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Marriott timeshare presentation to analysts

Dave M

Dave M

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Marriott made a presentation to security analysts earlier today regarding Marriott's status as a timeshare developer, its recent financial data, projections for the future and some info on its Ritz fractional brand. Here is the pdf link to the presentation materials, but note that it takes quite a while to load, even at fast connection speeds.

Summarizing -
  • 62% of MVCI owners are at least 46, but only 9% are at least my age (65).
  • 63% of owners have annual income of at least $100,000. Buyers who borrow have a median income of $125,000 and a credit score averaging 740.
  • Over 300,000 households currently own at least one MVCI timeshare.
  • 30% of owners use their own home week (for personal use, use by friends/relatives or private rental), 28% exchange to another Marriott, 22% (!!!) exchange for Marriott Rewards points, 11% exchange for a non-Marriott and 9% do something else with their unit, including renting through Marriott.
  • Of Marriott's timeshare sales, 30% are to existing owners, 20% are from owner referrals and the remaining 46% are to un-referred new customers.
  • Total Marriott sales in 2007 were approximately $1.25 billion!
  • Marriott currently has three sales offerings (Singapore, Hong Kong & Phuket) in its Asian points timeshare venture and is targeting Japan, Beijing, Shanghai and Australia for near-term expansion. Las Vegas' Grand Chateau participates in the program, which is not open to Western Hemisphere residents. Other targets include Bali, Macau & Northern Thailand.
  • Marriott currently has 29,000 weeks available for sale, 47,000 weeks under construction and 108,000 weeks connected to projects under discussion internally.
  • The Ritz-Carlton brand (fractionals, residences and memberships) currently has 12 locations in existence or under active development.
  • 69% of MVCI revenue comes from sales, 11% from financing and 20% from providing services to MVCI resorts. However, 35% of the profit comes from financing and only 8% from services.
  • Borrowers typically take a $23,000 loan at 13%-13.5% and make a 10%-15% down payment. In addition to the incentive points that buyers get for financing, sales executives also get incentives if their customers borrow!!! Delinquencies have been steadily dropping, from about 10% in 2002 to about 6% in 2007.
  • Marriott projects continued strong annual sales growth of $150-$250 million (that's annual growth, not total) over the next three years.
  • Marriott expects that of sales over the next 10 years, 35% will come from existing projects, 24% will come from projects on the drawing boards but not yet in sales and a hefty 41% from projects not yet identified. For historical perspective, 70% of MVCI sales in 2007 came from projects that didn't exist in 2000!
  • Marriott projects total timeshare sales over the next 10 years at $21-25 billion, with another $4-5 billion of Ritz fractionals and residences.
For comparison, here are links to my previous posts regarding a June 2005 similar security analysts' meeting, some info from a November 2006 meeting and the 2005 annual report and a presentation to analysts in March 2007.
 
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DaveM: Do I read correctly that Singapore and HongKong are locations that are in the midst of becoming a timeshare property?
 
Dave M said:
22% (!!!) exchange for Marriott Rewards points
Click to expand...


I'm amazed at this number. With the ability for any Marriott Rewards Member to purchase 50,000 points per year @ 1.25 cents a piece, it makes no sense at all for me to trade my week for points. After the initial purchase, hefty maint fees and an extra $104.00 for them to convert it to points, the value for me just isn't there. I think I'll start looking for MVCI weeks to stay for points more often since this many change their week for points.:)
 
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Cathyb said:
DaveM: Do I read correctly that Singapore and HongKong are locations that are in the midst of becoming a timeshare property?
Click to expand...
I'm not DaveM, but I can point you to the website that provides more information about Marriott's Asia Pacific Club: http://www.marriottvillas.com/asiapac/default.jsp

Asia Pacific Club's target customers include Singapore and Hong Kong, but that doesn't mean there are any villas in those locations.
 
Cathy - Yes, but not for MVCI; only for the Asian points system.

1sland - I agree. I was initially surprised at how high that figure is. However, TUGgers (and others like us) who are knowledgeable about how to best use our timeshares don't rule the roost. There are many thousands of timeshare owners who, for whatever reason, don't use their timeshares annually. For Marriott owners who don't use their timeshares, trading for points is an easy alternative that rescues some value.

Also, to your point about possibly using points for Marriott timeshare stays, very few Marriott weeks are available for such stays. Marriott takes most of those weeks traded for points and rents them.
 
Thanks Dave ... interesting report. Looks like Marriott will stay in timeshares for a long time!

Island -- I think the percent of owners trading Marriott BeachPlace for points is 30% so that is above average ... but they can do it every year for 110,000 MR points (platinum). Trading 2 weeks a year for multiple owners is not a stretch, especially empty nesters who want to see the world and feel the justification of 440,000 pts every 2nd year affords a very nice trip somewhere special where there isn't a Marriott timeshare to enjoy - such as downtown London, Rome, Paris, Parague, Vienna, etc.

You can only buy 50,000 pts each year to use to make up a small shortfalll in getting to a nice reward. That's only a fraction of what is needed for the hotel+air packages.

Brian
 
pwrshift said:
Thanks Dave ... interesting report. Looks like Marriott will stay in timeshares for a long time!

Island -- I think the percent of owners trading Marriott BeachPlace for points is 30% so that is above average ... but they can do it every year for 110,000 MR points (platinum). Trading 2 weeks a year for multiple owners is not a stretch, especially empty nesters who want to see the world and feel the justification of 440,000 pts every 2nd year affords a very nice trip somewhere special where there isn't a Marriott timeshare to enjoy - such as downtown London, Rome, Paris, Parague, Vienna, etc.

You can only buy 50,000 pts each year to use to make up a small shortfalll in getting to a nice reward. That's only a fraction of what is needed for the hotel+air packages.

Brian
Click to expand...

Hi Brian..I agree, but as I've learned here, my spouse and I can buy 100,000 in Dec and another 100,000 in Jan, and have that 200,000 point travel package for $2500.00. (still a great deal IMO, when giving up my weeks, my maint fees and fees for changing the week over to points can come pretty close to that figure for 2 weeks!) We have done lots of these travel package trips over the years and have traded my week for points a time or 2 when it wasn't possible to just buy that many points so reasonably. I enjoy reading your posts about how you use your points. :)
 
1sland said:
I enjoy reading your [Brian's] posts about how you use your points.
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Always, always, always! As I move into retirement this summer, I plan to use Brian's shared expertise on booking hotel-air travel packages to start using up my mega Marriott Rewards points built up over the past 27 years. :D
 
Nancy, you and DaveM are too kind. We all freely share our thoughts here on TUG and benefit from each other.

As a 'single' I had forgotten that husband and wife can have separate MR accounts and double the purchases of points each year. I buy them every year too, but only 50,000 of them. :(

Dave ... with 27 years of point collecting you'll be away a whole year or more! If I can be of any help to you, let me know.

Brian
 
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Dave M said:
1sland - I agree. I was initially surprised at how high that figure is. However, TUGgers (and others like us) who are knowledgeable about how to best use our timeshares don't rule the roost. There are many thousands of timeshare owners who, for whatever reason, don't use their timeshares annually. For Marriott owners who don't use their timeshares, trading for points is an easy alternative that rescues some value.
Click to expand...

And this is where Marriott makes the easy sales, and big money. How many TUG members are Marriott owners vs the 300K of households that own Marriott? Tuggers are a fraction of the ownerbase. So for every incredibly savvy Tugger, there is 9.5 other people that don't know how to maximize their Marriott owners. That is why Marriott is making a killing.

Regards.
Joe
 
Dave M said:
Always, always, always! As I move into retirement this summer, I plan to use Brian's shared expertise on booking hotel-air travel packages to start using up my mega Marriott Rewards points built up over the past 27 years. :D
Click to expand...

I just hope you guys do much of this planning on an open forum so we fellow Marriott owners can read and learn. :D
 
Dave M said:
...
22% (!!!) exchange for Marriott Rewards points
...
Click to expand...

AND every one of those MRPs is dedicated to MRP usage - outsiders using their MRPs to stay at MVCI resorts.

Marriott does NOT rent those units to pay for MRPs turned in.

Right?
 
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Actually, not right, Perry. Marriott makes almost no timeshare weeks available for Marriott Rewards free stays. Try it. Try making a dummy points reservation at a Marriott timeshare. Many resorts have no availability for an entire year.
 
Learned something new today from all you guys ... Thanks.

I did not realize that we could buy up to 50K points each year @ 1.25 per 100. When we bought Aruba I bought the points for the first year since we were not able to have usage. We paid $850 for 90K. This was a good deal in comparison. So might be the gold week we tend to turn in to get 110K for the MF of $845 plus the $104. As for the rest of our weeks, we prefer to go and not turn them in for points. Also, I would never turn in a lock off unit for the meager points given in exchange. :clap:

Beverley
 
But...but...but

Dave M said:
Actually, not right, Perry. Marriott makes almost no timeshare weeks available for Marriott Rewards free stays. Try it. Try making a dummy points reservation at a Marriott timeshare. Many resorts have no availability for an entire year.
Click to expand...

Well that's what the Marriott lady said at our MOC owner's seminar last week - every MRP turned in for a MOC went to usage ONLY for other members of MRP. They didn't rent the units out (Which is what I always thought) and turn the money back to the MRP organization.

She said that there were multiple inventories of usage at MOC:

1) 13 and 12 month inventory for MOC owners and guest certificates

2) MRP inventory used ONLY for MRP usage

3) Rental inventory - MOC owners who turned in their units for Marriott to rent

4) II inventory - units set aside for II exchanges


But, it was a timeshare person so that's why I asked - RIGHT?

Dave, if you can ask your contacts at Marriott if this is correct it would help me at least.

P.S.
At the new towers there was an additional:

5) Developer's inventory used for "priming" II and internal Marriott usage.

And I'd add:

6) Week 53 usage
 
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Don't forget that there are TWO different classes of MR points - those that come from converting your timeshare to MR points and all other MR points.

MR points obtained from converting your TS to points CANNOT be used to book another Marriott TS. Those that were earned, given as a bonus, or purchased CAN be used to book a Marriott TS. But, as Dave mentioned above, not easy to find a Marriott TS for MR points anyhow.

(unless your going to Orlando)
 
I think it goes like this, Perry:

1) Units owned by individual owners are made available to them and only to them to reserve at 13 months and 12 months and at lesser advance periods. At some point, Marriott takes control of units not reserved (and has the right to do so according to the docs) and offers them for rent or uses them for other purposes to try to avoid lost use.

2) Units owned by Marriott (not yet sold) and units traded into Marriott in exchange for Marriott Rewards points all belong to Marriott to use in any way Marriott chooses - e.g., as rentals, for promotions, for Marriott Rewards stays or to deposit with II in exchange for consideration from II.
 
I asked my VOA what would happen to my 2009 MLE week if I were to convert it to MR points. I asked if it would be rented by Marriott. She told me "no", that Marriott would make my week available to MR points users. I mentioned that I was never able to find any MR points stays availability at any Marriott TS's. She sounded surprised and searched various places and dates for me and found nothing but availability in Orlando.

Although she stated it, she never convinced me that my week would become available for MR points.
 
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Beverley said:
So might be the gold week we tend to turn in to get 110K for the MF of $845 plus the $104.
Beverley
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Hello Beverley, Wouldn't this then make the value of the week that you give them around $200.00 or $300.00? Since you and your DH can purchase 100,000 for $1250.00...you are paying $949.00 and giving up the use of your unit for 110,000 (not even consdidering your purchase price..)

This is how I have been looking at this....I have traded my unit for points in the past and I really do think that the way you use the points can make up for the seeming loss of value...but, I am struggling with it...
 
Nancy -

I'm not sure your math works. The maintenance fees ("MFs") are payable each year no matter what an owner does with the week. If an owner uses a week, there is no added cost. Only if the owner exchanges for points or for another week (e.g., through II) is there added cost and that added cost is nominal.

Stated another way, if the "value" of the points acquired includes the MFs, the value of the week should also include the MFs, since the MFs are payable anyway.

Bottom line? The value is in the eye of the beholder! The way that Brian and some others use points for travel packages, those points can easily have a value far in excess of the 1.25 cents per point that Marriott charges for a purchase.
 
thinze3 said:
I asked my VOA what would happen to my 2009 MLE week if I were to convert it to MR points. I asked if it would be rented by Marriott. She told me "no", that Marriott would make my week available to MR points users. I mentioned that I was never able to find any MR points stays availability at any Marriott TS's. She sounded surprised and searched various places and dates for me and found nothing but availability in Orlando.

Although she stated it, she never convinced me that my week would become available for MR points.
Click to expand...

This doesn't work mathmatically either. If I recall correctly you need 150,000 MRP to stay at MVCI 2bd for a week. I do not know of any resort that gives you that many points for turning in a week.

I thought that the resorts are charged for the points and it is up to them to recoup the costs. I would expect it to be much more lucrative to rent the weeks than make them available for points.
 
wuv pooh said:
I thought that the resorts are charged for the points and it is up to them to recoup the costs.
Click to expand...
I don't believe either of those statements are true. If they were true, you would see some pertinent line items on the financial budgets for each resort.

You own your week. If you elect to trade it in for points, you are trading it to Marriott, not to your resort. Similarly, if you use points to stay at a resort, you are using your points for a week that Marriott (not the resort) has in its inventory. Thus, the points transactions are between you and Marriott, not between you and the resort.

As for it working mathematically, it does work, just as with any other profit-oriented transaction. Marriott is in business to make money. Thus, it makes sense that Marriott would charge more points for a free week's stay at a resort than it pays to an owner to acquire that same week.
 
thinze3 said:
....I mentioned that I was never able to find any MR points stays availability at any Marriott TS's. She sounded surprised and searched various places and dates for me and found nothing but availability in Orlando....
Click to expand...


I now feel VERY lucky. I just returned from a 7 night stay at DSV II in a two bed room on points, and even got the week on PointSaver for 135,000 points!

Just as an FYI I just looked and found Newport Coast Villas on points from 1/3/09 through 1/10/09 for 150,000 points.

Ray
 
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Why we use points!

We own 3 Marriott timeshares and always trade one of ours that has a yearly point exchange of 110,000 for points. We recently just came back from Curacao where the room we had went for $430 per night ( we added one additional night at that rate) and our airline tickets would have been $910 from our location during President's Week. The package we used was for 185,000 points and it gave us 7 days at the Marriott ocean center view and 2 roundtrip airlines. If we had to pay it the vacation would have cost $4,810 so even if you divide that in half, our points gave us a value of 2,405. We have used points to go to the Marriott in Puerta Vallarta, St. Kitts and Aruba also. I know some of the categories have now changed for next year so it will be 235,000 for the package. Maybe the airlines are just really expensive from our area Rochester, NY and I can only travel during President's Week as does everyone in this area that makes that part so high for us. The points for that one timeshare have worked well for us.
 
Dave M said:
I don't believe either of those statements are true. If they were true, you would see some pertinent line items on the financial budgets for each resort.
Click to expand...

I guess I am confusing it with how it works for hotels that are part of the program. Most of these are franchises and I thought they had to pay for the points someway, or at least the net between earnings and redemptions.

The other seems like double dipping. They already made the profit off of us on the sale and management fees. Then they charge an admin fee for the exchange to recoup their cost. They also restrict use at MVCI so I can't use it as a de facto exchange system. Therefore I believe they should give me full value for my week, but I understand it is not in their interest to do so.
 
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