How bad can it get?

tombo said:

Many here on TUG live for vacations and feel that other people will also vaction no matter what. Most people do not feel the same way. Most people vacation when they have secure jobs and when the cost to do so is not a strain on the family budget. The term "staycations" where people vacation at home was coined because so many people could not afford to travel on vacation in the poor economy and chose to stay home instead of going anywhere. Flying to Hawaii for most is a luxury item, not something they must do every year or so.

If air fares increase by 50%, double, or triple then you might not ba able to rent your weeks no matter how cheaply you price them. if you can't rent them, can't afford to pay the air fares, and can't sell the timeshares you might become the owner of a white elephant.

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Most prime week 2BDRM Marriotts will always have some value. Resale pricing continues to side but they will always be sellable. That is one of the reasons i buy the resorts I do. Worst case scenerio I could give away to free myself of MF burden if I ever needed to. I'm still supremely confident that will always be the case. I would be very stressed if I owned a TS that was unsellable, like most out there, other than the major brands like Marriott.

For the last few years people have altered their travel plans, more driving trips and short flights. Now clearly based on my own experience with tremendous 2011 rental demand and from everything I read about increase in trvael and travel plans, more are getting back to more regular vacations habits.

Yes oil prices can destabilize things but not to the point you are suggesting, and I believe it won't and the economy will continue to prosper albeit at a slow pace.

MOXJO7282 said:

Yes oil prices can destabilize things but not to the point you are suggesting, and I believe it won't and the economy will continue to prosper albeit at a slow pace.

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Read articles and see what is currently happening. Carles Maxwell and T Boone Pickens both predict $300 a barrel crude oil by 2020. That is less than 10 years from now. $300 a barrel could translate to gas prices of over $15 a gallon. How much more will jet fuel cost? How much more will the airlines have to charge to make a profit on flights to Hawaii?

Chas Maxwell is not guaranteed to be correct on his predictions, but he has a good track record over many decades. If these predictions are close to correct, yes air fares will skyrocket and non essential air travel will decrease. If gas is $4 or $5 a gallon this summer, prices could change for flights very quickly. both of these forecasters think that natural gas will fill the gap on oil, but jets do not fly on natural gas, they need jet fuel which comes from crude oil, not gas or corn.

Oil Guru Chas Maxwell of Weeden & Company was forecasting the following prices for West Texas crude last September. Oil will probably reach $100 a barrel thissummer, well before the 2012 date he predicted. His forecast might be conservative with prices moving up faster than he anticipated.

2011 $85
2012 $95/barrel
2013 $115 translates to about $4.00/gallon for gasoline
2014 $140
2015 $180
2020 $300

http://www.bnet.com/blog/clean-energy/another-300-oil-prediction-8212-and-why-this-one-matters/4191


Oil predicted to be $100 a barrel this summer for the first time since 2008 and gas predicted to be $5 a gallon this summer.

http://www.nola.com/business/index.ssf/2011/02/oil_prices_hit_100_per_barrel.html

Read the forecasts. China has a growing economy with 1 billion people who will need more and more oil. Our consumption is up. The question is really not whether we will be paying $5 or more for a gallon of gas, the question is when that day will come. When the oil and fuel prices rise, air fares will have to follow suit.

Any Hawaii timeshare is at risk of being priced out of existence by rising air fares, no matter how nice they are or what name is on the entrance. It seems like now might be a good time to sell because when oil reaches $300 a barrell giving any Hawaii week away for free might be almost impossible. That is my educated guess. I will be glad to retrieve this thread in 5 to 10 years and see if I can say I told you so or oops I was wrong. I would wager a pretty sizeable bet that i will be able to say I told you so. Time will tell.

$5 a gallon - really horror of horrors. With Gas at over $8 in the UK and the rest of Europe - we don't see any reduction in travel whether driving or flying ! People will pay what it takes.

$5 a gallon this summer. $15 a gallon between 2015 and 2020. At $5 a gallon travel patterns will change. At $15 a gallon vacations to even driving locations could become few and far between. Food and all products will skyrocket due to transportation costs. In this Forbes article they are saying Americans might have to cut their oil consumption by 50% or more. Read the article.

“[Maxwell] expects an oil-induced financial crisis to start somewhere in the 2010 to 2015 timeframe,” Energytechstocks.com reported. “He said that, unlike the recession the U.S. appears to be in today, ‘This will not be six months of hell and then we come out of it.’ Rather, Maxwell expects this financial crisis to last at least 10 or 12 years, as the world goes through a prolonged period of price-induced rationing (eg, oil up to $300 a barrel and U.S. pump prices up to $15 a gallon).”

http://www.consumerenergyreport.com/2010/09/13/maxwell-forecasts-peak-oil-in-seven-years/

tombo said:

$5 a gallon this summer. $15 a gallon between 2015 and 2020. At $5 a gallon travel patterns will change. At $15 a gallon vacations to even driving locations could become few and far between. Food and all products will skyrocket due to transportation costs. In this Forbes article they are saying Americans might have to cut their oil consumption by 50% or more. Read the article.

“[Maxwell] expects an oil-induced financial crisis to start somewhere in the 2010 to 2015 timeframe,” Energytechstocks.com reported. “He said that, unlike the recession the U.S. appears to be in today, ‘This will not be six months of hell and then we come out of it.’ Rather, Maxwell expects this financial crisis to last at least 10 or 12 years, as the world goes through a prolonged period of price-induced rationing (eg, oil up to $300 a barrel and U.S. pump prices up to $15 a gallon).”

http://www.consumerenergyreport.com/2010/09/13/maxwell-forecasts-peak-oil-in-seven-years/

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A bigger problem will happen if there is a meltdown in the US dollar and if oil no longer is traded in dollars. If the US dollar loses it's reserve currency status, America has to go out and buy the currency that oil is traded in before buying oil, it will make oil even more expensive and volatile.

More hysteria! When we were kids gas was .$25 a gallon and when it went up we all survived. If it goes to $5.00 we will still survive since earnings will ado go up...let's stop the doom and gloom. I guess I am just an optomist that knows that whatever happens we will get through it!

I guess we will all just ignore all of the reserves in Saudi Arabia that will last the rest of the century. They have the wells already drilled and capped so that they can turn on the tap when they want.

Why would Saudi Arabia let an oil depression take place?

Could it be that the big owners of oil and gas are making predictions so they keep on getting all of the tax breaks from the government?

wof45 said:

all this speculation is pretty pointless.

the spinoff is all about the stock price. Marriott Intl stock gets a much higher multiple if it does not have a lot of invested funds, meaning that its roi is much higher.

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Do you truly believe what you say? Did you buy the stock after the announcement? Or, if you already own it did you buy more?

DanCali said:

Do you truly believe what you say? Did you buy the stock after the announcement? Or, if you already own it did you buy more?

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just about every major move a corporation makes is done to drive the stock price higher. particularly mergers, acquisition, and divestitures. A divestiture happens because the financial analysts believe the two companies stock will do better separately than they do as one today.

Divestitures also happen when management realise that part of the business is non-core and is just not part of the future for the corporation. Thus it is either sold through a trade sale to a company interested in that part of the operation or through a spin off.

So in this case it might be that Marriott hacve seen that MVCI is not Core to their future business.

This does not mean that the TS business is essentially bad - just not part of the Marriott vision for their future.

wof45 said:

just about every major move a corporation makes is done to drive the stock price higher. particularly mergers, acquisition, and divestitures. A divestiture happens because the financial analysts believe the two companies stock will do better separately than they do as one today.

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You didnt answer my previous questions...

Lemons or Lemonaide?

Pure speculation on my part.

Spinco will become the consolidation vehicle for a number of timeshares not currently under the Marriott brand.

Points are the currency to enable it.
Fees will sustain and grow it.
Look to Diamond Resorts for a loose model.

Fredm said:

Pure speculation on my part.

Spinco will become the consolidation vehicle for a number of timeshares not currently under the Marriott brand.

Points are the currency to enable it.
Look to Diamond Resorts for a loose model.

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Not speculation

Quoted from remarks by Steve Weisz - 2/15/11 MAR conference call

At the same time, we will also be able to develop and operate timeshare resorts under other brand names.

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Page 4, Par.4 of Weisz remarks

LINK

windje2000 said:

Not speculation

Quoted from remarks by Steve Weisz - 2/15/11 MAR conference call



Page 4, Par.4 of Weisz remarks

LINK

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Yes, I read that. Thank you.
It was not an offhand remark by Weisz.
Assuming Marriott didn't pull this split out of its ear in the past 8 months (a good assumption I think), Marriott has bigger plans for a fee based business than many here realize. At least that is my speculation.

Splitting it off allows it to pursue the opportunities the marketplace presents in a more aggressive way. Hardly shedding the orphan dog.
The business is evolving from a development company to service consolidator.

Fredm said:

Yes, I read that. Thank you.
It was not an offhand remark by Weisz.
Assuming Marriott didn't pull this split out of its ear in the past 8 months (a good assumption I think), Marriott has bigger plans for a fee based business than many here realize. At least that is my speculation.

Splitting it off allows it to pursue the opportunities the marketplace presents in a more aggressive way. Hardly shedding the orphan dog.

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Absolutely - that remark was not offhand.

I will speculate that they have probably been pitched this idea/transaction for years, based on the input of WS analysts, but pulled the trigger relatively recently.

Weisz's remarks suggest to me that he envisions not only fee business, but also some development down the road.

MAR stock has not done much at all since the announcement.

windje2000 said:

Absolutely - that remark was not offhand.

I will speculate that they have probably been pitched this idea/transaction for years, based on the input of WS analysts, but pulled the trigger relatively recently.

Weisz's remarks suggest to me that he envisions not only fee business, but also some development down the road.

MAR stock has not done much at all since the announcement.

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Fred Silverman defined the way with the formation of Cendant. Acquired Fairfield and Worldmark. Bought RCI and introduced RCI Points. Consolidated its business under Wyndham Worldwide. Created the largest vacation rental business in the world (without having purchased any of the inventory). All the while, members maintain it with maintenance fees.
Marriott must have looked at that with envy.

Since we are speculating, Spinco acquires I.I., enrolls member resorts into Spinco points, and fragmented points/ aging exchange inventory is rented. Fees, on top of fees without driving another nail (although they might).

Cendant did it all by floating corporate bonds.
Marriott will not want to do that, but the new Spinco might.

wof45 said:

Why would Saudi Arabia let an oil depression take place?

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Maybe a miscalculation based on greed.

Maybe a takeover of the country by those who want to show the world who is in charge.

Who knows?

DanCali said:

You didnt answer my previous questions...

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no, we are shifting all our spare cash into a condo in Islamorada, so we will have excess TS weeks in the future, and we won't need to fly nearly as much.

DanCali said:

Do you truly believe what you say? Did you buy the stock after the announcement? Or, if you already own it did you buy more?

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Good gravy, so the folks who aren't naysayers are not only supposed to be buying DC Points to show the courage of their convictions, but they're supposed to buy the stock too? I'll make a deal with you - as soon as you take whatever loss is necessary to just walk away from your Weeks lock, stock and barrel, ASAP, with no thought at all of the best price you can get, then I'll buy shares.

But if you're into the stocks game, shareholders of record as of last Friday, 2/25 will be issued shares in the spin-off. It wasn't time to buy yet if you want (more) MAR shares and not (more) spin-off shares. It could be we'll see more activity with MAR beginning Monday but who knows.

SueDonJ said:

Good gravy, so the folks who aren't naysayers are not only supposed to be buying DC Points to show the courage of their convictions, but they're supposed to buy the stock too? I'll make a deal with you - as soon as you take whatever loss is necessary to just walk away from your Weeks lock, stock and barrel, ASAP, with no thought at all of the best price you can get, then I'll buy shares.

But if you're into the stocks game, shareholders of record as of last Friday, 2/25 will be issued shares in the spin-off. It wasn't time to buy yet if you want (more) MAR shares and not (more) spin-off shares. It could be we'll see more activity with MAR beginning Monday but who knows.

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Can you post a link to the source of this?

EDITED TO ADD: Perhaps you were thinking of the date of record for the quarterly cash dividend?

windje2000 said:

Can you post a link to this?

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Eventually when I find it again, sure! I remember seeing it on the day of Marriott's press release somewhere in all the different articles that I read, wrote down the date but not the source, and haven't been able to find it since. Tomorrow I'll be putting some more time into searching for it.

windje2000 said:

Not speculation

Quoted from remarks by Steve Weisz - 2/15/11 MAR conference call



Page 4, Par.4 of Weisz remarks

LINK

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I also read somewhere that each affiliate member will keep the reservation window for their members or resorts. I don't remember the exact wording but I read it a long time ago and asked about it recently again what they mean with affiliates. If you deal in points, then you may be able to visit any brand name resort but what will happen to II? Will they be for the independent resorts mainly?

They have something similar in Mexico now that you can exchange to many brand name hotel resorts. I have to find out the name again and if it really works. It is not one of the names that we all know. I will find out from a friend who recently bought from a developer here in Bucerias.

SueDonJ said:

Eventually when I find it again, sure! I remember seeing it on the day of Marriott's press release somewhere in all the different articles that I read, wrote down the date but not the source, and haven't been able to find it since. Tomorrow I'll be putting some more time into searching for it.

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OK. I have reviewed with a finetooth comb every related article until my head is about to explode and still can't find the source. This is the strangest thing - I KNOW I read it, can see the line in my head, but now it's nowhere to be found! It definitely was real because I wrote it down in my notes as, "sor a/o 2/25 - spec div" and showed it to Don later that night. He and I talked about watching for the effective date of the spin-off because it would be more significant then the sor date! I could maybe see that I made a mistake IF 2/25 appears in a line elsewhere as significant for another reason, but I'm not finding that either. Aaaaarrrrgggghhh, this is very frustrating. Is it even possible that if an online article is amended then the original version disappears off the face of the earth?! I didn't think so but now I'm so confused.

Regardless, if ever there was a source it's now disappeared and today's MAR activity doesn't appear to be going gangbusters either way, so I'm ignoring what I could swear I saw. You should ignore it too.

{eta}

windje2000 said:

Can you post a link to the source of this?

EDITED TO ADD: Perhaps you were thinking of the date of record for the quarterly cash dividend?

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Maybe, I guess, but I'm remembering it as separate from the cash div. The 2/25 date is indicated on MarketWatch, etc, in the charts but like I said, I can see the line in my head and wrote a specific note about it.

SD, thanks for the response...I am still convinced that it is up to us, as owners, to set the spending levels and MFs. I have attended most of the annual meetings in Boston and the board has been very open to comments and input from owners. Maybe most owners do not get involved so they create (again my reference) hysteria...the Marriott branding is signifiance but it is up to us to say what it will cost.

Dave M....do you have any comments on this?

Confusing use times with brand value

MOXJO7282 said:

Most prime week 2BDRM Marriotts will always have some value. Resale pricing continues to side but they will always be sellable. That is one of the reasons i buy the resorts I do. Worst case scenerio I could give away to free myself of MF burden if I ever needed to. I'm still supremely confident that will always be the case. I would be very stressed if I owned a TS that was unsellable, like most out there, other than the major brands like Marriott.

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You are confusing unsellable with brand name rather than the real reason (that applies to brands as well) seasonality. An off season Marriott is nearly as worthless as an off season "Joe's Timeshare". If you bought all lower use time Marriotts rather than platinum you would discover the same issues as "most out there". It is said that 80% of the owners / renters want only 20% of the available time and that is the real driver of value or lack thereof. Naturally there are many more non-Marriott examples of poor value ownerships as they outnumber Marriott by hundreds to one. But the problem is exactly the same for them all - if you don't have the best times/units you don't have value. It isn't exclusive to Marriott or non-Marriott but universal to all.