Rentals
Can you believe this is actually the scene of a crime? That's right. In the corridor area between San Jose del Cabo and Cabo San Lucas at Grand Regina on the Sea of Cortez. In the area on the left, 64 two bedroom fractonal ownership time-share villas were to be built.
Raintree Vacation Club (owners of Club Regina) was the original developer and seller of this project. In December 2006, after they had sold more than $25 million of these units pre-construction, they sold the property and project developmental rights to Starwood Vacation Ownership. Starwood has a significant stake in this area with the Westin Los Cabos Hotel so when they reached out to all the original villa owners and talked about their plans to develop the Los Cabos Ocean Villas and take care of the owner's interests and rights, there was a great deal of enthusiasm.
From all indications, the $25 million was not put in trust by Raintree as contracts stipulated, but rather became part of the consideration in restructuring Raintree's huge debt with Starwood. ($100 million, 13% senior notes were converted to $25 million at 5.5%) All along, Starwood kept saying the right things to villa owners- they put up a web site to promote and communicate their development plans, stated their intension to have owners convert their ownership interest to Starwood Vacation Ownership and continued to state their confidence in the revised completion date of early 2009 for the Westin Los Cabos Ocean Villas.
In late October 2008, Raintree was notified that Starwood had decided to put the villas project on indefinite hold. There was no direct communication from Starwood to any of the owners. There was only silence. Starwood's Westin Los Cabos Ocean Villas web site vanished, like it never existed. Four months later in Feb. 2009, communication from Raintree did not offer villa owners their money back. Instead Raintree offered a 20-25% cash refund over 4 years and the opportunity to convert the balance of the purchase price into time-share points with Raintree. The Raintree facilities are in no way comparable to the quality of the villas that were bought and paid for.
So here is how things stand- a) most of the owners have not accepted the ridiculous offer made by Raintree, probably because they no longer trust them. b) the $25 + million has gone to Starwood, and they have decided to do nothing, indicating that Starwood and Starwood Vacation Ownership also should not be trusted, c) most likely this will evolve to be litigated, just to insure that hospitality organizations like Raintree and Starwood that depend on their reputations in preserving the trust of their customers, understand how important it is not to violate that trust. We tried to explain this to Frits van Paasschen, President & CEO of Starwood, but that's when there was total silence.
In late August 2009, more than 150 of the defrauded
owners filed suit against Raintree Resorts and Starwood Vacation Ownership.
In the meantime, here is what the unsuspecting owners have to show for
their investment- basically dirt...
...and this is where these 2 CEO's belong:
Doug Bech, Raintree
Frits van Paasschen, Starwood 
Click here for press release details about the lawsuit.