Dear The Royal Caribbean Member:
We would like to share some important information about The Royal Caribbean and the termination of the membership program.
As you know, the final interval is week 43 and the resort will close on November 3, 2018.
The membership agreement stipulates that The Royal Caribbean must be sold in a public or private sale and the net proceeds of the sale, after deducting taxes, commissions and other appropriate charges and expenses, divided among the members in good standing and the Company, with members having first priority.
Rombec S.A. de C.V., the company that owns The Royal Caribbean property, hired three valuation and appraisal firms to carry out independent market valuations of the property. HVS Consulting and Valuation, CBRE Valuation and Advisory Services, and JLL Hotels & Hospitality Group are all leading international valuation companies with years of experience in the hotel and real estate sector.
Each firm presented a valuation of The Royal Caribbean based on the best use of the property and current market conditions in Cancun and they are as follows:
HVS US$56,000,000.00
CBRE US$51,800,000.00
JLL US$54,800,000.00
After reviewing the appraisals, Royal Resorts decided to buy The Royal Caribbean and keep it in the Royal Resorts family.
An affiliate company in the Royal Resorts group will purchase The Royal Caribbean and will pay the highest appraised market value (the HVS valuation), a purchase price of $56 million dollars.
Advertising a resort property for public sale entails marketing costs, broker commissions and legal fees. This decision means The Royal Caribbean will be sold at the best market price and the fees and expenses associated with the sale will be kept to a minimum.
There will be no marketing expenses or broker commissions to pay which results in fewer deductions from the net proceeds available for Residual Rights distribution.
The fact that The Royal Caribbean will be remaining in the Royal Resorts group means that members at the other clubs will still have access to the facilities.
The company has obtained a loan to purchase The Royal Caribbean and will be formalizing the credit agreement in the coming months. The sale will happen on November 5, 2018, right after the last occupancy date. As a result, there will be no additional expenses associated with the upkeep of the resort to pay after the sale takes place.
Once the sale of the resort is formalized and the final report of resort operations and other expenses is available, we will be sharing additional information relating to the Residual Rights distribution, the payment process and timeline.
Residual Rights will only be paid to Members that have these rights stipulated in their membership agreement and are in good standing in accordance with the terms of said agreement. The amount they will receive would be distributed from the net proceeds resulting from the sale of the resort and its assets, after the deduction of expenses such as staff severance payments, debts, taxes and any legal and administrative fees associated with the sale. Any remaining cash reserves available at termination will also form part of the proceeds to be distributed; this includes the club cash reserve and hurricane cash reserve.
We estimate that Residual Rights payments will be sent in the first quarter of 2019.
In order to be eligible to receive their Residual Rights, members must be current with their annual Club Service Fee payments or any other debt on the date of the termination of the Membership program. Members who are currently in arrears are urged to settle their financial obligations now by contacting Interval Servicing.
We know that many members have concerns about The Royal Caribbean employees. They will receive severance payments when the resort closes, in accordance with the Mexican labor laws in effect in November 2018. It is likely that some of them will decide to retire or pursue their own business interests. The purchasing company also intends to hire many of the current employees in the future.
On May 24, Royal Resorts management representatives met with The Royal Caribbean Advisory Council members to brief them on actions taken to date and to present the plan for the sale of the resort. Click here to read their letter endorsing the decision to keep The Royal Caribbean in the Royal Resorts family.
We hope that this information is useful. We have prepared a FAQ section to answer any questions that you may have about the sale of the resort and the Residual Rights distribution. We will also be sharing additional details with you in the months to come.
Warm regards,
Grand Caribbean Company, Ltd.
