The real Relative Usage defined....
Let's look at it another way. Similar situation, but I bought my house for $ 500,000 10 years ago, my friend in another state bought his for $ 1,000,000 just last month. Both houses appraise for $ 1,000,000. Let's say we decide to exchange usage. It would be fair to exchange at a 1-1 rate, right? Both houses are worth the same. But, my friend thinks that because he paid twice as much he should get 2-1 in the exchange. Sure doesn't seem fair, does it? This is exactly what Wyndham is doing.
Let's also look at Marriott. If I bought a Platinum week at Marriott Summit Ridge in 1997 for $ 20,000 is it worth any less than a current $ 40,000 Platinum week at the same resort? No. How does Marriott make their money when the cost of real estate and building keeps going up? They charge more. Duh. Just what Wyndham isn't doing.
I know that you know this, but for others, it may be a fresh look.
Relative Usage demands that the NEW condo be worth EXACTLY the same as the AVERAGE of the existing 5,000 condos - that's very hard to do. What then?
(I'm going to make up numbers since no audits have ever been done at WM. This has math in it and I will summarize my findings at the end)
The average WM 2BR condo appraises out to $225k and Wyndham builds/buys a condo in an area that a comparable condo costs $300k - what to do?
We need more information - the average $225k WM 2BR condo generates 350,000 WM credits during the year and the new condo generates 300,000 WM credits - how do we compare this? Simple:
We must break down the above to cost per WM credit generated:
Existing average 2BR WM condo:
$225,000/350,000 WM credits = 64¢ per WM credit
Basically the 10,000 WM credits needed in a Red week appraise out to $6,400.
New Wyndham condo:
$300,000/300,000 = $1.00 per WM credit
10,000 WM credits in a Red Week appraise out to $10,000.
The new condo is worth a lot more than the average WM condo so we now simply adjust the number of WM credits needed to stay 1 week in Red season. Instead of 10,000 WM credits per 2BR Red week Wyndham is demanding $10,000/$6,400 * 10,000 = 15,625 WM credits or round to 16,000.
Conclusion:
In the above example Wyndham is going to demand that 16,000 WM credits be spent by WM owners to stay 1 week at the new 2BR Red week unit.
This IS the very definition of Relative Usage and Wyndham is correct to demand more credits.
All this is so simple if we just demand appraisals of existing WM condos – something only I have proposed over the years. Without this information we must defer to Wyndham’s answer.
You can't have it both ways guys - demand 10,000 WM credits when you have NO evidence that this is the correct answer - it's not.
P.S.
This is the kind of detail that the founders of WM left out of the documents – what the heck Relative Usage is and how the heck to calculate it. Without this fundamental definition Wyndham is correct to leave you guys in the dust and use their own. Our founders were a bunch of window salesmen - and this is exactly the mess one would expect from them.
This is the FIRST piece of business the WM BOD must address – get the definitions of WM in writing - down to the very math.
Anyone running around crying “Relative Use” violation have nothing to base your claims on – nothing.
And of course a WM CEO and a management team should be doing all of this and not 5 BOD members who meet once in a while and who’s toughest decision is “Chicken or beef for lunch?”.