Author Archives: Sharon Newman

Marty Kandel

Understanding your right to cancel. Timing is everything!

By Marty Kandel for TimeSharing Today

Rescission or cancellation of a timeshare contract is a statutory right in almost every state, but the state where you purchase your timeshare interest is generally the law that applies. The amount of time you must cancel or rescind your contract varies from 3 to 15 days, and averages 7 days for purposes of this brief article.

The right to cancel is, in some ways, a legislative way of protecting timeshare buyers from themselves, (as well as the developer).  The provision is a tacit acknowledgment that consumers have endured a moderate to high pressure, one on one sales presentation, for a significant period.  The statutory cancellation right also recognizes that there is a great deal of information to absorb during a sales presentation, that the verbal assurances of the salesperson does not always”match” the language in the purchase agreement and public offering statement (POS), and that the consumer does not have an opportunity to review any agreement in a meaningful way until after the agreement is signed, the deposit money is paid over, and the new purchasers have left the sales office.

Often, timeshares are purchased while on vacation, when potential purchasers are relaxed, carefree, and in some cases, unprepared for the 90-minute presentation in exchange for show tickets or a tasty meal. If the timeshare is purchased at the front end of a vacation, the rescission clock is running and may run out by the time the new owner gets home.  At that point, you can no longer cancel!

Remember, a new purchaser has a legal right to cancel their contract within the statutory time. This right cannot be waived and a consumer need only follow the directions as to how to cancel found in the purchase agreement. Consumers are usually entitled to 100% of any money paid, but you may have to return the POS and owner’s kit or risk paying a fee for them. Generally, a cancellation should be short, to the point, and need not state a specific reason for wanting to cancel. Buyer’s remorse is not uncommon.

If being mailed, it is wise to send your letter and sales kit by certified or registered mail and be postmarked prior to the last day of the rescission period.  If a purchaser is hand-delivering the cancellation notice back and materials back in the sales center, get a signed receipt and try to steer away from long discussions with your salesperson, whose job it is to talk you back into the deal.  Generally, if your instinct is to cancel, follow through.  You can always go back at any other time and in most cases, get at least as good a deal as you received in the first place.

Finally, it is common that solicitors from one timeshare company will prey upon new owners of another. The second company will help you cancel your timeshare if only you purchase the better product from the second company.  Well, let the games begin!

Marty Kandel is a Principal and General Counsel of Timeshare Advisory and Resolutions Services, LLC. He can be contacted at: martykandel@tarserv.com

Send comments about this article to: staff@tstoday.com Subject: Rescission

 

Timeshare developers upbeat at annual ARDA World conference

By Jeff Weir, for TimeSharing Today
NEW ORLEANS — At a decidedly upbeat annual conference, US timeshare companies exuded confidence that the long road back from the recession of 2008-2009 is just about complete as sales inch closer to the coveted $10 billion mark in 2017 (not counting resales, which is an indeterminate number).
At panel after panel over four days of meetings, from educational seminars to legislative roundups and CEO sessions, developers said they are looking ahead to another year of 5-6 percent growth as well as increased sales to new buyers, rather than existing owners, which were the bulwark of sales after the banking-and-mortgage crisis of 2008. With a new pro-business president in the White House, industry consultants and lawyers also anticipate a rollback of regulations and potential timeshare-finance investigations that, during the final two years of Obama’s presidency, hung over the industry like a sword of Damocles. According to government insiders who spoke at ARDA World, the industry’s primary regulatory threat, the Consumer Financial Protection Bureau, is quietly dropping investigations as staff members scramble for new jobs to avoid the possibility of getting fired — or emasculated — by a Trump Administration that is vocally hostile to the CFPB’s penchant, under the Obama presidency, to investigate any industries that lend money to consumers
Sixteen hundred people attended ARDA World, which was hosted by the American Resort Development Association, which serves as the industry’s primary public advocate and lobbying organization in the US, the Caribbean and beyond. Drawn from all over the world, attendees seemed eager to soak up the idea that more good times are ahead for an industry whose original resorts are 25 to 35, or more, years old.
“This product is a product people want,” said Stephen P. Weisz, President and CEO of Marriott Vacations WorldWide and outgoing chairman of ARDA. “We have weathered the storm – and come out stronger.”
There appears to be plenty of room for CEO optimism. The industry’s not only growing, it is building again.
Hilton Grand Vacations, which was relaunched in January as an independent, public company, just opened a new timeshare property in Waikiki. Vistana, formerly Starwood, is about to open a luxury timeshare in Maui (its third on the island, occupying one long stretch of Kaanapali Beach), . Marriott will open its Waikoloa Beach Club timeshare on the Big Island in May. Wyndham continues to push westward to gain a dominant foothold in the Asian travel market. Disney Vacation Club, meanwhile, plans to open its new Copper Creek villas and cabins property (in Orlando, next to Disney World) in July.
And those are just examples among the major brands. In the timeshare world, as in other major industries, if the big brands do well, smaller companies and suppliers also bask in the benefits of a travel-tourism industry on the rebound. There are always exceptions to this trickle-down effect, but that’s the trend. An improving US economy tends to lift most if not all boats in the travel industry.
From a sales standpoint, it’s been a slow climb back from the brink.
The industry hit-an-all-time high of $10.6 billion in retail sales in 2007. When the bottom fell out in 2008, many companies retooled to “asset light” business models where, instead of building capital-intensive new resorts, they partnered with other companies to share inventory (or take it over) so they could continue to provide more vacation options for owners. This is the so-called “fee-for-service” model, which is still popular today. It enables companies, when financing for new construction tightens up, to expand inventory and, as a result, continue to ramp up retail sales.
Since 2010, according to figures provided by ARDA, developers have averaged sales growth of 5.5 percent, capped by 8.8 percent growth in 2015. They are expecting 6 percent growth in 2016 (the final numbers for 2016 will be released in May). Insiders also expect similar growth for 2017, which would push sales close to the $10 billion mark — and set the stage for a “complete” recovery in 2018, 10 years after the recession of 2008.
Optimism and persistence outweighed all the math at the 2017 ARDA conference. Barring an international incident that would throw the world economy into chaos, attendees anticipate a bullish year for timeshare companies and owners, alike.
“We’re fortunate to be in a business that makes people happy,” said Howard Nusbaum, ARDA’s ebullient president and CEO.
Noteworthy at this conference. The word “owners” crept into more and more conversations as developers debated issues that affect the entire timeshare universe: owner-data privacy; attracting millennials to the sales table; the impacts of continued consolidation; do-not-call regulations; the challenges facing legacy resorts; owner delinquencies and, in some cases, the threat of litigation from activist owners and their attorneys. Based upon what they said at the conference, companies are trying to overcome some owner concerns (such as the lack of exit programs in the industry) by stressing the need to keep providing new and different vacation experiences for owners and club members. They are promoting timeshares as a means to an end — a way to provide owners with a fantastic family vacation experience (this may not sound new, but it is. In 2017, experiences top destinations). In an Internet era where social-media communications compete with corporate announcements (or trump them altogether), timeshare developers and vacation clubs are embracing the opportunity to provide owners with more information, more choices, and, most of all, more EXPERIENCES.
Through ARDA, companies are also stepping up their communications with lawmakers across the country, usually in efforts to block states from imposing new taxes on owners or to promote legislation that updates obsolete or unduly restrictive (in ARDA’s eyes) timeshare laws and regulations. Here are some examples that were discussed at ARDA World.
In South Carolina, ARDA and ARDA ROC (The Resort Owners Coalition, which represents 1.5 million owners who donated nearly $5.5 million to ARDA-ROC this year) are promoting a bill that would provide a five-day rescission period, outlaw transfers to entities that have no intention of paying maintenance fees, and update escrow and contract rules in a way that benefits companies and owners.
In the US Virgin Islands, ARDA-ROC approved at $150,000 budget request to mount a legal challenge to a newly imposed “Environmental/Infrastructure Impact Fee” that amounts to a $25 tax, per day on timeshare users and owners. According to ARDA executives, this is just another example of a local government gouging timeshare owners who have no electoral voice in the taxing country. The money will be spent researching legal ways, including litigation, to overturn a law that goes into effect May 1.
In Hawaii, ARDA is launching an economic impact study that should provide ammunition to block future attempts by Hawaii lawmakers to increase taxes on timeshare owners. Hawaii is not only full of fancy timeshares, but it is a constant hot-spot for timeshare taxation in a state where virtually all timeshare users come from somewhere else.
In Florida, which is home to approximately half of the 1,500 timeshare resorts in the US, ARDA wants to update long-standing timeshare laws in order to give HOA boards more flexibility to extend or terminate their timeshare plans. With many resorts rapidly approaching the end-date of their timeshare plans, the legislation would amend the voting requirements needed to wind down or extend a plan.
Send comments about this article to staff@tstoday.com Subject: ARDA

Jeff Weir

Jeff Weir

Disclosure bill benefitting timeshare buyers survives first hearing — but with some scars

By Jeff Weir, for TimeSharing Today

CARSON CITY, NV — A new bill that would require developers to provide additional disclosures for timeshare buyers passed its first legislative hurdle in the Nevada Senate March 2.

But not without some injuries.

As amended by the Judiciary Committee, Senate Bill 195, authored by Sen. Becky Harris (R-Las Vegas), would add the following consumer disclosures to the Public Offering Statement documents that are handed over to buyers at the time of sale.

“A timeshare is for personal use and is not an investment for a profit or tax advantage.  The purchase of a timeshare should be based upon its value as a vacation experience or for spending leisure time, and not for purposes of acquiring an appreciating investment or with an expectation that the timeshare may be resold.

“Resale of your timeshare may be subject to restrictions, including .. the developer’s first right of refusal and the developer’s continuing sale of timeshare inventory.  Any future purchaser may not receive  ancillary benefits which were not part of the timeshare plan that the developer may have offered at the time of purchase.

“You should check your contract and the governing documents for any such restrictions and also check whether your purchase contract, note or any other obligation will be fully due and payable upon sale of your timeshare.  Real estate agents may not be interested in listing your timeshare.”

In a separate section, the bill also requires that timeshare managers disclose all details of their compensation annually to members of the association.

While reasonable at face value, these consumer disclosures are timid compared to the proposals of the original bill, which was designed to inform buyers that their timeshares might have little, or no, value on the resale market.  In the original bill, Harris wanted buyers to sign a one-page document acknowledging, in effect, that their brand new $20,000 timeshare might prove worthless on the secondary market.  A second contentious proposal sought to advise customers that their timeshare purchase was a “perpetual contract” that would obligate buyers, and their heirs, to pay maintenance fees forever.  A third would have required developers to disclose the existence of any “give-back, deed-back, repurchase” or “other ownership divestiture programs.”

These three proposals, along with the one-page disclosure document, were exorcised from the bill over a 10-day span during which Harris communicated with interested parties, including owner advocates and representatives of the American Resort Development Association (ARDA), the lobbying arm of the US timeshare industry.

The end result of those discussions was a scaled-back bill — not what Harris really wanted, but what she could get.  That’s how legislation, frequently referred to as sausage by insiders, gets made across the country.  Harris is an attorney by trade.  She does not own any timeshares.  Nor has she ever attended a timeshare presentation.  Her knowledge of what happens at a sales presentation is limited to what she learned from her legal clients.

“I had clients who thought they had bought something that was an asset.  But it was not,” Harris said in an interview.  “I think more consumer protections are needed in the timeshare industry.  My premise is, I wanted a one-page sign-off sheet where buyers realize that they are not buying real estate property, and that they may not be able to sell.  It was a laundry list of items (buyers) had to sign.  Having all that information in one place protects consumers.”

SB 195 is similar to a bill that Harris authored last year.  It won passage in the Senate but died in the Assembly without a hearing, the victim of unknown assassins.

“I could not understand the pushback,” Harris said.  “Timeshare documents are 40 to 80 pages long.  There’s no way a regular consumer can take time to read them.  I just want it to be clear about what people are purchasing, and not, and what the resale value could be.”

This year, for tactical reasons, Harris tucked the timeshare disclosure provisions into an omnibus HOA bill that would reform and update the laws that govern condominium associations. She recognized that the HOA proposals would draw attention from many legislators — and, perhaps, provide air cover for her modest timeshare consumer protection proposals.

The language of the original bill included the following stark statements: “Be aware that the future value of a timeshare interest is very uncertain. Do not count on appreciation..The timeshare developer may have limited your resale rights.  Any future purchaser who buys your timeshare from you will have severely limited opportunities to reserve occupancy in the timeshare plan.”

None of those statements survived the amendment process.  They disappeared along with the “perpetual contract” statements (which, in fairness, would scare potential retail buyers and queer sales).

In light of the amendments that Harris acceded to last week, her original proposal appeared to have no chance of passage in a state that is dominated by the political and fundraising support of the casino-gambling-hospitality-tourist-and-recreation industries.  None of those powerful entities represent timeshare owners, who are spread across 50 states and Canada and, as a result, have little political clout to enact consumer friendly timeshare legislation.

One of the original advocates of the bill, Michael Kosor of Las Vegas, was rankled but not surprised by the legislative deliberations on SB 195.  Kosor, an owner at Wyndham Grand Desert in Las Vegas, is an outspoken individual who, by virtue of his lifetime experience, has developed black-and-white opinions about the timeshare universe. Kosor is frustrated with Nevada regulators, and absolutely dismayed by Harris’ willingness to compromise on her legislation.  He’s also running for a seat on his HOA board.

“I got involved in all of this because of the resale issue.  When I moved to Las Vegas and wanted to get rid of my timeshare, I found out it was an impossible feat,” Kosor said.

“This bill would not fix the overall secondary market issues, but it would make the absurdity of the resale situation available to everybody.”

The American Resort Development Association (ARDA), the industry’s lobbying arm in Washington, D.C., is actively following but NOT sponsoring the bill.  According to Harris’ statements at the March 2 Senate Judiciary Committee hearing, ARDA is now “supportive” of the amended bill.

“Our Nevada State Committee is tracking, monitoring and working the bill to ensure that the timeshare portion is accurate and does not have an unintended effect on the industry (including consumers),” said Peter Roth, ARDA’s vice president of communications and industry relations.  In an email, Roth added, “It is important that timeshare legislation and regulation be balanced and work for the consumer and the platform as both benefit from growth and protection of the industry.”

Harris’ bill arrives on the heels of a new consumer disclosure policy announced by Diamond Resorts in response to an investigation by the Arizona Attorney General into allegations of deceptive sales practices by Diamond sales personnel.  Diamond’s new program, which includes a host of new sales protocols, a voluntary relinquishment program and ethical promises to treat consumers fairly, was announced Jan. 23, 30 days after Diamond agreed to settle the Arizona case by paying $150,000 to the state for legal costs and $650,000 for restitution to buyers.

Both developments — the Nevada legislation and the Arizona litigation — suggest that the industry, overall, is gradually (maybe grudgingly) moving to a posture that endorses more consumer-friendly practices when sales agents try to persuade consumers to buy timeshares.

TimeSharing Today will keep you posted on all future machinations of SB 195.  The bill must gain passage from the state Senate and Assembly before being signed into law (or vetoed) by the governor.

Here is a link to all of the online information about SB 195.

https://www.leg.state.nv.us/App/NELIS/REL/79th2017/Bill/5061/Text

To comment, reply to staff@tstoday.com Subject: Nevada Bill

Big transitions ahead in 2017 – By Jeff Weir, for Timesharing Today

timeshare

Consolidation.  Growth.  Unsolicited calls from travel clubs.  Increasing maintenance fees.  Turbulence in the resale market as older owners drop out.  Plus, big changes in Washington, D.C. (and elsewhere) that could impact the entire timeshare travel universe.

With all apologies to the cliché about death and taxes, there are a half-dozen trends, at least, that are guaranteed to impact timeshare owners in 2017.  Based upon our interviews with industry leaders, board members and regular timeshare owners, here is a glimpse of 2017 — in advance.

Money talks

Maintenance fees, a subject every owner likes to complain about around the hot tub, will increase on average 2-5% in 2017, with most of the increases due by the end of January.  At many legacy resorts, the increases may go much higher as HOA boards try to offset the double-downside of increasing delinquencies with an urgent need to renovate older units and onsite amenities.  Legacy resorts that DON’T or WON’T increase maintenance fees may be headed for a rougher landing, in several years, when they try to mix the value of timeshare vacations with an ugly business reality — bankruptcies and shutdowns.  Conversely, HOAs that are not staying competitive in the timeshare market, may become takeover targets for well-funded companies, public and private, that are eager to pick up inventory — even at dilapidated resorts — to feed their trust inventory.  This enables the buying companies to continue selling timeshares at high retail prices — $25,000 or more for a week of usage, according to our most recent survey — even if the inventory they are stockpiling in their trusts, for pennies on the original dollar, may be resorts that have minimal value.  In the trust inventory world, where individual intervals are tied to points instead of specific real estate, every interval looks like a penthouse in Hawaii, and that’s how developers sell it.

Consolidation continues, along with modest growth

The timeshare developer industry appeared to enjoy modest growth in 2016 following a 9 percent increase in sales in 2015, according to annual studies conducted by the American Resort Development Association.  That makes seven straight years of growth since the financial crisis of 2008.  That progress is expected to continue in 2017, incrementally, unless an economic crisis or an international political event, such as a war, changes everything, depresses the travel industry and makes people stay home.

ARDA’s 2016 economic report also provided the following snapshot of an industry in transition.  The average sales price for a timeshare interval in 2015 was $22,240, with 54 percent of all sales going to existing owners (many for upgrades).  Timeshare occupancy rose 2 percent to a robust 80 percent, compared to 60 percent in the hotel industry.  The timeshare universe included 1,547 resorts where 70 percent of all units offered two bedrooms, or more.

These milestones suggest a healthy industry going forward even as some older resorts approach potential shutdowns or buyouts.  A major restructuring is also taking place as healthy companies — the big brand names — expand their inventories, purchase other clubs and consolidate their influence over the market.   Consolidation brought about big changes in 2016 — and more changes are ahead.  Equity giant Apollo Global Management LLC bought Diamond Resorts for $2.2 billion and, recently, announced the Dec. 31 departure of CEO David Palmer.  ILG (formerly Interval Leisure Group) added the Hyatt, Westin and Sheraton vacation clubs to its stable of holdings while Hilton Grand Vacations and Marriott Vacation Club spun-off from their parent companies to offer timeshares on their own.  The Marriott hotel chain, which bought the hotels formerly owned by Starwood, announced a grand total of 30 brands in its hospitality chain.

ARDA President and CEO Howard Nusbaum contends that consolidation is a predictable and heathy indicator for an industry that has proven its value (over 40 years) and still attracts new investors and consumers.  “This is a natural iteration of a healthy business,” Nusbaum said.  “We have well-capitalized players who are going to look for more synergies through acquisitions.  Frankly, I would be nervous if we weren’t consolidating.”

Marketing challenges for millennials

At the same time, the major timeshare brands are struggling to find a winning formula that will bring millennials into timeshare presentations.  So far, the youngest generation of monied travelers (the oldest millennial is 36) prefers spontaneous, short-term, AirBnB-like vacations, not weeklong stays at the same resort.  And they appear extremely leery of, if not hostile to, lifelong purchase contracts.

“Every focus group we’ve done shows that lifestyle trumps generation” Nusbaum said.  “We are seeing younger purchasers over the past 36 months, where the average age is 42.”  Bottom line, Nusbaum is confident that more and more younger buyers will embrace timeshares when they discover the myriad options that come along with ownership — including spontaneous timeshare escapes to New York, Washington and other urban areas.

For now, though, capturing the elusive millennial is a work in progress that will continue to unfold in 2017.

Secondary market will continue to struggle

The secondary timeshare market — with resale inventory outstripping demand — is expected to continue struggling in the new year despite efforts by some companies to devise “exit programs” that will enable longtime owners to get rid of their timeshares without being scammed by third-party companies that, for the moment, aggressively pursue elderly owners.  Wyndham’s Ovation program is the leader in this field, so far, because it offers owners a safe, secure and no-cost way to divest themselves of their timeshares.  The demand for more Ovation-like programs will build as more and more original timeshare owners age-out of their timeshare travel.

The emergence of travel and vacation clubs, which are not regulated and susceptible to abuse, will also impact owners seeking exit strategies.  Many travel clubs are stockpiling inventory to create their own business franchises, while simultaneously selling exclusive vacation packages.  They solicit owners directly but also work with legacy resorts. Legitimate travel clubs tend to have working arrangements to recycle inventory with developers and legacy resorts.  The “ill-intended players,” as Nusbaum described them, are hit-and-run specialists that prey on longtime owners.

“Everybody is rooting for the secondary market to be healthy,” Nusbaum said. “Developers realize that recycling inventory is important.  The quality resellers and realtors need to work together to create more opportunity. I believe it will continue to get better.”

President Trump also promises to change things

Donald Trump’s election as president is the final wild card for timeshare developers and owners in 2017.  During his campaign, the Republican Party adopted a platform that included a promise to dismantle a below-radar federal agency — the Consumer Financial Protection Bureau, which is currently investigating numerous industries and at least one timeshare company, Westgate Resorts.  Created by Congress in the aftermath of the subprime mortgage crisis of 2008, the CFPB investigates complaints about financial credit and loan programs that may defraud consumers.  It is singularly responsible for exposing the Wells Fargo Bank sales scandal that triggered the ouster of the bank’s president and led to a congressional investigation.

While not focused on the timeshare industry as a whole, the CFPB is looking at Westgate’s practice of financing owners’ timeshare purchases, a program which is common within the industry.  Using its subpoena powers, the agency has been investigating Westgate’s overall business practices, including sales representations, since the fall of 2015.  Business groups say the CFPB is too aggressive and should be reigned-in by an independent commission.  Consumer groups say it is doing a great job. Trump’s chief of staff, responding to Republican calls to regulate the regulators at CFPB, said recently that the next president would unveil his regulatory reforms as soon as he finishes picking a Cabinet.

At TimeSharing Today, your opinion really does count. What are your views about the state of the industry.  To comment, please email staff@tstoday.com.  Subject: Industry

It’s time to pay attention

Pay Attention Post Image

By Shep Altshuler

There are changes in the dynamics taking place in the timeshare industry that can impact hundreds of thousands (perhaps millions) of owners and their resorts. It’s now more important than ever for owners of legacy resorts and their boards of directors to keep a careful eye on what is going on.

For many legacy resorts, time may not be on their side. We have already seen several owners associations that have come to the reality that they are no longer financially viable and may have to wind down or repurpose their resorts.

One example is the Forest Glen Inn Resort in North Conway, NH. The board of directors and its resort manager have been finalizing the process of preparing a termination of the timeshare plan and selling the property to a hotel operation. TimeSharing Today was advised the resort planned to cease daily operations on December 30, 2016.

The resort published its “Plan for marketing and sale of the Inn and the termination of Declaration of Covenant, Conditions and Restrictions and the liquidation and dissolution of the Association.”

It can be a very scary proposition for timeshare owners who are not being kept informed of the realities about the financial condition of their resort. The problems are compounded by owners who simply fail to pay attention to information that is being made available to them. In the case of the Forest Glen Inn, the process of winding
down was effectively managed. The Inn also published information on its website.

More repurposing
Another example of managing change is the Plaza Resort Club in Reno, NV. The resort was originally built as a hotel. Then, 36 years ago, a developer saw the property could be better served by converting it to a timeshare. That transition turned out to be successful.

In recent years, the board of directors recognized that the decline in dues-paying owners had increased to the level that action had to be taken.

An investor was found to help clear titles to enable repurposing the property from a timeshare back to a hotel. There were significant challenges in clearing the titles, but the process is being well managed and should be concluded in early 2017.

TimeSharing Today also recently learned about a resort in Ocean City, MD, that has gone through the process of winding down the timeshare and the property has been resold as wholly-owned condos.

These case studies are examples of positive outcomes. They are positive because proactive boards of directors made careful analyses about the sustainability of the resorts as timeshares.

The boards took the steps necessary to keep their owners informed and were able to then act in their own best interests. It’s not easy to wind down or repurpose a timeshare resort, but if steps are not taken, chaos can occur and negative outcomes can be extremely painful.

Hostile takeovers
Hostile takeovers can hit you and your resort by surprise. Several major timeshare management/vacation clubs have realized that certain legacy resorts have inventory that can increase their value proposition to their club members. Some have been gobbling up deeds of foreclosed units, have made online purchase on eBay or other websites, have acquired deeds through trade-in deals, or have acquired owners’ association controlled inventory. Their objectives, in some cases, are to gain control of the board of directors and impose themselves as the management companies.

Some associations that were not tracking the title transfers were taken by surprise and the original owner board members found themselves out on the street. The owners then found themselves dealing with a new management regime and culture.

One resort that has been effectively resisting a hostile takeover is the Tahoe Beach and Ski Club in South Lake Tahoe, CA. It makes an excellent case study. Writer Jeff Weir told us about this conflict (Nov/Dec, 2015 pp. 20-22) and updates its status on page 39 of the Jan/Feb 2017 issue.)

What should you do?
Pay attention. Evaluate the financial condition of your resort. Read your governing documents, budgets, and financial statements. Research how many nonrevenue-generating deeds are held by the owners’ association. Get in touch with your resort, attend owners’ meetings and vote. Sunset provisions in the governing documents of many resorts may call for a vote of a majority of the owners to decide if the timeshare plan is to continue or is to be terminated.

Many resorts have already taken action; some may be planning to act so as not to miss the required deadlines. Unfortunately, others are ignoring the issue.

A significant number of these sunset provisions will kick in within the next three to 10 years. A lot can happen if the owners do not act. Industry experts agree that chaos may result in the event the owners become tenants in common. (Not sure what tenants in common means to you as a timeshare owner? Ask your attorney. You can also get a formal definition at
http://legal-dictionary.thefreedictionary.com/tenancy+in+common).

Make sure your board of directors and resort manager are aware of the Timeshare Board Members Association. TBMA was formed to provide them with education, resources, and solutions. Every board member and manager should attend TBMA meetings. The key issues facing legacy resorts and details about TBMA’s next meeting scheduled for May 21-23, 2017, in Providence, RI, can be found at www.tbmassoc.org.

An interesting video about case studies and the need for board members to be proactive can be viewed on TST Broadcasting at https://www.tstodayjoin.com/resort-management-marketing-november-8-2016/.  It presents perspectives from the recent TBMA Conference in Tucson, AZ.

Your opinion about this editorial is important. Make it count.  Email comments to: staff@tstoday.com  Subject: Pay attention.

Shep Altshuler is publisher of TimeSharing Today and president of the Timeshare Board Members Association.

Trolling for Votes and Control

Several developers have adopted deed back programs whereby owners at selected resorts are able to turn back their deeds, sometimes at a cost to the owner. Those developers are also aggressively acquiring defaulted timeshares that are being sold at auction or that can be found online at distress sale prices. The economic motives for this are clear. It is more cost-effective to convert existing timeshare properties to a developer’s points/vacation club than it is to build new projects.

Another developer strategy is to acquire enough voting rights to displace the bona fide owner-board members with developer-controlled board members. Board control empowers the developer to manage maintenance fees, special assessments and management costs.  They then end up with revenues gained through management fees and inventory to feed their vacation clubs.

The prime targets for these activities are legacy resorts and legacy owners. Other targets are the board members who have served to protect the interests of those legacy owners. We have seen developers in court battles with boards of directors and recently, TimeSharing Today has learned that two board presidents at different developer-controlled resorts have been ousted by the new “puppet” boards of the developers. Those board members do not have access to the owners lists to inform them about what is taking place.

Developers argue that the legacy resorts they target need higher maintenance fees to ensure adequate reserves for needed upgrade the resorts to bring them up to the standards of their vacation clubs; new owners get the quality amenities and services that are consistent throughout their properties. This argument, in certain situations, can be valid.

The questions for legacy owners are they:

  1. Informed about what is going?
  2. Getting hit with surprise special assessments and maintenance fees?
  3. Being coerced to convert to a Points/Vacation Club during sales presentations?

To comment, send an email to: staff@tstoday.com Subject: Developer Control

Couple Sues Gold Key Over Virginia Beach Timeshare Deal

Read the March 11, 2016 The Virginan-Pilot article “Couple claims bait and switch, sues Gold Key to get out of Virginia Beach timeshare deal” by Kimberly Pierceall at http://pilotonline.com/business/consumer/couple-claims-bait-and-switch-sues-gold-key-to-get/article_019cb544-d105-5352-8751-fbd1dc83a5a8.html

Timeshare Company Accused of Elder Abuse

by Jon Chown, Courthouse News Service, March 10, 2016

VENTURA, Calif. (CN) – An 81-year-old man claims in court that Diamond Resorts International, a timeshare club, defrauded him of $50,000 and keeps trying to get more.

Louis Wolff claims Diamond Resorts International Club and six affiliates used high-pressure sales tactics to open credit cards in his name, run up bills on them “before plaintiff even realized the cards existed,” and charge him more than $50,000 for “membership ‘services’ in DRI entities.”

Wolff sued Diamond Resorts on March 8 in Superior Court. He claims the abusive sales pitches, on the phone and in person, could last for four to five hours. And despite the $50,000 Diamond Resorts already took from him, he says, it continued to harass him for upgrades to his membership.

“He’s just a senior, with sort of the normal cognitive challenges that comes from being a senior,” Wolff’s attorney Eric Ridley told Courthouse News.  “You get to an age where you become more susceptible, more trusting and maybe a little less discerning. It’s not uncommon thing.”
Ridley said his client is typical of many people his age, and susceptible to high-pressure sales, which can be overwhelming.

Diamond International sends buses to seniors’ communities to take them to Nevada, Ridley said. And once they get a name, there will be a nonstop barrage of phone calls. That’s what happened to him, Wolff says in the lawsuit.

Diamond International says on its website that it has a different approach to selling its timeshares. It sells points, which can be used to stay in one a company resorts. Some members complain that the points seem to go down in value or disappear if they are not used quickly enough, or can’t be redeemed for anything of value.

New York Times economics specialist Gretchen Morgenson devoted a long Jan. 22 article to Diamond Resorts, under the headline: “The Timeshare Hard Sell Comes Roaring Back.”
One Diamond timeshare owner told Morgenson: “Diamond is much more ambitious, aggressive and downright nasty in their sales presentations compared to Marriott and Westin. Diamond just has an amazing reputation of being tough on people.”

A 77-year-old California woman told Morgenson that after a 5-hour hard sell, which left her “shaking,” but which she withstood, Diamond gave her a voided receipt for a $4,840 charge on her credit card: “The representatives had been so certain that she would agree to the offer that they had charged her card for the down payment – even though she had not given approval,” the Times reported.

Diamond CEO David Palmer told Morgenson he had “belligerently zero tolerance” for any of his sales representatives who “goes off script.”  Diamond reported $845 million in revenue last year, according to the Times article, which cites two other lawsuits similar to Wolff’s, one in Florida and one in California.

“I’m glad we have these consumer protection laws in California that protect seniors,” Ridley said.    Wolff seeks restitution, rescission of contract, and punitive damages for elder abuse, unfair business practices and fraud.

Diamond International Resorts could not be reached for comment after business hours Wednesday.

Attorney Ridley’s office is in Port Hueneme.

Article courtesy of Courthouse News Service, Thursday, March 10, 2016

http://www.courthousenews.com/2016/03/10/time-share-company-accused-of-elder-abuse.htm

Send comments about this article to: staff@tstoday.com. Subject: Timeshare Company Accused of Elder Abuse

Festiva Ordered to Issue Vacation and Timeshare Refunds

Tennessee Attorney General Herbert H. Slatery III recently announced a $3 million settlement with Festiva, a network of vacation and timeshare companies, for alleged violations of the federal Telemarking Act, federal Telemarketing Sales Rule, and the Tennessee Consumer Protection Act.

Under the terms of the settlement, Festiva has agreed to provide $1,250,000 in cash restitution and up to $1,000,000 in loan forgiveness for eligible Tennesseans, and make a $750,000 payment to the State of Tennessee. In addition, Festiva has agreed to specific guidelines prohibiting unfair, deceptive, or misleading acts or practices in connection with their telemarketing and face-to-face sales of vacation or timeshare products.

Certain consumers who purchased vacation or timeshare products from Festiva companies, including Festiva Adventure Club and Etourandtravel, will be eligible to have their Festiva contracts cancelled and receive partial refunds of the money they have paid to date. In addition, some consumers who financed their Festiva purchases will be eligible to have the entire balance of their Festiva loans forgiven.

“Tennessee prides itself on being one of the top tourist destinations in the country. Our office has zero patience for the type of activities exhibited in this instance and will take swift action against companies that do not play by the rules,” Slatery said. “We hope this settlement will remind consumers to always do their homework and research a company before turning over hard-earned dollars to that company.”

The settlement resolves allegations that Festiva operated a telemarketing and direct mail enterprise that used fraudulent and deceptive tactics to lure Tennesseans into attending high-pressure sales presentations designed to sell them expensive vacation memberships and products. According to complaints reviewed by the Tennessee Attorney General’s Office, consumers were misled into believing they had won or been selected for a valuable prize, but to claim the prize, had to comply with many undisclosed requirements including a lengthy, high-pressure sales presentation.

Once consumers purchased their vacation or timeshare products, they learned the vacations were different from what was promised at the sales presentation or during the telemarketing call. Onerous rules and terms allegedly made the products difficult to use, and desirable vacation locations were difficult to book because of unavailability.

The defendants, all headquartered in Asheville, NC, include Festiva Development Group, Inc., d/b/a Festiva Adventure Club, Festiva Real Estate Holdings, LLC, f/k/a Festiva Resorts, LLC, Festiva Resorts Adventure Membership Club Association, Inc., Festiva Sailing Vacations, Inc., Human Capital Solutions, LLC, f/k/a Festiva Resort Services, LLC, Resort Travel & Xchange, LLC, f/k/a Festiva Travel & Xchange, LLC, Patton Hospitality Management, LLC, f/k/a Festiva Management Group, LLC, Zealandia Capital, Inc., f/k/a SETI Marketing, Inc., Zealandia Holding Company, Inc., f/k/a Festiva Hospitality Group, Inc., as well as Festiva principals Donald K. Clayton and Herbert H. Patrick, and Festiva marketing executive Richard A Hartnett. Additional Florida and Arkansas-based defendants were later added to the case including Etourandtravel, Inc., Escapes Travel Choices, LLC, and Festiva/Etourandtravel principal J. Lance Croft.

Known eligible consumers will be notified by mail by the Tennessee Attorney General’s Office in approximately one month. Tennesseans who believe they may be eligible to share in the Festiva settlement are encouraged to contact the Tennessee Attorney General’s Office by April 30, 2016.

Any Tennesseans who believe they may be eligible to participate in this settlement, or have questions about the settlement, should call the Tennessee Attorney General’s Office at (615) 741-1671.

To comment email:  staff@tstoday.com

Diamond Resorts International Announces 2015 Earnings Conference Call

February 11, 2016, Las Vegas, Nevada – Diamond Resorts International, Inc. (NYSE:DRII) announced today that it will release its fourth quarter 2015 earnings results after the market closes on Wednesday, February 24, 2016, and hold a conference call to discuss the quarter’s results at 5:00 p.m. ET that day.

On the call will be Diamond Resorts President and Chief Executive Officer, David Palmer, and Executive Vice President and Chief Financial Officer, Alan Bentley.

To access the call, dial (888) 753-4238 from the United States, or (706) 643-3355 from outside the U.S. The conference call I.D. number is 44866691.  Participants should dial in 5 to 10 minutes before the scheduled time and must be on a touch-tone telephone to ask questions.

The call will also be available as a live webcast which can be accessed at the Diamond Resorts Investor Relations website at http://investors.diamondresorts.com.

Diamond Resorts International® manages vacation ownership resorts and sells vacation ownership points for over 350 managed resorts and affiliated properties and cruise itineraries.