The
number of credits Wyndham gets to sell for a new resort is based on how many credits it takes to fill that resort. To simplify
things, if they built a new resort with 100 units and each unit had a
value of 10,000 credit per week, year-round, then Wyndham would receive
the following to sell (using the new policy of selling 50 weeks instead
of the former standard of 48 weeks):
100 units x 50 weeks = 5,000 weeks @ 10,000 credits/week = 50,000,000 credits.
Some have talked about the value of the properties being developed
and the money Wyndham gets from selling the credits, and whether they are equitable. The problem is
more complex than that. If a resort was valued by an independent
appraiser at $80 million and Wyndham sold $80 million worth of credits,
then on the surface they have been appropriately compensated. The
problem is not the total receipts, but the manner in which they achieve
them. That $80 million could be achieved by selling 40 million credits
at $2 per credit, which is about what they do now, or by selling 20
million credits at $4 per credit. The difference is that credits are
easier to sell at $2 each than at $4 each. By bringing in the new
resorts at higher credit values, they are making it so that they can
sell the higher number of cheaper credits, which is much easier to do.
I don't know what the average initial purchase from the developer is,
but I would guess that it's in the range of 7000 - 8000 credits (the
overall average account size is just over 10,000, and that includes
people who have been building their accounts for years).
So let's say the average developer sale is 8000 credits. If Wyndham
sold 40 million credits at $2 each, then that would be 5000 new owners
in the Club. If they sold 20 million credits at $4 each, then it would
be 2500 new members in the club. By increasing the credit values for the new units, they are
creating more new owners per new unit that they did in the past, thus
increasing the competition to get the prime reservations.
Easier sales is not the only benefit of higher credit values for
Wyndham. Remember that they are not only the developer, but also the
manager. As manager, their fee is whatever is "excess" from Club
operations. The more money they bring in, the more money they take
home. By raising the credit values on these resorts, they are also
raising the maintenance fees paid per unit. The downtown San Diego
resort is 15,000 credits per week for one bedroom. The Oceanside resort
is 8,000 credits per week for one bedroom. So Wyndham receives almost
twice as much money in maintenance fees per unit at San Diego. Which
resort is more expensive to maintain? Oceanside has a pool, hot tub,
tennis court, playground, covered parking, etc. Downtown San Diego has none of
this. Oceanside's units themselves are MUCH bigger than those in San
Diego, meaning that they are more expensive to clean and more expensive
to refurbish when the time comes. Oceanside has fireplaces,
washer/dryer, and full kitchens in each unit -- San Diego does not.
So the abandonment of the Relative Use Value protection built into our
documents -- assigning higher credit values for lesser accommodations
-- not only creates the Credit Dilution that is clearly demonstrated
in the "white papers" listed below; it also has given Wyndham a way to
effectively increase our maintenance fees above and in addition to the 5% annual cap provided in our governing documents. |
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