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Los Abrigados Lawsuit Near Settlement

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					TimeSharing                                                                                                                             $4.




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The Trusted Independent Voice of Vacation Ownership since 1991
                                                                                                                    Issue #82
                                                                                                                Jul/Aug, 2005
Los Abrigados Lawsuit Near Settlement
   A class action suit filed in late 2003 against Los Abrigados Resort & Spa, its vacation club
and parent company, ILX Resorts Incorporated, appears on the way to settlement. The com-
plaint by two timeshare owners, had charged defendants with “a pattern of deception” in the
sale of timeshares and in the operation of the resort.
      Plaintiffs had claimed that after all the 9,100 units at Los Abrigados were sold, ILX began selling interests in its Premiere Vacation
Club and purportedly set aside a number of units at each of its resorts, including Los Abrigados. As a result “owners of the timeshares
and interests in the Premiere Vacation Club, including Plaintiffs, often cannot make reservations at Los Abrigados because it is
oversold or defendants have rented out these rooms to the general public on a hotel-type basis.”
                                                                                                               Additionally, according to
    The Changing                                                                                          the complaint, annual mainte-
                                                                                                          nance fees had been siphoned
 Exchange Landscape                                                                                       as profits to defendants instead
           By Rosalie E. Leposky                                                                          of being used for the general
      When my family purchased our time-                                                                  upkeep of the resort. And lastly,
share unit in 1982 at a small non-branded                                                                 plaintiffs claimed that model
resort in Pompano Beach, Florida, we ex-                                                                  rooms shown to potential buy-
pected to be able to exchange when and                                                                    ers “were much larger and more
where we wanted to go. When we discov-                                                                    comfortable than the actual
ered that our exchange company wanted                                                                     rooms” timeshare owners re-
to treat us like sheep, we had two options:                                                               ceived once they had purchased.
      • Go where our exchange firm had in- ence, and insist that the exchange com-                   ILX Resorts is a publicly traded com-
ventory it wanted us to fill, or                   pany accommodate us.                         pany which has developed and operates
      • State a strong destination prefer-              We usually triumphed in these ex-       nine timeshare resorts, six in Arizona and
                                                   changes, though sometimes only after         one each in Indiana, Colorado and Mexico.
                                                   acrimonious discussion with exchange              Notice of the proposed settlement
                                                   counselors and their supervisors.            was recently mailed by court order to own-
  In this issue............                             Today there’s an additional wrinkle     ers of timeshares at Los Abrigados and
    Comparison Chart of                            in timeshare exchange transactions. The      members of Sedona Vacation Club and
         Exchange Companies                        major exchange firms are no longer inde-     Premiere Vacation Club, all of whom would
                                                   pendent and dedicated to owner exchange      be affected by the settlement. Recipients
   Late breaking news:                             as their stated reason for existence. Their  of the notice can advise the court that they
        Cape Cod timeshare                         inventory is fair game for use by a variety  are choosing to “opt out” of the deal, so
                                                   of sister companies with customers who       they can pursue their own remedies if they
        closes suddenly;
                                                   are not timeshare owners, so timeshare ex-   choose. If they have any objections to
        management AWOL.                                                                        the proposed settlement and have not
                                                   changers have even more competition for
   Reviews of resorts                              scarce inventory in desired times and lo-    opted out, they can apprise the court of
                                                   cations.                                     their objections by mail, and even appear
   Articles on Hurricanes,                              The only constant is that developers    in court on July 26, 2005, when the court
        Donating, Travels, more                    continue to control the industry. Now        will make a determination whether the pro-
                                                   one of the major exchange companies          posed settlement is “fair, reasonable and
                                                          (Continued on page 16)                          (Continued on page 11)
TimeSharing Today                                                Page 16                                               Jul/Aug,2005

         The Changing                            a match. The big exchange firms continue       numbers are up for the first four months
                                                 to charge membership fees and require          of 2005,” says Chris Moscarella, director
      Exchange Landscape                         consumers to relinquish their weeks or         of Platinum Interchange. “In 2004 we had
        (Continued from front page.)                                                            27,720 confirmed exchanges. We do not
                                                 points before accepting a match.
 owns resorts and should be classified as             The Web is a major force for the larger   keep tabs on our rental program.”
 a developer. I wonder how it can play both      firms and the small ones alike. Companies           Moscarella says growing numbers of
 sides of the industry, and not take advan-      compete on who has the most services on        timeshare travelers are exploring the
 tage of the consumer. Who, I wonder, is         the Web, booking on the Web, selections        Internet for vacation rental opportunities
 watching the chicken coop                       announced on the Web, and admission to         at hotels, condominiums, and timeshare
                                                 user-only sections of their Web sites.         units, an opportunity available only to
 Nibbling at Crumbs                              Many offer both exchange and rental pos-       travel agents in the past.
      For years, several small exchange          sibilities from their Web sites.                    “Customer demand for exchanges
 firms – also independent – have been nib-            Before you select a Web site to use,      and rentals are high,” he says. “There is
 bling at the crumbs dropped by the big          investigate the company. What does it          not an appreciable difference in demand.
 two. They got their foothold because they       charge for, and what is free? Does it list a   Our philosophy remains that our rental
 offer better, more personalized service,        phone number you can call. Where does          and exchange services complement each
 didn’t charge membership dues, and tried        it advertise, and how does it present its      other. Our objective is to maximize inven-
 to obtain the destination and perhaps           offers? If it sends you an unsolicited e-      tory usage of core resorts and for our ex-
 even the individual resort a customer           mail, it may not be reputable, and you         changers. From time to time developers
 wanted.                                         would be well-advised to take your busi-       ask us to help fill their empty spaces.
      Today’s small exchange firms typi-         ness elsewhere.                                These inventories vary greatly from day
 cally represent one resort or several ex-                                                      to day and from year to year.”
 clusively, handle consumer-banked weeks         Platinum Interchange                                Moscarella says Platinum Inter-
 at other resorts, and also may offer man-            Platinum Interchange, a subsidiary of     change’s exchange inventory is growing
 agement services and rental possibilities.      Tricom Management Company in Anaheim           and more people are requesting its firm’s
 They still don’t charge membership fees,        California, always has offered rentals and     services. “Clients like our exchange rates
 and some may not take control the               exchanges to owners at the 14 resorts it       and the fact that we have no membership
 consumer’s week or points before finding        manages. “Both our rental and exchange         fee, making it easier for timeshare owners
                                                                                                who don’t want to exchange every year,”
                                                                                                he says.
                                                                                                     “We expect to see an increase in num-
                                                                                                bers of exchanges among companies that
                                                                                                provide higher quality services. We also
                                                                                                expect to see more disparity between ex-
                http//:www.redweek.com
                                                                                                change services, with the better exchange
                                                                                                services giving members access to see
                                                                                                exactly what is available for exchange any
                                                                                                time they want to vacation.
                                                                                                     “We e-mail our owners a current list
                                                                                                of our available inventory, and ask where
                                                                                                they want to travel in the next six months.
                                                                                                We ask them to e-mail back their prefer-
                           Rent. Sell. Buy.                                                     ences as soon as possible because of the
                                                                                                rapid changes on our list.”
                           Read. Review.
                         A heavily visited Web site = lots of                                   Trading Places
                             exposure & connections.                                            International
                                                                                                     The primary business at Trading
                How much is a week at your resort going for?                                    Places International in Laguna Niguel,
                Connect with a community of owners and travelers in a fair                      California is resort management and time-
                and honest marketplace. It takes a great working Web site                       share exchanges” says Carol Martens, di-
                with plenty of traffic to help make your timeshare experience                   rector of marketing. “We manage 13 re-
                the best it can be. Post your timeshare for rent or sale.                       sorts mostly in Mexico, Hawaii and west
                Make a RedWish. Connect today.                                                  coast mainland. We may be the largest of
                                                                                                the smaller exchange companies. Rental
             Connecting travelers and the timeshare community.                                  of exchange intervals deposited with the
                                                                                                larger exchange companies has created a

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TimeSharing Today                                                         Page 17                                                                                                Jul/Aug, 2005
 lack of available exchanges for members             “Consumers like the search option on                                           share to have a timeshare exchange vaca-
 resulting in them being dissatisfied. This     our Web site,” Kunz says. “They don’t                                               tion, not to rent the use of someone else’s
 dissatisfaction has benefited smaller com-     have to deposit anything with us until we                                           unit.
 panies that still provide more personal        find an exchange for them within a rea-                                                   “Our customers don’t want to rent.
 service. Trading Places excels at this hav-    sonable time, so our owners still have to                                           We don’t work with the general public.
 ing combined management with exchange,         time to list their unit for exchange. This                                          Our clients are all timeshare owners. The
 travel services, sales fulfillment, etc. We    year we have noticed that high airfares                                             only rentals we do are for our owners. Their
 have always worked closely with our de-        have had a great impact on our mainland                                             units go into our rental pool, and owners
 velopers and help them fill their unsold       owners using their Hawaiian weeks. So                                               get 80 percent of their rental. If their unit
 units with exchanges and rentals.”             instead of exchanging, they have listed                                             doesn’t rent, it goes into our exchange
                                                their units in our rental pool. Interestingly,                                      pool, and the owner has up to three years
                                                most of our rental clients come from the                                            to use it for an exchange. We will always
 Hawaii Time Share                              mainland and are willing to pay the air-                                            be an exchange company and help own-
                                                fare.”                                                                              ers keep alive their exchange vacation
 Exchange                                                                                                                           dreams.”
      “We do both rentals and exchanges,”                                                                                                 Donita says owners associations, not
 says Sonya Kunz, operations manager at
 Hawaii Time Share Exchange (HTSE) on           Dial an Exchange                                                                    developers, have asked her firm to handle
                                                     “It is a negative action for the time-                                         their inventory. “We provide owners as-
 Kauai, Hawaii. “Last year we did over 3,000                                                                                        sociations a strictly rental arrangement to
 confirmed exchanges and about 400 con-         share industry for more and more ex-
                                                change companies to being doing rentals,                                            help them make money to offset their main-
 firmed rental weeks out of about 550 of-                                                                                           tenance fees for unsold units. We take a
 fered rental weeks. Our members have the       and a positive for us,” says Donita Cilch,
                                                director of Dial an Exchange in San Diego,                                          small commission but most of the rental
 option to bank their week with or rent their                                                                                       funds go directly to the association. Ex-
 week through us.”                              California. “The rental market growth is
                                                sending more and more customers to us.                                              pect our exchange and rental inventories
      HTSE has offered rental services for                                                                                          to grow. We plan to keep exchanges simple
 three and half years, and sees more own-       Owners have a lot of money tied up in
                                                their units and their maintenance, and they                                         and affordable.”
 ers wanting to rent their weeks to try to
 recoup their maintenance fees.                 want to exchange. Owners purchase time-




                                                     We think this is the fastest and easiest
                                                       way to become a Marriott owner.
                                                            But you make the call.


                                                      Now, the hardest thing about buying a Marriott timeshare is picking up the phone
                                                                  and pressing the buttons. Call Marriott Vacation Club Direct.
                                                It’s an easy, friendly and convenient way to own a lifetime of spectacular Marriott vacations.
                                                                                   www.vacationclub.com
                                                                                   or email your inquiries to
                                                                                mvci.direct@vacationclub.com




                                                       This is neither an offer to sell nor a solicitation to buy to residents of states in which registration requirements have not been met.
                                                                           This offer is made in compliance with the law of jurisdiction in which the project is located.
                                                 THIS ADVERTISING MATERIAL IS BEING USED FOR THE PURPOSE OF SOLICITING SALES OF TIMESHARE PERIODS.
                                                                                                                                                                                                 TEL00300




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TimeSharing Today                                                 Page 11                                                Jul/Aug, 2005

  Lawsuit Settlement                             ber of “Copper” units at The Inn at Los
                                                 Abrigados as compared to The Bell Rock
                                                                                                 companying the annual maintenance in-
                                                                                                 voice to the effect that owners may begin
         (Continued from front page)             Inn, the only other property in Sedona,         making reservations as soon as their dues
 adequate.” The court can approve the            Arizona with “Copper” units available for       are paid. In addition, to both the invoice
 settlement only after making such a find-       use.                                            and the cover letter will be added the sen-
 ing.                                                                                            tence, “Reserve early for greatest avail-
                                                 Improve service                                 ability.”
 ILX Script                                            Under the settlement, ILX has also
       Under the settlement, ILX will create     agreed to limit its use of “Copper” units at    Ongoing unit search
 “ILX Script” and distribute it to class mem-    the Inn at Los Abrigados and also has                Also under the settlement, if an owner
 bers. Owners of annual timeshare inter-         agreed to certain measures to improve its       calls to make a reservation, but the re-
 ests in SVC or PVC will receive $40 in “ILX     customer service with respect to owners’        quested date is unavailable, ILX will con-
 Script” and owners of biannual timeshare        reservations. These measures include (1)        tinue to offer to check other properties for
 interests in SVC or PVC will receive $25 in     having ILX make inquiries during “owner         the same date or another date for the prop-
 “ILX Script.” “ILX Script” may be used to       updates” regarding any difficulties the         erty sought by the owner. If an owner is
 purchase food and beverage at any res-          owner has had in using his/her owner's          seeking a week-long reservation and his/
 taurant operated by ILX where permitted         time or in making reservations, or regard-      her choice of dates is not available at the
 by law, to purchase goods or services at        ing any other matters an owner would like       requested property or at another property,
 Sedona Spa and to purchase Sedona Spa           to address; (2) having ILX annually send        at the owner’s request, ILX will search for
 products by catalog or online. ILX Script       questionnaires with postage-paid return         the next full week available at the re-
 must be used at point-of-purchase and is        envelopes to owners regarding any diffi-        quested property. Further, if asked to do
 not redeemable for cash. Change will not        culties in using their time or making reser-    so, ILX will search for the next available
 be given when ILX Script is used. ILX           vations or other matters an owner would         week at another requested property.
 Script may not be used in conjunction with      like to address, providing an email address          Finally, under the settlement, ILX, SVC
 any other discount or promotional offer.        for owners to send inquiries, and having        and PVC have agreed to pay to Counsel
 ILX Script may be used through Decem-           ILX's Owner Services Department follow-         for the Settlement Class such fees, costs
 ber 31,2009.                                    up with the owner by telephone when so          and expenses as are awarded by the Court,
                                                 requested; and (3) having ILX continue          up to a total of $350,000.
 Plan Documents modified                         to maintain a customer service hotline and
      Also under the settlement, ILX, SVC        email address specifically for customer
 and PVC agree to modify Membership              concerns (i.e., separate from reservations)
 Plan documents to make clear that ILX,          to be displayed with a link on the ILX
 SVC and PVC have the right to set aside         website and referenced on dues letters and
 room rights in advance for use by ILX in        other mailings.
 its sole discretion, including use as a ho-
 tel operation, based on the number of un-
                                                 Discounted hotel rooms
 sold PVC memberships. Also under the                 Also under the settlement, in the
 settlement, ILX, SVC and PVC agree to           event that an owner calls to reserve a full
 modify Membership Plan documents to             week using his/her timeshare rights, but
 make clear that ILX, SVC and PVC have           no full weeks are available at the requested
 the right to set aside room rights in ad-       property, if the owner so requests and if a
 vance for use by Exchange Company               room is available, Defendants will make
 guests in anticipation of owners* exercise      available to the owner a hotel room at a
 of their opportunity to “bank” room rights      reduced nightly room charge in order to
 through an Exchange Company. Plan docu-         create a full week’s stay. (The discount to
 ments also will be modified to make clear       be offered to an owner under these cir-
 that when rooms are set aside in advance        cumstances shall be no less than 10 per-
 in this fashion for Exchange Company use,       cent of the published “rack rate” for the
 they are not available to be reserved by        room.) The opportunity provided in this
 owners. Language also will be added to          paragraph may be exercised by any par-
 Membership Plan documents to make clear         ticular owner only one time a year. Fur-
 that although there are “Copper” units          ther, ILX has the right to terminate this
 available for use at The Inn at Los             practice if it proves to be unduly disrup-
 Abrigados (located adjacent to Los              tive of the interests of other owners.
 Abrigados Resort & Spa), there are no
 “Copper” units available at Los Abrigados
                                                 Early reservations
                                                     The settlement also provides that lan-
 Resort & Spa. The added language will
                                                 guage will be added to the annual mainte-
 also make clear that there are a limited num-
                                                 nance invoice and to the cover letter ac-
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