2009 Annual Owner Meeting
President's Report
with commentary
Announcer: Ladies and Gentlemen: Please welcome the President of your WorldMark Board of Directors, Gene Hensley.
Gene: Thank you. Well it’s nice to see everybody. I was afraid that everybody’s concern for the flu and everything might keep participation down. So, welcome you hardy brave souls. It’s nice to see you here this evening.
Welcome to the 20th annual owner’s meeting. Unbelievable, isn’t it? Twenty years. Just out of curiosity, can I see a show of hands of people that are attending for the first time? Really. This is well, let’s start in the back, if you want to stand up and introduce yourself we’ll just go acro.. no?
OK, I gotta tell you. Early in my career I ah was in
Um, for you that don’t know me, or a little bit about me. I ah am president of our board and I began with WorldMark 20 years ago. I started when we had a condominium at Eagle Crest and a bunch of dreams. Ah, I was one of the principal architects that worked with our founders, Bill Peare, Jeff Sites and Mike Moyer to develop Trendwest and the WorldMark business models. Ah in ’93, I took over the day-to-day operations of WorldMark, the Club as Executive Director and then in 1995 I took over sales, marketing and the operations as Vice President. In ’98 I was promoted to Executive Vice President and helped take the company public, and then Chief Operating Officer. As you know, in 2002 the company was sold to Cendant. Shortly thereafter, Cendant broke up their company into four publicly held corporations, one of which, Wyndham Worldwide, now has our development contracts. Wyndham Worldwide is in charge of our sales, marketing and ah, has the management company.
Ah but before Wyndham, before Cendant, there was Trendwest, and they are the original developer of WorldMark, the Club. And the club is the most innovative, the most flexible, and it’s the first true points-based club that was ever created in the hospitality industry. And, quite frankly, our feeling is that you own the very best. (Applause) Um, yeah that’s OK.
Did I mention to you that we have a live simulcast? We have a live simulcast going on right now and there’s ah well, several thousand probably out there watching us as we ah begin. These are people that were willing but unable to attend and I’m grateful for our ability to do that. Ah you’ve noticed a fine group of ah people in the back of the room this evening. They’re here to answer questions and to get you acquainted with the various departments and the individuals who ah service you throughout the year. And it’s just a great opportunity to put a name to a face of people that you’ve been talking to.
Ah, I’d like to welcome Destinations team, Exchange Services, Owner Education, Owner Services, WorldMark Green, it’s a department we should all be proud of, and ah Resorts Renovation and Design, headed up by the very talented Sam Buckingham, RCI, Travelsecure, Travel Services, and our own WorldMark Retail. Ah I also would like to welcome Mike Hassleshack, our account executive from RCI, who is here this evening. Ah and take a moment to introduce you to the other members of the board. Ah, our other members include: John Henley, Bob Morrison, Peggy Fry, and ah Dave Herrick.
Ah tonight, we’re also joined by Joe Campbell and Joe Campbell is the Vice President BNY Mellon Shareholder Services who have conducted our elections for a number of years. Ah WorldMark the Club’s election process is facilitated by this third party independent company. And they facilitate many many large corporate election processes every year. Ah you should know that you can still vote throughout the evening and they’ll announce towards the end of the evening when the voting is going to come to an end. A write-in proxy, should you have one, ah is assigned to an individual owner and it requires the owner’s signature in order to be valid. But here from Mellon Services to verify our quorums status, our voting power and any additional instructions is Joe Campbell. (Applause)
Joe Campbell: Good
evening. BNY Mellon Shareowner Services is the voting tabulating agent of the
2009 WorldMark the Club Annual Owner’s Meeting. I, Joe Campbell, have been
appointed as the inspector of election for the 2009 Annual Meeting of WorldMark
the Club. I will faithfully execute the duties of inspector of election at this
meeting with strict impartiality and to the best of my ability. As of August 24th,
2009, the date of record, the owner voting power was 477,513. The membership
meeting quorum required to vote on previously noted business is 15%. The owner
voting power present at this meeting, in person or by proxy, as of October 22nd
at 6 PM tonight is 149,018 or 31.21%. The figure establishes that a quorum is
present for holding this meeting. (Applause)
Gene: That is ah, one of the largest percentages I can ever recall as having in twenty years. We ah, used to struggle just to get 10 to 15% and ah you know when people are happy, when they’re satisfied with the club ah, sometimes they don’t realize the importance of engaging. So what does 31% participation tell you? That maybe people are NOT happy and satisfied with the Club? The election participation rate has been steadily increasing over the last several years. And I really want to thank all of you for participating. It’s how your club is governed, it truly is. Um, recognizing the quorum, we will officially open up tonight’s meeting. And to open up our meeting, WorldMark’s created a short overview of the last twenty years. I’m going to see this for the first time with you as well. Ah but, some points of interest that I wanted to include. I don’t know that they’re there. Is the fact that WorldMark, for the very ah first time, I ah mentioned that it was the first pure points-based club, opening the way for Disney, it opened the way for Marriott, Hilton and many others. And it was WorldMark that worked very closely with RCI back in 1995 to create search first. Which was the very first time an owner could actually seek out an exchange without having to make a deposit. We were also the first company to use credits as a travel currency. Creating subsets like solo travelers, the cruise for credits, the golden adventures where you can use your credits as a currency for activities outside the traditional use of WorldMark condominiums. So, I’m going to join you in about ten minutes, and we’ll see what they’ve put together for us.
AUDIO FROM VIDEO PRESENTATION: Twenty years ago this month WorldMark, the Club began as an idea. A new way to look at timeshare. Developed with a vision of a lifetime of vacation opportunities, without the limitation of spending a vacation at the same resort year after year.
By 1989, Bill Peare had successfully built a
membership-based organization, providing a network of campgrounds to its
members. Bill quickly identified an opportunity to expand a similar concept to
the timeshare industry. And so, in October of 1989 Club Esprit was born.
Trendwest resorts, the developer and manager of Club Esprit, sold the first
Club Esprit membership to a young couple eager to start a life together.
Built on a model of 80% drive-to resorts, and 20% fly-to resorts, plans for the club were grand. Offering access to a town home in Eagle Crest, a condo at the Inn at Otter Crest, and a hotel suite at the Ashland Hills Inn, Club Esprit was the first true points-based product in the industry. In fact, Club Esprit revolutionized the industry.
Now 20 years, and over 250,000 owner families later, let’s
take a trip back down memory lane and see how we got here. In 1990, shortly
after the club’s inception, Trendwest expanded into
Club Esprit continued to grow in 1991, adding resorts in Tahoe,
In 1997 the club continued to grow with two new resorts in
Trendwest offered the first cruise for credits program in
1998, offering owners the ability to use their vacation credits to book
cruises. The first cruise sold-out in just 48 hours. Three new resorts opened
in 1998, Angels Camp and Clear Lake in
In 2004 two urban resorts joined the portfolio: The Camlin
in
2005 brought new resorts in New Orleans,
In 2006 Cendant Corporation spun off into four separate,
publicly traded companies, creating Wyndham Worldwide. Trendwest resorts became
part of Wyndham Worldwide. New
In 2007 Trendwest Resorts re-brands to WorldMark by
Wyndham. Owners are welcomed at new resorts in Red River,
In 2008, the club continued to expand with Taos and Santa Fe in New Mexico, a third resort in Las Vegas, a Washington coastal resort in Long Beach, a resort in New Braunfels, Texas and a grand resort in Anaheim, just steps away from Disneyland.
In 2009, it’s been 20 years since the first owner joined the club which has expanded from just four units to over 70 resorts, with opportunities to access resorts worldwide. We thank Bill Peare for his vision and we wonder if he ever thought this vacation ownership club would play such an important role in the lives of so many families.
Gene: Wasn’t that nice? (Applause) Well, I ah still see Bill Peare and we have lunch occasionally get out on the golf course and such and I can tell you, he had no idea that this was where it was going to go when we started the whole opportunity in Club Esprit, what happened was Club Esprit was challenged by Esprit de Corps and we could’ve gone to court and fought and tried to keep the name, but Bill decided he would prefer to change the name and spend the money on opening new resorts. Which is exactly what we did.
I don’t think anybody anticipated the kind of growth that we would have or the reception we would have from the vacationing community. Because everybody thought we were crazy. They said these people are building resorts in their backyard. Well, for twenty years you have used them the same way. The average stay is three and a half nights, and ah it’s been consistent. You take more vacations than most folks and take shorter ones. And about every other year you go out for that grand one. But ah, it was definitely a pioneering concept and I think that Bill, and it’s also Jeff Sites, and Mike Moyer. He would definitely share the credit with those two. It was the three of them that brought it together.
The club and the developer are two very very separate
entities and people confuse them. And the
Developer is doing all they can to encourage that confusion. “WorldMark by Wyndham”? Trendwest
was never “WorldMark by Trendwest”. And as I mentioned earlier, the developer, the
original being Trendwest was Trendwest until acquired by Cendant in 2002. It
was one of the largest purchases ever made in the vacation timeshare industry.
It was two years later which they; you know I should probably have taken a look
at this before (chuckle) because we’re going to double up here. I’ll try to not
repeat what you’ve already been told. But basically, Wyndham has the right to develop,
build resorts, and transfer those resorts into WorldMark ownership without any
debt or encumbrance. There can be no encumbrances whatsoever. No debt on them
whatsoever. They transfer the real estate into WorldMark; it becomes a part of
the WorldMark asset. And, in exchange they have the exclusive sales and
marketing rights. Once a resort is transferred to WorldMark, the credit values
on that resort can never change. When you purchase WorldMark, the price is
based on the number of resorts that exist at the time that you purchase. All
memberships are numbered and reflect the number of resorts at the time of
purchase. Huh? My membership number is xxxxxxx1302. There were certainly not 1302 resorts when I
purchased! The future isn’t promised, nor is it guaranteed. Except that we ARE guaranteed access to all future WorldMark
resorts. We are not guaranteed that
there will be new resorts, but if the resorts do come, we are guaranteed full
access. It’s the developer’s prerogative how fast we grow. The
developer also has the right to adjust the price and the credits according to
inflation, among other things. But truly product development is the number one
driver behind those credits. Nope. The Declaration of Vacation Owner Program
says that the “Declarant (developer) shall allocate to each Unit in that Phase the number
of Vacation Credits required for occupancy during different seasons of the year
and on different days of the week. Such allocation shall be based on the
relative use-value of the new Resort compared to existing Resorts, in Declarant's
reasonable discretion. “ There is no
mention of inflation of product development costs. The Declarant is granted reasonable discretion. This contract is a privilege,
it’s not a right, and it can be broken by the owners at anytime. All it takes
is a vote of the owners. The management contract can be
rescinded by a vote of the owners, but acting as Developer for WorldMark is a right bestowed by the Vacation Program Agreement, and cannot
be voted out by owners. That agreement
can only be cancelled by mutual agreement of the parties involved – the
Developer and the Club (through its Board of Directors).
WorldMark the Club is a non-profit, mutual beneficiary
corporation. It’s self-funding and it’s a completely autonomous entity. You,
the owners, run it represented through your Board of Directors. The management
company reports up to your Board of Directors. Except that the Board of
Directors is made up of and controlled by the management company! I like
to compare it with a New York co-op. Very, very, very similar. In a
The club’s bylaws, guidelines and declarants (he means terms of the Declaration – the Declarant is Trendwest, now Wyndham) are what protect the inherent rights of ownership and the board only has the power to amend a bylaw. He mis-spoke. He meant that the Board has the power to change the Guidelines. Amending the bylaws requires a 25% affirmative vote of the owners. Like we did recently with the reservation window. Before you would book 60 days in advance if you were going to stay less than seven nights. We noticed that 80% of all reservations were being booked within that 60-day window. So expanded the reservation window to 90 days and it opened up I believe we figured it was 21,000 additional nights for everybody. Technically these are not “additional nights” – the number of nights available in the system can only be changed by adding or removing units. What he means is that these nights are now available for booking in reservations of less than 7 day duration during the additional period from 60 to 90 days in advance. A bylaw on the ballot this evening requires 25% or greater of the vote in order to change. A declarant requires 50% of the vote or greater in order to change.
Now there’s ancillary benefits which get talked about quite
a bit. They’re provided by the developer and they’re completely optional not
unlike RCI or II. They have to do with the use of credits outside the club’s
right of usage such as the Cruise for Credits, the Solo Travelers, the Guided
Tours and such like that. And it’s the responsibility of the developer to
monetize those credits. Originally, we tried to do it inside the club, but as a
non-profit we weren’t able to, nor was the liability of carrying 3 million
credits and having to monetize them healthy for the club. For some, it’s
perfect. It rounds out exactly what they need to fulfill their vacations. For
others, like myself, we stay within the WorldMark system and do without. It’s
strictly an option, totally up to you.
I mentioned earlier, that the industry seems to re-invent
itself every 10 to 15 years, and so it is today. Anybody who’s read the papers
or watched the news, they know that the industry is going through a very big
transition.
Timeshare began with a fixed week. It was simply: buy a
week at a resort, in a condominium, and that’s what you used every week ah,
every year. The next step was a floating week. In other words, you could buy a
season. If you bought within a red season, your week could float within that
red season. And that was the beginning of flexibility. Ah, then in 1989,
WorldMark forever changed the face of vacation ownership by introducing a pure
point-based system, and was the first one to create a beneficiary cooperative.
Now a lot of legislation had to be passed. A lot of rules
and ARDA has always been one of the resorts and one of the owners’ greatest
allies. Really?
ARDA proudly lists among its legislative achievements the passage of the
2004 California Timeshare Act, which excludes
timeshare owners from the protections afforded HOA’s in the Davis-Stirling
Act. How is that being an ally to the
owners? Within ARDA, there’s a group called ARDA ROC. It’s the
Resort Owner’s Coalition. They lobby on our behalf. They’re working right now,
so hard, to get this transient occupancy tax changed. They feel, as we all do,
that it is an unjust tax, and it needs to go away. Ah, (applause) yeah, that’s
a fact, isn’t it? I mean, we’re getting dinged twice. I don’t know anywhere
else that that happens. Anyway, your board attended ARDA last year. Every other
year they have one on the West coast. Every other year it’s on the East coast.
This year, we all attended, and it was so incredibly worthwhile. Because it
gets you up to date on everything that’s happening within the industry. Where
legislation is going, and some of the changes that are being made. So, we’ve
decided to attend every other year and ah, bring back some of that information with
us. Now, WorldMark has recently achieved an honor in
customer satisfaction for timeshare 2 quarters in a row. We’ve taken the number
one spot from Disney. It was always: Disney, Marriott, and WorldMark. Then it
was Disney, WorldMark, and Marriott. It’s now WorldMark, Disney. (Applause)
Yeah, yeah, I mean you have an incredible management company and all of you
know the level of service that’s provided. Great management. How about the Developer/Sales side? Gene didn’t mention another customer satisfaction
survey – the one by the Better
Business Bureau:
BBB Rating
Based on BBB files, this business has a BBB Rating of F (click here for an explanation of BBB ratings)
Reasons for this rating include:
· Number of complaints filed against business
· Number of serious complaints filed against business
In 1993, I told Bill Peare that I wanted to achieve 100% owner satisfaction. To which he replied to me: “It is never going to happen.” And I was taken aback and I asked him why and he said: “Well Gene, 5% of the population were born angry, and you’re never going to change that.”
Well, that year we achieved a 97% owner satisfaction and we continued to do so for many years. So, I’d like you to know that even a percentage of the angry folks can be pleased. Um, I would like it if you would join me in just in saying thank you to the hardest working team in the vacation industry. And that’s your management company who’s made a little piece of history by taking such good care of the owners and being number one in owner satisfaction. (Applause) They don’t hear it enough.
Last year at this time, I told you that one of my projects
was the WorldMark Charitable Giving Program. Well, it’s in full swing and you
have made it an incredible success. It’s always been a part of the service
culture within WorldMark. It was always part of the culture within Trendwest.
Our management company administers the program at absolutely no cost whatsoever
to the club. We identify four charities and the charities will change that
we’re working with. One of them is near and dear to me.
When I retired four years ago, I joined the Board of
Directors working for East Side Domestic Violence and we operate the safe
houses. And helped transition 32,000 families out of domestic violence
situations. And then with vocational training, helped them assimilate back into
society. Your credits that you donated to the charitable giving cause helped
them raise almost $300,000 in their auction. You are making a difference in so
many people’s lives with this. You’ve helped expand phone lines, you’ve helped
open child care centers, and safe houses. It’s just a tremendous program, and
you’ve responded to it wonderfully.
Being a good steward to the communities that support us has
always been a part of Trendwest, was always a part and IS a part of the
WorldMark’s service culture, and I’m happy to say that Wyndham, they share that
calling in a big way. Peggy Fry, I know,
is going to discuss it in a bit more detail further into program, but you’re
making an enormous difference in people’s lives. There’s also a general fund
and this general fund will support any charity that you might request a
donation toward. The only stipulation that we ask is that it not have a
religious or political affiliation. So, there’s a general fund available for
individual charities as well.
Now, the role of your Board: The role of your Board is to ensure the Club
operates in accordance with the governing documents. To protect the inherent
rights of WorldMark ownership, and to provide input and guidance to the
developer in order to help facilitate and ensure the growth of the Club. And there is currently a derivative lawsuit in
As mentioned earlier, we have a proposed by-law, and it’s
and addendum to help us clarify an existing bylaw. No, they are trying to CHANGE the existing bylaw to
retro-actively ratify a policy that the Board implemented without Owner input. The courts have already declared that policy
unreasonable, and the Club is appealing. For 20 years we have had owners
ask for the membership roster. We have, and I’ll tell you something, I when I
was with Trendwest, I would get calls all the time. People that said that they
wanted the owners roster, that they needed to, every single one, with the
exception of one, I’m going to give one the exceptional rule here. Actually
two. But they had some kind of commercial interest. It just so happens that
they were selling WorldMark, or they were renting WorldMark or there was some
type of… Anyway all I’m asking is to help us protect your privacy. What we want
is, we’ve made arrangements for people who want to communicate with the owners
to do so through a third party so your names, your addresses, and your phone
numbers are not handed out. Once those names, addresses, and phone numbers are
handed out, we have no way of protecting them. They might as well be on the
Internet. So, this addendum to the bylaw is simply helping us to keep that
information private, keep it secure within the club. Now, you’ll hear opposing
views. We published those views. They most
certainly did NOT publish those dissenting views. What they published was “some people don’t
think you should vote for this. But we
do, and this is why.” We
encourage you to look at it, but please vote on it. Let’s resolve the issue. If
you vote in favor, we’ll continue to protect that information. If you want the
information to be let out, then vote against, but let’s resolve the issue.
Let’s get everybody to vote and let’s get the 25% that we need in order to go
forward. This
is incredibly misleading. The bylaw
amendment as written (and the existing policy it is trying to retroactively
endorse) would require any individual owner seeking to communicate with other
Club members to spend $150,000 - $200,000!
This amendment is not about protecting owner privacy, it is about
protecting Wyndham’s control over communication. THER ARE OTHER OPTIONS that the Board has
refused to consider. During the 2008 and
2009 elections, I asked to contact owners regarding election issues and as
proxy drive. I asked for inclusion in
materials already being mailed, I asked for a separate email sent by the Club,
and I asked for space on the Club website and within Destinations. Each of these would have allowed me to
communicate with owners regarding issues that are clearly Club business and not
commercial in nature. None of these
would have given me direct access to any personal information. The Board (or was it Management? Is there a difference?) refused. Our Bylaws and
What I’d like to do now is we’re going to introduce the
Club Board of Directors, actually the candidates for the Board of Directors.
Since I’ve already taken up enough of your time, what we’re going to do is
we’ll move on to the next candidate. And, I believe the first one up is, ah
Peggy Fry. OK, thank you very much. (Applause)
