WM BOARD MEETING SUMMARY I’m trying to play this straight…i.e., trying to keep my opinions out of the summary…mostly. Any personal comments I make will be in brackets [like this]. Anything in commas (like this), are just explanatory details. One caveat: my note-taking skills are quite poor, and as I try to fill in the blanks, my memory seem to be just as poor, so please don’t take any of this as gospel. WorldMark board meeting November 20, 2014. Began at 9:00am. I arrived 10 min. late, coming in the middle of the President’s Report (John Henley). He was mentioning some talks he attended recently [I couldn’t determine where] that warned of timeshare scams. I’m not sure if these were scams to WM members, or to timeshare owners in general. The Treasurers Report was presented by Pete Hernandez (WM CFO). He reviewed some of the numbers YTD and the forecast to the end of 2014. Revenue is over budget a small amount and is expected to remain approx $3.2 million over budget for the rest of the year. Expenses are higher than budgeted, for a number of reasons, some of which are anomalies (WA state lodging/convention center taxes; Reunion and Stable Springs properties; WVR units, etc), so the net, which becomes Wyndham’s management payment, is projected to be lower than budgeted. Thus, Wyndham will get less management money than they budgeted: $9.5 million, instead of $12.6 million. According to their projections, their fee will be 3.81% for the year (5.17% was the projection). [At this point, this lower-than-expected fee became the topic of much discussion]. According to director Geoff Richards [a current Wyndham employee, as well as a WM director], the standard for the timeshare industry is in the 10-15% range. He said they’d like it to get close to 10% some day in the not-to-distant future. Other directors threw out some revenue and cost-savings comments: perhaps changing the Annual Owners Meeting to every two years; perhaps “tiering” the maintenance fee structure, so owners with higher amounts of credits pay higher dues than those with lower amounts of credits (the cost/credit issue); reducing staff; and the problem of the hard-wired 5% cap [dues or hk, I’m not sure which it refers to]. It was acknowledged that some increased-revenue ideas would require changes in Club By-Laws. [A mention was made several times to a “declining credits” issue. I don’t know what this refers to, but I think it relates to the current dues or hk structure, which - I think I’ve read on FB –favors members with lots of credits, and does not favor WM]. Hernandez said most of the WM expenses are direct property and property employee expenses, so any savings here might diminish the member experience, and – anyway – probably wouldn’t be enough to get the management fee appreciably closer to 10%. He said he will be ready with some numbers on variable expenses for the next board meeting. Geoff Richards threw out the idea of some special assessment, and the need for a 5 year plan to get the management fee up to 10%. [if he mentioned what the special assessment might be for, I missed it]. [The way the discussion was going, I think there’s a great likelihood the eventual emphasis will be on increasing revenues, not on reducing expenses]. Henley said they’d pick up this discussion in the afternoon’s strategic planning session [which I assume is not open to the rest of us]. Gary Hyde (WVO Sr VP Resort Operations) reported on the progress being made on Coral Baja. He said the insurance will cover all but $50,000 (the deductible), so they are undertaking a complete renovation of the property. Building 1 should be ready by the end of January and the other two building 3-4 months later. He said all the property employees (which are not WM, or even Wyndham, employees, but are [I think he said] employees of a contracted Mexican company), are unionized, so there is some continued expense there. He also mentioned that virtually all their homes were destroyed, so once everything shakes out, they (Wyndham) will be donating all useable furniture to the local employees. He also said revenue from Wi-Fi is ahead of budget and that Direct TV is being rolled out to all properties and they will be developing a pricing structure for it. At this point some directors brought up the “value proposition,” that motels have set the standard, that they don’t charge for wi-fi and cable TV (or, more accurately, that’s these things are built into the price of the room), so this is something – along with the possibility of any increase in dues – that needs to be considered sometime. Director Bob Morrison told Hyde hed like to start seeing project occupancy again and Hyde said that will be done. Stephanie Sandmeyer (WVO Director of Club Management) reported on club management and services. She reported on service metrics (all good, she said), owner education workshops and webinars, etc): 616 “owner families” attended workshops [I think these are the infamous on-site updates], 1162 owners attended live webinars, 6036 attended recorded webinars. They are creating two shorter webinar topics, Winter and Summer Sensations), and there is a drive for members to gift some credits back to Wyndham, who will then monetize them and donate the funds to the Coral Baja staff. She handed out a report on Club Pass [we attendees were not blessed with copies for ourselves]. She said it was quite a success and that so far or the 10,830 reservations, 6189 were WM reservations [since they all seemed pleased, I assume this means we WM members used the CP program more than did the members of Wyndham’s other vacation clubs]. One of the Wyndham people [Geoff Richards, I think] said it’s a balancing act, to make sure any imbalance is “within an acceptable range and is not a trend.” He said they have a committee that oversees the balance frequently (a complicated balance of points and credits used, inventory-type used, etc). [I got the impression the CP program isn’t a detriment to us WM members, as I initially thought it was, but I do think it’s one more way for Wyndham to get a little extra money directly from WM members than they can make indirectly from us within the structure of the basic WM program]. Next agenda item: director Cecilia Cuevas gave a brief report on the Management Agreement, and it passed without discussion. The lease on the San Diego parking lot also was discussed. Final items: accepted the certified election results (only 28.86% voted, which is less than in the previous year), named board officers to the next year (no change), named committee members (no change, except for the nominating committee), and approved the updated Guidelines (increased cost of BT and HK). Meeting was adjourned at 11:00. [After the meeting was adjourned, president Henley asked the three of us members in attendance if we had any comments or suggestions. I said several things: (1) to one of Geoff Richard’s earlier comments about a previous failed attempt to encourage members to call (or write) directly to a VRO line when they encounter an exemplary service or employee, or a very poor service, I made a simple suggestion; (2) to another of Richard’s earlier comments about the need to increase the management fee, I said if it needs to be brought up to some “industry standard,” I think it’s in Wyndham’s interest to come up with specific ideas for the board’s consideration, both short- and long-term, rather than to just let the board speculate on “things,” as I thought it was doing today; they assured me that they already are considering firm ideas; (3) also to Richard’s reference to an “industry standard of 10-15%,” I posited that perhaps not all “managers” in the industry also were the developers, and that when the manager is also the developer there is income at both ends of the deal, and that there are many non-management ways to make money in such a relationship (I specifically should have mentioned TS, CP and RCI exchanges, Wyndham Travel, My Savings, Travel Secure, etc, but I was taking up more time than I should have, so I stopped).] That’s all she wrote. I can’t be at the next board meeting (March 12), so maybe someone else will do this.
Posted on: Sat, 22 Nov 2014 05:48:18 +0000
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