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.

for more no nonsense vacation ownership stuff.

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.