# Marriott Taking $760M Timeshare Hit



## njdoofus (Sep 23, 2009)

Cutting prices and development at luxury resorts:

Bethesda,  MD  -  23 September 2009 -  
Marriott International, Inc. (“Marriott”) (NYSE:MAR) today announced third quarter 2009 pre-tax impairment charges of approximately $760 million associated with its timeshare segment.  The charges largely relate to the company’s plans to reduce prices and development at luxury fractional and residential resorts to accelerate cash flow.

“The decisions we announced today were made to enable us to drive long-term cash flow and profitability in our timeshare business,” said Arne Sorenson, Marriott’s president and chief operating officer.

Specifically, the company is recording impairment charges of approximately $295 million associated with five luxury residential projects, $300 million associated with its nine North American luxury fractional projects, $95 million related to one North American timeshare project, $55 million related to the four projects in its European timeshare and fractional business, and $15 million associated with two Asia Pacific timeshare resorts.  The $760 million of impairment charges are non-cash except for approximately $25 million expected to be funded in 2009 and $20 million expected to be funded in 2010 or 2011.  The cash amounts were previously included in the company’s spending forecasts.
Full press release here:
http://www.marriott.com/news/detail.mi?marrArticle=457129


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## BocaBum99 (Sep 23, 2009)

This is actually a good move for Marriott and its customers.   What this does is acknowledge that the prior values of the properties are now lower in value.  This is a type of mark-to-market of their sellable assets.  So, instead of keeping an artificially high asset value on their balance sheet, they are writing it down and taking the loss now.  That will allow them to reduce prices and maintain a decent margin going forward.


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## Cathyb (Sep 23, 2009)

bocabum:  Were you a math wizard in college?  You amaze me so many times


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## Whirl (Sep 23, 2009)

*MVCI -done!?*

Perhaps fueling the DVC/ Marriott merge debate, but thought this was interesting tidbit in *BOLD *below....Also in _italics_ below, indicates that no new timeshares will be added to  the MVCI resort portfolio, so what you have now is what all you will ever have. They're done with timeshare development essentially....

"Demand for the timeshare segment’s luxury residential products was soft in 2008 and weakened further in 2009.  Given this economic environment, Marriott expects to reduce residential prices, convert certain proposed projects to other uses, and sell some undeveloped land.  *Going forward, while Marriott expects to continue to license and manage luxury residential projects developed by others as part of its lodging business*, _it does not expect its timeshare segment to pursue new Marriott-funded residential development projects._"


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## TheTimeTraveler (Sep 23, 2009)

Sounds like what you see is what you get!


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## timeos2 (Sep 23, 2009)

*The old days have (thankfully) ended. Lets hope for a better model going forward*



BocaBum99 said:


> This is actually a good move for Marriott and its customers.   What this does is acknowledge that the prior values of the properties are now lower in value.  This is a type of mark-to-market of their sellable assets.  So, instead of keeping an artificially high asset value on their balance sheet, they are writing it down and taking the loss now.  That will allow them to reduce prices and maintain a decent margin going forward.



It also seems to mean that the permanent price reduction that Perry said would represent a true drop in value has occurred. The timeshare industry is now OFFICIALLY in freefall.


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## Swice (Sep 23, 2009)

Whirl said:


> Perhaps fueling the DVC/ Marriott merge debate, but thought this was interesting tidbit in *BOLD *below....Also in _italics_ below, indicates that no new timeshares will be added to  the MVCI resort portfolio, so what you have now is what all you will ever have. They're done with timeshare development essentially....
> 
> "Demand for the timeshare segment’s luxury residential products was soft in 2008 and weakened further in 2009.  Given this economic environment, Marriott expects to reduce residential prices, convert certain proposed projects to other uses, and sell some undeveloped land.  *Going forward, while Marriott expects to continue to license and manage luxury residential projects developed by others as part of its lodging business*, _it does not expect its timeshare segment to pursue new Marriott-funded residential development projects._"



This is HUGE news that was buried in the news release.   I wonder how this is going to unfold??


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## SueDonJ (Sep 23, 2009)

Whirl said:


> Perhaps fueling the DVC/ Marriott merge debate, but thought this was interesting tidbit in *BOLD *below....Also in _italics_ below, indicates that no new timeshares will be added to  the MVCI resort portfolio, so what you have now is what all you will ever have. They're done with timeshare development essentially....
> 
> "Demand for the timeshare segment’s luxury residential products was soft in 2008 and weakened further in 2009.  Given this economic environment, Marriott expects to reduce residential prices, convert certain proposed projects to other uses, and sell some undeveloped land.  *Going forward, while Marriott expects to continue to license and manage luxury residential projects developed by others as part of its lodging business*, _it does not expect its timeshare segment to pursue new Marriott-funded residential development projects._"



I think "luxury residential products" refers to the Ritz-Carlton Destination Club and Grand Residences by Marriott brands, not the MVCI properties, which would mean all timeshare development isn't being halted.

Interesting that the article mentions financial difficulties for only one MVCI US property and two Asian properties.  We can probably guess the US property is Crystal Shores and that probably explains the new pricing mentioned in this thread.

That's my take, anyway.


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## SueDonJ (Sep 23, 2009)

timeos2 said:


> It also seems to mean that the permanent price reduction that Perry said would represent a true drop in value has occurred. The timeshare industry is now OFFICIALLY in freefall.



I don't know, this seems a little too Chicken Little for me - the article mentions only one MVCI US resort that has had permanent price reductions, and two Asian resorts that have suffered losses.  Didn't we all agree that, at Crystal Shores anyway, those price points were ridiculous to begin with?

The sale prices across the board with all MVCI properties this year should have been expected in this economy, and they seem to have done the trick to keep sales moving forward.  "We expect the timeshare segment to produce positive cash flow in 2009, higher levels of cash flow in 2010, and improving profitability."  That to me doesn't say that they're halting all MVCI development.


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## Swice (Sep 23, 2009)

*Dropping new developments*

The news is hitting the wires... 


These two lines are lifted from The Business Journals:
---------------------/
"Marriott also plans to convert some proposed projects to other uses and selling some undeveloped land. Marriott did not disclose which specific projects will be converted.

The company also said it does not expect to fund the construction of any new residential development projects, even though it will still license and manage some."
----------------------/


This is going to be a concern in the long-term to Marriott's dedication to timeshare owners.    What will the "LONG TERM" impact be on Marriott Reward points?    Obviously, the first answer is that our points will be fine.   But if Marriott is no longer pushing new developments and padding our accounts, then they'll be less concerned with keeping timeshare owners "happy" with program perks.


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## Whirl (Sep 23, 2009)

SueDonJ said:


> I think "luxury residential products" refers to the Ritz-Carlton Destination Club and Grand Residences by Marriott brands, not the MVCI properties, which would mean all timeshare development isn't being halted.
> 
> Interesting that the article mentions financial difficulties for only one MVCI US property and two Asian properties.  We can probably guess the US property is Crystal Shores and that probably explains the new pricing mentioned in this thread.
> 
> That's my take, anyway.



I think you are right on that; upon a more careful read,  they *clearly delineate between the timeshare/fractional business and luxury residential*....


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## GregT (Sep 23, 2009)

I would think ROFR is definitely dead -- if they're curtailing their new developments and taking a charge, I can't imagine they are going to spend their precious cash to add to their timeshare inventory.   Plus with limited new sales efforts going forward, they don't have the incentive to support the market prices.

AND....if their commitment to developing new time shares is reduced, why bother introducing a new points-based system?  I think the system as we see it today will remain -- fixed/floating weeks, and Interval International.


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## LisaRex (Sep 23, 2009)

Certainly they should halt new developments in this economy.  They'd have a difficult time securing a loan even if they wanted to move forward, but with soft sales, it makes sense to batten down the hatches.  

The good news is that I'm sure Marriott is getting a nice chunk of change from the MFs for managing the properties.  This may be sufficient to keep them happy until the storm subsides.  The bad news is that MF defaults are on the rise.  We Starwood owners have recently been informed that we may need to pay SAs to cover the record defaults.  

My biggest overall concern about the TS industry is that sans new developments, which is where the big $$ are, both Starwood and Marriott will simply sell off the TS division.  Their primary concern is hotels and they loved us while we were bringing in a bunch of money.  TSing is no longer bringing in big bucks.  So I fear that not only is the love affair over with but that its well on its way to a messy divorce.

Time will tell.


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## Stefa (Sep 23, 2009)

GregT said:


> if their commitment to developing new time shares is reduced, why bother introducing a new points-based system?  I think the system as we see it today will remain -- fixed/floating weeks, and Interval International.



If they thought they would make more money off an internal exchange system it would make even more sense to move in that direction now that they aren't making big bucks off timeshare sales.


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## m61376 (Sep 23, 2009)

"For the segment’s traditional U.S. timeshare business, recent successful marketing promotions included volume discounts and other purchase incentives.  The company expects to continue targeted short-term promotions.  At the same time, the company has enhanced returns by lowering overhead, streamlining sales and marketing efforts and deferring introduction of new projects and development phases. "

So in accordance with what Sue already pointed out, I didn't read it as unexpectedly bleak. Clearly in this economy they've had to halt development, but they are deferring new timeshare development and not ceasing it according to the way I read the article.


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## timeos2 (Sep 23, 2009)

Stefa said:


> If they thought they would make more money off an internal exchange system it would make even more sense to move in that direction now that they aren't making big bucks off timeshare sales.



Very true. There is no money to be had developing but almost free money to set up a conversion to points from weeks. It really seems to be a move they would want to make now more than ever before.


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## Latravel (Sep 23, 2009)

I read the press release like Sue.  The timeshare business is fine but they are slowing the luxury segment, which makes sense in this economic climate.  

My father is a real estate developer and all his projects are on hold, not because banks won't given him money but because buyers are having a hard time getting a loan/cash.   Everyone is just weathering out the storm.  Things will get better again.  The real estate market goes in cycles and we can see the trends for the future by looking in the past.  This is not a doom scenario, just part of the real estate game.


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## lovearuba (Sep 23, 2009)

*revenue making*



Stefa said:


> If they thought they would make more money off an internal exchange system it would make even more sense to move in that direction now that they aren't making big bucks off timeshare sales.


 

They can also increase maintenance fees and create more points to give out.  Its like printing their own money..


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## Numismatist (Sep 23, 2009)

LisaRex said:


> Certainly they should halt new developments in this economy.  They'd have a difficult time securing a loan even if they wanted to move forward, but with soft sales, it makes sense to batten down the hatches.
> 
> The good news is that I'm sure Marriott is getting a nice chunk of change from the MFs for managing the properties.  This may be sufficient to keep them happy until the storm subsides.  The bad news is that MF defaults are on the rise.  We Starwood owners have recently been informed that we may need to pay SAs to cover the record defaults.
> 
> ...





This makes me nervous:  I have Frenchman's Cove - a big part of that enjoyment is being able to 'use' the Marriott Hotel next door for amenities.

Should they ever sell off MFC to a non-Marriott company I could imagine that they may restrict usage of the Hotel nearby.

This would really be a detrement to owning there...


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## SueDonJ (Sep 23, 2009)

lovearuba said:


> They can also increase maintenance fees and create more points to give out.  Its like printing their own money..



???  MVCI can't increase m/f to some arbitrary dollar amount in order to increase their own profits - the management contract terms are specified in the Timeshare Declarations, and the resort budgets are determined by the BOD's based on associated costs and expected future refurbishments.

Creating points, maybe, but it's a safe bet that whatever points system is implemented, if any, will be subject to strict contractual terms also.


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## Whirl (Sep 23, 2009)

LisaRex said:


> The good news is that I'm sure Marriott is getting a nice chunk of change from the MFs for managing the properties.  This may be sufficient to keep them happy until the storm subsides.  The bad news is that MF defaults are on the rise.  We Starwood owners have recently been informed that we may need to pay SAs to cover the record defaults.



I think that the risk of SA's and increased maint fees is something to seriously consider if you are currently contemplating any purchases...Especially if you have bought at a newer resort in the last last couple years when people could have taken out home equity loans to pay for the week or MORI loans( at extortionist rates).

We are not through the mortgage and credit crisis yet and people will most definitely stop paying their maint fees and timeshare loans before they stop paying on their home!

I have combed through thousands of Marriott deeds registered in the last year recently...I was dually shocked at how many weeks MArriott was crossing at sold out resorts and heartened as well, by the occasional Foreclosure or "deed in lieu of forclosure" that I came across...i suspect, there will be many more yet to come.

I think older resorts are somewhat less problematic as most timeshare loans are likely 10 years or less so paid off or really close to it, but newer ones, originated in 2006-2007, peak mortgage loan delinquincy and default years....watch out!

Crystal shores, St Kitts,  Surf Watch...what other new ones are still in major sales?....very scary.

Could be way off base, but just some random thoughts...


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## njdoofus (Sep 24, 2009)

*From WSJ.com today*

Marriott International Inc.'s disclosure Wednesday that it will stop developing new time-share and luxury-residential projects and write down the value of such properties under construction by $760 million marks the beginning of the next phase of the shakeout in the vacation-home industry.
The three largest time-share players -- Wyndham Worldwide Corp., Starwood Hotels & Resorts Worldwide Inc. and Marriott -- already had dramatically pared their time-share businesses in the past year to reflect weakening demand, falling prices and difficulty securitizing loans for consumers.
Now, Marriott is stepping back even further by abstaining from new development until the market recovers and slashing prices on existing inventory in an effort to sell it quickly. Marriott said it will take the $760 million noncash charge against third-quarter profit for 21 projects under development in North America, Europe and Asia. The company is scheduled to release its third-quarter earnings report on Oct. 8.
"This business, at least for the next 10 years, is going to remain permanently shrunk," said Joseph Greff, a gambling and lodging analyst for J.P. Morgan Securities, speaking of the time-share and luxury-residential markets in general.
The pullback affects all three formats that Marriott sells under its Marriott and Ritz-Carlton brands: time-shares, fractional-ownership projects and luxury-residential projects. Marriott is permanently exiting development of luxury-residential projects, which are for-sale condominiums and penthouses that sit atop or adjacent to its hotels. It will, however, continue to manage such properties built by other developers and license its brands to them. It will complete its luxury-residential projects already under construction.
Marriott also will stop building new time-share and fractional-ownership projects. But, unlike its exit of the luxury-residential market, Marriott plans to return to building new time-share and fractional-ownership projects when those markets rebound. The time-share format allows buyers to purchase a week or more of access to a resort each year, and sometimes to trade for time at other resorts in the same network. Fractional ownership, by contrast, entails buyers purchasing a share of a given unit in a resort and thus getting access to it for a dozen or more weeks a year.
The time-share business actually has done better for Marriott than the fractional-ownership and luxury-residential segments. In the first half of this year, Marriott logged $338 million in time-share sales. By contrast, the two other formats generated nothing after cancellations wiped out their gains.
Overall, Marriott's entire time-share division -- including sales of the three formats and income from managing and licensing them -- registered $632 million in revenue in this year's first half. That is down from $863 million in the same period last year.
Marriott, based in Bethesda, Md., also manages or franchises 3,150 hotels globally and owns eight.
Marriott's pullback will focus attention on whether Wyndham and Starwood will follow suit when they report third-quarter results.


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## njdoofus (Sep 24, 2009)

*Sorry about the long post above*

WSJ.com is a paid site - links don't always work.


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## Twinkstarr (Sep 24, 2009)

The article is in today's hardcopy WSJ, back page of the Marketplace section.


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## dioxide45 (Sep 24, 2009)

The WSJ didn't get it all right, at least according to Marriott's own release. Marriott didn't indicate it was ceasing or abstaining from further timeshare developments (except in Europe). They indicated many changes affecting their fractional and luxury residential properties, but TS was the least impacted segment.


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## SueDonJ (Sep 24, 2009)

dioxide45 said:


> The WSJ didn't get it all right, at least according to Marriott's own release. Marriott didn't indicate it was ceasing or abstaining from further timeshare developments (except in Europe). They indicated many changes affecting their fractional and luxury residential properties, but TS was the least impacted segment.



I think today's WSJ article got it right and is much easier to understand than yesterday's press release.

Yesterday's press release said this:


> For the segment’s traditional U.S. timeshare business, recent successful marketing promotions included volume discounts and other purchase incentives.  The company expects to continue targeted short-term promotions.  At the same time, the company has enhanced returns by lowering overhead, streamlining sales and marketing efforts *and deferring introduction of new projects and development phases*.  Despite the difficult business environment, only one U.S. timeshare project is incurring a charge for the 2009 third quarter, largely attributable to its high development costs coupled with lower demand than originally anticipated.



Today's WSJ:


> Marriott also will stop building new time-share and fractional-ownership projects. But, unlike its exit of the luxury-residential market, *Marriott plans to return to building new time-share* and fractional-ownership projects when those markets rebound.



I'm a little confused by this line in the WSJ article:


> Marriott, based in Bethesda, Md., also manages or franchises 3,150 hotels globally and owns eight.



Do they mean eight "hotel brands", and are these the eight?  JW Marriott,  Marriott Conference Centers, Renaissance, SpringHill Suites, Courtyard, Fairfield, Residence Inn, TownePlace Suites?


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## LisaRex (Sep 24, 2009)

SueDonJ said:


> Marriott, based in Bethesda, Md., also manages or franchises 3,150 hotels globally and owns eight.
> 
> Do they mean eight "hotel brands", and are these the eight? JW Marriott, Marriott Conference Centers, Renaissance, SpringHill Suites, Courtyard, Fairfield, Residence Inn, TownePlace Suites?



I think they mean exactly what is written. There are 3150 hotels that bear the Marriott name (be they called JW Marriott, Residence Inn, etc.) but are not OWNED by Marriott. Rather they are franchises or Marriott simply manages the hotel.  They outright OWN (and manage) only 8 hotels.  

Tangent: There are tons of threads on FlyerTalk about folks who turn to Marriott Corporate for issues related to their stay and are told that there's very little that corporate can do because the owner of the hotel has the final say as to how to resolve the situation.


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## SueDonJ (Sep 24, 2009)

LisaRex said:


> I think they mean exactly what is written. There are 3150 hotels that bear the Marriott name (be they called JW Marriott, Residence Inn, etc.) but are not OWNED by Marriott. Rather they are franchises or Marriott simply manages the hotel.  They outright OWN (and manage) only 8 hotels.
> 
> Tangent: There are tons of threads on FlyerTalk about folks who turn to Marriott Corporate for issues related to their stay and are told that there's very little that corporate can do because the owner of the hotel has the final say as to how to resolve the situation.



8 out of 3,000+?  Wow!  Any idea which are the 8?

I know if I had a problem with a certain hotel I'd talk to that GM first, but if the Marriott name is on the door and the GM can't help me then I'd sure expect corporate to step in.


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## lovearuba (Sep 25, 2009)

*Marriott Stellaris in Aruba*



SueDonJ said:


> 8 out of 3,000+? Wow! Any idea which are the 8?
> 
> I know if I had a problem with a certain hotel I'd talk to that GM first, but if the Marriott name is on the door and the GM can't help me then I'd sure expect corporate to step in.


 

The Stellaris in Aruba is not owned by Marriott, I had problems and asked Marriott corporate for help but was unable to resolve the issue.  Their response was to give me more points.


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## lovearuba (Sep 25, 2009)

*Time will tell*



SueDonJ said:


> ??? MVCI can't increase m/f to some arbitrary dollar amount in order to increase their own profits - the management contract terms are specified in the Timeshare Declarations, and the resort budgets are determined by the BOD's based on associated costs and expected future refurbishments.
> 
> Creating points, maybe, but it's a safe bet that whatever points system is implemented, if any, will be subject to strict contractual terms also.


 
Hard to prove that by me.  Those documents are not worth the paper they are printed on.  You continue to trust that they have your back but I gave up that belief many months ago.  They will get out of the timeshare business if it is no longer profitable, the only way to keep it profitable is to get money from someplace else.  time will tell.


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## wuv pooh (Sep 25, 2009)

SueDonJ said:


> 8 out of 3,000+?  Wow!  Any idea which are the 8?
> 
> I know if I had a problem with a certain hotel I'd talk to that GM first, but if the Marriott name is on the door and the GM can't help me then I'd sure expect corporate to step in.



Several years ago Marriott split into 2 parts that both separately trade on the stock exchange.  All the property went into a real estate REIT and all the management contracts went into Marriott International.  That is why MAR does not own any hotels.  I believe the only ones they own are under the JW brand, but not sure.


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## Cobra1950 (Sep 25, 2009)

One question that hits me initially is what will that do to the Marriott resale market, will it further drop prices  or will it cause them to stabilize? 
    Sure is a lot of uncertainty going forward on Marriott timeshares, they had already said they were doing no more lockoffs and no more ski destinations, when they reenter market-if they do-probably will be a pretty dull offering (yes, in Orlando probably )


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## m61376 (Sep 25, 2009)

Cobra1950 said:


> One question that hits me initially is what will that do to the Marriott resale market, will it further drop prices  or will it cause them to stabilize?
> Sure is a lot of uncertainty going forward on Marriott timeshares, they had already said they were doing no more lockoffs and no more ski destinations, when they reenter market-if they do-probably will be a pretty dull offering (yes, in Orlando probably )



Cancun is slated to be the next development.

No more lock-offs is a mixed bag- they are great to own, but harder to trade into larger units if you need/want a 2BR.


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## SueDonJ (Sep 25, 2009)

lovearuba said:


> Hard to prove that by me.  Those documents are not worth the paper they are printed on.  You continue to trust that they have your back but I gave up that belief many months ago.  They will get out of the timeshare business if it is no longer profitable, the only way to keep it profitable is to get money from someplace else.  time will tell.



But it isn't that I trust them to "have my back" - it's that I trust that they and we owners can be legally forced to abide by the terms of the contracts.  If ever my resorts' m/f are increased to the point that MVCI realizes a greater profit margin than what is specified in the management contracts, well, that's when I'd hire a competent attorney to cover my back.

I do agree that they'll get out of the timeshare business if it's no longer profitable for them.  That's good business sense, though, and it's what their shareholders would expect them to do.


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## SueDonJ (Sep 25, 2009)

Cobra1950 said:


> One question that hits me initially is what will that do to the Marriott resale market, will it further drop prices  or will it cause them to stabilize?
> Sure is a lot of uncertainty going forward on Marriott timeshares, they had already said they were doing no more lockoffs and no more ski destinations, when they reenter market-if they do-probably will be a pretty dull offering (yes, in Orlando probably )



I agree, the uncertainty is worrisome, but only slightly more so than any other "luxury" business in this economy.  The press release from the other day actually makes me feel a little better, knowing that the steps they've taken to ride out the bad times are keeping Marriott's timeshare business above water.  It's surprising to me that Crystal Shores is the only US property (so far?) that's had prices permanently slashed, but it appears that the temporary discounts at all of the other resorts still in developer sales are doing the trick to keep the company stable.  In this economy, we can't ask for a company to do much better.

The one thing I am worried about is the m/f non-payments that we can probably expect with the 2010 bills.  It's probably time to review the contracts to see how much that can and will impact the other owners.


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## SueDonJ (Sep 25, 2009)

m61376 said:


> Cancun is slated to be the next development.
> 
> No more lock-offs is a mixed bag- they are great to own, but harder to trade into larger units if you need/want a 2BR.



I like the idea of no more lock-offs because it may result in more 3BR units being available for exchanges.  Of course lock-off owners will split their 3BR to get two or more weeks - I would too if what I owned was a lock-off!  But my 3BR aren't lock-offs and my exchanges have all been to 2BR because 3BR are hardly ever available.

I would like to see II offer an AC automatically to everyone who accepts fewer BR in exchanges.  And that AC should be in addition to any that the deposit would usually get.


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## jerseyfinn (Sep 25, 2009)

timeos2 said:


> . . . . The timeshare industry is now OFFICIALLY in freefall.



Timeshare has always functioned in the discretionary economic realm, so the prices went up when times were good, and they will definitely fall when the economy drops. When it rains outside you get wet, and presently timeshare's forecast is for showers ( and perhaps heavy rain at specific resorts or destinations not only in MVC land, but across the industry).  The prices have long since reset themselves and in the case of Marriott, we could see the anniversary sale prices setting the new mark.

The WSJ article does indeed better suggest Marriott's thinkng, which is to limit losses and exposure in those areas where demand has evaporated ( high end fractional and high end residential products ) while reducing expectations in the mainstream timeshare product which has indeed stopped hemorrhaging as sales slow and begin to define the new landscape. The WSJ article suggests a long drought of up to 10 years, but Marriott will stand pat, cease new projects, and go lean and thin while allowiong this economy to cycle through it's miseries. In other words, it's business as usual with lower expectations.

For MVC owners, some clarity returns as we will all soon be able to better evalutate the value of our weeks as we extrapolate from the new price line. It's all in the early stages, but I don't see any Nostrodamos effect here. I see a market in action that took us on a rollercoaster ride.

It's reassuring to hear that Marriott continues to have faith and patience with it's mainstream timeshare product. Time for owners to enjoy their weeks and keep their eyes and ears open as the next couple of years play out and surrender hints about what will happen in the property market and the sort of demand that will or will not return to that sector, which will in turn hint at the level of discretionary spending urges that do or do not yet return to the economy.

Barry


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## dioxide45 (Sep 25, 2009)

Cobra1950 said:


> One question that hits me initially is what will that do to the Marriott resale market, will it further drop prices  or will it cause them to stabilize?
> Sure is a lot of uncertainty going forward on Marriott timeshares, they had already said they were doing no more lockoffs and no more ski destinations, when they reenter market-if they do-probably will be a pretty dull offering (yes, in Orlando probably )



Even after MVCI claimed to not be ding any more lock offs, they promptly started selling another resort with lock offs. The no lock off claim was and is just another rumor perpetrated by sales staff trying to sell lock offs. They claim the no lock offs in the future hoping you will want to jump on one now while they are still selling them. We heard this at MGV on several sales pitches.


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## Davey54321 (Sep 26, 2009)

*Grand Residence on Kauai being converted to timeshare?*

When we did a presentation at Waiohai last month, the sales guy told us that they would be moving the sales office pretty soon (resort is almost sold out) to the Grand Residence in Lihue. He also told us that these hadn't sold much so they'd be converted to timeshare units instead of fractional residences. Has anybody else heard about this? It would certainly lend credence to the idea that Marriott is not planning to invest further in luxury residence or fractional ownership that they are converting some...

Would be interesting to see what the pricing for these units would be! We didn't ask at the time, had just told them that we wouldn't consider buying in Hawaii since we are from East coast and flight is too long (and maintenacnce fees too steep) for this to make sense for us...

Anyhow, just wondered if anyone had heard about this - or other conversions from luxury residences to timeshare within Marriott?  

Vicki


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## Cobra1950 (Sep 26, 2009)

Davey
    That is a good point, wonder if Marriott will convert unsold weeks at Ritz Carleton fractional ownership units to timeshares to liquidate them? 
Some of them are pretty nice but fractional does not fit our lifestyle:whoopie:


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## MULTIZ321 (Sep 26, 2009)

This link should work -

Marriott to Halt Development of Time-Shares, Luxury Products - from the September 24, 2009 Wall Street Journal Online


Richard


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## MULTIZ321 (Sep 26, 2009)

Impairment Charges: The Good, The Bad, and the Ugly -  from Investopedia.com


Richard


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## bogey21 (Sep 26, 2009)

Just goes to prove that Marriott has been ripping us off for years.

George


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## jerseyfinn (Sep 27, 2009)

*Ponder the bigger picture*



lovearuba said:


> They can also increase maintenance fees and create more points to give out.  Its like printing their own money..



You've just confused MVC with the US government ( sort of a slap-in-the-face to Marriott which is a credible company   ).

Let's get something straight here. The HOAs oversee the resort MFs and the last time I've looked, most of our MVC HOAs are pretty tuned-in to risinig costs and are cost averse in that sense. That said, Marriott could raise their administrative fees to the resorts, but I suspect that many HOAs would negotiate hard and that any such administrative increases would face close scrutiny/justification.

As to a points system or internal trades, I'd be willing to hear Marriott out on this one. If Marriott can devise an internal trade system which confers decent perks/incentives, I have no objection to Marriott taking it over. That Marriott derives another income stream is part of the game of give-and-take if they give MVC owners value in so-doing.

With that in mind, I'd suggest to developer purchase owners that they stay tuned in to any such internal trade developments ( and remember, despite what ever some of the pundits here suggest, the *majority* of MVC owners come in through the developer door and these developer owners hold a great deal of sway if they would ever take the time to let Marriott know what their thoughts are ).

What should a developer owner be thinking about or telling Marriott? 

Well, if economics are gonna drive Marriott towards taking over internal trades, then developer purchasers gotta start leaning on Marriott to enhance the value of purchasing developer ( remember, MR points devaluation is a normal consequence of time, and we MVC folks feel a more profound effect of this devaluation -- a simple consequence of how Marriott rolls MVC into the larger MR program ). Toss in rising MFs which are a consequence of the larger economy around us and developer purchasers are going to feel increasingly squeezed in the future as resale could be a better route for those pondering additinal weeks.

How might Marriott remedy this? Well aside from offering higher purchase points incentives or retroactively raisinig the MR redemption value of weeks ( which would be a meager way to temporarily cure MR devaluation ),  Marriott could offer developer owners a "preferred" internal trading window modeled something like the present perk that Interval confers, or significantly discounted trading fees.

My wife and I are finished purchasing additional weeks, but if we were in the market, our decision of whether to go developer versus resale would rest partially upon the "what's in it for me" paradigm if we were to consider MVC developer.  Even at these temporarily lower developer prices, I would want more value since I already know that MFs will indeed rise in the future and the MR devaluation is a natural process of time as well. 

The ironic thing about this entire developer versus resale paradigm is that MVC developer prices remain the Rosetta Stone for all owners as this provides the set point for all of us, both folks purchasing resale and developer owners trying to gauge their long term strategy or to set a sale price for their own weeks.

I'm glad that Marriott is staying in the mainstream TS game. Likewise, no problem with their decision to stand on the sideline in terms of new construction or new resorts. It all makes sense in this economy. I expect Marriott to be active on the hotel side of things through acquisitions as they put their cash to work in other places for the future ( which also means that the economy will indeed go up again -- no Nostordamus effect necessary to figure this one out   ). Those of us in MVC should be most concerned with price stability in the short term while awaiting the regrowth of the economy to help create additional demand.  It would also be nice if Marriott explores ways to enhance ownership during this initerim. Internal trades is one such example. We owners need to give Marriott feedback and thoughts on this process. Bad times can also lead to innovation and improvements.

Barry


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## lovearuba (Sep 27, 2009)

*agree to disagree*

I have an opinion that Marriott has been dishonest for years and can appreciate the fact that owners have an escalating commitment to them.  You've invested a lot of money in a timeshare which has lot considerable value and its hard to accept the fact that Marriott's promises through its sales people are worthless.  Its hard for folks to realize that those sales folks represented Marriott so if they were untruthful then Marriott is untruthful.  

My personal experience is not a positive one.  I was lied to.  I had a lot of respect for the Marriott name until I could no longer defend the name or the purchase of a timeshare from them.  You can think the HOA has power and is representing your best interest and you have a right to do that.  I dont share the same opinion and will agree to disagree with you opinion.  I hope you continue to enjoy your timeshare and dont experience what I have.


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## MULTIZ321 (Sep 27, 2009)

Whirl said:


> We are not through the mortgage and credit crisis yet and people will most definitely stop paying their maint fees and timeshare loans before they stop paying on their home!
> 
> I have combed through thousands of Marriott deeds registered in the last year recently...I was dually shocked at how many weeks MArriott was crossing at sold out resorts and heartened as well, by the occasional Foreclosure or "deed in lieu of forclosure" that I came across...i suspect, there will be many more yet to come.
> 
> I think older resorts are somewhat less problematic as most timeshare loans are likely 10 years or less so paid off or really close to it, but newer ones, originated in 2006-2007, peak mortgage loan delinquincy and default years....Could be way off base, but just some random thoughts...



The problem is not unique to Marriott.  Other timeshare companies are facing similar problems. We recently received a special assessment for Celebration World Resort in Kississimee for $321 - half payable in 2009 and half payable in 2010. Accompanying the special assessment was an operating budget .   The Bad Debt Expense Line item in the budget caught my eye and was alarming  - $971,981.   That's a huge number and signifies larger underlying problems - more than just the distaste of having to support non-payers.


Richard


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## JimC (Sep 27, 2009)

LisaRex said:


> Tangent: There are tons of threads on FlyerTalk about folks who turn to Marriott Corporate for issues related to their stay and are told that there's very little that corporate can do because the owner of the hotel has the final say as to how to resolve the situation.



That may depend on the issue, the department in corporate and the representative you contact.  I had hotel, reservation and reward problems resolved by my Marriott Rewards contacts quickly and efficiently.  MVCI was not nearly as efficient or helpful with a timeshare issue.  That is not how it should be, but my experience is that the hotel side is much more consistent in remote customer service.  Properties seem to be about the same level of consistently high product and service.


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## JimC (Sep 27, 2009)

lovearuba said:


> Hard to prove that by me.  Those documents are not worth the paper they are printed on.  You continue to trust that they have your back but I gave up that belief many months ago.  They will get out of the timeshare business if it is no longer profitable, the only way to keep it profitable is to get money from someplace else.  time will tell.



I believe you are extending your Aruba Ocean Club experience as standard SOP at every MVCI property, HOA and local management.  That has not been my experience.  I acknowledge that AOC owners have raised a number of issues regarding their timeshare, its HOA and local management.  But I don't think it is fair to extend that to all properties.

I do agree that Marriott will not pursue business lines that are not economically viable.  But that decision is made with a fairly long term view.  The issues currently are related to the housing and credit crises coupled with the recession.  The combination of those three issues and applicable accounting regulations probably require Marriott to take a charge to earnings.   It is also prudent for them to adjust their operations and investments (hotel and timeshare) short term.  But I seriously doubt that the leisure market is being abandoned as no longer viable.


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