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Worldmark abandoning their business model

PA-

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One of the fundamental principals on which ALL timeshares is based is that you are "locking in the price of tomorrow's vacations with today's dollars". Yes, operating costs (maintenance fees) go up, but your acquisition costs are done. If they add new units at a floating unit resort, you don't have to pay another acquisition cost.

Since Worldmark is a non-traditional timeshare, with never-ending development of a points based system, the ability to violate this fundamental principal exists, merely by increasing the number of points required to use their new resorts. Over time, as the number of resorts requiring higher point values increases, there will be increased competition among owners for the lower value resorts, and more owners will also be unable to book the new resorts without another acquisition cost for more points.

Fortunately, the founders of Worldmark included a very important protection against this. They put a clause in the declaration that required the developer to base point values on "relative use" as opposed to cost. Relative use means a 2 bedroom during red season built one year will charge the same points in general as another resort built 10 years later. Of course, the acquisition cost of those points will rise over time, but not the number of points needed.

This model worked exceedingly well for many years. But about 3 years ago, the developer began disregarding this clause in the declaration. Most new resorts now cost more credits. The Worldmark Board of Directors is the only defense that the owners have; and they are mostly current or recently retired employees of the developer. They claim they have no ability to enforce this clause. Now, at the last board meeting, they stated publicly for the first time that they are no longer going to use relative use value as a basis due to "the economic realities of today". The price of resorts has risen drastically over the last 20 years. So why are the realities any different today than they were over the previous 20 years? They aren't.

This opens the doors to major abuse of current owners. Worldmark owners will soon be faced with either selling their ownerships or buying more credits or seeing diminished benefits. The developer justifies this by saying that the owners can still use the old resorts; but over time, as a greater percentage of resorts charge more, it's going to be increasingly difficult to book into the lower value resorts.

I believe this is the beginning of a long, downhill slide for Worldmark. The developer may disagree with that logic, but one thing is for sure. They are violating the declarations, and our board is responsible to enforce them. If you're an owner, I suggest you contact our board and tell them your feelings on this violation.
 

kapish

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Please contact the BOD to share your concerns

Thanks Philip.

One way Worldmark owners can communicate their frsutrations and concerns about this violation is by writing on the "message to President of the Board" of your proxy-ballot. When you send in the ballot, ComputerShare coropration is supposed to get that information and forward to Gene.

If you are inclined, you can also send email to the Worldmark Board of Directors:

Here are the details, taken from http://www.worldmarktheclub.com/owners/board-of-directors.shtml
  • Gene Hensley, President
    Lives in: Kenmore, Washington
    WorldMark owner since: 1989
    Current term expires: 2007
    E-mail: Gene.Hensley@worldmarktheclub.com
  • John Henley, Secretary
    Lives in: Gold Coast, Australia
    WorldMark owner since: 1992 Current term expires: 2006 E-mail: john.henley@trendwest.com.au
  • Jack (John) McConnell
    Lives in: Orlando, Florida
    WorldMark owner since: 2002
    Current term expires: 2006
    E-mail: jw.mcconnell@yahoo.com
  • Peggy Fry
    Lives in: Snohomish, WA
    WorldMark owner since: 1996
    Current term expires: 2007
    E-mail: Peggy.Fry@trendwest.com
  • John Walker
    Lives in: Kirkland, Washington
    WorldMark owner since: 1991
    Current term expires: 2007
    E-mail: jwalker296@hotmail.com
 

timeos2

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Everything costs more than 20 years ago

I can feel for both sides. On the one hand owners purchased under a set of rules and expect them to be honored. On the other the company wants to build in new areas and, without question, it costs more. To try to say they can build new resorts at the cost of 20 years ago is being unrealistic.

So what can be done? Build cheap places in out of the mainstream areas that can still be offered for the original points value? Or violate (or change) the rules to meet the new reality that new areas/buildings will cost more both to purchase AND in points? Or freeze the original members with what they have now, keep it at the old point level, and only offer "WM II" to new owners with the understanding that new resorts might cost more?

None are ideal answers. But if I owned WM I would prefer to get new resorts in the system in good locations, with a high quality construction even if it meant a higher point value. My guess is thats the way the Board members of WM also feel. If that isn't acceptable to the majority of owners I would expect that there will be no more new resorts in the WM system. They couldn't afford to build them and then offer them at the old point value OR charge the new owners more while their more expensive resorts get snapped up by the old owners who pay less. It's a model that cannot work.

To me the real question is are the current owners so happy with the staus quo that they want to freeze it forever as is or do they want new resorts?
 

T_R_Oglodyte

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What this does is make Premier membership a bit more like a regular membership. For regular members, point values are fixed, and they can only use their points at resorts that were part of WM at the time the membership was sold.

Now premier members will generally have point values "frozen" at the time of their purchase, similar to regular memberships. The difference will be that they will be able to access the new, higher value resorts, but they will need more points to do so.
 

roadsister

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timeos2 wrote:
"To me the real question is are the current owners so happy with the staus quo that they want to freeze it forever as is or do they want new resorts?"

timeos2,
A couple years ago Worldmark BOD DID poll the owners whether they would be willing to use a few more credits if they built a resort where they wanted or whether they should walk away and not build....overwhelmingly the owners said they would be willing to use a few more credits.

Now, in the case of San Diego, owners have been asking for a resort there for years but it came in at a much higher rate than anticipated....we hope that this does not occur again. many owners have written their BOD about it.
 

timeos2

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roadsister said:
timeos2 wrote:
"To me the real question is are the current owners so happy with the staus quo that they want to freeze it forever as is or do they want new resorts?"

timeos2,
A couple years ago Worldmark BOD DID poll the owners whether they would be willing to use a few more credits if they built a resort where they wanted or whether they should walk away and not build....overwhelmingly the owners said they would be willing to use a few more credits.

Now, in the case of San Diego, owners have been asking for a resort there for years but it came in at a much higher rate than anticipated....we hope that this does not occur again. many owners have written their BOD about it.

Thats actually good news. It sounds like the Board is acting on the wishes of the owners. SF is a VERY expensive place to build and maintain. Most areas wouldn't be as high. As much as I would like to see prices of 20 years ago (not for everything - think about computers, dvd's, digital cameras and other tech items - they have gone the other way for sure) I don't feel its realistic. Especially in real estate or building costs. Costs have risen since that time.
 

roadsister

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You are right about SF, hotel rooms there are very expensive if you want to stay in a decent area.....I have stayed at the resort there several times and it is in a great spot and worth every credit!
 

PA-

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I think we're mixing metaphores here.

We Worldmark owners expect our board to force Trendwest to adhere to the governing documents in making new resorts cost the same number of CREDITS. Not the same number of dollars.

If a 2 bedroom costs 10,000 credits during RED season, of course the credits themslelves would go up in price over time. That's a good thing for owners, who would see their initial investment go up. If, on the other hand, Trendwest raises the number of credits over time for a 2 bedroom red week, while keeping credit prices relatively static, that would be a horrible thing for existing owners, but a great thing for new purchasers and TW salespeople.
 

philemer

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PA- said:
If, on the other hand, Trendwest raises the number of credits over time for a 2 bedroom red week, while keeping credit prices relatively static, that would be a horrible thing for existing owners, but a great thing for new purchasers and TW salespeople.

Don't they raise the price of a points package to new members just about every year? That new $$ flowing in should cover the higher costs of new resorts & they could keep the points needed to trade in the same.

Phil
 

cotraveller

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Las Vegas is a good example to use since it has both an old resort and a new one. The old resort has 44 units, a small pool and spa, and few other amenities. A 2 br unit costs the typical 10k credits for a week.

The new resort has over 400 units, three swimming pools, several spas, a lazy river, concierge service, etc. A 2 br unit costs 11k credits for a week. Yet even with 10 times the number of units and 10 percent higher cost, the new resort fills first. The owners clearly prefer the new resort and are voting that way with their credits.

In terms of the latest relative use talk, the new resort amenities make it worth more than the additional 10% credit cost. We got a bargain.
 

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philemer said:
Don't they raise the price of a points package to new members just about every year? That new $$ flowing in should cover the higher costs of new resorts & they could keep the points needed to trade in the same.

Phil
While credit prices have gone up, not nearly enough to keep up with the rising cost of real estate or building. WorldMark owners don't have a deeded interest in a specific property but we own shares of the club based on the number of credits we own. The club owns the real estate. That's why it's regulated by the Department of Real Estate.

Credit allocations should not go up as when they do, they dilute the value of our credits. For more information, read on the WMOwners.com site in the WorldMark BOD Election Discussions forum.

Credit requirements could go up slightly when the amenities of a resort are significantly superior to other resorts. The newer Las Vegas resort has superior amenities than the older one on Spencer Street.
 

roadsister

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Mixing metaphores here??? Nope

You just put a different "spin" on what the documents say or don't say than others.

On that I guess we will have to agree to disagree.
 

PA-

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roadsister said:
Mixing metaphores here??? Nope

You just put a different "spin" on what the documents say or don't say than others.

On that I guess we will have to agree to disagree.


I wouldn't want to mis-quote, or take anything out of context, so I'll post the entire section of the declaration dealing with this issue, and people can decide for themselves. Over the last few years, the board has allowed Trendwest to disregard this clause. At the last Board meeting, the Worldmark board actually conceded that they will no longer adhere to this clause. I don't believe they can legally do this without a vote of the owners. And I doubt that the majority of owners would ever agree to allow Worldmark to change this important protection.

3.4 (a) Allocation. Prior to recording or filing this
Declaration as to a Phase of the Property, Declarant shall allocate
to each Unit in that Phase the number of Vacation Credits required
for occupancy during different seasons of the year and on different
days of the week. Such allocation shall be based on the relative
use-value of the new Resort compared to existing Resorts, in
Declarant's reasonable discretion
. Declarant shall notify Club in
writing of the schedule of Credits allocated to a Unit no later
than when the Unit is conveyed or transferred to the Club. The
total Vacation Credits allocated to each Unit is shown on Exhibit
"A" attached hereto.


The way I think most reasonable people would interpret that bold face section is that Trendwest may NOT use COST of the resort as a factor in setting the credits. If an old hotel conversion in San Francisco takes 12,000 credits for 1 week in a 1bedroom unit, then an old hotel conversion in San Diego (which most people would consider the same relative use-value to an owner) should also be 12,000, not 15000 credits.
 

PA-

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philemer said:
Don't they raise the price of a points package to new members just about every year? That new $$ flowing in should cover the higher costs of new resorts & they could keep the points needed to trade in the same.

Phil


In the last 5 years, credit prices have increased about 25%. Any guesses on the increased value of our portfolio of resorts? Would you think the value of our oceanfront resorts in Hawaii, Oregon, California and Washington have increased more than 25%? What about our slopeside resorts in Whistler and Steamboat?
 

jimbosee

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Worldmark/Trendwest!!!

I am not sure if I have my facts right,but I thought that W/T was now a part of the huge Cendant Group,if that is so,that's what they do,push the limits.


jimbosee.:hi:
 

roadsister

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Kapish,
I wanted to say that maybe it isn't a good idea to put people's emails out there on TUG - especially since some are personal email addresses. The opportunity for spammers to pick them up is terrible.

I believe on the worldmark forum you have to be an owner and logged in to see them...

:hi:
 

roadsister

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Unfortunately Phillip there were no Worldmark resorts existing in San Diego to compare to.
 

T_R_Oglodyte

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Well - the sales pitch that Trendwest was using in their sales presentations for years stated very explicitly that:

  • if you purchased a 10,000 point premier membership, your purchase would allow you to reserve a 2-bedroom unit in any Worldmark resort
  • by buying today, from the developer at the sales presentation, you would receive a Premier membership, which would carry that assurance of being able to reserve for 10,000 points forward to all future resorts added.
By adding resorts at 15,000 points, Trendwest is violating the promises that they have been making for years in their sales presentation.

For information, I have sat through three Trendwest sales presentations, spanning from about 2001 through 2004. The claim that I outline above was made at everyone, and was explicit - buy a 10,000 point Premier membeship and you will always be able to reserve a 2-bedroom unit at any WM resort, both existing resorts and resorts that will be added. I know they said it, because in all three cases I grilled the sales person explicity and in detail about that issue. And in every case it was directly attached to the Premier membership and offered as a reason why you should purchase today instead of going home to think about it.

We were close to purchasing a WM membership one time (resale, of course), but decided not to because it was shortly after Cendant had acquired TW and I didn't trust Cendant. Had Jeld-Wen not sold TW, there's a good possibility we would today be WM owners.
 
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roadsister

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As pointed out time and time again, you know what they say about believing salesmen......

It's a catch 22 Steve -
If Jen-Weld HAD retained WM we wouldn't have near as many resorts but it was their choice to sell - they didn't want to be in the timeshare business anymore, it was not Worldmark's decision to make who we were sold to.... :(
 
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Dave M

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I believe you Steve. However, I think there is a basic premise on TUG that if we are going to count on a benefit or other material aspect of a timeshare purchase, it needs to be in writing. Or as we have written so often, "If a promise it isn't in writing, it doesn't exist."

It sounds as though this one doesn't exist.
 

T_R_Oglodyte

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Granted, Dave. But for an honorable company - and there are many of them out there - the words that are spoken do have meaning even if they are not in writing.

The contrast between TW and the Mariott presentation we sat through for our first TS presentation is notable. I'm pretty sure the Mariott salesman we were with was one of those top producers - probably one of those $150k per year commissions people. He was quite persuasive, but from what I have read about Mariott here, I can also say that everything he said was true, everything he promised was real, and Mariott has been faithful to what we heard in our presentation.
 
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T_R_Oglodyte

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roadsister said:
As pointed out time and time again, you know what they say about believing salesmen......

It's a catch 22 Steve -
If Jen-Weld HAD retained WM we wouldn't have near as many resorts but it was their choice to sell - they didn't want to be in the timeshare business anymore, it was not Worldmark's decision to make who we were sold to.... :(
Agreed - but that means it is incumbent on the WM Board to ensure that TW, under it's new ownership, maintains it's committments and promises.

The WM board represents the owners. Unfortunately, there is ample reason to question the Boards independence from TW.
 

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I find your experience at a TW sales meeting very interesting. I attended one in 1996, and at that one they were quite explicit that the 10,000 per 2 br. red week applied to all existing resorts - that the points for resorts already in the system couldn't change. Nothing was ever said about point values for future resorts (to be fair, I never asked either). So it looks like the sales people changed their pitch sometime in the 4 years between our presentations, maybe along about the time Cendant took over?
 

T_R_Oglodyte

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mtngal said:
I find your experience at a TW sales meeting very interesting. I attended one in 1996, and at that one they were quite explicit that the 10,000 per 2 br. red week applied to all existing resorts - that the points for resorts already in the system couldn't change. Nothing was ever said about point values for future resorts (to be fair, I never asked either). So it looks like the sales people changed their pitch sometime in the 4 years between our presentations, maybe along about the time Cendant took over?
The first two presentations we went to were before Cendant acquired Sunterra.
 

PA-

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mtngal said:
I find your experience at a TW sales meeting very interesting. I attended one in 1996, and at that one they were quite explicit that the 10,000 per 2 br. red week applied to all existing resorts - that the points for resorts already in the system couldn't change. Nothing was ever said about point values for future resorts (to be fair, I never asked either). So it looks like the sales people changed their pitch sometime in the 4 years between our presentations, maybe along about the time Cendant took over?

We're getting a bit off track. It doesn't matter what the salespeople promised. The requirement that credit assignments be based on RELATIVE USE-VALUE, rather than cost, is explicite. It's in the declarations. The board of directors has the ability and the responsibility to enforce it. IT's in Trendwest's financial interests to ignore it. Those are the facts, and I don't see how a reasonable person can argue with any of them. Our board went on record saying that they will no longer honor that clause in the declarations.
 
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