Hilton Worldwide Should be Wary of Apollo’s Timeshare Pitch
By UNITE HERE Local 5
A New York Post arcle (“Hilton Fears Bad Rep Over Timeshare Deal”, January 30, 2020
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) revealed Hilton
Worldwide (HWW) was concerned about how its Hilton brand would be impacted by a potenal acquision
of Hilton Grand Vacaons (HGV). According to the arcle,
“Hilton Worldwide appears worried that a sale of the meshare resort company could
tarnish the brand of its own swanky chain, according to sources close to the situaon.”
The New York Post reported that HGV, which spun o into a publicly traded company in 2017, sll
recruits most of its customers from the Hilton Worldwide Honors customer loyalty program.
The fact that Apollo Global Management reportedly made a bid for Hilton Grand Vacaons lends credibility
to the claim HWW is worried for its brand. An Apollo acquision of HGV sets up a scenario where Apollo
could merge HGV with its other meshare aliate, Diamond Resorts.
Diamond Resorts has a history of making headlines. For example, there was a 2019 arcle by Consumer
Aairs tled, “Diamond Resorts sll can’t explain why it sold $250,000 worth of meshare points to an 88-
year-old”. HWW should worry if future negave news arcles about meshares reference “Hilton” in the
headline.
This report looks at reputaonal risk if HGV were to be acquired by Apollo and merged with Diamond
Resorts. HWW should exercise its licensing agreement rights to prevent deterioraon of its Hilton brand
name.
Leadership Sets the Tone
Notably, Diamond CEO Michael Flaskey was promoted in 2017, aer Apollo acquired the
company. Flaskey was an execuve in Diamond’s sales and markeng departments
since 2010 and the meline of his tenure in sales and markeng roles overlap some of
the issues described below (such as the Arizona aorney general selement that covers
a period between 2011 and 2017 discussed below).
Arizona Attorney General Settlement with Diamond Resorts
On December 23, 2016, the state of Arizona’s aorney general announced an $800,000 selement with
Diamond Resorts Corporaon to resolve allegaons of Consumer Fraud Act violaons.
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Arizona Attorney General Settlement with Diamond Resorts (continued)
The state of Arizona received hundreds of complaints against Diamond Resorts. The Arizona aorney
general reported that those complaints were about claimed decepve sales pracces, oral
misrepresentaons and false statements during meshare sales presentaons. According to the aorney
general, these allegaons of misrepresentaon were related to:
Annual increases in maintenance fees;
Membership resale and buy-back programs;
Timeshare membership resale market;
Ability to rent meshare vacaons; and
Discounts on other travel needs
Under the court-conrmed selement, Diamond did not admit to any wrongdoing, but did agree to
change its business pracces and allow qualifying meshare owners to return their meshare interests to
Diamond with no further obligaons. Consumers eligible for the relinquishment program in the Arizona
selement were dened as those who purchased their Diamond meshare between 2011 and Jan 22,
2017.
Diamond Resorts in the Headlines
Diamond Resorts has been the focus of unfavorable headlines in
recent years. The New York Post menoned a 2016 New York Times
exposé on meshares that featured Diamond Resorts and shed light
on the company’s business pracces.
The New York Times invesgaon interviewed Diamond meshare owners and industry insiders to show
how Diamond employees ulized the meshare “hard sell”.
The arcle tells the story of seventy-seven year old Mary Ann Guerrez. Diamond representaves are said to
have pushed Ms. Guerrez in a ve hours long meshare presentaon to upgrade her exisng meshare
interest to Diamond’s point systems. Over the ve hours, she was told it would only cost $30,000 upfront,
her maintenance fees might rise and she could ask her children to help her pay. She was quoted,
“They weren’t going to let me out that door, I was shaking, I was so nervous.”
Ms. Guerrez’s account didn’t end when she was nally allowed to leave. According to the Times, a
Diamond representave handed Ms. Guerrez a voided credit card transacon for $4,840. Apparently, they
had already charged her the down payment even though she hadn’t given her approval.
Je Weir, who was an actual Diamond meshare owner himself and industry journalist, was quoted saying,
“Diamond is much more ambious, aggressive and downright nasty in their sales
presentaons compared to Marrio and Wesn. Diamond just has an amazing
reputaon of being tough on people.”
“The Timeshare Hard Sell Comes Roaring Back”
New York Times, January 22, 2016
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In addion to the New York Times’ aenon, just last year there were two arcles about how Diamond
Resorts sold hundreds of thousands of dollars’ worth of meshares to senior cizens in their late 80s:
Diamond Resorts in the Headlines (continued)
“Diamond Resorts sll can’t explain why it sold $250,000 worth of meshare points
to an 88-year-old”
Consumer Aairs, March 29, 2019
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Consumer Aairs reported about Diane Burkhart, a woman who complained to the FBI about how her father
was sold $250,000 worth of meshare points from 2016 to 2017. Her father was 87 when the purchases
began. By 2018 he was diagnosed with demena and was living in a nursing home.
Diamond Resorts reportedly agreed to forgive the $116,000 loan on a meshare contract her father bought
in 2017. The company’s oer reportedly included “non-disparagement” condions and required the family
to waive rights to pursue the other meshare contracts.
“Company convinces Arizona couple, nearly 90 years old, to buy $150,000 meshare”
Arizona Republic, March 28, 2019
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In another story, the Arizona Republic reported that a Mr. and Mrs. Lusk, aged 89 and 88, were convinced to
buy $150,000 worth of Diamond Resorts meshares in September 2018 and the elderly couple called it “the
dumbest thing we ever did”. Mrs. Lusk said she had insomnia and fainng spells from stress, and went to
the hospital several mes.
How Will Hilton Loyalty Members Be Impacted?
How will dissased Hilton Grand Vacaon meshare customers impact the Hilton brand?
The New York Post claimed that HGV relies heavily on Hilton Honors loyalty members to nd customers. If
Diamond’s sales taccs or policies are implemented at HGV properes, how will Hilton Honors members
react?
The legal disncon between Hilton Grand Vacaon meshares and Hilton branded hotels may be lost upon
Hilton Honors members who experience o-pung meshare sales pracces. Any hotel guest—not just
Hilton Honors members—that leaves a Hilton Grand Vacaons meshare property unhappy is a brand image
issue for HWW.
As shown below, there is some evidence that HGV currently enjoys a more favorable online reputaon
than Diamond Resorts.
State Regulatory Complaints
Some states have accessible online databases to search for consumer complaints led against companies.
A search for “Hilton Grand” and “Diamond Resorts” in four such state databases (Florida, Hawaii, Virginia
and Oregon) show that Diamond Resorts enes have received far more complaints than Hilton Grand
Vacaons enes. The status and legal outcome of those complaints vary and case details were not
examined here.
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Online Reviews
PissedConsumer.com is an online review forum where consumers can share their personal experience
with a company’s product or service. A search of the website for the term “Hilton Grand Vacaons”
resulted in 13 total reviews and a 2.6 star rang. In contrast, a search for “Diamond Resorts
Internaonal” resulted in 267 total reviews and 1.6 star rang.
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Diamond Resorts had over twenty mes the number of reviews on PisssedConsumer.com as Hilton Grand
Vacaons.
Hilton Worldwide Is Right to Be Concerned
Diamond Resorts has a history of making headlines. Any stakeholder in the Hilton brand image should be
wary of an Apollo acquision of Hilton Grand Vacaons. Hilton Worldwide should exercise all its rights in
its brand licensing agreement with Hilton Grand Vacaons to protect the Hilton trademark value.
Diamond Resorts
Complaints
Hilton Grand
Vacations
Complaints
Virginia 109 2
Hawaii 57 4
Florida 34 23
Oregon 14 10
“It Takes Many Good Deeds to Build a Good Reputation...”
Endnotes
1. “Hilton Fears Bad Rep Over Timeshare Deal”, New York Post. January 30, 2020. hps://nypost.com/2020/01/30/hilton-fears-bad-rep-over-meshare-deal/
2. “Aorney General Brnovich Announces $800,000 Selement with Diamond Resorts”, Aorney General Oce of Arizona. hps://www.azag.gov/press-
release/aorney-general-brnovich-announces-800000-selement-diamond-resorts
3. “The Timeshare Hard Sell Comes Roaring Back”, New York Times. January 22, 2016. hps://www.nymes.com/2016/01/24/business/diamond-resorts-
accused-of-using-hard-sell-to-push-me-shares.html#:~:text
4. “Diamond Resorts sll can’t explain why it sold $250,000 worth of meshare points to an 88-year-old”, Consumer Aairs, March 29, 2019. hps://
www.consumeraairs.com/news/diamond-resorts-sll-cant-explain-why-it-sold-250000-worth-of-meshare-points-to-an-88-year-old-032919.html
5. “Company convinces Arizona couple, nearly 90 years old, to buy $150,000 meshare”, Arizona Republic. March 28, 2019. hps://www.azcentral.com/story/
money/business/consumers/2019/03/28/diamond-resorts-convinces-elderly-arizona-couple-buy-meshare-frank-bey-lusk/3282776002/
6.
Florida Department of Agriculture and Consumer Services hps://csapp.800helpa.com/cspublicapp/businesssearch/businesssearch.aspx
State of Hawaii’s Department of Commerce and Consumer Aairs (DCCA) hps://web2.dcca.hawaii.gov/ocp/#/search
Virginia Oce of Aorney General hps://www.oag.state.va.us/consumer-protecon/complaint/search/6009164765
Oregon Department of Jusce hps://jusce.oregon.gov/complaints/
7. PissedConsumer.com. hps://www.pissedconsumer.com/
