Is Wyndham taking over Club La Costa?

A Club La Costa (CLC) press release on 25th October 2021 announced a 'strategic partnership' with Wyndham, sending the timeshare rumour mill into overdrive.  But what does it actually mean for the businesses?

Some perspective

First of all, even though Club La Costa was once regarded as a giant in the European timeshare world, it is a speck of dust compared to Wyndham Hotels and Resorts.  The latter turned over $1.3 trillion (with a T) in pandemic struck 2020.  CLC's turnover is a fraction of 1% of that number.  This isn't going to be a relationship between two equals.  For CLC this is game changing, but for the mighty Wyndham, this is just another day at the office.

What exactly is the new relationship?

Disconcertingly vague phrases like 'operational partnership', 'strategic partnership' and 'collaboration' give no breakdown of the financial commitments involved.  All we know for sure is that Wyndham will be rebranding 12 CLC properties as some of the brands under the Wyndham umbrella for 'midscale and upscale' family accommodation options.  

One can safely assume that this involves some form of payment to CLC, which the insolvency practitioners FRP are likely to be interested in investigating on behalf of CLC's many creditors. 

What do the experts think?

Industry experts believe that this partnership is likely to have significant effects for CLC members:

• Availability: With Wyndham guests now having access to CLC properties, the CLC timeshare owners may now have even less availability than they do at present.  "CLC members already complain to our switchboard about how difficult it is to get the week they want," says Daniel Keating, information Officer for the Timeshare Consumer Association (TCA).  "It's difficult to see this move as doing anything other than making that problem worse as Wyndham guests are inserted into already contested inventory."
• Member services:  It's no secret that CLC's member services, such as kids' clubs, welcome packs and onsite entertainment have been disappearing from CLC resorts.  With weeks being rented to regular holidaymakers, are Wyndham likely to fund these services that even CLC are abandoning?  "Unlikely," believes Keating.  "This is all about money.  With no members joining CLC, they have to be looking to maximise profit on the annual fees.  They can only push the fee costs up so far before the members revolt, so they will look to minimise outgoings instead.  CLC members paid tens of thousands of pounds to join something that anyone can now book through Expedia. They paid this premium because of all the little touches like Member Services.  This downgrading of service is clearly unfair to CLC owners.
• Will Wyndham take on CLC's debts?  "Probably not," according to Dan Keating.  "Wyndham are the world's largest hotel franchising company.  They are smart operators, and will want no part of the mess CLC have got themselves into by disregarding consumer laws for all those years.  I would be very surprised if Wyndham had not contractually separated themselves well and truly from CLC's self imposed financial quagmire.
  
• Will CLC owners be asked for more money?  Some owners believe that they will face pressure to 'upgrade' their memberships in order to benefit from access to properties across the Wyndham pantheon of hotel brand giants.  "Timeshare owners are used to being harangued by inhouse sales assaults every time they visit a resort," says Daniel.  "it's difficult to imagine that the parties involved in this deal won't see it as bringing a host of sales opportunities involving the beleaguered CLC members." 
• Is this an attempt by CLC to avoid paying the millions they owe?  CLC owes a fortune to various creditors, including tens of millions of pounds to consumers that they sold illegal membership contracts to.  Industry observers are speculating that this rebranding could be an attempt to distance CLC from their creditors.  "Club la Costa may consider it a psychological win if they can remove the tainted CLC name from the resorts.  They may feel that their victims will lack a target to focus on, making them more likely to give up," Keating says.
• Is this testing the water for a more complete takeover?  Wyndham could swallow up CLC in one gulp, should it choose to.  The world's largest hotel franchising company has a comprehensive track record for absorbing the competition and the CLC resorts appear to be ideal targets for its burgeoning expansion into European holiday destinations.  "A complete Wyndham takeover would seem like a perfect parachute for the CLC team," Keating confirms. "They seem to be looking for a way out of their financial mess and this must be very inviting.  If Wyndham were to take over CLC completely, the latter's memory would fade away a little more every day.  Just one problem though.  The CLC debts would have to be dealt with first.

If you have questions or need advice on this, or any other timeshare related matter, contact our team at the Timeshare Consumer Association