FREQUENTLY ASKED QUESTIONS

FOR THE ROYAL CARIBBEAN MEMBERS

  1. Who is purchasing the assets of The Royal Caribbean property?
    The assets are being purchased by an affiliate company of the Royal Resorts Group. The Company decided to keep The Royal Caribbean in the family for the benefit of Members, employees and ultimately to secure the Company´s interests long term.
  2. Does the Royal Resorts have the financial resources to purchase and pay cash for The Royal Caribbean property?
    Yes, Royal Resorts has raised the equity and secured a loan to ensure the payment in cash of the price offered at the time that the sale of the assets takes place.
  3. Was The Royal Caribbean advertised for sale?
    No, the property was not advertised for a public sale; instead three market valuations were carried out by three different independent professional brokerage and valuation firms. The resort is being sold through a private sale as permitted by the membership agreement.
  4. Which firms conducted the market valuations?
    The market valuations were carried out by HVS Consulting and Valuation, CBRE Valuation and Advisory Services, and JLL Hotels & Hospitality Group, all well-known international firms.
  5. What were the bases and the US dollar amounts of each market valuation conducted by these firms?
    The three firms concurred on the same business model for the best use of the property. The US dollar amount of each market valuation is shown in the following table:

    MARKET VALUATIONS
    USD
    CBRE $ 51,800,000
    JLL $ 54,800,000
    HVS $ 56,000,000
  6. What was the price originally offered by Royal Resorts management for The Royal Caribbean property?
    The price offered is the highest of the three market valuations: US$56,000,000 dollars.
  7. Why did the Advisory Council endorse the private sale when Royal Resorts Management expressed their interest in acquiring the property?
    The endorsement of the Advisory Council was for the following reasons: to receive the maximum market value for the sale of the property, to save broker commissions and marketing expenses associated with the sale and to ensure that The Royal Caribbean remains in the Royal Resorts family. See attached letter.
  8. What are the benefits of a direct sale to a Royal Resorts affiliate?
    The benefits are: (a) The property is being sold at the highest appraised market value; (b) there will be no marketing expenses or broker commissions; (c) The Royal Caribbean property will remain in the Royal Resorts family and the members of the other Royal Resorts will not lose access to facilities at The Royal Caribbean; (d) the purchasing company intends to hire many of the current employees working at The Royal Caribbean and (e) The Royal Islander members can continue to have access to The Royal Caribbean facilities.
  9. Roughly what is the amount of money required to cover staff severance payments?
    This amount varies but it will be in strict accordance with Mexican Labor Laws in effect in November 2018. The initial estimate is over US$1 million dollars.
  10. How many of the current The Royal Caribbean employees are expected to be hired by the company that will operate the resort?
    We expect there to be many; however at the moment it is difficult to estimate a number. It will depend on the needs of the resort once it is remodeled and the desire of the employees to continue working for a Royal Resorts affiliate since some might prefer to retire once they have received their severance payment.
  11. How much money is expected to be in Club Service Fees (CSF) reserves at the end of the membership period and are these funds added to the amount to be distributed to Members?
    Please refer to Royal Resorts Life magazine for a breakdown of reserves as of 2017 and be aware that these amounts may vary by November 3, 2018. All reserves existing on this date will indeed be part of the funds to be distributed to Members in good standing.
  12. What will happen to the Hurricane fund reserves when the property is sold?
    The funds remaining in the Hurricane Fund on November 3, 2018 will form part of the reserves that are returned to Members. However, in the unlikely event of a hurricane happening before November 3, 2018 the cost of the resulting damage will be taken out of the existing reserves.
  13. What is the approximate number of The Royal Caribbean memberships?
    There are approximately 10,557 memberships.
  14. What percentage of these memberships is in good standing?
    Currently there are 10,225 memberships in good standing. That is 97% of all memberships.
  15. What are Residual Rights?
    “Residual Rights" is the amount of financial proceeds that a Member would receive at the termination of their Membership Program.
  16. Where does the Residual Rights amount to be distributed come from?
    The amount to be received by Members will come from the net proceeds resulting from:
    • The liquidation of assets (the sale of the resort including buildings, equipment, furniture and fixtures)
    • After payment of liabilities (debts; staff severance payments; municipal, state and federal taxes; legal fees and administrative and brokerage expenses associated with the sale of the resort)
    • Plus any cash reserves available at termination
  17. Would Residual Rights be paid to all The Royal Caribbean Members?
    No, Residual Rights will only be paid to Members who have Residual Rights stipulated in their Membership Agreement and are in good standing according to the terms of said agreement as of November 3, 2018.
  18. How will the members be notified about the Residual Rights payment process?
    Members of The Royal Caribbean who have Residual Rights stipulated in their Membership Agreement and are in good standing according to the terms of said agreement will receive detailed information by email. It is important to have your contact information up to date in order to receive this in a timely manner. Members may contact Interval Servicing to make updates.
  19. What is the estimate of Residual Rights proceeds to be paid to Members compared to the Membership price paid?
    At this point in time it is too early to give you an estimate. As soon as we have an accurate percentage, we will advise Members.
  20. When will the distribution of Residual Rights take place?
    The distribution and payment of Residual Rights will take place during the first quarter of 2019.
  21. Will the sale of The Royal Caribbean affect the value of The Royal Islander?
    It is very early to say, the value of The Royal Islander will depend on the demand and the economic conditions prevailing in Cancun at the time of sale.
  22. Will the properties across the street also be sold (Captain’s Cove) when selling The Royal Caribbean?
    No, that property is owned separately.
  23. If Royal Resorts keeps The Royal Caribbean, will there be any membership programs available for the current members?
    Yes; the plan is to have points-based memberships backed by The Royal Caribbean inventory once this resort is remodeled. They will be available for members and non-members to purchase.
  24. What is the latest price offered by Royal Resorts management for The Royal Caribbean property?
    This information, as well as the specifics of the sale will first be presented to the Advisory Council of The Royal Caribbean during their meeting at the end of October; once it is validated we will inform the Members accordingly.