# Experiences w. fractionals?  (Ritz Carlton, Fairmont Heritage, St. Regis)



## greenlight (May 31, 2007)

Hi,

I just joined Tug, and this is my first post.  I haven't seen much talk about "fractionals" here, basically timeshares where you get a number of weeks (usually 3 to 6 weeks).  I think they're interesting because they're deeded ownerships and more flexible than standard timeshares.  I'm about to take the plunge in buying one, and wonder what peoples' experiences are with any of the ones I mentioned (Ritz, Fairmont, St. Regis).  I've seen sales brochures and literature, what I want to know is the real experience from real people.  

* How do you like yours?
* How well does the management company run the place?
* What's the revenue split with the management company? (and/or the rental income) i.e., does it come out well financially 
* Have you seen or do you expect to see price appreciation?
* Any general advice on buying one?  (Negotiation tactics?  Things to look out for?)

If you're curious, the particular one I'm looking into is the Fairmont Heritage at Ghirardelli Square.

Thanks!

Looking forward to hearing from you all


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## Steamboat Bill (May 31, 2007)

I was just there last week and they seem to have a LONG way to go before that project is complete. It was simply a shell of a building from 1880.

It will be a fantastic property when completed as it is a Fairmont. I would FIRST think about personal use and trading to other Fairmonts (they are all nice) and the perks of ownership and think of rental LAST as this is NOT a proven product. It will be the NICEST place to stay in Fisherman's Wharf and offer great views of the bay. What is the price range?


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## greenlight (May 31, 2007)

*price range*

Hi Steamboat Bill,

Price ranges are pretty high- in the 250k to 350k ballpark, depending on if it's 2br or 3br.  But, you get 5 weeks, and, the option to trade weeks for other Fairmont properties, as you mentioned.  Yes, it looks like they have a ways to go in redevelopment.


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## Steamboat Bill (Jun 1, 2007)

That is $50-60k per week and I am sure the MF will be extremenly high...like $2k per week or $10k per year. If you plan on visiting SF or Fairmont properties...it may be worthwhile, but I don't think it will double in price anytime soon.


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## kaxper (Jun 9, 2007)

hi greenlight ... i am also looking at the properties you have mentioned. 

the ritz SF have a 1/12th fractional but get 21 days .. (instead of 30) ... the other 9 days is left "open" thus ensuring members have higher probability of getting their desired days (deliberately "undersold")". 

i understand fairmont ghirardelli is 1/10th 35 days but i dont know how are the days allocated, possibly first come first serve.

if you know how the booking system in any of these PRC works, would be great if you can share any ideas of what is better or worst.


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## PA- (Jun 9, 2007)

greenlight said:


> ....
> 
> * How do you like yours?
> * How well does the management company run the place?
> ...



I've purchased a number of fractionals in my life.  Never from the developer, but I have learned enough to hazard a guess at most of your questions above.

1)  You can be certain that the management company will make good money from the rental program, and you can be certain that you won't.  While it may look ok, and even work out ok the first year or so, over the long haul you'll do poorly on rentals.  It's just the way the free market works; if there are excess profits, more people will move into the market until those profits are gone.  And since you're splitting the money with the management company, you'll lose.

2)  One thing is common to all timeshares, including fractionals.  Over time, they depreciate.  THey never appreciate over the long haul.  You will lose a large sum of money if you buy a fractional and keep it more than a few years.  If you sell early enough, you'll lose less money.

3)  Best advice I can offer is don't buy a fractional, they're hard to sell (fewer people can afford multi-week timeshares).  Secondly, if you do buy a fractional, buy resale.  If resales don't exist, buy elsewhere.

4)  If you disregard all above, I'll talk to you in 8 or 10 years, when I'm buying them for 10cents on the dollar.


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## Steamboat Bill (Jun 9, 2007)

PA- said:


> If you disregard all above, I'll talk to you in 8 or 10 years, when I'm buying them for 10cents on the dollar.



I agree that fractionals are not the BEST investments out there, but I doubt you will be able to buy a Fairmont of Ritz for 10c on the dollar....50c is more reasonable.


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## kaxper (Jun 9, 2007)

thx ... so in your view, there is no conceptual difference between time share and fractionals, ie i guess the deeded stuff and TIC arrangements for fractionals are just marketing tools and that they dont really protect price deprecation.

maybe ultimately it boils down to location - i am quite aware that the fairmont/ritz in SF are selling at us$1600-1900k/sqft and that buying a condo probably cost you us$1000-1300/sqft for similar location. this argues that price appreciation is probably difficult. however, these location may protect downside depreciation?

as steamboat said, these are not great "investments". i personally am happy if there is not price depreciation (for fairmont/ritz SF) - someone convince me if i am wrong - and looking for personal usage "gain". the yearly HOA/tax of us$10-13k is depreciation enough in my view.

btw, this is my 2nd post and i am new here so please forgive any protocol erros - living and working in thailand.


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## PA- (Jun 10, 2007)

kaxper said:


> thx ... so in your view, there is no conceptual difference between time share and fractionals, ie i guess the deeded stuff and TIC arrangements for fractionals are just marketing tools and that they dont really protect price deprecation.
> 
> maybe ultimately it boils down to location - i am quite aware that the fairmont/ritz in SF are selling at us$1600-1900k/sqft and that buying a condo probably cost you us$1000-1300/sqft for similar location. this argues that price appreciation is probably difficult. however, these location may protect downside depreciation?
> 
> ...




1)  No, there isn't any difference between fractionals, and timeshares.  In fact, timeshares are fractional ownership.  And fractionals are timeshares.  Many timeshares are deeded.  And many timeshares have lots of the same features your Fairmont fractional has, including rental programs, bonus time, etc.

2)  If the Fairmont is selling for $1600 - $1900 per sq. ft., then similar condos are probably less than $1000 - $1300.  Normally, the sales/marketing overhead on a timeshare or fractional is greater than that.  I don't follow the condo market in San Fran, but fractionals usually sell for around 3 - 4 times the cost of real estate.  

3)  I don't believe that the location will be a hedge against depreciation.  Of course, it will be better than Iowa.  But there are LOTS of fancy places to stay in San Fran.  The other thing about San Fran, there's no particular "season"; the demand is there all year long.  If I was planning a trip to San Fran, and I couldn't get a decent rental rate or timeshare 1 week, I'd just pick a different week.  Wouldn't matter which one, as long as not Jan or Feb, when it rains.

4)  I think Bill was being diplomatic when he said "not a great investment".  From a financial standpoint, I think most would agree it's a terrible investment.  The reason he or I or most people won't tell you not to do it is because we can't know how much you value the usage there.  If you own it 30 years and use it consistently every time you can, and you don't mind losing most of your money plus maintenance fees, then I suppose it might make sense.  Just understand, you will lose a LOT of money, if you keep it any length of time.  If you sell early, you'll lose less, perhaps.

5)  You're doing fine, no protocol errors.  Good luck.


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## kaxper (Jun 10, 2007)

i guess the smart thing to do is to buy it resale 5 years from now and rent from them in the meantime.


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## pwrshift (Jun 10, 2007)

*Condo-Hotels vs Fractionals?*

It is obvious from timeshare renting that the developer/manager is the one who makes the money, which I would assume is similar to fractional renting.

How do you view condo-hotels in comparison?  I'd be interested in your views.  

Trump's 1st Ft. Lauderdale is under construction now right beside Starwood's Atlantic (already up) and Starwood's W (under construction).  They all started out at about $600 sq ft and are now about $1200.  Trump's incentive is all year living if you want or 70% of any rentals to the owner.  Wonder if it's true?  

I hear Trump's 2nd condo-hotel just south of Los Olas beachfront is not selling too well - probably too many going up at once.  

The beachfront will be different in a few years for sure ... with Marriott BeachPlace timeshare jammed in the middle of it all!  St. Regis and Hilton condo-hotels are already open .. some DC's have bought in the St. Regis already.

Brian


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## greenlight (Jun 10, 2007)

*re: fractionals*

Hi,

Great discussion!  I think there are some balancing factors in favor of the Fairmont Ghirardelli property.

First, I suspect the sales+marketing costs for 5-week fractionals is much less than for 1 week timeshares.  My guess is, it may be only in the 10-20% ballpark as opposed to the usual 40-50% for normal timeshares.

San Francisco is also fairly built-out already, and there is just some infill going on.  That means the new supply of luxury 2br and 3br vacation property  is probably going to be fairly limited.  In addition, there isn't that much 2BR and 3BR vacation property there to begin with.  Anyways, that's the supply side.  The demand site is a bit fuzzier, but, I would guess there's a good demand for it, especially for travelling families, and especially as there is a growing luxury travel population over the next few decades.

Finally, the Ghirardelli location isn't just an average location in SF, but an premiere location for a vacation property.  The Ritz Carlton SF property is more ideal I think for the business traveller.  Ghirardelli, is more ideal as a vacation home, being near the bay, with bay views, close to many touristy areas, and in addition, is itself a historic landmark.  I'm not sure how much a premium a historic landmark, or bay view gives, but, it does add to the value compared to the average San Francisco property.

To balance the positives though, is the question of if the San Francisco real estate is overvalued, and where that's headed.  I always feel San Francisco property is extremely highly priced, but, even 8 years ago, when things were nearly half the cost of what they are now, I felt the same way.

greenlightventures


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## kaxper (Jun 11, 2007)

greenlight .. have you talked to the sales people and get the numbers for the locations you have mentioned. i only know from what i read in the news and their websites. i have not approached them yet as i am afraid to get hard sell to death. thanks.


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## Cathyb (Jun 11, 2007)

PA I disagree slightly that ALL timeshares depreciate.  It depends on supply and demand.  We own oceanfront in Kaanapali and in the 15 yrs we have had the unit it has appreciated -- only 15%, but it did appreciate.

Also look at Sanibell, Florida -- same thing, holds its value because of S&D.  San Francisco may be in the same category altho I must admit there seems to be more and more hotels getting on the bandwagon of fractionals and that would affect my earlier S&D statement.  Just another side observation


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## PA- (Jun 11, 2007)

Cathyb said:


> PA I disagree slightly that ALL timeshares depreciate.  It depends on supply and demand.  We own oceanfront in Kaanapali and in the 15 yrs we have had the unit it has appreciated -- only 15%, but it did appreciate.
> 
> Also look at Sanibell, Florida -- same thing, holds its value because of S&D.  San Francisco may be in the same category altho I must admit there seems to be more and more hotels getting on the bandwagon of fractionals and that would affect my earlier S&D statement.  Just another side observation




So you're saying if you bought a timeshare from the developer on Kaanapali, like the embassy or marriott, that you would see no depreciation over time?  Do you have sales data to support that theory?


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## Steamboat Bill (Jun 12, 2007)

I love the Fairmonts as this is my favorite hotel chain. I also visited the SF location about 3 weeks ago as I was there on business. I think it will be a great property when finally built...they are probably 2 years away (IMHO). I am not 100% convinced that this is the BEST SF location as the surrounding area is like a Kissimmie tourist trap. The closest hotes are Holiday Inn and Marriott Courtyard. There are no other nice hotels in this area. Most upscale hotels are located in other areas in SF. Either way, if you have a high floor unit. the views will be killer. Low floors will not have any view at all.


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## Cathyb (Jun 14, 2007)

PA -yes here is your proof requested: go to www.whalerrealty.com or Monty Fitts website (don't have their URL handy) and check the timeshare prices today for an oceanfront one bedroom.  We paid $38,000 for Two Week Interval about 15 yrs ago (Unit 851).  Make sure it says oceanFRONT not oceanview!

Now once you do this I hope you will not be so narrow-minded in your thinking.  You came across as if I were talking nonsense.


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## Cathyb (Jun 14, 2007)

pa-go to the TUG Marriott board and ask the Maui owners if their timeshare is now worth more than they paid for it.  This is not necessarily true for the other islands however.

As for Embassy -- I don't think they are in the same class and therefore this is not part of my debate as far as appreciation goes.


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## kaxper (Jun 15, 2007)

i guess the question is are these the exceptions rather than the rule. it goes to show that one has to do a lot of homework before buying one of these "investments". and presumable if one is early, one gets better choice/allocation and pricing.


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## PA- (Jun 15, 2007)

Cathyb said:


> PA -yes here is your proof requested: go to www.whalerrealty.com or Monty Fitts website (don't have their URL handy) and check the timeshare prices today for an oceanfront one bedroom.  We paid $38,000 for Two Week Interval about 15 yrs ago (Unit 851).  Make sure it says oceanFRONT not oceanview!
> 
> Now once you do this I hope you will not be so narrow-minded in your thinking.  You came across as if I were talking nonsense.




Not narrow minded.  I'm open minded, I asked if you had any data to share that supported that concept of timeshare values going UP in value, rather than down.

The link points me to asking prices, not sales prices.

Also, you may have gotten a great deal, I don't know.  But 1 sale doesn't establish a market.  Anyway, it's not a big deal.  There may be extremely isolated cases where timeshare values don't depreciate over time.  I haven't seen it, and I don't believe there is.  But even if there is, in general, I think we can all agree, they go down in value over time.


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## taffy19 (Jun 16, 2007)

Cathyb said:


> pa-go to the TUG Marriott board and ask the Maui owners if their timeshare is now worth more than they paid for it. This is not necessarily true for the other islands however.
> 
> As for Embassy -- I don't think they are in the same class and therefore this is not part of my debate as far as appreciation goes.


CathyB, the Whaler Inn has done really very well for the timeshare owners as prices have gone up so much.  It surely is the location where the units are. Condos in the area are selling for several millions.  How can you go wrong but other Hawaiian islands have the same beautiful beaches so how much longer can it last?  I often wonder.


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## Cathyb (Jun 16, 2007)

PA:  I have to correct a percent number in my former post on appreciation of the Whaler as I have just revisited the Whaler Realty website on actual sales and just this May two units (2 wk intervals)sold for $70,000+ each for oceanfront one bedrooms.  Since you are a numbers man, what is the percent increase from our $38,000 purchase 15 yrs ago???


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## PA- (Jun 16, 2007)

Cathyb said:


> PA:  I have to correct a percent number in my former post on appreciation of the Whaler as I have just revisited the Whaler Realty website on actual sales and just this May two units (2 wk intervals)sold for $70,000+ each for oceanfront one bedrooms.  Since you are a numbers man, what is the percent increase from our $38,000 purchase 15 yrs ago???




Don't know.  I'd have to know what the owners originally paid, and how much they netted when the realty company sold them.  I see 1 bedroom oceanfront as low as $16,000.


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## Cathyb (Jun 17, 2007)

PA Take me to the site that shows Whaler 1 bedroom oceanfront (not oceanview) for 16,000. I may want to buy it.  It is a two week interval, right?

Original owners bought in around 1975 for under $10,000/wk, I was asking the percent since we bought in 1990.  Come on now, do you 'sort of'' agree some timeshares appreciate over time?


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## kaxper (Jun 17, 2007)

Cathyb said:


> PA:  I have to correct a percent number in my former post on appreciation of the Whaler as I have just revisited the Whaler Realty website on actual sales and just this May two units (2 wk intervals)sold for $70,000+ each for oceanfront one bedrooms.  Since you are a numbers man, what is the percent increase from our $38,000 purchase 15 yrs ago???



on a compound annual basis, us$38k to us$70k in 15 years is about 4.15% per year. this is not including other costs of course, but not bad considering you get to enjoy the place.


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## PerryM (Jun 17, 2007)

*A light bulb goes on...*



Cathyb said:


> PA:  I have to correct a percent number in my former post on appreciation of the Whaler as I have just revisited the Whaler Realty website on actual sales and just this May two units (2 wk intervals)sold for $70,000+ each for oceanfront one bedrooms.  Since you are a numbers man, what is the percent increase from our $38,000 purchase 15 yrs ago???



Cathy – don’t sell yourself short.

The current resale price compared to the original purchase price is just a fraction of the entire story.  During the time of ownership we MUST account for the savings of the MF versus renting the exact same week.  That savings MUST be included in the overall price.

Isn’t the reason we save money by owning timeshares exactly the same reason we buy a compact florescent light bulbs, which costs 5 times a normal bulb; because it saves us money every time it’s used in electricity costs.  In the long run we will save money.

So throw in the savings you got each vacation by owning the unit versus renting the unit and you now a an accurate worth of the asset.


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## m61376 (Jun 18, 2007)

Cathyb said:


> PA I disagree slightly that ALL timeshares depreciate.  It depends on supply and demand.  We own oceanfront in Kaanapali and in the 15 yrs we have had the unit it has appreciated -- only 15%, but it did appreciate.
> 
> Also look at Sanibell, Florida -- same thing, holds its value because of S&D.  San Francisco may be in the same category altho I must admit there seems to be more and more hotels getting on the bandwagon of fractionals and that would affect my earlier S&D statement.  Just another side observation



There have been many posts here about how some of the higher end timeshares, even bought from the developer, have appreciated over time. Many of the initial pre-construction Marriott purchases are selling on the resale market for more than the initial offerrings a few years back. DVC is another one that has been frequently mentioned.


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## kaxper (Jun 19, 2007)

is there a thread here or a link for fractional and/or PRC rental? are these typically handled by different agents than timeshare rentals? thanks.


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## PerryM (Jun 19, 2007)

m61376 said:


> There have been many posts here about how some of the higher end timeshares, even bought from the developer, have appreciated over time. Many of the initial pre-construction Marriott purchases are selling on the resale market for more than the initial offerrings a few years back. DVC is another one that has been frequently mentioned.



I, personally, sold our 5 pre-construction Marriotts for more than what we bought them for.  That does NOT include the huge savings of the MF over renting the identical unit from Marriott.

I'm sure dozens of other Marriott owners can report the same experience - this is a straw dog that has been set afire many times.  You can make money selling some timeshares that were bought from the developer.

One can argue that this is phony price support by Marriott - so what, a profit is a profit.


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## Steamboat Bill (Jun 19, 2007)

I read on the Marriott Forum that the PRECONSTRUCTION prices for a Marriott Crystal Shores on Marco Island, Florida - 2 BEDROOM GULF FRONT - Platinum Float week is $79,200. I am guessing that the annual dues is $1,000 or more.

This works out to be:

lost opportunity (5%) + annual dues / nights of use = nightly fee

$3,960 + $1,000 = $4,960 / 7 = $708.57 PER NIGHT

Wow...these prices are HUGE. Where is the potential price appreciation in these units? Marco is an alright resort, but not for $80k...this time it is better to be a renter.


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## PerryM (Jun 19, 2007)

*Free vacations and a profit to boot...*

If Crystal Shores follows the traditional Marriott Pricing Model here is the analysis:

2 Bedroom Gulf front:
Starting prices: New Years (52) $98,700
Ending prices: New Years (52) $197,400 (double starting price)
(These prices bring a smile to my face; it’s just a 2BR!)

These are the most expensive Marriott weeks in the project and will be the first to sell out – it always works out that way.

The person buying for $98,700 can expect to sell for at least 60% the ending price of $197,400 or $118,440 and I would not be surprised to see it being 80% or $157,920 for a week 52 in the resale market.

So in 5 years our Marriott owner can look to sell for $138,180 (average or 70% developer price) or a tidy $40k profit in 5 years.  That would still make a profit of $15k on the sale with lost opportunity costs thrown in.

I’d guess a MF of $1,400 for 5 years = $7,000.  That still leaves a profit of $8k and 5 wonderful vacations.    *The Marriott got you 5 free vacations and $8k in your pocket.*

We did this similar thing 5 times with our pre-construction Marriotts - plus we got about 10% off the initial price with Marriott Reward Points that just made the deals sweeter.

DC’s in the mean time (5 years) will cost you 20% of the membership fee plus the yearly MF per week.  (in the same buy-use-sell model)

That’s why Crystal Shores will sell like gangbusters and swamp every DC out there - except BelleHavens.  There will be a deed issued for 1/52 ownership of the Marriott condo.

DC's are so expensive when measured against pre-construction Marriotts that this comparison should be more oriented towards a mature Marriott resort which lumbers along at 3% - 5% increase per year.  That increase is just Marriott's increased asking price for the resales they represent - it has nothing to do with real estate.

P.S.
I love the 3BR unit New Years (52) $137,300, still just a 3BR.  Following the traditional Marriott Pricing Model look for the last unit to sell for $274,600 and a resale on eBay for $192,000.  (Can't you just see that *"Buy it Now" button [$192,000].*

This one Marriott week will sell for more than many Destination Clubs membership fees!


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## Steamboat Bill (Jun 19, 2007)

PerryM said:


> That’s why Crystal Shores will sell like gangbusters and swamp every DC out there - except BelleHavens.  There will be a deed issued for 1/52 ownership of the Marriott condo.
> 
> DC's are so expensive when measured against pre-construction Marriotts that this comparison should be more oriented towards a mature Marriott resort which lumbers along at 3% - 5% increase per year.  That increase is just Marriott's increased asking price for the resales they represent - it has nothing to do with real estate.
> 
> This one Marriott week will sell for more than many Destination Clubs membership fees!



Althought, you are probably correct in respect to the "potential" profit for a Marriott buyer, it certainly is not a slam dunk guarantee. With the real estate slowdown, it is hard to imagine anyone paying these TOP prices for a reslae 1/52 share. But Marriott is known for their fantastic sales.

At these prices, I am MORE convinced that joining a DC is a BETTER option for me and my family as we get to travel to TONS of different locations and don't have to deal with II. I think HCC, PE and Bellehavens offers better value (not better profit) than a Marriott Marco timeshare.

I really like my 2 bedroom Platinum Marriott Manor Club (bought it for $8k) that will easily trade into Marco and other MUCH more expensive Marriott's. Marco island is nice for a weekend, but a week there is a long time. The beach and water there is certainly NOT the Turks and Caicos.

Additionally, the $708 per night for a Marriott is MUCH more expensive than my $300 per night for HCC.


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## PerryM (Jun 19, 2007)

Steamboat Bill said:


> Althought, you are probably correct in respect to the "potential" profit for a Marriott buyer, it certainly is not a slam dunk guarantee. With the real estate slowdown, it is hard to imagine anyone paying these TOP prices for a reslae 1/52 share. But Marriott is known for their fantastic sales.
> 
> At these prices, I am MORE convinced that joining a DC is a BETTER option for me and my family as we get to travel to TONS of different locations and don't have to deal with II. I think HCC, PE and Bellehavens offers better value (not better profit) than a Marriott Marco timeshare.
> 
> ...



I can't argue with you on this point - until Marriott goes to an internal exchange system that will, unfortunately, instill some reality to exchanging like for like.  Until then a Gold Summit Watch will be dreaming of exchanging into the new resort.  Heck maybe even WorldMark has a shot.

P.S.
With the ROFR and Marriott controlling resales I see no reason why it can't do what I forecasted it probably will do.  They do it over and over and with each new resort the prices get higher and higher and folks here say "Crazy" and Marriott sells out.  I'll go with Marriott's proven system of making tons of money from resales.  Folks here can say "no way" all they want, Marriott isn't listening to the naysayers - just their MBAs.


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## m61376 (Jun 19, 2007)

PerryM said:


> P.S.
> With the ROFR and Marriott controlling resales I see no reason why it can't do what I forecasted it probably will do.  They do it over and over and with each new resort the prices get higher and higher and folks here say "Crazy" and Marriott sells out.  I'll go with Marriott's proven system of making tons of money from resales.  Folks here can say "no way" all they want, Marriott isn't listening to the naysayers - just their MBAs.



When I read these discussions (which I find very enlightening, btw) I keep on thinking that we lose sight of the fact that most of Marriott's customers are not Tuggers. They are offerring a quality product backed by name recognition to people who, for the most part, are looking for Marriott resort-style accomodations and have enough discretionary income that they aren't necessarily looking for a bargain. That is why such a small portion of the sales are actually resales. I think many of their buyers are people who love an area and love the idea of having a vacation home there, even if only for 1/52nd of the year... and if they want a place there badly enough, they'll pay the asking price (even though many of us here-myself included- think the Marco prices are crazy and would never consider such a purchase).


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## smbrannan (Jun 19, 2007)

m61376 said:


> They are offerring a quality product backed by name recognition to people who, for the most part, are looking for Marriott resort-style accomodations and have enough discretionary income that they aren't necessarily looking for a bargain.



Except that half of Marriott timeshares are financed.  Suggests that lots of people are stretching financially to buy into the vacation ownership concept.


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## caribbeansun (Jun 20, 2007)

With last year's negative savings rates it seems people are stretched buying into darn near everything these days!


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## jerseygirl (Jun 20, 2007)

smbrannan said:


> Except that half of Marriott timeshares are financed.



It''s worse than that.  According to the analysts' presentation someone posted a few weeks ago:

Typical Household Income -- $75K - $200K
Propensity to Finance -- 55-65%
Typical Borrowing Amount is 85% at Typical Borrowing Rate of 13-13.5%
Automatic Credit Approval if FICO over 600 (Yikes)
Marketing and Sales Costs -- 43% of Sales Price
Product Costs -- 40% of Sales Price
Developer Margin -- 17% of Sales Price
Management Fee -- 10% of Maintenance Fees
Financing Represented $97M of $280M 2006 Profits

These are some scary numbers if/when there's an economic downturn.


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## PerryM (Jun 20, 2007)

m61376 said:


> When I read these discussions (which I find very enlightening, btw) I keep on thinking that we lose sight of the fact that most of Marriott's customers are not Tuggers. They are offerring a quality product backed by name recognition to people who, for the most part, are looking for Marriott resort-style accomodations and have enough discretionary income that they aren't necessarily looking for a bargain. *That is why such a small portion of the sales are actually resales.* I think many of their buyers are people who love an area and love the idea of having a vacation home there, even if only for 1/52nd of the year... and if they want a place there badly enough, they'll pay the asking price (even though many of us here-myself included- think the Marco prices are crazy and would never consider such a purchase).




I don't have stats on Marriott resales but consider this:

*EVERY timeshare owner will get rid of their timeshare!*

Folks die, divorce, retire, get sick, get bored, etc.  There are all kinds of reasons why a smart timeshare developer is actively involved with resales of their units they once built and owned.

Opening a small office in a timeshare resort and then having a local real estate person manning it for resales is a cash cow to the developer.

Marriott is smart to bolster their product, even once it's been sold, by providing a price support of 60% of their current sales price.  That sales price is indirectly tied to real estate appraisals of the units.  At least every time I've done an analysis of a mature Marriott resort they are following their pricing model even when 100% sold out.

FairField (or I guess it's now a variation of Wyndham) does not support resales and that's why the typical FF week/points is worth 15% of the sales price the second the ink dries on the sales contract.  I wonder what rattles thru the mind of the FF/WN salesrep as the ink dries "Sucker" would certainly be appropriate.


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## m61376 (Jun 20, 2007)

I agree Perry. When I stated that only a small portion of sales are resales I meant resales as Tuggers know them  ; Marriott makes a bundle reselling units either bought back through ROFR and then resold or taking a commission out of reselling them for previous purchasers. Since people are paying current developer's prices I don't consider these sales as resales, although in actuality they are.

As for the huge numbers being financed...although it is not my style, that is commonplace today and I believe this trend will continue even moreso over the next few decades, so that it is unlikely that the need to finance will retard sales. I know from personal experience and from talking with friends and professional acquaintances, etc., that today's young adults don't believe in delayed gratification and vacationing is a lifestyle many have become accustomed to. Just as the "baby-boomers" have been making financed luxury purchases, as their children come of age (as many already are) they will be making these vacation purchases without being bothered by the need to finance.


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## PerryM (Jun 20, 2007)

m61376 said:


> I agree Perry. When I stated that only a small portion of sales are resales I meant resales as Tuggers know them  ; Marriott makes a bundle reselling units either bought back through ROFR and then resold or taking a commission out of reselling them for previous purchasers. Since people are paying current developer's prices I don't consider these sales as resales, although in actuality they are.
> 
> As for the huge numbers being financed...although it is not my style, that is commonplace today and I believe this trend will continue even moreso over the next few decades, so that it is unlikely that the need to finance will retard sales. I know from personal experience and from talking with friends and professional acquaintances, etc., that today's young adults don't believe in delayed gratification and vacationing is a lifestyle many have become accustomed to. Just as the "baby-boomers" have been making financed luxury purchases, as their children come of age (as many already are) they will be making these vacation purchases without being bothered by the need to finance.




*Financing a timeshare just results in making it twice as expensive* and far more expensive than renting the same exact week from the developer.  I believe that most timeshare folks financing thru the developer got caught up in the sales buzz and financed.

Short term financing, like a line of credit on your home, makes sense for 6 months or less while you shift assets around.  It’s the 13.99% for 10 years that doubles timeshare costs.

There are cases where the developer has some interesting goodies thrown in if you finance thru them for 3 months or so – that’s ok if the numbers work out.

The resale market is not really into offering financing so if a person needs a timeshare so bad and can’t pay cash and has run the numbers then I can’t argue with that.

Part of the reason the developers can charge unbelievable prices for their units is because 73% of all timeshare purchases are financed and a FICO score of 600 becomes an automatic loan in the developer's eyes.


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## Steamboat Bill (Jun 20, 2007)

PerryM said:


> *Financing a timeshare just results in making it twice as expensive* and far more expensive than renting the same exact week from the developer. Part of the reason the developers can charge unbelievable prices for their units is because 73% of all timeshare purchases are financed and a FICO score of 600 becomes an automatic loan in the developer's eyes.



This is a SAD, but true statement.


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## kaxper (Jul 6, 2007)

is there a forum on exchanging fractionals or PRCs? and/or sites that specializes exchange in fractionals or PRC ... thx in advance


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## GregGH (Jul 6, 2007)

kaxper said:


> is there a forum on exchanging fractionals or PRCs? and/or sites that specializes exchange in fractionals or PRC ... thx in advance



Hello


do a search on 'registry collection' and you find some --not much - but as we get more - if we can share - great

In the mean time --wow - has this thread ever gotten off the topic - Experiences with Fractionals ....  easy to get you guys side tracked onto values and money ...

Regards
Greg


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## kaxper (Jul 7, 2007)

thanks GregGH


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