Redweek just entered the exchange company game

[e.bram]

Looks like everybody is wishfull thinking. RW will never get enough diverse inventory to get off the ground. Probably will end up with a bunch of white and blue weeks. In New England where I look they only have a handfull of TSs for saale or rent, all at unrealisticly high prices.

 

[rickandcindy23]

Looks like everybody is wishfull thinking. RW will never get enough diverse inventory to get off the ground. Probably will end up with a bunch of white and blue weeks. In New England where I look they only have a handfull of TSs for saale or rent, all at unrealisticly high prices.

They lack a person to call, which most exchange systems, if not all others, have in place. That is the only downside I can see. I think they will make a go of this and become a huge player in the exchange industry.

Redweek already has 1,000,000 customers. I would bet most of the smaller exchange companies would love to have that many potential exchangers. I think Redweek was very smart. They even followed the formula that some wise TUGgers dreamed up a while ago. I remember the conversation about exchanges having different values, which could be done with a point system, and the idea of paying money to trade up. Looks like they were watching.

 

[e.bram]

Who is going to get the tradeup money? RW or the exchanger? I can guess? How long will the trade down exchanger tolerate that.
1,000,000 customers, where did you get that. They only have a handfull in New England. Less than Ebay.

 

[PerryM]

They lack a person to call, which most exchange systems, if not all others, have in place. That is the only downside I can see. I think they will make a go of this and become a huge player in the exchange industry.

Redweek already has 1,000,000 customers. I would bet most of the smaller exchange companies would love to have that many potential exchangers. I think Redweek was very smart. They even followed the formula that some wise TUGgers dreamed up a while ago. I remember the conversation about exchanges having different values, which could be done with a point system, and the idea of paying money to trade up. Looks like they were watching.

I was searching for that 1 M customers - I remember reading it somewhere too.


I love the way folks look at a successful business and declare future projects a failure when they are a few days old.

Me, I'll go with a winner and assume they know what the hell they are doing unless evidence mounts that they are emulating RCI points.

Show me the evidence.

 

[rickandcindy23]

When I logged in to Redweek today, the main page had that 1,000,000 registered customers as I went to log in. That is probably where you saw it, Perry.

e.bram, I don't know why Redweek would feel they would get the cash for the trade up, but most people are not going to pay that much money to trade up. If they only valued my week at 2,500 points and I wanted something for 3,500 points, I would think long and hard before I paid that much for the upgrade. Depositing another low MF week would be cheaper.

 

[chemteach]

Results for a few of my units:
1581 for Country Club Villas 2 BR summer unit near Myrtle Beach
1000 for Peppertree Atlantic Beach 2 BR summer unit - NC beach
1150 for Aquamarine Villas 1 BR July 4th week - SoCal coastal

These are too low to even consider depositing as they get me weeks through II/RCI with which I have been happy. I would be trading down with the latter two offers, and might possibly get an even trade with the first. It's not worth the risk until RW has a proven track record or I see something that looks worthwhile to exchange into. I'll stick with RCI and II for now. When the big 2 no longer can get me the trades I want, I might consider RW.

 

[rickandcindy23]

They offered 2,421 for my ski week 1 in Fraser, Colorado. It is a two-bedroom. I was pretty impressed with that. Only 1,000 for a week 52 at Foxrun.

 

[PerryM]

When I logged in to Redweek today, the main page had that 1,000,000 registered customers as I went to log in. That is probably where you saw it, Perry.

e.bram, I don't know why Redweek would feel they would get the cash for the trade up, but most people are not going to pay that much money to trade up. If they only valued my week at 2,500 points and I wanted something for 3,500 points, I would think long and hard before I paid that much for the upgrade. Depositing another low MF week would be cheaper.

Thanks, you are absolutely correct.

1 M customers and all the naysayers - where is their track record?

Will folks like me give up a cheap week that exchanges into an expensive week in II and deposit it in RW - not that week. Not until II goes Points too.

But I should imagine folks will start to deposit units and start to shop around. This will take time. But with 1 M customers even 10% participation means 100,000 exchanges per year. Big bucks for RW.

And this will just take exchanges from II and RCI. The side effect could cause revenue to drop at II and RCI and thus increase in exchange fees.

Don't you just love it.

P.S.
If I were RW I’d keep the upgrade money since there will be enough “spoilage” of Points as folks have scraps and they expire worthless.

I’m assuming that you can’t transfer RW Points to another account or sell them on the open market.

 

[Jennie]

The New Redweek Exchange Program

Submit your information
Get a Point Value for Your Timshare Week for Free
Receive an email with the point value within 24 hours.

Great way for Redweek to get all your t/s information
What resort you own, which week, unit number, etc.
Name, email. Looks like they are building a data base!

I believe, but am not sure, that one has to already be a member of Redweek in order to receive a "Points value offer" for their week. Redweek already has the name, address, telephone number, and credit card number of their 1,000,000 + members that have come and gone through the years. They can also see what weeks each member has listed for rent or sale, and even which weeks the member has inquired about renting or buying from other Redweek members, since the first Email communication is sent out through Email (just as Ebay handles questions for sellers from "lookers"). In all my years of Redweek membership, as far as I know, I have never received any spam as a result of Redweek having access to, or sharing or selling, my personal information.

For a number of sound reasons, I really do trust this company.

 

[BocaBum99]

Thanks, you are absolutely correct.

1 M customers and all the naysayers - where is their track record?

Will folks like me give up a cheap week that exchanges into an expensive week in II and deposit it in RW - not that week. Not until II goes Points too.

But I should imagine folks will start to deposit units and start to shop around. This will take time. But with 1 M customers even 10% participation means 100,000 exchanges per year. Big bucks for RW.

And this will just take exchanges from II and RCI. The side effect could cause revenue to drop at II and RCI and thus increase in exchange fees.

Don't you just love it.

P.S.
If I were RW I’d keep the upgrade money since there will be enough “spoilage” of Points as folks have scraps and they expire worthless.

I’m assuming that you can’t transfer RW Points to another account or sell them on the open market.

A customer is by definition someone who BOUGHT something from you. Until they buy, they are merely a PROSPECT or LEAD.

1M people are REGISTERED users. It is FREE to register. It is impressive to have that many registered users because it isn't easy getting a million people to turn over anything personal.

Moreover, those 1M registered users are mostly NOT timeshare owners. So, they are not even prospects for exchange. They are prospects for rentals and resales.

I think about a year ago, I estimated that Redweek had about 30000 listings. 30000 is a better indicator of their potential customer base. It's a lot lower when you net out brokers who will not be exchanging and people who are selling their weeks because they no longer use it. In addition, some people are renting because they don't want to use their timeshare this year. So, their customer base is actually a lot lower than 1M. In fact, the addressable customer base is probably more like 10k.

10k is sufficient to start an exchange. It depends on how many weeks they get to start the exchange system. If some developers gave them 1000 weeks for deposit, that could kick start the system.

 

[PerryM]

DOA

A customer is by definition someone who BOUGHT something from you. Until they buy, they are merely a PROSPECT or LEAD.

1M people are REGISTERED users. It is FREE to register. It is impressive to have that many registered users because it isn't easy getting a million people to turn over anything personal.

Moreover, those 1M registered users are mostly NOT timeshare owners. So, they are not even prospects for exchange. They are prospects for rentals and resales.

I think about a year ago, I estimated that Redweek had about 30000 listings. 30000 is a better indicator of their potential customer base. It's a lot lower when you net out brokers who will not be exchanging and people who are selling their weeks because they no longer use it. In addition, some people are renting because they don't want to use their timeshare this year. So, their customer base is actually a lot lower than 1M. In fact, the addressable customer base is probably more like 10k.

10k is sufficient to start an exchange. It depends on how many weeks they get to start the exchange system. If some developers gave them 1000 weeks for deposit, that could kick start the system.

Good grief BB,

Everyone here seems to delight in declaring RW's competition to II and RCI Dead On Arrival - this sounds like our politicians who declare this on their competition all the time. They get nothing done.

Someone show me some proof, just 4 days into their venture, where this project is already doomed. No one here can with all this chest pounding. So why bash Red Week for doing what everyone here demands - more competition?

But if it makes folks feel better....

 

[theo]

The independant exchange companies have a larger customer list that Redweek. If they wanted to start a sales and renting classified they could email them. Thay know timesharing better than Redweek and could be up and running in a short time. The exchange business is a order of magitude more complex than a classified.

You may not be aware that the new RedWeek exchange program is also actually a partnership with Dial an Exchange (DAE), in which there will be shared services and shared inventory. In short, an "independent exchange company" is, in fact, an integral PART of the new RedWeek program right from the outset. Not waving any banners here, just adding a relevant fact.

 

[BocaBum99]

As the Caveman said, "what?"

I didn't declare them dead. I simply put a more realistic view of facts that are thrown out on this message board. I offered a reasoned explanation of the 1M registered users. I provide clear logic for why that number is not relevant for this exchange. You use it as the reason they will be successful.

It's you who are making bold, but unsubstantiated predictions. You are declaring them winners after 4 days. Most are hoping they will be successful (including me), but we are more tempered in our assessments.

I believe I am providing a balanced view of what this concept represents.
I have acknowledged that they have a great concept. I have pointed out some of the challenges that they will face. I have offered ideas for how they could address those challenges. They will decide on solutions which they believe will be effective with or without my input. The market and their execution will define their success. I could be completely wrong in my assessments. But, it does provide input to others who may be trying to evaluate their risk of trying out the system.

 

[theo]

Puzzled...

Boca Bum: To whom / what post is your below quote directed?
I'm puzzled...... (not an uncommon occurence, I admit).

As the Caveman said, "what?"
I didn't declare them dead. I simply put a more realistic view of facts that are thrown out on this message board. I offered a reasoned explanation of the 1M registered users. I provide clear logic for why that number is not relevant for this exchange. You use it as the reason they will be successful.

It's you who are making bold, but unsubstantiated predictions. You are declaring them winners after 4 days. Most are hoping they will be successful (including me), but we are more tempered in our assessments.

 

[BocaBum99]

Boca Bum: To whom / what post is your below quote directed?
I'm puzzled...... (not an uncommon occurence, I admit).

As the Caveman said, "what?"
I didn't declare them dead. I simply put a more realistic view of facts that are thrown out on this message board. I offered a reasoned explanation of the 1M registered users. I provide clear logic for why that number is not relevant for this exchange. You use it as the reason they will be successful.

It's you who are making bold, but unsubstantiated predictions. You are declaring them winners after 4 days. Most are hoping they will be successful (including me), but we are more tempered in our assessments.

This was addressing Perry's message titled "DOA" and started with Goodgrief BB. I am BB.

 

[theo]

BB:
Got it, thanks. I was hoping that I hadn't somehow innocently entered a fray by merely pointing out DAE's involvement in the new RedWeek program, to someone else who seemed quite unaware of that "partnership" arrangement.

 

[BocaBum99]

Who is going to get the tradeup money? RW or the exchanger? I can guess? How long will the trade down exchanger tolerate that.
1,000,000 customers, where did you get that. They only have a handfull in New England. Less than Ebay.

I believe the trade up money will be used by Redweek to purchase inventory and reinject weeks into the system. Redweek profits through the exchange fees. If they pocket the trade up profit, then they will deplete the exchange inventory which will weaken the system.

Here's an example that may help illustrate this point.

Let's say that 1000 people deposit weeks worth exactly 2000 RW points each. The total value of those deposits would be 2,000,000 RW Points.

RW would grant each of those 1000 owners 2000 points. So, outstanding exchange credits equals 2,000,000 RW points.

Assuming that RW does a PERFECT job at assigning point values (which is highly debatable), then at the start of the system, there is no exchange imbalance since deposits = exchange credits. 2M points of inventory. 2M points of exchange credits.

Now, let's say that 1000 people do a search first exchange for those 1000 deposited weeks. But, their weeks are only worth 1000 RW points each. They will each owe RW $1000 each because they are taking out a 2000 point week and only depositing a 1000 point week.

In this scenario, RW collects $125,000 in exchange fees ($125 * 1000 exchanges). And, they collect $1,000,000 in trade up fees.

Now, let's look at the exchange balance sheet. After these 1000 exchanges, the exchange system has 1000 weeks in it worth 1000 points each. So, there are 1M RW points worth of inventory. But, there are still 1000 depositers who have 2M RW points worth of credit. So, there is an exchange imbalance of 1M RW points.

2M RW points chasing 1M RW points of inventory. That is called inflation.

The way that RW can address this is by taking the $1M in trade up fees and acquire 1M RW points of inventory and reinjecting it into the system. If they are smart about it, they can get great wholesale prices for weeks and not have to pay $1M for 1M worth of points. Or, they could cheat by buying $500k of inventory and assigning it 1M RW points in value.

So, there is a lot of trust being placed in RW to assigned point values according to the real market price. It would be very very easy to cheat.

Also, remember, timeshare intervals are perishable products. If 10% of weeks expire without being exchanged, then the exchange base is depleted. Redweek either needs to buy weeks to put into the system at a very effective rate, get developers to deposit free weeks or they need to over assign points and put them into the system. Either way, the exchangers are placing their trust into the central bank of Redweek who assigns point values and manages the system.

The system works when it hits critical mass and it's customers trust that it isn't cheating.

I believe that publishing daily statistics on key exchange statistics would be important to building trust with depositers.

Make no bones about it. Redweek is creating a currency. Their success or failure will be due in large part to their ability to manage these exchange balances.

 

[BocaBum99]

You may not be aware that the new RedWeek exchange program is also actually a partnership with Dial an Exchange (DAE), in which there will be shared services and shared inventory. In short, an "independent exchange company" is, in fact, an integral PART of the new RedWeek program right from the outset. Not waving any banners here, just adding a relevant fact.

I have stated that I believe the Redweek and DAE alliance is a good one. They both have what they other doesn't have. That makes for a good potential partnership.

What are those assets and skills.

Redweek doesn't have knowledge and expertise in managing an exchange company. The business is dramatically different than operating a listing company. DAE can bring that to Redweek along with thousands of deposited weeks. And example is the process for locking in and securing a week so that a depositer doesn't take a week and either use and deposit it elsewhere. There is actually a very important function called "cleaning and pressing" inventory to prepare it for exchange. A listing company doesn't have that requirement and therefore the skill set needs to be acquired or developed.

DAE desperately needs a trading power system. Today, their exchange model is anything in gets anything out. What that ultimately leads to is a system that is riddled with dog weeks that nobody wants. For those of us who have viewed the DAE inventory, you will see that characterization of its inventory as low quality is generous. So, if Redweek can help them create a more effective trading power formula, it can make the DAE exchange system more viable long term.

So, DAE is sharing it's facility with Redweek and some "shared" inventory. They are probably also sharing exchange revenue for shared exchanges.

Here is the issue. DAE inventory is low quality. So, it will probably have lower point values. If people are trading down for that inventory, then the DAE shared inventory will be depleted at greater than a 1 to 1 rate. So, they will be giving up more than 1 week for every week deposited. As an example, if DAE puts 2 weeks into the system that are worth 1000 RW points and someone deposits a week worth 2000 points and exchanges for both DAE weeks, there is only 1 week left in the system and DAE gave up 2 weeks. They have just created an exchange imbalance for their own system.

It will be very interesting to see how DAE manages in this enviornment their inventory. The best way to play this system flaw would be to take very cheap dog weeks and deposit them into DAE. Use their anything gets anything system to pluck out anything good. Take that week you get out, deposit it into Redweek and pluck out your orignal week and more with the points you get. Well, you have to pay the exchange fees, so it won't work well. But, I think you get the point.

 

[BocaBum99]

Here is how Redweek's current strategy can work. Perhaps they have this in place already. If they do, It would dramatically increase my probablity of success.

I believe that Redweek can get to critical mass much more quickly if it can create affiliation agreements with 100 more resort developers. They are very prominent at ARDA, so it may be possible for them to pull it off. That is as long as RCI and II don't attempt to block such affiliations.

If Redweek can create an agreement where developers provide them with 100 free weeks each, they could have 10000 weeks in the system for exchange. That would start it off with a very positive exchange surplus. People will certainly want these exchanges, so they will deposit their weeks and increase the diversity of their exchange base.

Then, they could agree to pay the maintenance fee for other weeks they want to deposit. Since many people will be trading up, they could use the trade up profit to pay for those weeks.

If they had this in place, they would be in an excellent position to win big with a new concept.

But then again, if I could get 100 developers to give me 100 free weeks and then all future weeks at the maintenance fees, I could probably make more money just renting all of those weeks and pocketing the profit.

 

[bruwery]

Now, let's look at the exchange balance sheet. After these 1000 exchanges, the exchange system has 1000 weeks in it worth 1000 points each. So, there are 1M RW points worth of inventory. But, there are still 1000 depositers who have 2M RW points worth of credit. So, there is an exchange imbalance of 1M RW points.

2M RW points chasing 1M RW points of inventory. That is called inflation.

The way that RW can address this is by taking the $1M in trade up fees and acquire 1M RW points of inventory and reinjecting it into the system. If they are smart about it, they can get great wholesale prices for weeks and not have to pay $1M for 1M worth of points. Or, they could cheat by buying $500k of inventory and assigning it 1M RW points in value.

So, there is a lot of trust being placed in RW to assigned point values according to the real market price. It would be very very easy to cheat.

Very sound analysis, Boca. You have hit the nail on the head with the trust issue. Let's assume for a moment that they do set up the business model where they use the trade-up fees to purchase inventory, and let the exchange fees flow to the bottom line as earnings.

As with any company, there's a great deal of pressure from month to month to hit a specified earnings target. What happens in a given month if exchange revenue is below budget, or operating expenses exceed plan for whatever reason?

It's too easy to "borrow" from the trade-up cash. Once that process starts, blammo, the system is out of balance and exchanging becomes more difficult because there's less inventory.

Now, I'm not saying that Redweek is dishonest, or has poor intentions, or anything like that. I'm merely reinforcing Boca's point that it's very easy to cheat.

Redweek offered up 2,000 points for my 3BR Cypress Pointe for President's Week. Based on the postings in this thread, that figure may allow me to pull some better trades through RW than I could through RCI - assuming some of the items submitted for valuation are actually being deposited. I haven't actually done a search yet, though. I'll ponder it over the next couple of days.

Onward and upward,

Mark

 

[Mel]

If Redweek does a good job of assigning values, I can see this program doing well. However, they would be doing it in a way very similar to what RCI is doing, but maybe being more honest about it.

As mentioned about, they have 1,000 weeks deposited, with a total 1M worth of points. The owners of those weeks "buy" another 1M of points to get the weeks they want in exchange, for a total of 2M points, 1M inventory. we've seen plenty of rental listings on Redweek, so if they don't have the week you want in the exchange inventory, they look to their rental inventory and use some of that cash to rent the week you want, and give it to you as an exchange.

The tricky part is when they don't have a taker for YOUR week, going the other direction. One would assume that at some point they will take your week and put it up for rent. The question then becomes when is it fair for them to remove that week from the exchange pool and place it in the rental pool? 9 months out? 6 months? Whenever they think they will get the best rental income from it? I don't see it as that different than RCI renting out weeks - only we don't know if RW has accurate data on what weeks will or will not be used. We might not trust RCI's data, or the way they use it, but we do know they have many years of data.

I'm assuming RW is basing their point values on likely rental costs. If they are, and their data is accurate, they should be able to pull this off - but what about inflation? Rental rates will go up year to year, will points values too? If not, will the cost of buying extra points go up to compensate for increased rental costs? For me, I'm happy with RCI right now; but RW is worth waiting to see. Maybe they can blend the rentals and exchanges in a way that is fair to everyone. Maybe it will become a good place to place moderate-demand week up for rent, if you know they are likely to offer a fair rental price to you to satisfy an exchange, since they will be making their money on the other end. If that is in face their business model, I can see some taking advantage of it - rent their week to RW, and turn and use the cash to rent something they want, vs using their exchange program, and saving the exchange fee. I'm not quite sure how they can prevent that, and how that may impact their program.

 

[BocaBum99]

My idea of developer affiliations won't work. The 100 developers won't work with Redweek because Redweek has a resale component that will serve to undermine the developers own sales efforts.

 

[PA-]

I don't believe for a moment that Redweek has anywhere close to 1million customers, even though they put that on their website. That may mean they've had 1million hits on their website at one time or another. Remember, there was a time it was free to look. TUG has been around for 15 years or so, and gets plugged in the news and all over the web, and they claim 17,000 members. I bet they'd tell you that 2/3 of them haven't logged in in years.

As for the success of their exchange program? I wouldn't be as quick as Perry to think they'll succeed where few have. There is little that makes me think they'll be a player in the exchange market, and they've failed before (remember their rental escrow program, or their direct exchange program). On the other hand, what may mean success to us may be different than for them. If their only cost is a few lines of computer code to offer this function, they may not have to do many exchanges to consider it a success. But I think anyone giving up even a mediocre week is taking a big chance.

As for the analysis that they seem to be giving 1 point for each $1 of rent that you could otherwise get, I think that's way high. Obviously, anyone able to get $1500 rent isn't going to deposit that week for 1500 points, they'll take the rent. Frankly, based on the numbers I've seen for the points they're giving out, I don't think they know what they're doing. They don't seem to fit any demand/supply curve, based on rental potential. Not to say they won't eventually figure it out. And like I said, it costs them little, they've got nothing to lose. I just can't imagine they'll get many exchanges, but we'll see.

 

[BocaBum99]

I just looked at all of the available resorts for exchange. I didn't see one resort on my list for potential exchange. I suspect that much of this inventory is from DAE.

For this concept to be successful, Redweek must get high quality inventory.

Perhaps it isn't Redweek's strategy to be a great listing / exchange company. Perhaps they are just trying to create a technology that another company acquires.

I don't think that Redweek can be successful unless it proactively acquires inventory and plays matchmaker for exchangers.

 

[ttt]

I deposited a 2008 2 BR North Readington Beach week 6 unit(TheIslander), and got 1267 points. I was offered 2013 points for Week 32, 2008 at Fairfield Westwinds, but don't know if I will deposit it or rent it. I don't think I could get $2000. as a rental.....