Bigger is Better When Spending Vacation $$ !

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Bigger is sometimes better and one example that illustrates this is Vacationing.  There are large and small hotel companies around; large and small resort operators and large and small exchange services ..OK, Some offer different amenities while other, boutique, mom & pop resorts will really pamper you while others are one stop shops for scuba diving or snow skiing…Fine. But if you really measure the value of a resort company, you will generally see that the Larger the hotel or Resort operator, the better value you and your family will get. Kinda like going to Wal-Mart…sure everyone likes to make fun of them but they are the #1 retailer for a reason. GREAT VALUE! Even those that jest about them go there and spend money often. If you want good quality and good service when looking for a set of tires, it is hard to beat Wal-Mart.

The same is true in the Resort vacationing business. Sure, a week at a 4 Star Wyndham resort may appear to cost more than staying at Bob’s resort but here is what you will get. According to Dos Mundos Developments in Austin think about what the following are worth:

#1 World Wide reputation as a superior hotel and resort operator with millions of satisfied customers that have unbelievable memories.

#2 Publicly traded company so is very regulated and very Brand Conscious

#3 Options & Flixibility: So many properties in the best locations that you could never visit them all

#4 Standard amenities such as pools, water slides, spas, golf courses, marinas, lazy rivers, 2, 3 & 4 bedroom units, concierge service, tennis courts, ski lifts, magic shows, game rooms, buffets, wifi, zip lines, security and much more!

FiFi’s boutique villa or Generic’s cheap hotel cannot compete with this, so as a guest you wind up driving elsewhere to get these services or amenities that you pay for…. not to mention the hassle. So you spend an extra $50 a day…really?? What did you spend at Starbucks last week?

Want a resort with a ski lift to your unit? Got it! Want to be next to the largest waterfall in the jungle? Got it! Want free magic shows for the kids? Got it! Want the largest pool in the state with a lazy river and swim up bar? Got it!  The Big Ones Got it!!

I don’t think that I have ever talked to anyone in their 70’s who has said, “ I really regret going on all those vacations with my kids and grandkids and I wish I did not have all those memories.”

For more no-nonsense resort management stuff call Chris Bounds Austin Texas directly.

 

Vacation Rental vs Timeshare or Fractional Ownership

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Seems kinda like the debate between using a gas grill vs a wood  fire or charcoal grill. (preferably Mesquite).  Should you rent via one of the impersonal, online, booking broker sites when planning a quality vacation or should you buy a fractional or timeshare?  Well, according to research conducted by Dos Mundos Developments, we offer the attached.

Ok, lets examine this from a practical stand point.   It is really great to step out on your deck, remove a plastic cover, push a button & start cooking steaks over a gas fired burner.  There are worse things, although gas comes from fermented stuff and petroleum that has been buried deep in the ground.   Sure, your gonna enjoy a nice steak with a grilled type flavor.  Its quick, its easy, no fuss, no real clean up and you put the plastic cover back on, wheel the thing back in the corner and that’s it.  Yep, you grilled a steak.  Yes you booked an air bnb.

Versus, lighting a fire to burn a large pile of Mesquite down into a pile of smoldering, delicious smelling, sultry, thick smoke producing coals.  Ahh, this process alone takes about 3 adult drinks or a horseshoe game (playing to 21) or a couple of dips in the pool or river or ocean.  Then you drop several one pound ribeys on a red hot grill which immediately injects smoke and flavor into the meat and broils the onion slices into the meat giving off an aroma that can be matched by nothing.  Now, at this point, there is time for another adult drink, one more jump in the pool, splashing your kids and a sampling of the olive oil drenched veges beside the steak.   Then, while being coached and advised by JV chefs standing around, you flip the steak at the perfect moment and listen closely to the sizzle as the coals do their thing again.  You throw one more horseshoe, push one more kid into the pool and light a cigar…knowing it cost you 50% less to grill those steaks with coals than it would have with gas.    Your guests bring you another adult beverage because they now realize you are on Varsity for a reason.  Then it happens…the steaks are flipped onto a large tray and covered with grilled onions, peppers and veggies and everyone enjoys food as it has been cooked for millions of years as we evolved to a species that does not mind a few extra steps to get to what is best.

So you book lodging online from an individual who lives in Cleveland but owns a flat in the islands. Not sure if he has leprosy, is a crooked politician or kicks puppies but you got a deal on lodging.  Versus pulling into a porta-co where a nice person greets you, loads your bags to your 3 bedroom condo while the kids are floating the lazy river and your wife is at the spa and you are lighting your OWN wood grill and your kids play in your OWN pool and knowing the entire time you can come back at the exact same time next year or swap for a different island, different city or different mountain, all with ease and likely much cheaper than the Cleveland guy’s 1980’s flat beside a green pool.

That is how I compare the online home or room rental options to owning a vacation outright.  Gas grilled steaks will work if that is all your expectations are. Ok fine. For me there is no debate; a wood fired grill beats a gas grill 100 times out of 100 and owning a vacation makes more sense these days than it ever has before.

For more no-nonsense resort development stuff visit, Chris Bounds Austin Texas.

To Sell or To Service — your Notes?

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Well your budget says that you spend about 50% of your variable expenses on marketing & G&A to get a sale. Ok. So now you have a $21,000, seven year, timeshare note paying 12.49%. What do you really have? After you figure that out then you must ask, What do you really want? To Sell or to Service.

That note is worth $ 31,600 over the next seven years. Based on the above, we know it cost you $10,500 to get that note. So you make $21,100 on a $10,500 investment. Not bad. 200% return. Your shareholders or partners or bankers will be happy with those numbers. But you are not so sure. Yes, you make 200% but that’s over 7 years and the money comes back to you in $300-$400 monthly payments that you have to service the note. It’s a capital intensive game and if you make the wrong move or the economy turns against you…you could suffer. The Principals at  Dos Mundos Developments, have over 100 years combined experience in making these difficult decisions and say, “Without decisions and proper planning we have seen faulty capital assumptions bring down many great developments.”

So you could sell that note the day it closes and get 90 cents on the dollar or $18,900 immediately on your $10,500. Your net gain is $8,400 on a $10,500 investment. That’s 80%….not bad but you are leaving 120 percent on the table.

Or you could “pledge” that note and get 100 cents on the dollar the day of closing and get to keep 90% of the monthly interest (only) payments as they come in and give recourse to the note “holder” in cases of default or late pays. Not a bad deal but requires third party administrators, legal stuff, guarantees and administration while you are are trying to market and sell more timeshare or fractional.

So, what’s the answer? Well, it depends on your capital structure and your risk tolerance. It’s that simple and that complicated. It kinda depends. Please call Chris directly

Generally, the priority among mortgages, trust deeds, and real estate contracts is determined by the date of recording, the first recorded instrument being the first in priority. In some situations, however, the parties may desire that a later recorded instrument have priority over an earlier recorded instrument. This is particularly common (or at least has been) in construction financing. A SUBORDINATION CLAUSE states that the instrument in which it is contained will be subordinate (junior) to a construction loan lien (mortgage or deed of trust) to be recorded later.

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Mexican Timeshare: Pros & Cons

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OMG, they kidnapped us and locked us in a sales meeting and tricked us and gave us food that made us throw up and laughed at us and the contract we signed was not legal and they would not refund our money and THEY DID IT ALL IN SPANISH!!!.

We have heard this story so many times that it is NOT FUNNY. Mexico is a third world country. You get that right? They have different laws. You are a long way from home. You don’t speak the language and you don’t understand the culture or customs. Even in the States you can get hooked up with less than honest timeshare and fractional folks. Don’t blame it on Mexico or on “Those Mexicans”. So you got a 6 day vacation at an all inclusive, 5 Star resort right on the beach for your whole family for $199. What were you thinking? How is that possible? Are you stupid? Really, ask yourself, “Why would someone sell me a $1,700 vacation for $199? ” So then you answer yourself, “Well its because I am a SMART gringo and these dumb Mexicans are going to lose money on me because I am not buying their timeshare”.

Well you are the stupid one…admit it. Just like in the States, there are good and bad players in every industry. In Mexico, although the laws regarding timeshare and fractional ownership have come a long way in the last 20 years, you still do not have much recourse if something goes wrong. Also, if you are thinking you can go down there, sign some papers and put a down payment on your credit card, only to cancel and request a charge back when you get back to Cleveland, think again. You are now the con-artist, liar and “pinche gringo” and will find that it is not that easy. So, just be reasonable. There are many great timeshare & resort club operators in Mexico, such as Real Group, Garza Blanca and Playa Resorts as well as many large US companies selling and servicing timeshare under Mexican branded names or companies. Do your homework. If you are trying to get a ridiculously cheap vacation anywhere you should be prepared to get what you pay for.

Many large, Mexican banks and other providers, service timeshare notes and generally stick to GAAP principals and the documentation is fairly standard. You can get some absolutely great values on timeshare and vacation club memberships at truly outstanding and luxurious resorts in Mexico but you have to be smart. And if you are not smart, don’t also be naive.

For more no-nonsense timeshare stuff from Chris Bounds, visit his site.SWIMUPBAR

Good Economy = Great Hospitality $$

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So, based on the attached data, provided by the US Bureau of Economic Analysis, which includes the latest data related to what happens to hospitality spending after an economic downturn, shows that it far outpaces the overall growth of the economy.

We contribute this to two, main factors. #1. The Coiled Spring Effect. People like to travel. Period. So when they don’t get to or can’t, they become more desirable of a vacation etc. Then, when times are better and discretionary spending bounces back, one of the first sectors to see hyper-growth is hospitality. (letting go of the compressed spring) According to a Post from Terry Christopher Bounds, timeshare and fractional sales lead the way early given the extensive marketing budgets employed by these sales groups. #2. Travel begets more Travel. If your employer is enjoying a growing economy and needs to get various department heads together in a fun place to increase moral etc, he might pick New Orleans. The employee might decide to make a family trip of it or come back again with the family. Once the travel ball gets rolling it is hard to stop. “We all rose to the top of the food chain, over millions of years, by..traveling!”

As we enter a new, more relaxed and business minded regulatory environment and with a rapidly expanding economy, it is my belief that timeshare and related club membership programs are entering another “glory days” decade of growth. Just follow the money. Marriott, Hilton, Wyndham have all completed spins, giving their timeshare development access to their own capital. Bluegreen and Diamond may be poised to also access public funds once again, via spins of their own. Wall Street is currently rewarding such activities. Holiday Inn Club Vacations is building a new, state of the art, corporate campus in Orlando and several large, Mexican developers have completed acquisitions and strategic partnerships with branded hoteliers in an effort to push timeshare related products. Yes, it appears that we have a near perfect storm of variable lining up to make the next several years record setting in the timeshare and fractional business.

See more no non-sense timeshare stuff at terrychristopherbounds.com.

Fractionals vs Timeshare vs Individual Second Home

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So, is it light black, grey or charcoal? Is it close, not to far or a moderate distance.  Well, yes it is.  The debate rages as to whether a second home….notably a vacation home, is a fractional or if its timeshare.  Well, it kinda depends.  Depends on what State you are in… “not state of mind”…  Depends on how many owners are involved and in some cases depends on what type of deed is involved and other statutory and tax codes etc.

Lets boil it down to the simplest explanation and apply some common sense.  If you and your best friend from the club and your brother in-law go in together and buy a beach house jointly,  for each of your families to use as you agree and its not a commercial operation, then, in most jurisdictions, this is simply a second home with three owners on the deed. (We are not attempting to give legal advise.  For your particular need, please consult your legal advisers.)  So that’s simple and makes sense.   What if there are 4 owners or 8- what then?  What if a developer with a real estate license is one of the owners?  What if that developer sold “interests” to others in that property?  What if there are 50 owners…each with a deed?  What if you own points that convert to weeks and there are 50 owners with enough points to own an interest? What if the owners, by deed restrictions etc, are forced to be members of an HOA or POA or COA??  What if a management company owns most of the “weeks” or an “interest” in the home or condo?  It goes on and on…really.

So and again, we are not giving legal advise and are keeping it simple.

FRACTIONALS:  Are generally defined by being a truly luxury, 5 Star, single family property with fewer than 12 owners.  Real Simple.  Most owners get a deed and participate directly in the equity of the property, ie, depreciation or appreciation and share equally in the repairs and upkeep.  According to Jaime Escobar, with Dos Mundos Developments, Inc, fractional second homes are making a big move in the wake of the over-proliferation of low end and hard to resell timeshare properties.

Timeshare:  Deeded:  Very similar to Fractionals except that there may be as many as 50 owners and there may be a forced HOA membership and dues involved.  More often than not, these properties are multi-family or multi-unit in design and are often a step (or two) down in quality. It may also be hard or impossible to participate directly in the underlying equity of the property but this is often overshadowed by the ease of use and the exchange-ability to other properties.

Timeshare Points: An even more “user friendly and flexible” form of timeshare that allows a person to buy and accumulate points to be exchanged for various length stays at various different and various quality properties.  No equity is accumulated but exchange programs exist that allow use of points at thousands of resorts all over the world.  Points can often be exchanged for cruises, airline tickets and rental cars adding to the ease and value of the timeshare.

Taxes:  Property taxes, estate taxes, income taxes, etc.  Not gonna touch this, but anyone involved in any type of fractional or timeshare property (and we are big fans of both), should visit with their tax adviser regarding these issue.

Chris Bounds Austin Texas

For more no non-sense resort stuff, contact Terry Christopher Bounds Austin Texas directly.

 

 

Trash or Treasure?

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OK, so you know and understand that one man’s trash is another man’s treasure.  One man’s loss is another man’s gain.  This is very true with real estate. Especially during and after “crisis” type events.  Sub prime melt down!  Economic recession!  Geo-Political problems!  You also know timing is everything… or at least most of everything.

According to Chris Bounds, Director of Dos Mundos Developments, Inc, in Austin Texas, hurricanes are great opportunities for lots of things…especially real estate acquisitions.  No need to be silly or macobre or act like a merciless vulture, BUT, hurricane damaged areas do produce opportunities for real estate investing.  “Sure, go help with the clean up, donate to the area’s Red Cross and do a lot of praying for those adversely affected by a storm”, says Bounds, ” that’s just what we do.  But we also like opportunities. ”

Storms have a way of shortening the decision time would be sellers (pre storm)  take to finally agree to sell a property.  Also, storms will sometimes expose the weak or marginal owners who were just barely hanging on anyway and give them a way out.  Also, insurance payoffs and or the lack of coverage will also place properties on the market.  My favorites are “under-construction” projects that are in some stage of completion.  Often, lenders and or investors, will second guess the project and may be willing to make a deal.  Those without interim or construction insurance make the best targets.  Properties cut off from or in-accessible to consumers because of public infrastructure issues also create deals.   Overall, damaging hurricanes put more inventory on the market, in concentrated areas, than can be absorbed.  This naturally forces prices down and creates value for buyers.

So, be ready to move faster than normal and be ready to be patient.  It may take weeks to get electricity and water back and months or years to gain access down certain roads or across bridges, but the earth will keep spinning and consumers will return to the market…not to mention lots of federal, state and local funding will find its way into the damaged area. hurricane harvey

For more no nonsense real estate talk, contact Chris Bounds directly.

Millennial & Gen Ex Vacationers….Oh Yeah!

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Mom & Dad, mid thirties, two kids….so Disney World is a logical vacation destination.  Well, it was.  The 30 somethings and younger crowd often see a vacation in a completely different light.   So pay attention.   The interval ownership, timeshare and fractional folks are coming around slowly but they will get there.

Zip lining, hiking, biking or sitting in a coffer shop at the beach with your smart phone can be a vacation for these folks.  Does not mean timeshare is out.  In fact, these guys timeshare everything from cars via Uber etc, bikes via most urban areas “share a bike program”, sofas  via Air BnB  to lawn mowers via renting from Home Depot.  No, they get it when comes to sharing stuff.   Don’t forget that Gen Xers say that on average they will spend over $4,000 a year on “vacationing”.  Now this might be made up of 3 or 4 two day trips to hike a mountain or see a concert or sky dive somewhere but they are spending money.

Also and importantly, they are getting married much later, if at all, having fewer kids and have less structure overall.  So buying an old fashioned, brick and mortar condo overlooking a  golf course might be a hard sell for some of these folks.   And buying  a bunch of points, well that is so 90s ish.  And you don’t have an App that shows my unit on live web cam…well that seems weird.

Its not a perfect call and the fractional business seems poised for more great things but those that figure out how to compete for the GEN X timeshare crowd will have cool and flexible Club memberships that update Apps daily and that have a constant string of new activities to try and will have 2 day deals at many locations with drive to options outnumbering fly in destinations.   They will have a lot of technology stuff around the resorts and will have programs for singles.  That’s where we are headed.  Recent stops in San Diego, Austin and Ft. Lauderdale re-affirmed this trend.

There will always be a market for the high end consumer but the mid-market consumer base is growing.

 

For other no-nonsense fractional stuff, visit with Terry Christopher Bounds directly. 

 

Fly Buys for Timeshare

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5 Days & 4 Nights at an all inclusive, 4 Star resort, for two adults and two children for $499 – Total!! WOW?  As the developer or resort owner, that is in business to sell club memberships, resort packages,  resort memberships, timeshare, weddings, corporate retreats etc, why would you want to sell this $1,200 package at such a loss?  Well lets study this.

1.  Yeah you lost some revenue: You could sell that package for $1,200 and net about 10% directly off the sale.  The guests would buy a few things from the gift shop and maybe book a snorkeling tour and so you make a grand total of $250 off the unit.  And so if you keep that suite sold 80% of the year, (292 nights) which is 73, 4 night packages, you net $18,250.  Not bad for an Inn keeper.

2.  So lets say you sell that package at the discounted rate of $499….but part of the deal is that your qualified guests will attend a promotional presentation about your Vacation Club or timeshare interests or your points program.  Assuming the industry average sales rate of 12% with an average ticket of $14,900, you will take in $130,500 in gross revenue from that same unit.  These guests will still buy something at the gift shop and will still book snorkeling tours adding another $9,000+….but also, you still got the $499…So you are at $176,000 vs $18,000.  Of course you have costs associated with your organized sales process but even if costs were as high as 75%, (which they should not be) you still more than double your revenue vs a straight rental program.

3.  Now lets not forget that those membership sales bring with them some annual maintenance fees or assessments.  Even if using the low side of the industry average of $650/year per member, that’s another $12,000 to help operate the resort.  Many software packages and aps exist that can easily, efficiently and cost effectively manage this entire process.

4.  Fly In only destinations have proven to be the best performing examples of this type of pricing for discounted promotional packages…hence Fly Buys.  Numbers have shown that guests driving to a discounted lodging package buy at a slightly less percentage than those flying in.

So, if you own or are involved in a large or even small, boutique type resort property up in the mountains or at a beach or in a resort area, which counts strictly on short term rental income, consider the economic advantages that exist in the Club, Membership or timeshare sales programs.   Some developers do both from the same property.

Chris Bounds Austin Texas

Manage Your Managers: Sales Production Perspective

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Manage your managers!  Seems straight forward, right?  WRONG.  Its not easy.  Its hard.  Its time consuming.  It gets complicated.  It has to be done.  Goals, accountability, reporting, timelines, budgets etc don’t just get done if not managed.  Chris Bounds, Austin, Texas offers the following:

#1   Ethical Sales will cure most other issues.  Lets be clear, its all about sales.  Sure, someone has to decide when to order more copier paper and yes, it is sad that Rick’s father is dying from cancer and that the swim up bar at the adult pool has a cracked mirror;  yeah those things must be dealt with BUT don’t let life’s distractions cloud your vision of what the goal is.  Don’t stay busy all day doing things that don’t show up on the bottom line of the quarterly sales report.  AND, don’t let your managers do it either.  Is it coincidental that record setting sales figures seem to make it much easier and more pleasant to deal with life’s issue.  I think not!   SO & THEREFOR, never, ever let your management team get bogged down in stuff that has nothing to do with sales. NO, no excuses; just don’t let them do it.  Try this for 3 months and watch what happens.

#2  Shift the focus of the time you spend with managers. With sales reps, you’d (hopefully) spend your time digging into the details of their sales production. But with your sales managers, you must dig into the details of their management. For example, in a review with an individual salesman (Bob), you might say, “Lets review your 30 day sales efficiency on X”. But with a sales manager, you would say, “How are you working with Bob given his 30 day sales efficiency report for X” Or rather than asking, “How could Bob have done Z better?” you instead should ask, “How could you have managed Bob to do Z better?”  Make your managers answer these questions.  Make them study and be accountable for their answers.  This will bind the team and give them ownership of the process.

# 3  Know that you’ll teach by example, whether you want to or not. When you’re managing all phases of a project or development, you’re probably not real concerned that the kitchen staff sees you out of your professional dress when you snitch a cup of coffee on your day off. But when you’re managing managers, you and your behaviors, dress, habits, language etc., matter 24/7. REALLY.  What they see, and so perceive of you, is what you are going to get back – and that can be good or bad. If you’re delegating effectively, providing useful and regular feedback, conducting useful check-ins, hiring wisely, and fairly holding all staff accountable,  that’s what your management team will do. Conversely, if you tell one of your mangers that he can hold a pender over and close it the next month so he can get his Christmas bonus, then you just told him (and his piers) that cheating and breaking the policies is ok.

#4  Feed the tigers, ride the horses & shoot the dogs. It is very important that the sales mangers you manage, although operating fairly, for everyone, by the exact same policies and handbook of rules, understand that at the end of the day SALES is what we do.  We do them ethically, straight forward and do not cut corners or skip any procedures, BUT our job is to sell.  When managing a fast paced, high energy sales organization fairly and according to stated goals and budgets, your managers’ recipe must call for: 1. Feeding the tigers: give more leads, tours, and prospects to the #1 salesman/manager/team.  The #1 seed in a tourney gets the #8 seed for first game.  That’s just how it is. Make your rules and policies match  2. Riding the horses: We don’t ride pigs or cows.  No, we want horses and when you have a horse why would you keep a pig or cow into the stable for riding.  Horses are for riding, so when your salesman/manager/team is selling well, do not quit riding.  Big mistakes are made when the top team is broken up because of promotions, lateral moves or reassignments.  # 3  Shoot the dogs: we don’t want dogs in our stable; it creates caos.  When a team/manager/salesman is just not performing and not performing consistently, despite your focused efforts, then you must train your management team to get the dogs out of the stable.

#5  Quick, fair & public trials:  Nothing quite like a public hanging to get your attention and help you understand that rules must be followed and that the results of actions will not be dealt with in secrecy or privacy.  Not withstanding proper adherence to employment and privacy laws, your mangers should see, know and understand that all matters, good and bad, will be dealt with immediately and in a fair and open forum.  Showing managers that it is ok to post the weekly sales reports and comment openly on efficiency numbers is a good thing.  There are no secrets in sales numbers.  They are exactly what they are.  No excuses, no what ifs and no where to hide.  If you are second place by $0.50 then you are second place.  Your management team must have the confidence to openly admonish wrong behavior and reward good behavior.  Actively treating managers with this same philosophy will trickle down.

For more NO BS sales management stuff, feel free to contact Chris Bounds, Autsin, Texas.