That was June of 2016, yet the company has yet to introduce the program. “Qualified” is the key word. Most members contacting Inside Timeshare have loans, and many allege they succumbed to high interest rate loans and credit cards after hours long aggressive sales presentations. A timeshare must be unencumbered to be eligible for any voluntary surrender program.

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

“Is Apollo Returning to its Junk Roots?” is the article Diamond found objectionable. Most remember the subprime mortgage crisis, but a decade earlier was the Drexel Burnham Lambert junk bond scandal that sent Michael Milken to jail for securities fraud. DBL founder and banker Leon Black filed bankruptcy on DBL only to reform and rebrand as Apollo Global Management, purchasing Diamond Resorts in 2016. If DBL liked junk bonds, which had some value, timeshare points that have no value the moment the contract is signed, should a buyer need to sell, must seem attractive.

Hurricanes and Timeshare

hurricane

One of the top complaints Inside Timeshare has received concerns upsells by timeshare sales agents on the US mainland selling against timeshare agents in Hawaii. This would be normal competition were it not for the fact the dueling agents work for the same company. Buyers tell us sales agents on the mainland side tell existing members they should not have purchased a Hawaii timeshare because of damages from hurricane Iniki that struck Hawaii on Kauai in 1992. They are encouraged to buy more points and transfer to US mainland points, despite Florida resorts included in their purchase. Obviously, Florida is at risk for hurricanes.

pam bondi 1      Ms. Bondi, please listen to us. The Arizona Attorney General has received over 900 timeshare complaints about Diamond Resorts:

http://insidetimeshare.com/arizona-attorney-generals-assurance-discontinuance/

Wyndham former timeshare sales agent Trish Williams was awarded $20 million by a jury concerning overly aggressive and predatory timeshare techniques:

https://www.nytimes.com/2016/11/25/business/my-soul-feels-taller-a-whistle-blowers-20-million-vindication.html?mcubz=0

Eric Schneiderman’s $6.5 million settlement with The Manhattan Club:

http://nypost.com/2017/08/17/new-york-ag-reaches-6-5m-settlement-with-manhattan-club/

In addition to member families,Charles Thomas at Inside Timeshare has heard from eight current and former timeshare sales agents alarmed at the escalation in predatory sales. The following comment made by a former experienced sales agent mirrors the others.

“I watched every day, agents selling DRI for double and close to triple what it was supposed to be sold for but management laughed and congratulated them for doing it.  The maintenance fees statement about buying more and using that to pay your maintenance fees was a practice that was encouraged, but be careful.  Some of the agents, who still work at DRI, would sell the program for $98k when it was only in the 50k range.  One of the guests came back to cancel but the agent said no worries, “I have it packed 40k but I’ll give then 15 off and still make a killing!”   This made me sick because these particular guests were in their late 70′ early 80’s.  I asked the agent if he had a conscience and he just laughed…if you can get them to pay more you’re a hero!!  They have the money!!

Deception actually goes back further than that.  We were told to pack the price for a trade in and imply that it was what they got back for their TS… we sold it for the regular price….they got nothing for their TS!”

(Charles Thomas, editors note: we have published on many occasions on the “stack and drop” tactic. This has been used for many years and we have seen it throughout Europe. It is used as a tool for upgrading or poaching other companies members. The consumer then believes they have had value for their other purchase).

It is our hope Diamond Resorts will listen and respond, along with Wyndham, Bluegreen and others, to improve timeshare sales today after the rise of “right to use” programs. In my opinion, such programs leave wide berth for misrepresentation and deceit.

The following are self-help Facebook pages representing over 1000 timeshare member families:

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

https://www.facebook.com/timeshareadvocategroup/

https://www.facebook.com/groups/180578055325962/

A few of the 144 families who have contacted Inside Timeshare:

Marsha, Ann and Marjorie

http://insidetimeshare.com/fridays-letter-america-18/

Bonita Hill

http://insidetimeshare.com/tuesday-review-clarity/

Eron Grant ARDA’s Code of Ethics

http://insidetimeshare.com/fridays-letter-america-14/

Irina Allen

http://insidetimeshare.com/monday-start-another-week/

Justin Morgan and Michael Nuwer June 30, 2017

http://insidetimeshare.com/fridays-letter-australia-no-read-correctly/

Alan Callner

http://insidetimeshare.com/wednesday-article-america/

Detective Lela Renea

http://insidetimeshare.com/fridays-letter-america-11/

David Franks Chapter 4

http://insidetimeshare.com/fridays-letter-america-15/

Karen Garello Secret Shopper June 22, 2017

http://insidetimeshare.com/works-industries-not-timeshare/

Romeo and Lily

http://insidetimeshare.com/fridays-letter-america-9/

Dr. Jeffries

http://insidetimeshare.com/fridays-letter-america-7/

Angela Johnson

http://insidetimeshare.com/timeshare-advocacy-group-update/

Neina Orrillo

http://insidetimeshare.com/diamond-in-the-news-again/

Barclaycard and Member stories May 17 2917

http://insidetimeshare.com/timeshare-barlcaycard-us/

Marjorie Menacker

http://insidetimeshare.com/another-nightmare-timeshare-street-client-experience-diamond/

Eron Grant May 12, 2017

http://insidetimeshare.com/fridays-letter-america-4/

Barclays Bank Charles May 11, 2017

http://insidetimeshare.com/timeshare-finance-barclays-hot-water-high-court/

Nancy Callahan April 24, 2017

http://insidetimeshare.com/another-nightmare-timeshare-street/

A Filipino Family April 13, 2017

http://insidetimeshare.com/anatomy-timeshare-foreclosure/

Laurie Sabbagh March 17, 2017 Clarity Review

http://insidetimeshare.com/friday-review-news-across-ocean/

A Military Family March 6, 2017

http://insidetimeshare.com/consumer-protection-week-usa/

The Hurleys January 25, 2017

http://insidetimeshare.com/timeshare-advocacy/

Irina Allen January 13, 2017

http://insidetimeshare.com/timeshare-news-across-atlantic/

Kathie Old December 6, 2016

http://insidetimeshare.com/call-change-us-timeshare-industry/

Wyndham Trish Williams $20 Million Whistleblower Jury Award December 5, 2017

http://insidetimeshare.com/wyndham-whistleblower-update/

The Peasant of Venice and the Queen of Versailles November 7, 2017

http://insidetimeshare.com/peasant-venice-queen-versailles/

Sylvia Saldana and the Barclaycard October 25, 2016

http://insidetimeshare.com/irene-parker-write-barclay-card-usa/

Hug Your Haters! By author Jay Baer on the importance of Social Media

http://insidetimeshare.com/customer-service-message/

need you

Will anyone listen? Author Jay Baer is to be keynote speaker at the upcoming October Interval International Shared Ownership Investment Conference, attended by developers and private equity firms. In Hug Your Haters, Mr. Baer strongly urges companies to listen. Members are hopeful, but doubtful, developers will listen to him.

Thank you Irene and those that proof read your article and gave advice, timeshare is a crazy world, which is such a shame as it is a great idea, with many who have enjoyed it for many years. There are some very good developers and resorts, but the reputation of the industry is being spoilt by a few.

Have a great weekend.

weekend-picard

         

 

victory-1

Manhattan Club: $6.5 Million Settlement

It would look like the long drawn out battle between the New York State Attorney General, Eric T Schneiderman and The Manhattan Club is finally over. It was back in July 2014, that AG Schneiderman announced he had obtained a court order halting the sale of timeshares at The Manhattan Club.

As AG Schneiderman put it in July 2014 “Purchasers Duped Into Paying Tens Of Thousands Of Dollars To Become Owners; Later Denied Benefits Of Ownership In Alleged Bait-And-Switch Scam”.

https://ag.ny.gov/press-release/ag-schneiderman-announces-court-order-barring-sales-manhattan-club-timeshare-hotel

They were also subjected to ever rising maintenance fees and unable to book as there was according to the hotel “no rooms available”. It transpires that rooms were being rented out over the internet to non-owners, even though they were told it was for the exclusive use of timeshare owners. This is not an uncommon problem that timeshare owners face, we see the same practice at resorts in Europe.

As part of the settlement, the Manhattan Club owners are not only being forced to sell, they must also give up management control and will be barred from the timeshare industry. This must go out as a warning to other timeshare developers, times are changing, if the industry itself cannot improve itself, then we can see more AG’s taking up the fight on the behalf of owners.

manhatton club

It must also be said that Eric Schneiderman is only one of a hand full of Attorney General’s who actually sides with the consumer, there are many more who are in bed with the industry. This is a list of those who are on the side of the consumer:

Arizona Attorney General Mark Brnovich issued an Assurance of Discontinuance following a probe of Diamond Resorts. A settlement of $800,000 has been awarded for restitution:

https://www.azag.gov/press-release/attorney-general-brnovich-announces-800000-settlement-diamond-resorts

Other Attorneys General have come down on the side of timeshare owners, including:

Colorado Attorney General Cynthia H. Coffman, as reported by Business Den reporter Amy DiPierro, concerning Highlands Resorts in Colorado and Sedona Pines in Arizona:

http://insidetimeshare.com/another-us-attorney-general-exposes-deceptive-tactics/

Tennessee Attorney General Herbert Slatery III settled with Festiva timeshare for $3 million:

https://www.tn.gov/attorneygeneral/news/38312

One AG that is conspicuous by her absence is the Florida AG Pam Bondi.

http://insidetimeshare.com/news-across-pond/

Others that need to be congratulated are the following coalition that worked with the Manhattan Club Independent Owners Group and the NYAG,  they are: NTOA, RedWeek, Sharket and Attorney Douglas Wasser. This goes to prove that by working together nothing is impossible.

Images from meetings of the Manhattan Club Independent Owners Group

image1 image3 image4

Follow the original article by Alison Fox published in amNEWYORK

am new york

http://www.amny.com/real-estate/the-manhattan-club-settlement-includes-6-5-million-in-restitution-ag-says-1.14048559

Article by Inside Timeshare’s  Irene Parker originally published in TheStreet back in September 2016

thestreet

https://www.thestreet.com/story/13653117/2/the-timeshare-industry-has-improved-its-reputation-but-still-faces-scrutiny.html

In Europe we are seeing Spain leading the way for timeshare consumers, the Spanish Supreme Court has now made 57 rulings against the industry, this is unprecedented. This has been largely due to the efforts of one law firm, Canarian Legal Alliance who continue to make Spanish legal history and help consumers to gain justice.

If the timeshare industry is to continue and prosper, it must take note and change the way it sells the product. The owner / member should be the priority, not huge profits for the sake of profit, (could they be the Ferengi from Star Trek)?

ferengi_profit_by_aweswanky-d5du6p4
Timeshare Developer

We have said this before, timeshare is a great concept, it does provide quality resorts, it does suit some, but it also becomes a burden to others.

Inside Timeshare welcomes your comments, if you have a story to share or just want information or advice, contact us and we will try to give you the best answers possible.

 

 

 

6-pillars-with-text 1

A Customer Service Message

Customer service is the provision of service to customers before, during and after a purchase. The perception of success of such interactions is dependent on employees

“who can adjust themselves to the personality of the guest”.

Today we publish another article by Irene Parker, this is entitled Hug Your Haters! A Customer Service Message. It is a look at Jay Baer’s book of the same title, which will be available at most airport bookstores through September. Irene already has her copy, Forbes has an article reviewing the book written by Shep Hyken:

https://www.forbes.com/sites/shephyken/2016/02/20/love-your-customers-hug-your-haters/#6c2d2bfa1573

But first some other news.

It has been announced that RCI the timeshare exchange company,which is part of part of Wyndham Worldwide, is set to take over the Australian exchange company DAE, Dial An Exchange. This has been an independent exchange program for many years, it is popular for one simple reason, there are no annual membership fees. Owners only pay when they make an exchange, which does seem to be the fairest method, as you may pay a membership fee and never actually use it every year.

Obviously with the link to RCI, it may be that will benefit those who use DAE, as it should increase the number of resorts available to them. Many owners in the UK like the DAE system as they were rather disappointed with RCI and the annual fees on top of their ever increasing maintenance charges.

According to RCI, DAE will still be a stand alone company, with no interference from RCI, the questions is for how long?

Since the article Truth, What is Truth , was published last Thursday, Inside Timeshare has been receiving many more enquiries from confused Anfi members. It would appear that Anfi has stepped up its campaign to spread the falsehood that they are not losing cases at the Lower Courts or the Supreme Court, by contacting members and laying the seeds of doubt. What must be remembered is the simple fact these cases are public record and can easily be verified. Somehow Inside Timeshare gets the feeling that not is all well at Anfi, from our sources there may just be a rather important announcement about to be made. We will keep you informed as and when news becomes available.

Truth, What is Truth?

Next week in our Tuesday article we will be looking at the flurry of lawsuits being brought against timeshare attorneys in the US, Irene again gives the US, along with her own view on this subject. It does look as though the timeshare industry on both sides of the great lake are on the offensive.

So now to Irene’s latest contribution.

Hug Your Haters! A Customer Service Message

A timely message and a needed customer service handbook

catdog

http://www.jaybaer.com/hug-your-haters/

By Irene Parker

August 15, 2017

Hug Your Haters was written before the violence that took place in Charlottesville, Virginia over this past weekend. The event was planned by white supremacy demonstrators. I was trained by a financial planner from Trinidad. He shared with me this story about knocking on the door of a white man. When the man opened the door he took a hard look at my mentor and said, “I shoot black people.” My mentor responded, “I’m not black. I’m from Trinidad.” After a second hard look this white supremacist laughed and said, “You want a beer?”

No matter the color of skin, the amount of wealth you possess, or your determination to make a sale, people are people. Even kings interacted with peasants. Jay Baer’s book could not be timelier. Communication is the key, author Jay Baer asserts. Inside Timeshare agrees.

New York Times bestselling author Jay Baer is to be the keynote speaker at the Interval International Shared Ownership Conference to be held at the Miami Beach Eden Roc Hotel October 23 – 25. Mr. Baer has advised more than 700 companies including The United Nations and 32 Fortune 500 companies.

https://www.regonline.com/builder/site/Default.aspx?EventID=1951406

The title of Mr. Baer’s book, Hug Your Haters, is also the title of his keynote speech that he will deliver to developers, investment bankers, private equity firms and other capital investment firms.

Our Timeshare Advocates are hopeful, as the only response our 400 plus member supported Diamond Resort Advocacy Facebook group has ever received from Diamond was from one brave sales agent who joined the group. Basically, his conclusion was that we are irresponsible whiners unwilling to fulfill our obligations. He ultimately had to be removed for driving away already financially shattered members.

In preparation for Mr. Baer’s keynote address, I have invited him to join our Facebook hoping he may be our bridge to communication. He would at least be provided a microcosm of timeshare comments and complaints to study. I don’t know if I would call us Haters. I think seekers of accountability and transparency describe us better.

We seek to provide Diamond Resort members a way to proactively address membership concerns; to advocate for timeshare reform; to obtain greater disclosure from the company; to advocate for a viable secondary market; and to educate prospective buyers.

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

We are not alone. DRIP is a website launched by over 1,000 British members trying to find a way out of their timeshare contracts.

http://drip.enjin.com/

A Club Intrawest Owners Group Facebook has over 3,400 members

https://www.facebook.com/Club-Intrawest-Owners-Group-921012087982547/

A recently launched Gold Key Diamond acquired resort Facebook

https://www.facebook.com/groups/1639958046252175/

Acquired resorts are on a campaign to reach out to other members in an effort to convince owners not to give up their deed in exchange for non-deeded right to use points.

Eight hundred Bluegreen members call this Facebook Bluegreen Class Action

https://www.facebook.com/groups/180578055325962/

Wyndham lost a whistleblower lawsuit when a jury awarded former Wyndham sales agent Trish Williams $20 million. Ms. Williams mentions TAFT days – tell them any fxxx thing to sell points on slow sales days.

https://dolanlawfirm.com/2016/11/wyndham-vacation-whistleblower-verdict/

hater

I could go on, but clearly Mr. Baer has his work cut out for him.

The timeshare lobby organization ARDA will be quick to point out that 83% of 9,000,000 timeshare owners are happy with their timeshare. Mr. Baer I’m sure will be quick to point out that the 1.15 million who responded they are not happy with their timeshare should not be ignored, even on social media sites. Mr. Baer’s primary thesis is:

Haters are not your problem…..

Ignoring them is.

In his book, Mr. Baer goes on to say that choosing to stay silent speaks volumes. Not responding is a response that says “I don’t care about you.” He talks about how it is psychologically difficult to engage with Haters, especially when they shine a giant spotlight on their perception of your shortcomings.

It’s not all gloom and doom though, at least not for Disney owners. We published this article analyzing why Disney has so few Haters.

http://insidetimeshare.com/lesson-timeshare-companies/

As far as us chalking us up as disgruntled grumblers that don’t know how to use our points properly, here is one of our Advocates offering his analysis, previously published as a stand-alone article, why the timeshare industry has so many Haters;

It appears the industry has long depended on “self-regulation”. It has not done a great job of that but there have always been just enough companies that seem to try and deliver a quality product and quality customer experience at the same time they balance trying to make a healthy profit.

I think of a brand like Disney first and foremost. Also while I know a company like Marriott has their critics, in all my years traveling and staying at their hotel and timeshare properties I always got the impression they were serious about fulfilling their fiduciary responsibilities and providing top shelf customer service and a quality customer experience. I am sure there are other good examples.

In the past, the actions of the bad eggs of the industry (the industry’s worst examples), the negative impact was always minimal and able to be managed before it metastasized. But the potential problem as I see it is that in the last decade it appears what may be described as large predatory financial engineering companies almost “posing” as timeshare companies have risen and aggressively worked every loophole and non-regulation to their own advantage and now are probably guilty of gross violations of their fiduciary responsibility to their customers / owners. These companies have created vast fortunes for a very small network of individuals at the top of the pyramid.

Ironically though, and looking at historical examples from other industries, it is these very companies likely to bring the whole industry into the national spotlight and to its knees eventually. Some of these appear to have walked to the edge of doing that already.

As these quasi financial engineering / timesharing companies become increasingly more brazen in chasing profits by any means possible, raising fees rapidly at the same time they are reducing owner benefits, due to their increased sheer size the public outcry will likely increase and just the odds of random probability suggests there will be a “Gotcha” moment or event that will bring increased scrutiny and increased legislation.

If the good timeshare companies try to ignore what the bad ones are doing, they may find someday that their systems and profits and share prices are negatively impacted by the future regulations forced on the industry from the egregious actions of the bad actors in their industry.

challenge

We will continue our discussion in a Part II Hug Your Haters article examining two of the eleven points Mr. Baer said customer service professionals will learn by reading Hug Your Haters.  

The two types of Haters and what they want from you when they complain.

Why you need to answer every complaint, in every channel, every time.

Finally, why am I so critical?

It all started when my husband and I attended a pathetically aggressive sales presentation, lied to in order to get us to attend. We had not been happy with availability so in no way were we going to purchase more vacation points. We make due but, like many others, we feel we were oversold on availability.

Next, I learned when we tried to sell our points, because our contract said we could, not one member of the 64 member Licensed Timeshare Resale Broker Association will accept a Diamond Resort listing, although they will accept virtually all major competitor listings.

http://www.licensedtimeshareresalebrokers.org/

As I started publishing articles for TheStreet, Jim Cramer’s Mad Money Investment News Service and then Inside Timeshare, I began to hear from timeshare Haters the world over, including the Philippines and Australia. Families allege they were sold by deceit and bait and switch. To date I have heard from 114 families of which 101 would fall into the Hater category. The others were simply seeking how to go about relinquishing their timeshare.

You can Hug Your Haters all day long but if a timeshare company violates their trust and respect by siding with the sales agent over the customer when the customer knows what they were promised and what was not delivered, Hugs won’t help. Change will.

As our online information site Timeshare Advocacy Group ™ states,

Knowledge Speaks, Wisdom Listens (Jimi Hendrix)

https://www.facebook.com/timeshareadvocategroup/

This certainly looks a very interesting book and I personally will be looking out for a copy, thanks again to Irene for her insight into this subject, with part two being published next week. Maybe, just maybe, the industry will take note of this.

Over the next few weeks we have some very interesting articles in the pipeline, with one article giving the results of our Timeshare Advocacy Group and the results achieved so far.

If you have any comments on any article published or need any help and advice on any timeshare related matter, contact Inside Timeshare and we will point you in the right direction. Inside Timeshare is committed to giving you the facts and not fake news.

letter from australia

Friday’s Letter from Australia (No, you have read that correctly)

Welcome to Friday’s Letter from (America) now Australia, this is just to confuse our American cousins, the reason is that we welcome our first Antipodean cousin to our pages. Justin Morgan, makes his debut with his first contribution to Inside Timeshare. It is ironic that it happens to be on the first anniversary of Irene Parker’s very first article, which was about the acquisition by Apollo of Diamond.

Since her first article, Irene has been a major contributor and very much a driving force in bringing the problems of owners in the US to the fore. She has also become a very valued friend not just to myself but to all those she met while visiting Gran Canaria.

But enough of that, how about some news of timeshare in Europe?

Diamond Resorts has had a battering in the courts in Tenerife, Canarian Legal Alliance has secured a victory for one of their clients with the High Court declaring their contract null & void, with the return of over 29,000€ plus legal interest. In this case the court stated that the contract did not contain specified information required by law, with the product being the points system which the Supreme Court has deemed illegal due to their lack of tangibility.

This is the fourth verdict delivered against Diamond by the Tenerife courts this year, which our sources indicate is just the tip of the iceberg!

justice2

Anfi, based in Gran Canaria is on the defensive, it would seem they are already sending out new contracts after the vote last Friday 23 June, which coincided with another defeat at the High Court in Las Palmas. In that case the court declared the contract null & void as it was for more than 50 years.

As this is being written, the news has just arrived from our contact at the Court of First Instance in Maspalomas, that another contract has been declared null & void, with the client being awarded over 35,000€ plus legal interest.

At the same court yesterday Palm Oasis / Tasolan, were ordered to repay over 31,000€ and declaring the contract null & void. In this case the court ruled against the points system, which it deemed as selling nothing but promises.

On the Tauro Beach project, which has been the subject of many articles, it seems that the beach is still closed to the public, although many people are ignoring the fences and entering the area. There still seems to be no indication when this area will be fully open to the public, it may not be for sometime yet as there are several court cases pending.

So now on to this weeks article.

Who is Apollo? What is Apollo?

Two Diamond Member Consumer Advocates offer their opinion

Up Down

By Michael Nuwer and Justin Morgan

Introduction by Irene Parker

June 30, 2017

In honor of my one year anniversary writing for Inside Timeshare, it is only fitting to revisit Apollo Global Management’s acquisition of Diamond Resorts as Apollo’s Diamond acquisition was the subject of my inaugural article June 30, 2016.

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

I had been shouting my timeshare concerns from the rooftops since my husband I attended a pathetically aggressive sales presentation July 2015 at Diamond’s Grand Beach Resort, which ultimately led to our appearance on the FOX News show Property Man, interviewed by Las Vegas attorney Bob Massi.

http://insidetimeshare.com/peasant-venice-queen-versailles/

The first I heard from Diamond was a year later in reaction to my Apollo article written for Jim Cramer of CNBC’s Mad Money’s investment news service, TheStreet. Diamond contacted TheStreet demanding a rebuttal. Diamond members are still waiting for Transitions, a relinquishment program that must still be in development.

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

Diamond boasted 11 quarters of robust earnings growth until shortly after the Apollo acquisition announcement. A delayed 2016 second quarter earnings report was attributed to accounting irregularities.

http://www.thestreet.com/story/13702895/1/diamond-resorts-international-s-second-quarter-earnings-reversal-is-worrisome.html

According to a May 2017 KROLL Bond Report, Diamond’s default rates remain elevated.

The collateral pool of DROT 2014 – 1 has experienced elevated levels of defaults, which similar to certain other vacation ownership companies in the industry, Diamond Resorts attributes to an increase in the number of borrowers who have been solicited by lawyers to get out of their timeshare and/or have sent Diamond Resorts “cease and desist” letters.  

https://www.krollbondratings.com/announcements/3705

A National Mortgage News article appeared indicating the interest rate on the Apollo acquisition was raised due in part to the earnings restatement. Earnings had to be restated back to 2014 resulting in an earnings decline from the prior earnings report. Since the merger was announced as an all cash $2.2 billion deal, I did not understand the comment about the raised interest rate.

advocate 1

We seek to provide Diamond Resort members a way to proactively address membership concerns; to advocate for timeshare reform; to obtain greater disclosure from the company; to advocate for a viable secondary market; and to educate prospective buyers.

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

Timeshare Advocate Michael Nuwer explains. I now understand what it meant when Diamond owners were informed Diamond is owned “by an affiliate of an affiliate of funds.” It’s pretty high finance.

Apollo Global’s acquisition of Diamond Resorts was organized as a “leveraged buyout”.  Here’s how the deal worked:

Apollo created a shell company called Dakota Parent. Four of Apollo’s investment funds own this company. Dakota Parent created a wholly owned subsidiary called Dakota Sub. Dakota Sub borrowed $2.2 billion dollars (a big chunk of it, $1.1 billion, from the four Apollo funds) and bought 100% of the DRI shares — 72.7 million shares at $30.25 each. Then DRI merged into Dakota Sub, changed the company name to Diamond Resorts International, and thereby took on all Dakota Sub’s debt. This is the way leveraged buyouts typically work. Former Diamond CEO Cloobeck used the same structure when he bought Sunterra in 2007.

Now that all is said and done, DRI is a wholly owned subsidiary of Dakota Parent. The equity in Dakota Parent is owned by the four Apollo funds. Diamond has $2.2 billion debt on which it must make interest payments. The primary lenders are the four Apollo funds. They are in for $1.1 billion, $500,000,000 at 7.75% and $600,000,000 at 10.75%. The secondary lenders are in for $800 million, and another $200 million is secured by some DRI assets (I think they are consumer loans).

There are two ways Apollo makes money on this deal assuming all goes well. First, the four Apollo investment funds receive interest income out of DRI’s cash flow. They are guaranteed $103,250,000 per year. High profits or low profits, it doesn’t matter, Apollo gets paid. Further, the Apollo investment funds own a claim to all the equity growth of the company (that is all value over $2.2 billion). Thus, if they can sell the 72.7 million shares for $45 each, not an unreasonable number if all goes well, Apollo’s capital gain will be about $1 billion.

Aussie Flag

From Justin Morgan Australia

As a tax accountant, finance planner, part time private equity guy, I completely agree that the Apollo deal will only end in debt being laid upon Diamond members, for the benefit of those who arranged the details of a LBO merger that, when combined with the liabilities of the timeshare structure that utilized Association Board powers and targets them, it becomes a lethal mix that allows financial dealers to write their own checks bigger each year. It seems there is no end to how high they could simply raise their own salaries, pay-outs and ‘returns’ towards simply legally expecting members to pay their share of these increased contributions.

In the economy, we have certain protections such as Trade Practices Acts, Fair Trading Laws, financial regulation, monopoly laws…All this is designed to prevent abuse of market power. In my opinion, I would characterize this Diamond set-up as worse, because there is NO market that is anything other than what DRI, and the timeshare industry in general, allows. It is engaging in practices specifically designed to restrict the market to only it and its approved associates.

I feel this exploits consumers at near will, and I wonder where Apollo will set their ceiling …Looking at how the deal was structured, they see huge opportunity to lend to a membership base locked up in dubious legalities and unfair contracts. All this would not be legal in Australia. I’m amazed at how it turns out to be in the US. And I write this from Mexico, where it is well known what happens when dangerous cartels form and throw their money around here.

Circumstantial evidence is that the proof is in the pudding, but proving it in the US, where the banks and private equity already got away with much…well, I can only hope that the powers that be realize that it won’t get better if they keep allowing the average consumer and householder to be abused by what is, in my opinion, predatory sales and lending.

If the new DRI were to strip assets, it’d be left holding the large liabilities, but that is usually the reason why they then go back to legacy members warning of bankruptcy if they do not buy more points. It looks like the new DRI is just financially ‘creating’ this balance sheet to look exactly how it should look to siphon off more money from members. They already have their interest windfall. Next would be the stripping, and finally, the call for more contributions to boost management revenue…all this whilst the members are forced into more debt.

This is a strategic type play from the banking world, but DRI and private equity were some of the quickest learners out of the Great Financial Crisis. Many learnt how the banks do it. Private equity rushing into timeshare is the new rush to create financial instruments that creates only ‘liability’ for the timeshare owner. The financial guys profit from the creation of liability, which is their ‘debt-holding’. In a near zero interest rate environment, Apollo is looking to create the debt, then shift it across to the membership…effectively, they’ve already done it. Now they must get their $1.1bn back, and the result is just pure profit for the financial players. This could turn out to be a textbook case of why this must be stopped immediately. It will possibly play out over years.  Bravo Irene for taking a stand. I will support your efforts however I can. You’ve struck here what I believe is the actual core of the New Timeshare. The Old Timeshare was less sophisticated, but for those of us who know that private equity in this industry is licking its lips over several recent acquisitions, the old caveat of “buyers beware” may even be too late.

Teacher

Thank you to Michael and Justin for their reader responses which are possibly the most sophisticated reader responses in the history of Inside Timeshare. More and more timeshare Advocates are coming forward bringing their expertise and experience to the timeshare table.

Contact Inside Timeshare or one of our Timeshare Advocacy Group™ Facebooks or websites if you need timeshare assistance or can become an Advocate.   

So there we have it, another week over in the murky world of timeshare, Inside Timeshare thanks Irene for her efforts in bringing so many people together to share their views and experiences.

To our latest addition to the Inside Timeshare family, a very hearty welcome and we hope to hear more from those in the “Land Down Under”, who we do tend to forget share the same experiences as us in Europe and the US.

It’s Friday, the weekend is here, so break out the BBQ’s and let’s PARTY!!!!!!!!

barbie

letter from america

Friday’s Letter From America

Welcome to this week’s Letter From America, from Irene Parker, as usual in her own style she explains what is happening across the Great Lake, but first a look at the week’s news in Europe.

Inside Timeshare is receiving many questions about the Anfi SGM and the vote to change the constitution, it seems to be causing a lot of confusion. No one seems clear as to what it is all about, so in a nutshell here it is.

Voting on Resolution 1

To establish occupancy periods for a maximum of 50 years duration, with an option to extend for further recurring occupancy periods of 50 years.

This will bring the contracts in line with the 50 year rule established in Spanish timeshare law, but it allows you to extend voluntarily to another 50 years.

Voting on Resolution 2

To limit the duration of the Timeshare Scheme to a maximum of 50 years.

The same as resolution 1 without the option to extend to another 50 years.

Voting on Resolution 3

Total change of Timeshare Scheme to adapt to Spanish Act 4/2012.

This adapts the contract to  “Rotational Enjoyment Rights” Anfi explains it thus:

“Every current holder of a membership certificate shall be allocated a number of rotational enjoyment rights, equal to the number of membership certificates they currently hold and which will entitle them to enjoy the same week of use as they currently hold”.

It will not make any difference unless you accept the new contract and sign them, it will however affect any new sales and those contracts.

As usual it is framed to confuse, why is it that anything to do with timeshare is made complicated, confusing and difficult for mere mortals to understand. Well, quite simply that is how they sold it to you in the first place!

The courts in the Canary Islands have been busy again this week, with many cases against timeshare companies being heard. Some of these sentences have yet to be announced, but as usual, we think we all know the outcome!

It has also just been announced that another ex-Anfi owner who won their case some time ago, has now received into their bank account the awarded amount. Their contract was declared null & void and now they can enjoy the 15,531€ as well as being timeshare free.

We have also been inundated with enquiries into several “claims” companies, all offering claims on a no win no fee basis. Then comes the crunch, they want several thousand pounds upfront! Obviously this is to relinquish the timeshare then the claim will be pursued, this claim is more than likely to be under the Credit Consumer Act 1974, Section 75. Which as we have stated before will not get paid out as the purchase was more than likely over the 6 year limit, (limitations act) or the fact that they will say you have received the goods and services as you have used the timeshare.

Again it pays to be cautious, so on with our Letter from America.

A Tina Timeshare Pinocchio Tale

Told by a Wyndham owner, possibly foreclosed by now, Mr. Patrick

pinocchio

By Irene Parker

June 9, 2017

Wyndham member Gene Patrick was one of several Wyndham owners to go to the trouble of making a YouTube about his timeshare trouble, continuing on with our “Nightmare on Timeshare Street” series.

Comments ranged from “this is the most boring video I’ve ever watched” to “this is the most informative video I’ve ever watched.”

Mr. Patrick is a videographer. I side with the latter, although the video is long at 45 minutes. Mr. Patrick is also an effective storyteller, but for those who would rather read a short article than watch the video, here are the seven lies (allegations) he described. He seemed to lose count after three, but I believe I found seven. Mr. Patrick did provide a disclaimer stating these were his opinions or allegations, a word I have come to detest in that, even if only half the highly educated and professional people asking Inside Timeshare for assistance with their timeshare troubles are telling the truth, Timeshare has a problem.

https://www.youtube.com/watch?v=Q218fyTmYpc

The back and forth comments among the 244 respondents sound familiar. Timeshare Facebooks that maintain a quota of happy vs angry members, admonish the angry members as irresponsible suckers that should have known better. Lawmakers and timeshare developers seem to agree with those hurling insults.

A Timeshare Tale

bloke

Gene and Melissa Patrick used his mom’s RCI points to stay at a Wyndham Resort. He was told he had to attend a member update or he would be charged $77 for a gift. He should have stopped right there, but like so many of our readers, he continued on.

We will call the sales agent Tina Timeshare as the sales agent in the video is like so many others we have reported on. As we always say, we know there are those trying to work fairly and honestly in timeshare, but the proportion of bad apples seems to be higher than even the proverbial used car salesman. Watch the video, but give it a chance. It seems boring in the beginning but the plot becomes more interesting as it thickens. For now, we will just itemize the allegations mentioned.

#1 A timeshare is tax deductible

This is a gray area, so we will defer to RedWeek and TimeSharing Today. Tax laws change, so a date would have been helpful. Apparently, in Mr. Patrick’s case, his timeshare was not tax deductible.

https://www.redweek.com/resources/articles/timeshare-tax-deductions

#2 Jim Cramer of Mad Money said Wyndham is a good investment.

Yes, Jim Cramer has been known to tout timeshare stocks, but that is not the same as saying buying a timeshare is a good idea. Mr. Patrick learned that the television clip he was shown was about Wyndham stock. Fifteen insiders made over $600,000 million on the Apollo buyout of Diamond, but that doesn’t mean buying the timeshare is a good idea. Mr. Patrick feels timeshare stock investors make money at the expense of so many who are duped into buying a timeshare.

One of our readers reported that he was shown a clip of the Ellen DeGeneres show at his Mystic Dunes presentation and told Ellen bought “hundreds of thousands” of Diamond points. Inside Timeshare is following up with Ellen on that one.

This is a good time to slip in the article I wrote for Jim Cramer’s investment news service, TheStreet, about timeshare contracts. At least Cramer allows opposing views.

https://www.thestreet.com/story/13653117/1/the-timeshare-industry-has-improved-its-reputation-but-still-faces-scrutiny.html

Tina advised Mr. Patrick that he had to promise not to sell the membership to someone for a higher price than what he had to pay. It was at this point Mr. Patrick began to lose track of the lies. “The pace of the deceit was so fast I could not keep up,” he lamented.

#3 Wyndham has a buy-back program

Mr. Patrick said his job had just been cut to 32 hours from 40 and he was unsure about his employment stability. “Not to worry Mr. Patrick! Wyndham has a buy-back program,” Tina assured him.

#4 The 90 minutes presentation was heading into its eighth hour

My favorite is #5

#5 God wants you to buy a Wyndham timeshare! He wants you to enjoy life.

Mr. Patrick might have been confused at this point because Tina probably meant “God wants me to enjoy life.”

#6 Your credit is Golden!!!

Melissa raises an eyebrow. “Our credit is golden?  Our credit score is less than 650. Our credit is not golden.” Mr. Patrick might have been confused here as well, because 650 is no problem whatsoever for a timeshare purchase so in that sense, his credit was golden, at least for the sales agent.

#7 is a sin of omission. Maintenance fees go up.

It wasn’t until the eighth or ninth hours, with pens in hand, were the Patricks told about maintenance fees and at that point they were about to collapse from exhaustion it seemed. The kids were getting a little tired too.

the end

That’s the end of our article, but we don’t know the end of the story. We do know that after Mr. Patrick lost his job he learned the hard way Wyndham did not have a buy-back program.

Which side are you on?

Like timeshare sales agent Chuck used to tell us on our timeshare Facebook, we’re all irresponsible suckers and should have known better. Lawmakers, timeshare developers and some Attorneys General seem to be on Chuck’s side.

ARDA says nine million own timeshares and 83% are happy with them. That leaves 1,530,000 not happy with most complaining about being sold by deceit, concealment, violation of trust and bait and switch. I’m on the side that thinks timeshare needs greater disclosure.

Diamond Resorts agrees too as they have launched a CLARITY™ program that, if followed, and that’s a big if, does provide accurate statements about their program. Inside Timeshare has heard stories reporting when CLARITY™ has worked and when it hasn’t.

The consumer is not off the hook here. I don’t blame the buyer for not reading word for word an 81 page contract, but the CLARITY™ forms ARE easy to read and are written in English rather than legalese. Items in bold are in bold on the form. I would have bolded what I have underlined. There are 20 items to be initialed on the legal size single sheet including:

I have reviewed the chart of Maintenance Fees for past years. I understand annual increases are normal.

The purchase of additional points will not decrease my maintenance fees.

Diamond does not offer a buy-back program and makes no representation regarding tax deductions, refinancing opportunities, or that there will be a secondary market for the sale of Points. Points do not typically appreciate in value.

I many not engage in any commercial rental activity to rent out Points for cash through online or print advertising to the general public and understand that my membership may be suspended or terminated if I do.

My membership is perpetual and may transfer by gift, or intestate succession upon my death. However, the transferee is not obligated to accept the transfer.

Redeeming points for reimbursement of travel services does not provide the best monetary value for my Points and is typically not lower in cost than spending cash for the same arrangements.

Non-Platinum Loyalty members cannot redeem Points for Maintenance Fees. Only Platinum Loyalty members may use Points to pay part of their annual Maintenance Fees, but that is not the highest and best use of Points. There is a $100 transaction fee and the redemption value per Point is currently $0.04 per Point and a maximum of 50,000 points can be redeemed.  

That about covers what Inside Timeshare has heard from readers asking Inside Timeshare for assistance with their Diamond complaints. I fell for two of the above.

So the moral of this story is not “Don’t buy a Timeshare” but “Timeshare Buyer Beware” and talk to a member of the Licensed Timeshare Resale Broker Association before buying any timeshare to compare the cost of buying resale or from the developer and the benefits or lack of benefits for doing so. Some may specialize in one resort or another like David Cortese of Magical Realty who specializes in Marriott Vacation Club, or Judi Kozlowski of RE/MAX who likes Hilton Grand Vacations, feeling Hilton has the most consumer friendly secondary market.

Contact Inside Timeshare or our member sponsored Diamond Advocacy Facebook to join the discussion.

We seek to provide Diamond Resort members a way to proactively address membership concerns; to advocate for timeshare reform; to obtain greater disclosure from the company; to advocate for a viable secondary market; and to educate prospective buyers.

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

There we have it, another week over and time to enjoy the weekend, breakout the BBQ’s, open a few tinnies or some vino and as our Aussie cousins say “Stick another shrimp on the barbie”!

Have a great weekend and as we always say before engaging with any company that either contacts you or you contact with anything to do with timeshare, it pays to do your homework!

stop press 1

Just as we were getting ready to hit the publish button this latest news has just come across The Great Lake from Irene Allen.

Lawsuit: Diamond Resorts ‘Harasses’ Timeshare Owners

 

https://www.classaction.org/news/lawsuit-diamond-resorts-harasses-timeshare-owners

It tells of a huge class action filed on 10 May 2017, so it looks like Diamond are being hit on both side of the lake!

 

weekend02

 

across-the-pond

Is this Timeshare Proposal merely Monopoly Money?

Many owners in Europe are also having some of the same problems as those in the US, that of constant upgrading when on holiday. One of the main tactics that has been used is the the price per point is about to go up, buy now and save money.

Many have been told the reason for the increase, is that it is to bring them in line with the price in the US. Some have even been told that today’s price will be frozen for them until their next holiday, or even they are entitled to last years price only if they buy today. All timeshare has in the past been sold on the “stack and drop” model, it gave the impression of the purchaser getting a bargain.

It must be said that in Europe things are changing, although there are some who still use the old methods. Unfortunately, the lack of a resale market is one of the biggest concerns, especially when clients are told they can sell, usually for more than they paid. The following article explains the problems in the US, many readers in Europe may have come across this here as well.

Is this Timeshare Proposal merely Monopoly Money?

You decide based on facts

By Irene Parker – February 22, 2017

Monopoly money

From Wikipedia

Monopoly money is a type of play money used in the board game Monopoly. It is different from most currencies, including the American currency or British currency upon which it is based,

Diamond Resorts points, according to Diamond Resorts sales agents, should be looked upon as “currency” in that Diamond vacation points can be used for a variety of uses – just like real money.  But does a Diamond point equate real currency?

Diamond Resort owners rarely can even give their vacation points away should the need to sell arise. Seeking to sell our Diamond vacation points due to overly aggressive sales presentations, rising maintenance fees, and availability falling far short of what was promised, I contacted David Cortese of Magical Realty.

David Cortese is one of 64 Licensed Timeshare Resale Brokers who will buy and sell any major timeshare except Diamond Resorts non-deeded points, as the LTRBA members feel the  restrictions Diamond places on the use of secondary market points is so onerous, it renders the points worthless on resale.

My husband and I paid $3.06 per point for 6,000 Diamond points in 2012.

Imagine the dismay of a consumer presented with the following figures during a sales presentation – after they learn the points they purchased are worthless when they try to sell. Is the buyer informed of the lack of a secondary market? The prices below are easily the cost of a nice home. Who would buy a $400,000 home that became worthless on resale the moment the contract was signed?

What difference does the inflated price make to anyone but the selling agent and the company?

  • 2013 Price per point $5.06 to $7.50
  • 2014 Price per point $7.70 to $7.95
  • 2015 Price per point $8.11 to $8.20
  • 2016 Price per point $8.28 to $8.51

The following chart was also presented:

  • 8,500 points @ $72,420 ($8.52 per point)
  • 17,000 points @ $144,840
  • 25,500 points @ $217,260
  • 34,000 points @ $289,680
  • 42,500 points @ $362,100
  • 51,000 points @ $434,520 ($8.52 per point)

Our existing owner was told, if they buy today, and with approval from above, they can buy points today for $4.80.

What benefit is this to a consumer if the points have no secondary market?

In addition to our personal price history, Roddy Boyd of Southern Investigative Reporting Foundation included a price per point history in a price chart included in his article “Diamond Resorts and Its Perpetual Mortgage Machine”  showing the price per point trending down to the $2 to $4 point range until 2014. Diamond did review the article pre-publishing.

Diamond Resorts and Its Perpetual Mortgage Machine

The Chart obtained from owner lawsuits:

http://98zo02bh3v9r369dtffl01cj.wpengine.netdna-cdn.com/wp-content/uploads/2016/02/DRII_points_lawsuits.pdf

The Kroll Bond Rating Agency, as reported by National Mortgage News, offered the following warning, concerned with Diamond’s default rate:

dollar graph

http://www.nationalmortgagenews.com/news/secondary/newly-private-diamond-resorts-tests-securitization-market-1090005-1.html

Since the timeshare operator (Diamond Resorts) completing its previous offering, in November 2015, losses on the loans it makes to customers have been rising, primarily because more borrowers are seeking legal representation, according to KBRA. (Kroll Bond Rating Agency)

The ratings agency’s pre sale report attributes this to “a handful of [law] firms, targeting certain timeshare borrowers” and to borrowers’ use of “cease and desist” letters. The presale report does not elaborate, but TheStreet and The New York Times have reported that the company is battling two lawsuits over its business practices.

https://www.thestreet.com/story/13702895/1/diamond-resorts-international-s-second-quarter-earnings-reversal-is-worrisome.html

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

These reportedly include pressuring owners to upgrade their membership in order to obtain benefits that do not materialize or are not as represented.

According to KBRA, the legal actions have dropped from their peak in the first half of 2016, but remain high compared with historical levels.

The ratings agency has the subordinate tranche of notes issued by a deal completed in July 2015 are under review for a possible downgrade.

Defaults reported by the deal, Diamond Resorts Owner Trust 2015-1, are zero, but only because the sponsor has been exercising its right to repurchase defaulted loans or substitute them with new loans. The company has the right to do this for up to 15% of the defaulted loans. However, it is not obliged to do so, and KBRA does not assume it will do so when it rates the bonds.

Diamond has also undergone a change in ownership. In September, the company was taken private by Apollo Global Management, which acquired it in a deal valued at $2.2 billion.

KBRA notes that, while other timeshare operators, including Wyndham, are experienced higher losses as the result of legal actions, “Diamond seems to be most affected.”

The presale report also notes that Diamond has made several changes designed to address the issue, including communicating with borrowers and attorneys on loans when possible and revising its sales and marketing training.

Bottom line: KBRA has increased its default expectation for the latest transaction considerably. Its base case is for gross losses of 17.9%-19.9%, compared with 13.05%-14.05% for the November 2015 transaction.

Roughly 99% of obligors are domestic and the weighted average FICO score is 732. However, the weighted average seasoning of seven months is approximately three months higher than in the previous transaction. The average loan balance remains high, at just over $25,000, which KBRA attributes to Diamond targeting obligors with higher FICO scores and incentivizing existing customers to upgrade into higher points programs.

Wells Fargo Bank will act as the “warm” back-up servicer in this transaction should the company experience deterioration in performance and be terminated as servicer.

At the very least, a timeshare buyer’s greatest advice:

group   Stay Informed and Seek Support

We seek to provide Diamond Resort members a way to proactively address membership concerns; to advocate for timeshare reform; to obtain greater disclosure from the company; to advocate for a viable secondary market; and to educate prospective buyers.

Buyers should also beware a Diamond point at $8.52 is worth only pennies used for travel awards.

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

Inside Timeshare would like to thank Irene for the article, it has certainly shed some light on these practises. As we said in the opening, Europe is changing the way timeshare and points are sold, it still has a long way to go, but it is heading in the right direction.

Your comments and stories are always welcome, just contact Inside Timeshare and we will get back to you.