Jeff - Thanks for setting the record straight.
And while I while I can empathize that Trish feels she needs better air cover from Lou, I still cannot reconcile why some of these suggested changes were not implemented before Wyndham took control of the BoD. Hasn’t she been on the BoD for a number of years?
You're welcome, and I'll do the short version answer of your question since I have covered this before in the past. You can probably look back at KBV threads here.
In the meantime, the first part of the answer is that, indeed, the IOA and AOAO BODs for a long time sort of effectively abdicated their responsibilities in terms of oversight of the resort management. For a long time, the original developer, David Walters, along with his assistant, Lynn McGrory, made the decisions. They were President and Vice-President for a long time. When Lynn left the Board, Trish took over as VP, and then became President when David passed away.
But as long as David was in control, the BOD sort of just went along with what he and Lynn did, not bothering to question. They assumed that David and Lynn knew what they were doing and, again, didn't question it. Sometime short of 2005, David brought Wyndham in.
I bought in 2001. In 2005, I was at the owners' update while I was there. I know Wyndham had at least a presence there at the time because I have evidence. The person talking to me at one point offered me an opportunity to join Club Wyndham if I turned over my oceanfront 2BR/2BA deed to them plus $7000 in order to join their Club Wyndham. I questioned whether I would have the same guarantee to use the oceanfront units that I had at the time (since I had a deed to them and had paid a premium for that deed).
But the more I thought about it, the more I had the opinion that the offer was inappropriate - for a number of reasons. #1) There'd be no way, particularly as most of the units were individually owned, that Wyndham would have enough inventory, not to mention
oceanfront inventory, to guarantee me that I'd be able to use the oceanfront units #2). Why was the management company we hired to manage our timeshare units (Wyndham) using our owners update to profit their Club Wyndham Vacation program company? I thought it was unethical (We're paying them to manage the property and they're using that time to profit another aspect of Wyndham.).
I started to inquire with a couple of members of the board and told them about my experience at the owners update. They were not aware that Wyndham was doing that. But the more I inquired (looking into the job they were doing), we started to come to the conclusion that Wyndham was underperforming. I wrote an article for TimeSharing Today about it, and I got many responses from those who had similar experiences. I continue to ask about buying, maintenance, and upgrading practices that Wyndham was doing. In contact with a couple members of the BOD, we kept seeing that Wyndham was things like buying mediocre furniture, but paying more for it. They replaced good plates in the kitchens with lesser quality ones, but charging more for them. With the payment model to get paid 10% of the maintenance fees, they'd make more money the more money they spent. But the resort was going downhill, with maintenance fees going up. In contrast, since Grand Pacific has come on board, we're in much better shape financially due to their rental program having raised $800,000 for the resort. This compares to the $100,000 that Wyndham had raised in rentals their last year as manager. It is now, with Grand Pacific as manager, that we're really starting to see major improvements.
At one point, David and Lynn had made an agreement to give Wyndham access to unpaid deeds if, after one full year, the maintenance fees weren't paid. Under the agreement, Wyndham would purchase the deeds for just the cost of foreclosure, $750/deed. Again, the rest of the BOD went along thinking that David knew what he was doing and that all was in the best interest of the long term health of the resort and the owners. David agreed to sell Wyndham the clubhouse for $1.
A good company would have done due diligence to really go after/try to contact the owners to get them to get their maintenance fees up to date. Wyndham wasn't doing that. They were waiting until the year would go by on the unpaid deeds and then quickly snap them up for the $750. Wyndham was slow in transferring them to their name, saving a lot in maintenance fees. But rather than try to sell them off, they held onto them to use the voting power. This was particularly important to Wyndham after the BOD started to catch "Wynd" (pun intended) that they just weren't getting good results for the money. David and the BOD had given Wyndham Management company a 10 year contract. The BOD wanted to get out of it, but it would have been too costly in terms of a legal fees. The BOD eventually voted to not renew Wyndham's contract when it ended, and started to look at alternative management companies. Wyndham wasn't having any of it. As you can see from the Wyndham's Smoking Gun memo, Wyndham plotted to remove BOD members who weren't pro-Wyndham, and replace them with those who were.
So the majority of the BOD's reliance on David Walters and Lynn McGrory to do the right thing, and assuming that Wyndham would do well didn't work out so well. The BODs were, indeed, guilty of a lack of oversight. But they did eventually wake up, although it was partly too late to keep Wyndham from getting control of both the AOAO and IOA. Wyndham's goal, right now, is to have control of the IOA BOD when Grand Pacific's contract is set to run out (in about 18 months). They will then end Grand Pacific's contract and vote to bring Wyndham back. The actual Wyndham employees (why are there two Wyndham employees on our board??) will likely have to recuse themselves. But Wyndham will work to get some non-employees who are sympathetic to Wyndham to vote in their favor. It's what Karen Blackford, Trish Harrington, myself, and even Jack Goodstein are trying to do to keep that from happening. It's essentially taking a monumental effort to regain the majority of the BOD. The AOAO was about to end Wyndham's contract as well, but Wyndham was able to get hold of that board and keep it from happening. It's why Wyndham manages the grounds and buildings while Grand Pacific manages the interiors of the timeshare units, the rentals, the sales, and the activities.
Hmmm, that was longer than the short version, wasn't it.
Jeff
