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TheStreet

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.

 

 

 

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

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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/

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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.

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