Holiday bond

SW17

mgdavid wrote: »

I still don't see what you are actually getting - are all these 'properties' just self-catering flats and houses?

It seems the majority of them are. I'm no more than an interested observer of this thread, but appears it's a form of membership scheme, you are buying "exclusive" access to these properties along with the other bondholders. Nothing wrong with that if it's your thing, and looks like you have to plan well ahead to get what you want over popular dates. Not for me, and it might well be overpriced, but I don't think it's a scam. I suspect many of the members secretly like paying a bit over the odds, thinking it keeps out the hoi polloi.

Seronera

I'm neither for nor against HPB, but out of interest I did read the (lengthy) previous thread referred to near the top of this thread. Seems at some point there was a demand for a lot more money from some of the bondholders, which you yourself were not happy with. The below 2 quotes from 2012 are an example of this (there were more unhappy posts from you, actually more unhappy than the below).

yorkgeordie wrote: »

As a bond holder for years my advice is dont do it. The financial arrangements are opaque to say the least and you are much better off holidaying where you want when you want without investing capital

Seronera wrote: »

Sad to say, yorkgeordie may have a point. I've been in HPB since 1986..or 7..I forget. I've had many great holidays and no bad ones. There have been two or three 'realignments' of charging along the way ostensibly to stabilise the outgoings with the income. i.e. the charges have risen by some margin with the introduction of first a user charge and now an admin charge, and still there is no guarantee the books balance. The so called 'Gold Fund' is pretty well compromised due to high charges and poor investment performance. It does mean my bond value has eroded considerably from what I put in, so capital erosion is a real problem.
The financial arrangements at HPB are probably no more than what you or I would do were we in charge, but yes, they are opaque and I am less than happy with the long term implications. Where an organisation keeps coming back asking for more money off existing Bond members, then my antennae twitch and my hackles rise. Either the financial model does not work or somebody is taking too much out of the fund in charges.

I say this with great sadness as there is so much about HPB that is absolutely bloody brilliant. I knew about the high charges from day one so have no complaint on that score. I had not anticipated that they were not enough, and even after increases are still not enough judging from the letter I received from them this year making me an offer I felt I had to refuse. You can only milk a cow so many times.

Seronera

I'd be interested to know if this has happened again, or how it actually changed things for you. You made a very reasonable and impassioned defence of HPB a few posts ago here, but rather glossed over this. I don't say it's a reason not to buy, but maybe some more perspective on the downside from an experienced bondholder would be useful for anyone here considering a purchase.

The main negative thing I observed from reading these threads (quite interesting stuff once you take out the mudslinging from both sides) was that it feels like there is an element of the Pyramid about this. Those who got in earlier seem to have a better deal and maybe are now partly funded by the later members, which is not too equitable. Maybe that was eroded by the events of a couple of years ago, but just an observation from someone with no axe to grind...

budgetflyer

I think Seronera would like to think he has bought into something more sophisticated than timeshare or a points based holiday club. But really that is all it is.
If you had put 6k into any real property investment back in 86, then it would have at least quadrupled today. HPB according to Seronera, would give you a 33% loss.
Where I do agree, spending a lump sum to secure quality self catering accom in the likes of Disney, Marriott etc can be viable. Especially if you buy on the resale market.
These places, as is HPB are not package holiday quality. You can not compare a Thomson/ Thomas Cook holiday. Try pricing a week in a 3 bed condo at Marriott Marbella Beach Club in July.If you can get one, there will be no change from £2.5K

Seronera

jonesMUFCforever wrote: »

I'm still not convinced LOL
I Could PAY £300-£400 per week fo a holiday of my choice anywhere in the world without having to invest in a bond.

Great that it has worked for you - what will happen if you do not want to continue to us it and how many salebacks have been completed in last 12 months?

If I don't want to use it I can either leave it, let other family use the points or donate the points to a worthwhile cause like the RAF Benevolent Fund. I've no idea how many salebacks have been completed, but its not many. I think new sales of bonds can best be described as 'steady' but the number of bondholders is at around the 55,000 mark and increasing slowly. There is a 'cash back guarantee' period in the first year of ownership if you take a holiday and decide the whole thing really is not for you. There is a small deduction to reflect what you have actually cost the bond to stop people using the facility just to grab a free holiday, but you get all your charges back. There is no hard sell and most new members are referrals from existing members, though I don't do referrals personally, though I have very occasionally obtained info for people who have asked me...then left it up to them to follow it up directly.

Its true you can spend £300 and find a holiday. I do it myself from time to time, but the great thing about the bond is its locations and the quality of everything they do. Some of the building restorations are fantastic...like the falling down Trossachs Hotel near Callendar (as seen in 39 steps). HPB spent about £8m restoring it and re-roofing it and bringing it back to life. The last restoration was a Mansion in Grange over Sands that had been a fisheries research lab having been taken over by the RAF in WW2. They have restored it to how it was when the Manchester textile baron built it in the 1880s, and built three new accommodation blocks and some cottages and put in an indoor pool and fitness room. Its superbly done. I went there a year ago. They have restored an abandoned village in the Dordogne, and they are restoring in stages some traditional Italian dwellings called Trulli in a southern Italian village, but I havn't been to either of those sites yet. I love the two sites in Wales....again they restored St Brides Castle that had been used as a TB isolation hospital then as a repository for NHS records. After they left nobody had any use for such a large place. They bought a Bankrupt hotel/country club in Beaumaris that had been a priory in the 16th Century. I've been there three times and love it. I really enjoy the properties.....as well as the surroundings..its as simple as that for me.

Seronera

mgdavid wrote: »

I still don't see what you are actually getting - are all these 'properties' just self-catering flats and houses?

The only answer I can suggest to you is that next time you are near one of the properties go and have a look and the staff will show you an apartment or cottage. They vary greatly from location to location so its impossible to generalise. Within a location some of the apartments are small and some much larger.

Seronera

SW17 wrote: »

It seems the majority of them are. I'm no more than an interested observer of this thread, but appears it's a form of membership scheme, you are buying "exclusive" access to these properties along with the other bondholders. Nothing wrong with that if it's your thing, and looks like you have to plan well ahead to get what you want over popular dates. Not for me, and it might well be overpriced, but I don't think it's a scam. I suspect many of the members secretly like paying a bit over the odds, thinking it keeps out the hoi polloi.

Seronera

I'm neither for nor against HPB, but out of interest I did read the (lengthy) previous thread referred to near the top of this thread. Seems at some point there was a demand for a lot more money from some of the bondholders, which you yourself were not happy with. The below 2 quotes from 2012 are an example of this (there were more unhappy posts from you, actually more unhappy than the below).





I'd be interested to know if this has happened again, or how it actually changed things for you. You made a very reasonable and impassioned defence of HPB a few posts ago here, but rather glossed over this. I don't say it's a reason not to buy, but maybe some more perspective on the downside from an experienced bondholder would be useful for anyone here considering a purchase.

The main negative thing I observed from reading these threads (quite interesting stuff once you take out the mudslinging from both sides) was that it feels like there is an element of the Pyramid about this. Those who got in earlier seem to have a better deal and maybe are now partly funded by the later members, which is not too equitable. Maybe that was eroded by the events of a couple of years ago, but just an observation from someone with no axe to grind...

The situation that you refer to that occurred in 2012 and affected roughly 12,000 bondholders has been stabilised as far as I know. We have not lost any benefits and certain parties have deferred charges they are entitled to until the bond is encashed to assist the fund....and if its never encashed they are never paid.

In fact the 12,000 bondholders (including me) have to accept some responsibility as the bond had written to us all asking permission to alter the terms of our contract to help make the fund more stable. I say they didn't make the importance of this move clear enough at the time, but in the event we did nothing about it and to some extent we were the victims of our own inaction in that case.

Either way both parties(Bondholders and Management) learned lessons over those events and since 2012 there has been a spirit of fence mending and better communication, and to the best of my knowledge there have been no further financial requests or alterations to bondholder contracts. I certainly did not pay the management any more money. For the present I am reasonably happy with how things have turned out, even though they are less than perfect.

You are incorrect about it being a Pyramid. There are mechanisms in place to ensure that all bondholder are fairly treated. Over time the price of entry rises just as the price of a tin of beans rises, but thats about it. There would be a massive furore if one section of bondholders was found to be subsidising another. There are so many accountants who are bondholders it would be spotted in a flash. This is the only place I have ever seen that suggestion made, so I can safely say it does not happen the way you suggest it might. Anyway I don't know a pyramid selling scheme that has lasted 30 years. Also pyramid schemes are illegal and the regulators would be down on the HPB like a ton of bricks if they suspected that was going on. Its not going on.

The management would be more than happy to explain how they keep it fair I'm sure. It would be madness to skew the benefits in favour of one group.

mgdavid

Seronera wrote: »

The only answer I can suggest to you is that next time you are near one of the properties go and have a look and the staff will show you an apartment or cottage. They vary greatly from location to location so its impossible to generalise. Within a location some of the apartments are small and some much larger.

ah, so they are just self-catering places then, thank you.
When we were young and had a young family we were 'poor' and rented self-catering places for holidays; it was obvious that it really wan't much of a break for my wife, who just did the same every day as at home - but somewhere else. Now we are older, wiser, and better off, we prefer to take more restful holidays where other people do all the work.
Generalising for a moment, I do find it very common that the more money a mistake has cost somebody the harder they find it to admit it, and the harder they work to pretend it's the best thing since sliced bread. A friend of mine calls it a form of self-delusion.

zagfles

mgdavid wrote: »

ah, so they are just self-catering places then, thank you.
When we were young and had a young family we were 'poor' and rented self-catering places for holidays; it was obvious that it really wan't much of a break for my wife, who just did the same every day as at home - but somewhere else. Now we are older, wiser, and better off, we prefer to take more restful holidays where other people do all the work.

Just because a place is 'self-catering' doesn't mean you have to self-cater! We go 'self-catering' nearly all the time because it's useful to have a fridge, toaster etc for milk/breakfast, and making butties for lunch, but we nearly always eat out for dinner. Or maybe have a BBQ.

SW17

Seronera wrote: »

You are incorrect about it being a Pyramid. There are mechanisms in place to ensure that all bondholder are fairly treated. Over time the price of entry rises just as the price of a tin of beans rises, but thats about it. There would be a massive furore if one section of bondholders was found to be subsidising another. There are so many accountants who are bondholders it would be spotted in a flash. This is the only place I have ever seen that suggestion made, so I can safely say it does not happen the way you suggest it might. Anyway I don't know a pyramid selling scheme that has lasted 30 years. Also pyramid schemes are illegal and the regulators would be down on the HPB like a ton of bricks if they suspected that was going on. Its not going on.

The management would be more than happy to explain how they keep it fair I'm sure. It would be madness to skew the benefits in favour of one group.

Well, I didn't say it was a Pyramid scheme (which I'm quite aware are illegal). I said it had some elements of a pyramid based on what I read in these threads. In particular, there are numerous references in the other thread from bondholders and others stating that early purchasers (perhaps now called Silver bondholders? forgive me if I have the terminology wrong) don't have to pay the annual admin fee and in some cases, any user charges either. Is that no longer the case?

I would say that if this continues to be the case, it is not simply a case of the price of entry rising (that would be in the initial cost of the bond or the number of points you get per pound spent, if I understand it correctly), rather it is one group getting an ongoing benefit that later purchasers don't get. That's certainly not illegal, nor would it be unique to HPB, but maybe not equitable either and would be interesting to know the full story in the name of transparency. It might influence how potential purchasers view the product. Perhaps there are other benefits to new bondholders that older ones don't get, to offset this? I don't know.

I would certainly defend the right of this product to exist, even though it is not something that appeals to me. I am a fan of transparency, and the fact that it is a regulated financial product is not a guarantee of transparency. Financial products are sold every day without people being fully aware of the implications, because they are still commercial enterprises.

zagfles

SW17 wrote: »

I would certainly defend the right of this product to exist, even though it is not something that appeals to me. I am a fan of transparency, and the fact that it is a regulated financial product is not a guarantee of transparency. Financial products are sold every day without people being fully aware of the implications, because they are still commercial enterprises.

Indeed. Also you can tell a lot about a product by the way it's sold. I don't know about this particular scheme, but similar schemes (points/timeshare) are often sold at presentations where they want you to make a decision on the night. No going away and thinking about it/researching it.

Any product sold in this way is almost invariably a rip-off. If someone tries to get you to commit to spending several thousand on something without being given a chance to sleep on it is invariably trying to rip you off. Will it really not be there tomorrow? Or next week? Seriously? Course it will. You say "no" then come back a few days later will they really say "sorry - you had your chance, not available any more". Course they won't, they'll snap your hand off.

Stuff like double glazing is often sold in the same way. usually some bulls**t about a discount that expires tonight etc. Nothing wrong with the product itself, but they don't want you to shop around, see what others quote, perhaps (in the case of timeshare/points) get them on the second hand market if you're really interested.

Seronera

SW17 wrote: »

Well, I didn't say it was a Pyramid scheme (which I'm quite aware are illegal). I said it had some elements of a pyramid based on what I read in these threads. In particular, there are numerous references in the other thread from bondholders and others stating that early purchasers (perhaps now called Silver bondholders? forgive me if I have the terminology wrong) don't have to pay the annual admin fee and in some cases, any user charges either. Is that no longer the case?

I would say that if this continues to be the case, it is not simply a case of the price of entry rising (that would be in the initial cost of the bond or the number of points you get per pound spent, if I understand it correctly), rather it is one group getting an ongoing benefit that later purchasers don't get. That's certainly not illegal, nor would it be unique to HPB, but maybe not equitable either and would be interesting to know the full story in the name of transparency. It might influence how potential purchasers view the product. Perhaps there are other benefits to new bondholders that older ones don't get, to offset this? I don't know.

I would certainly defend the right of this product to exist, even though it is not something that appeals to me. I am a fan of transparency, and the fact that it is a regulated financial product is not a guarantee of transparency. Financial products are sold every day without people being fully aware of the implications, because they are still commercial enterprises.

A little knowledge is dangerous and you have interpreted it 100% incorrectly as regards the equity of treatment between bondholders. There is NO favoured group and great care is taken to ensure this is the case. Do you not think it would be a big cause of dissent within the membership and a disincentive to join if that were the case. It is just common sense and your preference for a kind of conspiracy theory is well wide of the mark.....thankfully. I'd be out like a shot if I thought there were a preferred class of bondholder.

Early bondholders paid no user charge. When that changed and new entrants were obliged to pay user charges the new members benefits were increased to compensate..i.e the new member paid less per point than the early members and it was calculated by actuaries employed by the company to ensure that there was no advantage either way. Early bondholders were entitled to less holidays but paid nothing extra towards them, later bondholders got more holiday points as they paid less per point, but paid the user charge. Early bondholders could change to the new system and get an uplift in annual points to the same as the new entrants...as indeed I did and most did, but you can't change the other way as it was a change needed to ensure financial stability. It was necessary as the cost of maintanance and wages outstripped inflation and the returns on the investment portfolio that was originally intended to cover these costs, was not adequate.

It was a wise and sensible move. You all forget it was a fairly new concept planned when investment returns were way higher than they ended up being in the 90s and since. There were bound to be adjustments to get the 'mix' right and ensure the financial model worked properly in the medium to long term.

I repeat, there is NOTHING pyramid like about the HPB. Its in your imagination. If you buy a share in a company, and the price goes up, then later buyers pay more than you did. Thats no different and they get less shares than you did. That doesn't mean they have subsidised you does it, or that you subsidise them. The price mechanism within the bond was adjusted to ensure that everybody essentially got the same deal no matter when they joined. The move to a user charge just took pressure off the underlying fund. Simple as that.

Do you think for a minute that all the solicitors and accountants and company directors who are members do not scrutinise the finances and structure of the bond with a toothcomb, as I assure you they do. We also have an elected bondholders committee, and whilst it has no real power, they have felt quite at liberty to ask difficult questions and get answers. The management is sensible enough to seek input from everybody as the whole thing only stays afloat if the membership is happy and doesn't start leaving in droves. Some very good ideas have come from the membership to the management over the years. We are also canvassed as to where future developments should be located...again, its common sense to 'know your customer' so they ask us. The main shift was towards more UK developements than they initially planned. In their initial planning of the HPB they had rather thought foreign holidays would be the main focus, and it turned out they had underestimated the demand for UK. The number of UK venues has more than trebled since I joined.

We are also sent a summary of committee meetings and that includes details of any complaints received from bondholders. There are a few as you'd expect, but it is only a few and they are mostly what I would call 'housekeeping' matters.