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Just Back from the Royal Islander

Steve A

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We just returned 11/10 from our first non-Marriott trade, a week in a one bedroom at the Royal Islander. The unit was located on the top, eight, floor with a beautiful view of the pools and the marvelous blue ocean.

I agree with many of the positive comments made about the Royals. The staff were very, very friendly and helpful. The units and the grounds are immaculate. There seems to be a great deal of loyalty among both staff and owners.

On the downside we found the unit to be dated. The kitchen appears not to have changed since the 1993 when the Islander opened. The two TVs were tiny, but the bedroom was large and hosted a king size bed. The furniture seems to be verging on shabby although I admit that the light colors used may only give that impression. Smoking is allowed on the grounds, and although most people don't smoke there were enough cigarette and cigar smokers to be bothersome.

The beaches at all three locations are pretty minimal. The hurricanes and the recent tropical storm have done a job on the them. The Sands has the best beach but the water has undercut it creating a drop of over a foot from one part of the beach to the other. The water was rough, and red flags were out all seven days. We were told that the beaches will grow back when the seasons change.

The food was good, although the main restaurant at the Islander was only passable. We ate at the Captain's Cove twice. The food and service were excellent as was the ambiance on the open-air deck. Keep an eye out for the crocodiles that swim right up to the deck. The restaurant's bar is named after them. Those staying at the Royals get a 10% discount, and the charge is added on to their room bill. Try the hogfish. I liked it better than the grouper, which is a ubiquitous menu item in Cancun. If you intend to cook in the room the mini-market in the building will not be sufficient. Plan on a trip to the Walmart. Give yourself up to three hours to get out of Cancun if you are leaving on a Saturday. Lots and lots and lots of people and long lines.

We took the tour of the Royal Haciendas; a very large complex. They are only four floors high because of local zoning requirements. Nicely decorated and finished; very colorful. The ocean front restaurant was great. The beach was much bigger than in Cancun, but there still were rocks and the red flags were out.

The prices are much too expensive ranging from a low of $31,300 for a second or third floor ocean view "Flexivilla" weeks 37-42 to $121,400 for week 52 in a penthouse beach front deluxe. This is for phase four which will not have occupancy until 2010. They wanted 25% down immediately and with the rest paid off within a year or over 60 months at 15% interest.

We indicated that we weren't interested, and the salesperson came back with two options in the current units; one for $24,660 for week 38 and the other for $28,800 for week 44. We had no real interest in those either so he came back with an every other year for $14,220, which we were not interested in either. I must say he was pleasant but persistent.

Finally, I don't really understand the Royal system. It seems that Royals retain ownership and unlike the Marriott there is no real HOA, which retains Marriott as the management company. I also have difficulty understanding the 30-year buy back (50 years!!! at the Haciendas.) Does the owner of record get the price the unit originally sold for when the facility was new, and then you have to buy it back at a higher price? Why would anyone buy a Royal that was nearing the end of its usage?

We did enjoy our trip and would visit again.
 

geoffb

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Per Mexican law the membership is a trust with a fixed period. The law changed awhile back and the period can now be as long as 50 years. Also membership can be renewed once for up to 30 years (which was done at VCI).

Older properties had a value assigned to the residual rights but this is no longer done. At the end of 50 years the property would be sold and Royal Haciendas owners would get the value of one share of the proceeds from the sale of the resort for each week they own (number of units x 51 weeks = number of shares).
 

pjrose

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I also have difficulty understanding the 30-year buy back (50 years!!! at the Haciendas.) Does the owner of record get the price the unit originally sold for when the facility was new, and then you have to buy it back at a higher price? Why would anyone buy a Royal that was nearing the end of its usage?
.

At the end of the 30 or 50 years, the resort is sold (to the highest bidder, which could be another resort company, a consortium of owners, developers, etc., or if Mexican law allows, renewal of the trust is possible so owners could buy back in). After all fees (taxes, legal, etc), the proceeds are divided among the owners and developers - the specifics vary depending on the resort. At the Mayan and Caribbean, the owners get back the original purchase price (the "residual") (assuming the proceeds are high enough), then the developers get a like amount, then the remaining proceeds, if any, are divided among the owners and developers. At the Islander, Sands, and Haciendas, I believe the owners share equally, rather than according to the original purchase price. I believe at the two newest resorts - Sands and Haciendas - the owners share all the proceeds, rather than splitting them with the Developers.

People would buy a Royal nearing the end of its usage because toward the end, at resale they can be acquired for somewhat less than the "residual". Hence you can use it, rent it, or trade it for however many years are left, then (potentially) get back more than you paid at the end.

So far, the Royals' only experience with this was at the VCI - Vacation Club International - where the market did not bring enough of a sales price to reimburse all owners. However, the resort was renewed for another 30 years, with proceeds from those who bought back in, plus a contribution from the developers, used to pay back those who did not renew.

Regarding buying it back at a higher price - IF the resort ownership is renewed, and IF the owner of record wants to buy back in, the residual is folded back in to the new sales price, plus the owners get a hugely discounted price - I can't remember if owners got to buy back in to VCI at 1/2 off or 1/3 or 1/4 off, but it was a big discount. There was a lot of discussion of that on this board over the summer, so you could go back and check the details (search for "renew", "VCI", "residual", etc.).
 
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geoffb

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It would be interesting to see a consortium of owners bid for a property at the end of the trust. Of course they would also be subject to limits on foreigners owning land under Mexican law and would need to form a similar trust or corporation if any foreign nationals were part of the consortium. Would anyone be willing to go to the effort?
 

pjrose

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It would be interesting to see a consortium of owners bid for a property at the end of the trust. Of course they would also be subject to limits on foreigners owning land under Mexican law and would need to form a similar trust or corporation if any foreign nationals were part of the consortium. Would anyone be willing to go to the effort?

I'm not sure how to describe what happened with VCI - the owners bought back in, but I assume it was arranged by the developers/board rather than the owners bidding. But nonetheless wasn't a new trust or corporation formed?
 

KarenLK

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it is another trust, as far as I can figure. I got my new contracts back recently, but haven't read all the fine print, if any, that pertains to that.
I am pretty sure Richard Sutton is involved once again. They did not get the 75% originally expected to re-up. Various reports go as low as 44%, but they still offered it again, and the developers put their own money in until the remaining units are sold, as I understand it. Anyone with a better understanding, please chime in and help me here.
 

geoffb

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My understanding is this: the VCI renewal is based on the same Mexican corporation formed in 1976 since it is actually based on a legally permitted 30 year extension of the previous trust. Owners are participants in a "membership program" with residual rights held in the trust. This is briefly laid out in the declarations in the first section of the membership contract.

I spoke to Richard Sutton in Cancun when the renewal was first proposed and it was clear that he was very determined to find a way to make the plan work even though the goal of a 75% renewal rate seemed very ambitious (to me anyway).

I have not seen any reliable information on the number of memberships that were renewed but the developer seems confident that they can (a) do the promised $8 million in renovations in 2008, (b) pay out residual rights to members that did not renew their membership on schedule, and (c) market and sell the remaining intervals. I assume they expect to make a profit doing these things.
 

KarenLK

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I understood the money was fronted by the developers until the remaining units were resold. I am also quite sure that Sutton and Co. will not lose money on the deal :)
 

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I just returned from Royal Sands. Visited royal Hycinendas. Was offered $24,000 for week 43 or $17,000 one bed room for the same week. The price list, which I still have, has ocean front penthouse for $110,000. The prices are for closing in 2008. Those in 2009 will be more expensive. The resort is great. I didn't buy, but plan to exchange into next year.

I was quite disappointed with the food on site. They are not bad and reasonably priced, but not great either. I could find nicer restaurants in Cancun.

Royal Sands is wonderful. Service is great. That's why Royals are so popular.

They are also selling 30 year trust on CIC. Didn't go and don't know the price.
 

Joe L

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VCI owners were offered 50% off the new developer price then the residual value was deducted from that figure.
 

X-ring

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Visited royal Hycinendas. Was offered $24,000 for week 43 or $17,000 one bed room for the same week. The price list, which I still have, has ocean front penthouse for $110,000. The prices are for closing in 2008. Those in 2009 will be more expensive. The resort is great. I didn't buy, but plan to exchange into next year.

What phase and unit type was the $24k at the RH? ... also, was it the list price or after the 10% discount for pre-construction?

The highest list price when I was there last February was $92k for a beachfront penthouse deluxe in week 52.

[If memory serves, it seems to me that week 52 owners also get usage for week 0 when it comes around every 7 years.]

TIA
 
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PeelBoy

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What phase and unit type was the $24k at the RH? ... also, was it the list price or after the 10% discount for pre-construction?

The highest list price when I was there last February was $92k for a beachfront penthouse deluxe in week 52.

[If memory serves, it seems to me that week 52 owners also get usage for week 0 when it comes around every 7 years.]

TIA


Phase II 2008 closing, slightly more for 2009 closing, before any discount.

I guess your 92K is for Phase I 2007 closing. Price has gone up.
 

Steve A

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Phase 4 has a week 52 for 121,4000!!! I'm still put off by the fact that they want you to pay it off within a year but ypou don't have any use of it for two years.
 
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