By Karen in Maryland and Fact Checkers
There has been an abundance of information and misinformation concerning Hilton Grand Vacations acquisition of Diamond Resorts. The acquisition was finalized in August of 2021. Hilton’s product before the acquisition was a deeded product. The new product, called HGV Max, is a non-deeded, trust-based product, mimicking Diamond’s non-deeded, trust-based product.
The official HGV Max page:
Trust-based means properties are owned by a Trust, so those who purchase HGV Max points will be members, not owners. Buyers of non-deeded points purchase a right-to-use product. Buying HGV Max points is more like joining a country club or gym club. Gym or country club members have no beneficial interest in their club’s brick and mortar buildings.
The introduction of a trust product allows for lower barriers to ownership, reduced inventory delivery volatility and inventory recycling, enabling smoother sales and upgrades while providing buyers and owners network and pricing flexibility.
Inventory recycling means foreclosing or taking back points. It is less hassle for a developer to take back non-deeded points than it is to foreclose on a deed.
Integrates Diamond’s innovative Events of a Lifetime® experiential sales and marketing platform that drives strong engagement and Volume Per Guest (VPG) premiums with HGV’s owner base.
Volume per Guest is a metric that is often used to show efficiency in sales. Total sales volume divided by the number of tours “guests” that each site has. For example, a site sells 200,000 on a day with 25 guests = 8,000 VPG – This is the expectation for existing owners (figures provided by an industry insider).
DRI 7,000-12,000 VPG
Two key FAQ answers in an official Diamond Resorts communication:
Will my Diamond “The Club” benefits go away if I don’t join HGV Max?
Your current Club membership will continue to exist, and you’ll continue to access the benefits associated with your membership, as noted in The Club documents.
Will HGV Max impact inventory availability for existing Club members?
Your Home Collection and Home Resort Advantage reservation windows remain unchanged. HGV Max reservations may only be made six months or less prior to the check-out date. We always recommend booking as early as possible.
The biggest question on the minds of many Diamond members is – Will Diamond points finally have a resale value? Rules change, but at last check, if you buy Diamond points on the secondary market, you must buy 50% of the number of points you bought on the secondary market directly from Diamond to be eligible for The Club. Will HGV Max be so restrictive?
From the HGV website:
HGV Max is a new membership program that brings together the best of Hilton Grand Vacations Club and Diamond’s The Club, giving Members the opportunity to vacation in more properties and more destinations, as well as access to special events and discounts across the Hilton portfolio of 6,800+ hotels and resorts.
A member’s comment: The fact that The Club is not changing is a positive but rules can be changed anytime. I would anticipate a gradual diminish of benefits, not fast enough to trigger a class action, but making it slightly less valuable year over year.
By Karen in Maryland, a Diamond Platinum member
On April 27, 2022, I attended an Owners Update at Kaanapali Beach Club on Maui to learn about the new Hilton Grand Vacations Max (HGV Max) program, a way for Diamond Resort members to feel they are part of the Hilton family-like paying to be adopted. If you buy into Hilton’s new Max program, you are buying benefits and access, not ownership. HGV’s deeded product represents ownership.
According to our sales agent (quotes in bold), Max’s benefits include:
1) “Diamond members can convert unused points to the Hilton Honors program and those points won’t expire as long as the Hilton Honors account is active.” You can keep your account active, and earn points and discounts, by using the Hilton AMEX card. My salesman was not prepared to discuss the conversion rate for changing DRI points to Hilton Honors.
FACT CHECK: Get the conversion rate in writing. Do your timeshare math.
Another member reported: Back when we signed and then rescinded an HGV (deeded) purchase, your week could only be converted to Hilton Honors points at the start of the year. I believe that has changed now, but the exchange rate is variable depending on when you exchange. The later in the year the fewer points.
2) “By purchasing Max, you have access to 154 Hilton resorts, many of them in better shape than Diamond properties.” This is both good news and bad. The Hilton philosophy is, to provide a great experience, the environment needs to be controlled. Hilton designs and BUILDS properties. Hilton resorts are very, very nice. But remember, Max membership is not Hilton ownership; you will not have as much advance access to the Hilton properties as Hilton owners.
3) “The purchase of DRI by Hilton will lower maintenance fees.” That would be VERY exciting for Diamond members, but it was probably a misleading statement. The salesman didn’t provide any specifics. Our maintenance fees are set by perceived value as well as direct and indirect costs. I expect maintenance fees must rise as Hilton builds new properties. After a new property is transitioned to a fully-sold property, costs are transferred from the developer to owners. Remember Diamond Resorts founder Stephen Cloobeck? His philosophy was: buy and renovate. He felt members were best served if Diamond bought a building and improved it, feeling money could never be recovered if resorts were built from the ground up. During the recent past, renovation of Diamond resorts has been minimal or delayed. Apollo management restricted that budget line. I’m guessing that since two Apollo directors are on the Hilton Grand Vacations Board of Directors, it will be hard to maintain Hilton Quality with Apollo Financial Services members in the room.
Our salesperson said that Hilton was buying and refurbishing other hotels and resorts instead of building new ones. He might have been referring to Diamond’s acquisition.
Fact Check: Get the maintenance fees in writing.
A Member’s comment: Developers intentionally keep maintenance fees low in the early years, especially at self-built resorts, since they are paying the fees on all the unsold units. Eventually major renovation is required and fees jump significantly, by that time the developer is gone.
4) “Being able to convert Diamond points to the Hilton program provides access to the huge world of Hilton branded hotels.” We all need hotel rooms from time to time, but, if you don’t need them very often, use your Hilton points with the Hilton PERKS program. PERKS allows a Hilton owner to cruise; do adventure vacations; and join guided tours, all on points. PERKS don’t use points plus cash like the Diamond program. If you don’t have a lot of Diamond points to convert to Hilton points, it isn’t an advantage.
5) When a Diamond Platinum owner converts to HGV Max, they are automatically promoted to the Hilton Elite Premier Plus (HEPP) level.” That is amazing because owning property in Hilton Grand Vacation Club membership is a LOT more expensive than owning Diamond points. The salesman stated HEPP members would have access to all the best Hilton discounts and upgrades. I would like to see a discount schedule that includes my senior or military discount compared to a Hilton owner’s discount and a HEPP member discount.
6) DRUM ROLL: This is BIG!! At least for someone my age (72) – Hilton is a publicly traded company, accountable to stock holders, so it has created a formal Release of Liability contract to protect your family should something happen to you.” According to my salesman, Diamond has a very ambiguous TRANSITIONS program. He said that a Diamond owner he knows applied for TRANSITIONS four times and was turned down four times. The owner paid his fees for an additional two years in order to work things out. OUCH!
FACT CHECK: TRANSITION is not ambiguous.
All a Diamond member needs to do to apply for Transitions is go to their account online, click Transitions, and it will display a list of contracts. The member checks which contract or contracts they wish to exit, then in the next day or two Transitions will respond in the affirmative, if eligible. The process takes about 60 days. To be eligible there can be no outstanding reservations and:
- The Diamond member must have purchased directly from Diamond,
- There can be no loan outstanding. The member must be in good standing (current on maintenance fees),
- The member cannot have retained a third party.
7) My salesman also warned me that I could not just make a phone call and walk away because some Diamond contracts CANNOT be legally SELF-SURRENDERED.
FACT CHECK: Only points purchased from a third party are ineligible for Transitions.
8) Following through on that idea, the salesman said, “NEVER surrender points, ALWAYS use a good brokerage firm.”
FACT CHECK: This is utter nonsense due to the secondary market restrictions described above, that a RedWeek correspondent described as “draconian.” There is an organization called the Licensed Timeshare Resale Broker Association. To our knowledge, not one of the over 50 timeshare resale brokers will accept a listing for Diamond points due to due to Diamond’s secondary market restrictions. As one licensed broker explained, “What you sell turns into a different product.” Yes, you can sell if you find a buyer who will accept the restrictions, but how many buyers buy, knowing of the restrictions? Also, if you bought secondary market points, your only choice if you no longer want the points, is to default, because you will not be eligible for Transitions.
The sales agent said a Diamond client of his had success with Fidelity. If that is true, that information might have been worth the price of admission.
FACT CHECK: Fidelity completes the transfer if the member finds a buyer.
9) Did you know that Diamond salesmen sometimes have side businesses? Two different salesmen I met during the last 8 years had timeshare booking agencies on the side; “If you really need a special unit in a special place, call me. Buy from me and then book all your reservations through me. When you want out of Diamond, call me and I will sell your portfolio to other owners.”
FACT CHECK: Diamond sales agents are not allowed side businesses to sell or rent Diamond points. Diamond’s rules prohibit renting via a website or renting to anyone you don’t know.
10) In today’s meeting, I was warned several times: “Hilton will dump Diamond properties that don’t meet Hilton standards,” and, if I don’t own Hilton Max, “You will be left with fewer choices and more competition for those choices.” Since Hilton owners will be able to use Diamond properties, that could be true. But it might also be true that a Hilton owner with more than 150 deluxe or upscale properties in their reservation system might not EVER bother with a Diamond property.
FACT CHECK: See the FAQ above: “Your current Club membership will continue to exist, and you’ll continue to access the benefits associated with your membership, as noted in The Club documents.” In correspondence to current HGV owners, HGV owners can only access Diamond properties through RCI.
11) What I learned from the second salesman, the CLOSER FOR DIFFICULT PEOPLE, is that the written Hilton policy is: A DRI member can become a Max owner no matter how small the purchase. The first Hilton Max proposal presented to me was for 3000 points for $14,250 ($4.75 /per point, 10% down, >15% interest). Perhaps I could have teased along the process and purchased just 1000 points. The final CLOSER wanted me to buy a 20,000-point vacation package (must be used within 2 years) for $3995.
FACT CHECK: This $3,995 product is a Sampler, a trial product. We doubt Diamond members will be eligible for HGV Max with a Sampler purchase. The minimum purchase for annual points is 2,500 points.
12) The salesman tried to incentivize me to BUY NOW because, “As soon as the HGV DRI rollout is complete, the cost will be $9.25 per point.”
FACT CHECK: This is a broken record complaint. Your super proposed price point – is compared to the retail chart of $9 going towards $11! The consumer is led to believe the VALUE of the point is $9 per point, when in reality there is little to no resale value.
Well, one thing I like about the Hilton acquisition is, since January, I have been invited to TWO Events of a Lifetime. I am married but a sole owner. I have been offered events and tickets, then had the offers rescinded because my husband wasn’t with me. My husband doesn’t like resorts. He likes sleeping bags. That’s fine. Some folks blend families, we blend time away. I like that Hilton has acknowledged me with event invitations. I AM the buyer. Being a married but sole owner got me out of a LOT of owner updates – keep your spouse in the car and check-in alone if you don’t want an Owners’ Update!
One final observation: The Hilton logo didn’t appear on any form or information sheet. The sales offer sheet had no company name. Some of the explanatory paperwork had HILTON at the top. How do we know who we are dealing with?
Should you buy into HGV Max or buy an HGV deeded product?
The best person to answer this question is Judi Kozlowski, a REMAX timeshare resale broker with decades of experience. Some timeshare brokers have an expertise in a particular product. Judi is our go-to for anyone interested in learning about the benefits of buying a Hilton timeshare on resale.
Timeshare is a buyer beware industry. Don’t succumb to high-pressure demands to buy the same day. Trust us. The deal offered today will be there tomorrow. Take time to research and review what’s available and learn the differences in buying resale vs direct. Timeshare can be of great benefit for quality family time, or can financially ruin a purchaser who buys for reasons that don’t exist.
The Diamond Resorts Backstory:
Diamond Resorts sold to Apollo Global Management APO.N in 2016 for about $2.2 billion.
Apollo attempted to take Diamond public in 2018 seeking a valuation of $4 billion:
Private-equity firm Apollo Global Management LLC is preparing to take Diamond Resorts public …. Apollo could seek a valuation for Diamond Resorts of around $4 billion and aim to raise in excess of $500 million in the offering.
Hilton Grand Vacation purchased Diamond in 2021 for $1.4 billion:
HGV, spun out of Hilton Worldwide in 2017, will buy the Las Vegas-based Diamond Resorts from funds managed by affiliates of Apollo Global Management Inc., Reverence Capital Partners and others in an all-stock deal.
Thank you Karen for your first contribution, and also a very big thank you to Irene Parker for editing all of our US stories along with all the other work you are involved in. Unknown to Irene, the first article this week was all about the “twisting of the truth”, a warning to consumers regarding the news of Barclay Partner Finance finally caving in. This news quickly started the “cold call” campaigns and adverts by the dubious elements on the periphery of timeshare and was a very last-minute replacement. Strange how things can come together.
That is all for this week, we hope you have a great weekend, Baby Dog is once again sleeping and dreaming of being in the country.