# What happens to Marriott TS resales and rentals when employment improves?



## MOXJO7282 (Feb 19, 2011)

So what happens when unemployment improves and more people have capital to spend?

Right now so many have been effected by unemployment that IMHO its the single biggest impact, more than the DC program and now the Spin-off, on Marriott losing value over the last few years.

The fact is Marriott has weathered the disasterous economy better than any other brand. 

When people get back to work one of the first things they will look to do is go on vacations again. Its a well documented after effect.

So when that happens it seems logical more Marriott owners will go on vacation instead of listing their unit for rent and more non-owners will look to rent Marriotts from the smaller rental market.

I also think it could help stabilize resale prices if not have an uptick effect on the more high demand locations like Maui, Aruba and the like.

Also add the fact that no one will be adding inventory anytime soon. 


Those three things could add up to Marriott TSing maintaining value into the future. 

Now if we lose the Marriott branding that could be big but other than that I think when the economy and more importantly employment improves Marriott TSs will be continue to be a great value.

Otherwise I just don't see this a a dire situation as the Marriott naysayers contend.


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## timeos2 (Feb 19, 2011)

*Huh? Where did you get that idea from?*



MOXJO7282 said:


> The fact is Marriott has weathered the disasterous economy better than any other brand. =



Where do you get that idea from? In fact it appears Marriott has taken one of the hardest hits of all the bigger names in timeshare as they were "caught with their pants down" sitting on over $1.5 BILLION in unsold and low value inventory. So much so that they have announced plans to - in their words - "walk away" from timeshare as a key business. The "assets" they hold are boat anchors on their bottom line. 

That statement you make doesn't fit any available facts.


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## MOXJO7282 (Feb 19, 2011)

timeos2 said:


> Where do you get that idea from? In fact it appears Marriott has taken one of the hardest hits of all the bigger names in timeshare as they were "caught with their pants down" sitting on over $1.5 BILLION in unsold and low value inventory. So much so that they have announced plans to - in their words - "walk away" from timeshare as a key business. The "assets" they hold are boat anchors on their bottom line.
> 
> That statement you make doesn't fit any available facts.



What brand held its value as well? Not Westin, they don't sell at the same price point as Marriotts. Same Maui Units Marriott will sell for more. 

What brand did better? Would you rather own another TS product? I wouldn't.

And you didn't answer my question about what happens to demand when employment improves.


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## MALC9990 (Feb 19, 2011)

MOXJO7282 said:


> What brand held its value as well? Not Westin, they don't sell at the same price point as Marriotts. Same Maui Units Marriott will sell for more.
> 
> What brand did better? Would you rather own another TS product? I wouldn't.
> 
> And you didn't answer my question about what happens to demand when employment improves.



The majority of doom merchants I see here ignore the fact that the world does not stop at the US border. There are 1 billion plus Chinese and 800 million Indians out there - admitedly not all wealthy but in 10 years China will overtake the US economy. If you visit any Marriott or MVCI Resort in Asia - all you see are Chinese, Indians and Europeans - with a growing Russian presence.

Soon you will start to see the Chinese and Indians at US MVCI resorts on exchanges and they will be buying. Their economies continue to grow strongly and they will have money to spend as the desire for leisure time grows.

Asia is where the investment will go (is going) - a new MVCIAP resort opens this year in Macao, where next - Vietnam?, Bali?, more resorts in Thailand? - 3 Courtyards  and a Rennaisance opened in Phuket in the last two years - these are 100% vacation destinations.

Resale prices may be in the dumps in the USA but outside of the USA, resale prices for Marriott weeks are selling and for prices that are reasonable - not as high as developer prices by any means but more than a few hundred dollars. the buyers are Russian, Chinese, Indian, German, British, Malaysian, Singaporean - we see all these nationalities and more when we stay at our home resort in Phuket.

MVCI shifted to a points based system in Asia 4 years ago and they have been selling well into the boom economies of China, India, Singapore, Hong Kong and even Japan. As yet there is no resale market for MVCIAP points so these are all developer sales.

So the US market will not be where MVCI as a spin off company looks to invest but the Asian Market will be the growth market and the franchise model for developping these new resorts is the one that they will be using.


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## wof45 (Feb 19, 2011)

MOXJO7282 said:


> Those three things could add up to Marriott TSing maintaining value into the future.
> 
> Now if we lose the Marriott branding that could be big but other than that I think when the economy and more importantly employment improves Marriott TSs will be continue to be a great value.
> 
> Otherwise I just don't see this a a dire situation as the Marriott naysayers contend.



I totally agree with you.


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## wof45 (Feb 19, 2011)

MALC9990 said:


> The majority of doom merchants I see here ignore the fact that the world does not stop at the US border.
> So the US market will not be where MVCI as a spin off company looks to invest but the Asian Market will be the growth market and the franchise model for developping these new resorts is the one that they will be using.



I think you are right about the Asian market, but I also believe that once the economy in the US picks back up, there will be additional investment for additional points sales in the Americas.

It could even get interesting if some of the independent developers who have built nice resorts in nice areas work out a deal with the new MVCI to co-sale TS points / properties.


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## larue (Feb 19, 2011)

timeos2 said:


> Where do you get that idea from? In fact it appears Marriott has taken one of the hardest hits of all the bigger names in timeshare as they were "caught with their pants down" sitting on over $1.5 BILLION in unsold and low value inventory. So much so that they have announced plans to - in their words - "walk away" from timeshare as a key business. The "assets" they hold are boat anchors on their bottom line.
> 
> That statement you make doesn't fit any available facts.



I just got an email with an FAQ on the spin off and I don't see any reference to walking away.  In fact, they stress the plan to keep things the same.  See below.  I don't know if this has already  been posted.  Sorry if a repeat.


*Frequently Asked Questions Regarding the Proposed Transaction
Questions on how this transaction will affect your ownership*

*How will this affect my current ownership?*

This transaction will not affect your ownership. Marriott Vacation Club owners should see no changes in the branding of their properties, services, usage options, use of Marriott Rewards® points, or access to Marriott
International’s hotels. In addition you will be able to access Interval International as you always have.

*Who will manage the resorts?*

Marriott Vacation Club International and its affiliates will manage the resorts. They will still be developed and managed to the exacting brand standards established by Marriott.

*Questions about Marriott Rewards, Interval International and my COA
How will this transaction affect my ability to trade my week for Marriott Rewards® points?*

There will be no change in the ability to trade for Marriott Rewards® points. You will still receive elite credit for stays at Marriott Vacation Club and you will still receive Marriott Reward® points if you are renting at Marriott Vacation Club. There will be no changes in your current point balances.

*How will this transaction affect my ability to trade my week through Interval International?*

There will be no change. The agreements that are in place with Interval International will continue with new Marriott Vacation Club International.

*Will there be any changes with my COA as a result of this transaction?*

The COA management structure will stay the same. We expect that the same people that work with your COA today will continue operating the resorts. Marriott established brand standards will apply to operating the resorts and the physical plant.

*Questions about the transaction
Why was this decision made?*

This transaction will allow both companies to focus on growing and developing their respective business models.  It also advances Marriott’s longstanding strategy of separating real estate from management and franchising operations and will position Marriott Vacation Club International to consider expanded business opportunities.

*Is the decision in any way tied to the move to the new Marriott Vacation Club Destination’s points program?*

The decision is not tied to the Marriott Vacation Club Destinations™ program. The new points program has been very successful and has vastly exceeded our expectations with over 110,000 weeks already enrolled. We believe
it is the most exciting timeshare product in the industry. The new Marriott Vacation Club International structure will allow us to focus on further developing this product and new vacation opportunities for our owners.

*Does this mean that no new resorts will be developed and that Marriott is getting out of the timeshare business?*

No. It will allow Marriott Vacation Club International to focus on the timeshare business and to create new and expanded offerings it would not have been able to do in the past. It should position MVCI to expand
faster over time.  Marriott International will remain involved, as it focuses on its core businesses, it will also create value by leveraging its brand equity, positioning Marriott Vacation Club International as the exclusive developer and
operator of timeshare, fractional and related products under the Marriott brand.

*When will this transaction be effective?*

We expect the transaction will take place before the end of 2011.

*What will be the relationship between Marriott and Marriott Vacation Club?*
Marriott Vacation Club International will be similar to a franchisee and will be the exclusive developer and operator of timeshare, fractional and related products under the Marriott brand.

*I am a Marriott stockholder — what does this mean for me?*

Details of the transaction are not final but Marriott International stockholders are expected to receive stock in the new Marriott Vacation Club International as a stock dividend, and, of course, retain existing shares of
Marriott International.


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## jlf58 (Feb 19, 2011)

sorry Joe, John is right, they were ill prepared with 1.5 billion sitting on thier books unsold. I have seen they stats, they didn't lose the biggest % of buisness but were in the top 3.. MVCI has a quality product, if they can sell thier points they will probably be fine.



timeos2 said:


> Where do you get that idea from? In fact it appears Marriott has taken one of the hardest hits of all the bigger names in timeshare as they were "caught with their pants down" sitting on over $1.5 BILLION in unsold and low value inventory. So much so that they have announced plans to - in their words - "walk away" from timeshare as a key business. The "assets" they hold are boat anchors on their bottom line.
> 
> That statement you make doesn't fit any available facts.


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## wof45 (Feb 19, 2011)

Fletch said:


> sorry Joe, John is right, they were ill prepared with 1.5 billion sitting on thier books unsold. I have seen they stats, they didn't lose the biggest % of business but were in the top 3.



It is really hard to say that MVCI made any errors in having inventory on their books prior to the recession.  They were selling well, and the wall street crash in 2008 was a surprise to all companies in its severity and length.

It is also a misstatement that they have a lot of low value inventory, when much of it is tied up at Crystal Shores, Oceana Palms and Koolina Beach.  When people fault them for not exercising RFOR, they seem to forget the deals they made to take over projects from other developers at bargain prices.  Look for ROFR to come roaring back when they have sold off 2/3 of the inventory.

I am also curious about who the timeshare developers are that have out-performed MVCI


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## dioxide45 (Feb 19, 2011)

wof45 said:


> It is really hard to say that MVCI made any errors in having inventory on their books prior to the recession.  They were selling well, and the wall street crash in 2008 was a surprise to all companies in its severity and length.
> 
> It is also a misstatement that they have a lot of low value inventory, when much of it is tied up at Crystal Shores, Oceana Palms and Koolina Beach.  When people fault them for not exercising RFOR, they seem to forget the deals they made to take over projects from other developers at bargain prices.  Look for ROFR to come roaring back when they have sold off 2/3 of the inventory.
> 
> I am also curious about who the timeshare developers are that have out-performed MVCI



There are still at least two timeshare companies out there that are actively ROFRing for inventory (Hilton and DVC). Marriott was hurt by the glut of inventory. There is always something to be said about companies that expand too quickly. It is never a good thing. That is what Marriott did. They were building more and more as the economy was chugging along. Their hopes were that it would continue to chug, but it halted. That is honestly irresponsible to their shareholders.

The problem they have also is that at Marco Island and possibly also Oceana Palms, they are committed to building those out in the next x years. They don't have much of a choice, they have to build more inventory which they clearly don't need.


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## GregT (Feb 19, 2011)

What's also interesting is that the Securities Analyst Presentation that WindJE found and linked elsewhere had interesting data.

It had (rosy) revenue projections from 2011 - 2013, and yet ending inventory only declined from $1.5B to $1.2B.

This suggests to me that if they hit the (rosy) revenue projections, then the replacement inventory has to come from somewhere.

I think the replacement inventory could come from them consolidating existing non-Marriott buildings that are consistent with Marriott's requirements, but is more likely to come from ROFR, which is an easy way for them to replenish inventory.

So....they definitely had a glut of inventory (recall the $1.5B inventoy was after a $700M write-off), but then they were able to persuade the auditors that the carrying value of $1.5B was realizable.

This suggest to me that, as we've all speculated previously, that if they can get some time of sales  trend from new points purchasers that is meaningful (since the short term pop of selling points to skimmed owners is almost over) then they can more reliably forecast their inventory requirements, and may start ROFRing the high DClub points properties. 

They would logically ROFR those properties where they can resell the most points from that new week.    

Best,

Greg


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## myoakley (Feb 19, 2011)

So happy to see some of the optimists coming out on this post!


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## windje2000 (Feb 19, 2011)

GregT said:


> What's also interesting is that the Securities Analyst Presentation that WindJE found and linked elsewhere had interesting data.
> 
> It had (rosy) revenue projections from 2011 - 2013, and yet ending inventory only declined from $1.5B to $1.2B.
> 
> ...



Keep in mind that the cost of building timeshare is about 40% of the retail (developer) value or price of the timeshare.

That means that if inventory (shown on the books at cost) is $1.5 B,  inventory at retail selling price is $3.75 B.  

Calculation:  40% of $3.75 B retail = $1.5 B cost.  

Retail could be more if they recover some or all of the $700M impairment hit.  The retail value of that hit was $1.75 B.

Calculation:  40% of $1.75 B retail = $0.7B cost.

So the retail value of inventory probably ranges between $3.75B and $5.5 B

Calculation:  $3.75 B + $1.75B = $5.5 B


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## timeos2 (Feb 19, 2011)

*More employment great. But people won't find the old easy credit anymore*



MOXJO7282 said:


> And you didn't answer my question about what happens to demand when employment improves.



Very little. Most people have changed their view of disposable income and the easy credit that fueled the last boom will not be repeated. Add in the growing knowledge of options and especially of the resale market and pushing pricey retail purchase is not going to go very well.  The free-wheeling glory days are gone and Marriott recognizes that (so they plan to reduce direct ties to merely licensing the name for $$). The new stand alone company will be left scratching for investors which also view any type of timeshare capital investment as tainted. It isn't a positive situation no matter what changes may occur going forward. It has been exposed.


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## SueDonJ (Feb 19, 2011)

timeos2 said:


> ... So much so that they have announced plans to - in their words - "walk away" from timeshare as a key business. ...





larue said:


> I just got an email with an FAQ on the spin off and I don't see any reference to walking away.  In fact, they stress the plan to keep things the same. ...



John and several others are hanging their hats on quotes made by Arne Sorenson which may or may not have been used out of context in a Wall Street Journal article.  I think they probably were, considering that the meaning conveyed by the article conflicts with the official statements released by Marriott.  I agree with you, larue, that their emphasis is on doing what's necessary to protect their total business while staying engaged with their timeshares, and keeping timeshare usage the same for owners.



dioxide45 said:


> There are still at least two timeshare companies out there that are actively ROFRing for inventory (Hilton and DVC). Marriott was hurt by the glut of inventory. ...



DVC is not actively ROFRing inventory.  For at least the last year the only resort they've been exercising is Beach Club Villas - resale values on all others are in a free-fall.  Effective 3/20/11 DVC will for the first time be differentiating usage between direct purchase and external resales, which most believe will cause a further devaluation.

I completely agree with you that Marriott has been burdened with a glut of inventory.


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## GregT (Feb 19, 2011)

windje2000 said:


> Keep in mind that the cost of building timeshare is about 40% of the retail (developer) value or price of the timeshare.
> 
> That means that if inventory (shown on the books at cost) is $1.5 B,  inventory at retail selling price is $3.75 B.



Jack, agreed.

I should have added more numbers -- the analyst presentation estimates 2010 sales at $700M, growing to $995M in 2013.

Assume the interim years of 2011 and 2012 are $800M and $900M, respectively.

Rosy projections, but that's what I think they are calling for.

Accordingly, they are projecting sales of approximately $2.7B in the period 2011 - 2013, which is approximately $1.1B of inventory.

So, if they sell off $1.1B of the $1.5B of inventory they held at 12/31/10, but are still projecting to have $1.2B of inventory at 12/31/13 -- where's that incremental $800M of inventory come from ($1.5B - $1.1B + $XXX = $1.2B)?

I think it could be from ROFR....I may be looking at it incorrectly, and this heavily assumes they really can sell $2.7B of points contracts.

And think about when they ROFR a 2BR Ocean-View MOC at $10K that is the equivalent of 6,700 DClub points -- those points can be sold for $67,000 to some new points buyer (if they exist).

That's a terrific gross margin, _if _they can find someone who wants to buy those points.   I think that's the one of the major questions for SpinCo, is can they sell large numbers of points packages to a new customer base, since they would have mostly exhausted the (skimmed) existing owners.  

Best,

Greg


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## CMF (Feb 19, 2011)

I would be very happy if I could recover 80-90% of my resale purchase price in the next five years when the smoke clears.

Charles


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## windje2000 (Feb 19, 2011)

GregT said:


> Jack, agreed.
> 
> I should have added more numbers -- the analyst presentation estimates 2010 sales at $700M, growing to $995M in 2013.
> 
> ...



Greg,

I didn't consider the mix of finished goods v development pipeline inventory either, so they may be finishing some shelved phases of projects in these projections as well.  As we both know, there are lots of variables in financial analysis.  And you are absolutely right - the gross margin is incredible.  Which is one of the reasons timeshare resale value is less than developer prices --- unless Marriott is selling it for you and taking 40%. 

The point I wanted to make for the non-financial readers of this board is that comparing inventory carrying values on the books to sales is apples and oranges.  

The second point is that at current sales run rates, there's plenty to sell.


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## timeos2 (Feb 19, 2011)

CMF said:


> I would be very happy if I could recover 80-90% of my resale purchase price in the next five years when the smoke clears.
> 
> Charles



Who wouldn't? It's not likely to happen but it would be great if it did...


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## dioxide45 (Feb 19, 2011)

SueDonJ said:


> DVC is not actively ROFRing inventory.  For at least the last year the only resort they've been exercising is Beach Club Villas - resale values on all others are in a free-fall.  Effective 3/20/11 DVC will for the first time be differentiating usage between direct purchase and external resales, which most believe will cause a further devaluation.
> 
> I completely agree with you that Marriott has been burdened with a glut of inventory.



So DVC is ROFRing at Beach Club Villas? That sounds like they are actively ROFRing, at least more than Marriott is doing.

In response to others. Resale price has nothing to do with how well MVCI is performing as a business. So while their prime unit resale values may be higher than most other developers, it has nothing to do with how MVCI is performing as a business. Marriott has a lot of inventory, more than any other developer that I am aware of. While that can be an asset, it is only an asset if it can return value, either through sales or rentals. However, at this point Marriott clearly sees that inventory as a liability more so than an asset.


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## SueDonJ (Feb 19, 2011)

CMF said:


> I would be very happy if I could recover 80-90% of my resale purchase price in the next five years when the smoke clears.
> 
> Charles



Oh, I'd be thrilled.  But it's highly doubtful, and we still consider ourselves happy and satisfied owners because we've gotten from our timeshares exactly what we expected to get - wonderful vacations in gorgeous surroundings.  We bought direct because the specific configurations we wanted weren't available (for lower cost) at the time on the resale market, and figured right from the get-go that the purchase price could ultimately be a sunk cost.  We're still paying quite a bit less in m/f than it would cost to rent the same units, and availability isn't as limited being an owner as it would be if we were renting (especially with SurfWatch 3BR Oceanvista units, of which there are only 10 on property.)

I'm happy to be nowhere near the Doom-and-Gloom ownership phase.


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## BarbS (Feb 19, 2011)

We were fortunate that we sold two of our weeks back to Marriott right before the bottom dropped out of the market.......and were very pleased with what we got.  Even though we paid a lot for those weeks, we bought during the time they were giving out huge amounts of Marriott rewards points every time you purchased a timeshare week.  So if you take into consideration all the nice (free) vacations we got out of the deal, it wasn't so bad.  Back then you could get airfare and a week anywhere for 200,000 points.  

Since the two developer weeks we have left are both OF, I feel like there will always be some value there.   We purchased a resale week (Barony Silver Oceanside) for $5.50 off ebay.   I have a feeling we wouldn't have any problem getting back 100% of what we paid for that week.


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## m61376 (Feb 19, 2011)

Joe- It's funny, because this morning I started to post something in the other thread along a similar line and then decided not to. Personally, I don't see all the doom and gloom here. Rental rates have decreased during the last two or three years, and- no great surprise here- hotel rooms have sat vacant. Real estate values have plummeted. Of course timeshares aren't immune from the real world realities.

But what is interesting is that as the economy slowly recovers, people seem pent up to being traveling again, and the surge in travel seems, at least to me, to be faster than the economic recovery. I think over the next several years those bargain basement desperation rental prices will climb, as people again vacation themselves and as there is more demand. As hotel rooms fill up, so will the demand for timeshares. 

Something else- which is only my anecdotal observation- in the '90's when we traveled as a multigenerational family we were the anomaly; most of our friends traveled without the kids and certainly without parents/grandparents. Perhaps because families tend to be more widespread, perhaps because there is less family time with both spouses working full-time, or maybe because of other factors, today I see more and more parents traveling with kids and grandparents. It might just be my tunnel-vision observation, or it may be more characteristic of travel today, but people seem to be vacationing more with other people, whether family or friends, and that naturally increases the appeal of timeshare accommodations. I also think that overall travel is more relaxed and informal today than ten or twenty years ago- something which, again, is consistent with the appeal of timesharing as a vacation modality. So, of course purely in my opinion, I foresee a natural growth because of other sociological factors, rather than the demise of the product.

As for the spinoff company- I'm not sure it's all negative. It also opens the door for combinations perhaps that being purely Marirott would preclude. For example, combining Marriott and Starwood timeshares would formerly entailed combining the hotel divisions as well (although I think Starwood timeshares may already be a separate entity, but I don't really know about that). Now the timeshare divisions can act in the best interests of the timeshare divisions, so there is a positive side to all of this as well.

We'll just have to sit by and watch how this all plays out, and hopefully enjpy our vacations in the interim.


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## hotcoffee (Feb 19, 2011)

MALC9990 said:


> The majority of doom merchants I see here ignore the fact that the world does not stop at the US border. There are 1 billion plus Chinese and 800 million Indians out there - admitedly not all wealthy but in 10 years China will overtake the US economy.



Optimism is truly wonderful!  The cyclical theory that the U.S. economy will cycle back to what it was in the past is nice!  Now, if we can just convince China and developing countries around the world to stop their growing thirst for oil.  And, if we can just convince the extremists driven by their hate-fueled ideology to give up their desire to attack us, we can return to the good ole days.  And, of course, if we can just convince Americans to give up some of their desire for ever-increasing government programs . . . . 

But, it is a different world than it was 15 to 20 years ago.  Our country's options are becoming more-and-more limited.  It is my view that timesharing grew up in an economy that is very different from the one that we are evolving into.  I think the changes that we are now starting to see in timesharing will likely continue.  Americans will still take vacations, but they might not be willing to spend lots of money for something that seems like fake real estate far from their homes that they some day might not be able to use and might not be able to ever get rid of should the need arise.

I personally think that the new spin-off has a doubtful future unless their planners can come up with some truly cheaper vacation alternatives.  The Explorer program looks good on paper, but many of the options still require too many points.  I think they are going to have a hard time convincing people to buy points unless they can convince them that they have some truly memorable vacation options available that don't require a large up-front cash investment.  Without cheaper vacation alternatives, I think consolidation of the timeshare industry might loom on the horizon.


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## kjd (Feb 19, 2011)

*Possible new opportunities for spinoff?*

Marriott has not weathered the economic storm IMO.  They are emerging from it as a beaten company that needs to reinvent itself.  There are a lot of surprise bankruptcies or near bankruptcies of companies that ended up holding too much real estate for expected expansion.  Among them KMart, Arby's, Rob and Stuckey's, Giordonio's Italian Restaurants, etc.  All of them found a lot of their real estate was either upside down on financing and/or not worth the cost of carrying it because of low valuations.

While Marriott is not close to bankruptcy the spinoff is one action to get their balance sheet in better shape for their stockholders.  For Marriott, a good business decision.  For the spinoff company, maybe an opportunity to explore new avenues without the restrictions of a parent company calling the shots.  For example, almost all of the Marriott Hotels have no on-site gambling in places where it is legal to do so.  It also applied to the timeshare resorts.  Maybe if the spinoff is considering new international locations, especially in the far East, no corporate restrictions might be an advantage to them.

The spinoff might be able to explore city locations like SF and NYC where Marriott preferred not to compete with their hotel business.  The spinoff would have no such restrictions.  The spinoff could also have different trading and reservation rules which would benefit owners more than the present system.

I'm not ready to pronounce the spinoff a DOA.  It should be given a fair chance with or without the Marriott name on it.  I just hope that Marriott doesn't dump a lot of expenses and low value properties on the spinoff.  It if does, the spinoff will eventually collapse like many other spinoffs have.


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## a1000monkeys (Feb 19, 2011)

I don't see an uptick in resale prices or the timeshare industry until the real estate market turns around and people are feeling flush with equity again.  That will likely be awhile.  When the RV market comes back so will timeshares.


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## dioxide45 (Feb 19, 2011)

hotcoffee said:


> I personally think that the new spin-off has a doubtful future unless their planners can come up with some truly cheaper vacation alternatives.  The Explorer program looks good on paper, but many of the options still require too many points.  I think they are going to have a hard time convincing people to buy points unless they can convince them that they have some truly memorable vacation options available that don't require a large up-front cash investment.  Without cheaper vacation alternatives, I think consolidation of the timeshare industry might loom on the horizon.



I am not sure how consolidation of the industry will lead to cheaper vacation options. Consolidation equals less competition, which leads to higher prices. Consolidation helps companies survive because at the end of the day there are fewer players out there to compete against. So they are able to charge more for the same product.


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## oldkey (Feb 19, 2011)

> And think about when they ROFR a 2BR Ocean-View MOC at $10K that is the equivalent of 6,700 DClub points -- those points can be sold for $67,000 to some new points buyer (if they exist)



Greg - where can I find one of those $10 MOC OV 2 bd units?


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## dioxide45 (Feb 19, 2011)

oldkey said:


> [QUOTEAnd think about when they ROFR a 2BR Ocean-View MOC at $10K that is the equivalent of 6,700 DClub points -- those points can be sold for $67,000 to some new points buyer (if they exist)



Greg - where can I find one of those $10 MOC OV 2 bd units?[/QUOTE]

A GV 2BR recently passed ROFR at $5700.


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## MOXJO7282 (Feb 19, 2011)

Saw the article below just this morning


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## MOXJO7282 (Feb 19, 2011)

timeos2 said:


> Very little. Most people have changed their view of disposable income and the easy credit that fueled the last boom will not be repeated. Add in the growing knowledge of options and especially of the resale market and pushing pricey retail purchase is not going to go very well.  The free-wheeling glory days are gone and Marriott recognizes that (so they pan to reduce direct ties to merely licensing the name for $$). The new stand alone company will be left scratching for investors which also view any type of timeshare capital investment as tainted. It isn't a positive situation no matter what changes may occur going forward. It has been exposed.



Vacationers 'spring' forth
REUTERS

Last Updated: 7:25 AM, February 19, 2011

Posted: 12:37 AM, February 19, 2011

After experiencing one of the worst US winters in memory, more than a third of Americans are planning to take a break this spring in search of warm weather and sunshine, according to a new poll. 

"The purse strings seem to be loosening this year," said Beth Caulfield of AOL Travel, which commissioned the survey of 1,000 travelers. 

"The fact that people are willing to spend the same or more is indicative of some of the positive signs we are seeing in the economy."


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## oldkey (Feb 19, 2011)

m61376 said:


> Joe- It's funny, because this morning I started to post something in the other thread along a similar line and then decided not to. Personally, I don't see all the doom and gloom here. Rental rates have decreased during the last two or three years, and- no great surprise here- hotel rooms have sat vacant. Real estate values have plummeted. Of course timeshares aren't immune from the real world realities.
> 
> But what is interesting is that as the economy slowly recovers, people seem pent up to being traveling again, and the surge in travel seems, at least to me, to be faster than the economic recovery. I think over the next several years those bargain basement desperation rental prices will climb, as people again vacation themselves and as there is more demand. As hotel rooms fill up, so will the demand for timeshares.
> 
> ...



Just a note - we have been renting our weeks at MOC every year - even have President's Week next year rented for one week (that's 2012). All of our 09, 10 & 11 weeks all rented for very good rates. Maybe MOC has been an anamoly, but we haven't seen an issue at all. We were just there last week and it was packed. Everyone we met either owned or was renting for similar rates. ....yes, I had some disappointments in the prices at the Beachwalk Cafe and Longboards was pretty sterile and expensive, but the beach, Whaler's Village, all the hotels - everything was great as always. No doom and gloom anywhere to be found.


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## hotcoffee (Feb 19, 2011)

dioxide45 said:


> I am not sure how consolidation of the industry will lead to cheaper vacation options. Consolidation equals less competition, which leads to higher prices. Consolidation helps companies survive because at the end of the day there are fewer players out there to compete against. So they are able to charge more for the same product.



Correct.  Fewer players means that a larger percentage of the buyers will buy from each surviving company.  Consolidation also means more vacation choices, which, in turn means more incentive to spend money to buy points.  Otherwise, points are of dubious value.  Consolidation might be a way for the major players to survive if they cannot sell their inventory.

The optimists seem to assume that since people will once again start taking vacations (which might be true), the timeshare industry will recover.  I see it more as a need for the spin-off company to make a profit.  If it cannot make a profit, then things will have to change.


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## MOXJO7282 (Feb 19, 2011)

oldkey said:


> Just a note - we have been renting our weeks at MOC every year - even have President's Week next year rented for one week (that's 2012). All of our 09, 10 & 11 weeks all rented for very good rates. Maybe MOC has been an anamoly, but we haven't seen an issue at all. We were just there last week and it was packed. Everyone we met either owned or was renting for similar rates. ....yes, I had some disappointments in the prices at the Beachwalk Cafe and Longboards was pretty sterile and expensive, but the beach, Whaler's Village, all the hotels - everything was great as always. No doom and gloom anywhere to be found.



Same is true with all the resorts I own, especially the Aruba Surf and my Oceanwatch. As soon as I put those ads up I rent. I then usually leave the ad up to gauge interest and for those resorts the demand is tremendous. I could easily rent 10 weeks if I had them. Even my NCV rent super easily at a fair price.


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## BocaBoy (Feb 19, 2011)

kjd said:


> Marriott has not weathered the economic storm IMO.  They are emerging from it as a beaten company that needs to reinvent itself.



Is that Marriott stock hit a new high this week?  I guess if the facts don't fit the theory, just make up one's own facts.


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## dioxide45 (Feb 19, 2011)

BocaBoy said:


> Is that Marriott stock hit a new high this week?  I guess if the facts don't fit the theory, just make up one's own facts.



I think kjd was actually referring to MVCI, not Marriott International. Marriott International stock going up was largely a result of earnings release and announcement of the spin-off of MVCI. That doesn't say good things about MVCI. I think the facts do fit the theory.


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## timeos2 (Feb 19, 2011)

*Let 'er sail - soon!*



windje2000 said:


> The second point is that at current sales run rates, there's plenty to sell.



There sure is - about 5+ years worth at a minimum if they take back or construct nothing more!  And they have to PAY the fees on every one of those existing weeks just like any other owner - an unbelievable drain on cash resources (so do you think that as management they might tend to give a break to their own billings thus costing other paying members more? It has happened to intertwined developer/management groups i the past so it's not too far out to think it could occur with little the owners can do to stop it as the now unnamed company formerly known as Marriott holds all of the controls). 

They are buried in inventory that is not going to be easy to move (if it was they would have sold it already!) It is low value - but NOT low cost - stuff that doesn't fit well in today's market. 

There is a reason Marriott, the real one, wants to dump this grou and it's most assuredly NOT because it's going to make a ton of money for anyone. At best they hope to recover the huge investment and even that may not be possible. Face it, it isn't a good thing to have a division that is no longer wanted but they have to present a happy face until they get rid of it. Then the self congratulatory high fives will be handed out on the original MArriott side as they watch the former albatross sail away from their balance sheet.


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## hotcoffee (Feb 19, 2011)

dioxide45 said:


> I think kjd was actually referring to MVCI, not Marriott International. Marriott International stock going up was largely a result of earnings release and announcement of the spin-off of MVCI. That doesn't say good things about MVCI. I think the facts do fit the theory.



Yep.  I know I keep harping on the cheaper vacation alternatives, but I think it is a reality.  The new spin-off has to now make its own way in life.  To survive, it will have to convince the non-Marriott-owning public to buy points.  I do not personally think the vacation options they are offering right now are enough to make that happen.  There are, of course, always people who will buy 1500-2000 points or so without really considering what they will be able to do with that few points.  I think more changes will still be needed.


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## timeos2 (Feb 19, 2011)

*You make the offer - asking price is less than meaningless*



dioxide45 said:


> Greg - where can I find one of those $10 MOC OV 2 bd units?



A GV 2BR recently passed ROFR at $5700.[/quote]

Easy (not kidding). Offer $5900 (or whatever your number is) to any seller - what they are asking for means NOTHING! If they have ben on the market for anytime at all or have really looked at what the weeks now sell for - not ridiculous asking prices from 2007 - they will take the offer!  Really, it's that simple. If the first doesn't look for the next offer - it doesn't take many to foin one willing to sell at your level. And chances are the one(s) that refuse will be back in contact with you in a few weeks or a month saying "Oh, we  reconsidered (we have no takers or even nibbles at our asking price)- is the offer still good?" and you can either smile and say you already bought or take another few thousand off & get your deal.l 

It is a buyers market - period. What a seller "wants" means nothing at all to the savvy buyer today.


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## Stefa (Feb 19, 2011)

MOXJO7282 said:


> Same is true with all the resorts I own, especially the Aruba Surf and my Oceanwatch. As soon as I put those ads up I rent. I then usually leave the ad up to gauge interest and for those resorts the demand is tremendous. I could easily rent 10 weeks if I had them. Even my NCV rent super easily at a fair price.



I'm not surprised you are having good luck with renting since you own peak season in some of the more desirable locations.  It sounds like demand for your rentals remained strong even in the down economy. 

I'm much less optimistic about resale values for off season weeks and less desirable locations, however.   While a stronger economy may encourage more people to take vacations I also think there are other forces working to decrease demand for these resale weeks.  Now that Marriott has stopped bulk banking unsold inventory with Interval, the incentive to purchase resale weeks as traders has been diminished as the opportunities to "trade up" have been reduced.  

Also, potential buyers are no longer getting exposed to the weeks ownership through the sales presentation.  In the past, if someone came to TUG and asked about purchasing from Marriott, we could rightly point out that they could purchase the exact same thing on the resale market and only lose the MR points.  Now a resale weeks ownership is a completely different product.


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## MOXJO7282 (Feb 19, 2011)

[*QUOTE=timeos2;1064639]A GV 2BR recently passed ROFR at $5700.[/quote]

Easy (not kidding). Offer $5900 (or whatever your number is) to any seller - what they are asking for means NOTHING! If they have ben on the market for anytime at all or have really looked at what the weeks now sell for - not ridiculous asking prices from 2007 - they will take the offer!  Really, it's that simple. If the first doesn't look for the next offer - it doesn't take many to foin one willing to sell at your level. And chances are the one(s) that refuse will be back in contact with you in a few weeks or a month saying "Oh, we  reconsidered (we have no takers or even nibbles at our asking price)- is the offer still good?" and you can either smile and say you already bought or take another few thousand off & get your deal.l 

It is a buyers market - period. What a seller "wants" means nothing at all to the savvy buyer today.[/QUOTE]*

Huge demand and price difference between a garden view and oceanview. Another example of your inexperience with Marriott. 

Very few Marriott 2BDRM OV and  almost no 2 BDRM OFs are sold on Ebay.

Care to reason why? Because they don't have to sell at low ball prices and have so many takers that they don't even make it to auction. So you don't see them.

Here's a list of Marriott TSs please find any of them and I'll give that person a $1k finder's fee.

Any 2BDRM Maui, Myrtle Beach, Aruba Surf, Grand Ocean Plat OF for $18k. I'm sure there are many more that I could add to this list, like many New year's weeks and prime ski weeks at the top Marriott ski resorts.


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## yumdrey (Feb 19, 2011)

MOXJO7282 said:


> What brand held its value as well? Not Westin, they don't sell at the same price point as Marriotts. Same Maui Units Marriott will sell for more.



This is NOT quite true.
Starwood exercise ROFR for many oceanview or oceanfront units at two maui locations sold under $10,000. 
I don't think these prices are cheaper than marriott maui at all.
I own multiple hotel TS systems and when I compare them for the last 2-3 years market, Marriott has the greatest fall. It doesn't matter the location.
Hilton hold its value the very best at this moment, and starwood (westin)'s mandatory resorts (especially kierland villas) hold its value better than marriott.


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## BocaBoy (Feb 19, 2011)

dioxide45 said:


> I think kjd was actually referring to MVCI, not Marriott International. Marriott International stock going up was largely a result of earnings release and announcement of the spin-off of MVCI. That doesn't say good things about MVCI. I think the facts do fit the theory.



Actually kjd was referring to Marriott International being a beaten company and needing to reinvent itself by spinning off MVCI.  Here is part of what kjd said: "While Marriott is not close to bankruptcy the spinoff is one action to get their balance sheet in better shape for their stockholders." 

And how can you say the high price of Marriott stock is due to the earnings release and the spinoff announcement?  It actually closed the week lower than it was before the announcement, and the general market was up.


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## BocaBoy (Feb 19, 2011)

How did timeos2 become a moderator on the Marriott board?  Owns no Marriott units (never has), makes up facts and seems to have only one mission--to attack Marriott.  I would think a moderator would be more balanced.


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## wof45 (Feb 19, 2011)

timeos2 said:


> They are buried in inventory that is not going to be easy to move (if it was they would have sold it already!) It is low value - but NOT low cost - stuff that doesn't fit well in today's market.



this is totally out of line with reality.

the whole point of the DC was to get away from selling specific weeks and seasons and to move to selling points that reserve a lot of time off season and less time on season.

that fits perfectly in today's market.


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## dioxide45 (Feb 19, 2011)

BocaBoy said:


> How did timeos2 become a moderator on the Marriott board?  Owns no Marriott units (never has), makes up facts and seems to have only one mission--to attack Marriott.  I would think a moderator would be more balanced.



John is a Moderator on TUG. Though I don't think he is assigned to the Marriott forum. Remember, moderators are timeshare owners like you and I. Their posts here are their own personal opinion unless otherwise stated. They don't always speak on behalf of TUG



BocaBoy said:


> And how can you say the high price of Marriott stock is due to the earnings release and the spinoff announcement?  It actually closed the week lower than it was before the announcement, and the general market was up.



Well lets see. Marriott's closing price on Monday the 2/14 was $41 a share. Earnings release was after Monday's close. Tuesday their stock close over 1% higher. That seems like it would be attributed to earnings release.


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## dioxide45 (Feb 19, 2011)

wof45 said:


> this is totally out of line with reality.
> 
> the whole point of the DC was to get away from selling specific weeks and seasons and to move to selling points *that reserve a lot of time off season and less time on season.*
> that fits perfectly in today's market.



I am not sure this statement makes sense?


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## OldPantry (Feb 19, 2011)

*Timeshare floor prices: some observations.*

The world is awash in money looking for returns.  That's actually a good thing for the timeshare resale world.  Why?  Because weeks that can be rented profitably will be snapped up by folks looking to make money.  Take the case of a platinum week that can be rented for $2000+, when maintenance fees are perhaps half that.  Think Tahoe Timber Lodge, or Newport Coast.  A $1000 net profit yearly would easily justify an outlay of $10,000, with a 10% yearly return on investment.  Long term, profitable rentability is the key to establishing a bottom for timeshare prices. 
Yes, the potential fly in the pie is the question of increasing MFs.  If they rise substantially faster than rentals, then resale prices will continue to drop.  BUT, that's not necessarily going to happen.  A couple of things could intervene.  First, a rising economy and rising travel demand (particularly from the non-American world) could quickly bolster interest in top-quality luxury properties.  Rental prices could go up as a result.  In time, with little new stock being created, the effect on prices could be substantial.
Second, I can easily foresee a huge revolt on the part of timeshare owners against excessive MF increases.  Most resorts are sold out; that minimizes the ability of Marriott (or Spinco) to dominate the boards; if enough owners get pissed off, they'll scrap the Marriott management contracts and go with somebody offering a better deal.  Even in those places where Marriott retains a substantial ownership position (Ko Olina, Oceana Palms, Crystal Shores), the prospect of owners revolts elsewhere might severely limit the abuses.  This too would help resale pricing.
Long term, I see the biggest problem in mud weeks: those that cannot be rented for anything close to their maintenance fees.  Ultimately, I think homeowner associations will be forced to prorate MFs to accommodate the non-gold non-platinum week owners.  Otherwise, they will walk, saddling the rest with their maintenance fees anyway.  If enough did, the obligations would be functionally uncollectible.  It would be better to charge less, giving those weeks some hope of being rented at a profit.  Then buyers would emerge.  The good news is that nearly all Marriott properties are desirable enough to ensure that they can be filled nearly any time, assuming the right price.


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## hotcoffee (Feb 19, 2011)

wof45 said:


> this is totally out of line with reality.
> 
> the whole point of the DC was to get away from selling specific weeks and seasons and to move to selling points that reserve a lot of time off season and less time on season.
> 
> that fits perfectly in today's market.



Well, they were getting away from selling specific weeks for sure, but I think their biggest motivation was to try to extract some cash from inventory that was not selling very well.  By creating a land trust, they are now able to sell their inventory little-by-little via points.


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## timeos2 (Feb 19, 2011)

*Sorry but the market sets the price not a BBS discussion or owner wishes*



MOXJO7282 said:


> Huge demand and price difference between a garden view and oceanview. Another example of your inexperience with Marriott.
> 
> Very few Marriott 2BDRM OV and  almost no 2 BDRM OFs are sold on Ebay.



It has nothing to do with "inexperience with Marriott" - a sale is a sale no matter what the name may be. Yes, there are one or two weeks that will be purchased for WAY more than going rate as an inexperienced or uninformed buyer can come along (hey, they sell retail don't they?). And a very few weeks have a value a thousand or two above average due to view or time of year - but those are exceptions not the general market. And only 20% or less of all week are even potentially high value - 80%+ are NOT. 

Add in that Marriott started at a higher price in many cases and the percentage hit is larger. 

Sorry to rain on your parade but the facts don't back up your rose colored view. Only recorded sales can do that and finding even one above $5K now days is a rare thing and virtually nothing sells at $10 or more. That is the marketplace and its only getting worse especially with the recent moves by Marriott including attempts to devalue resales. It's working far better than they thought but hasn't helped them at all. Marriott is no shining star anymore in timeshares. 

Until you actually sell you won't believe. But you will find out if you sell in the future that prices are in a serious slide downward. Marriott is NOT immune.


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## GregT (Feb 20, 2011)

BocaBoy said:


> How did timeos2 become a moderator on the Marriott board?  Owns no Marriott units (never has), makes up facts and seems to have only one mission--to attack Marriott.  I would think a moderator would be more balanced.





timeos2 said:


> It has nothing to do with "inexperience with Marriott" - a sale is a sale no matter what the name may be. Yes, there are one or two weeks that will be purchased for WAY more than going rate as an inexperienced or uninformed buyer can come along (hey, they sell retail don't they?). And a very few weeks have a value a thousand or two above average due to view or time of year - but those are exceptions not the general market. And only 20% or less of all week are even potentially high value - 80%+ are NOT.
> 
> Add in that Marriott started at a higher price in many cases and the percentage hit is larger.
> 
> ...



Guys, can we close this thread?

John, we've learned a tremendous amount from you over the years, but I am totally baffled why you keep hammering away at Marriott owners --it seems like schadenfreude?   

For the rest of us, either hold on for dear life or pull the rip-cord.  We've put up with alot over the last year (Speculation about points, reality of points, legacy versus trust points, inventory availability, marriott preference, higher MFs and property taxes, SpinCo).   What a year!   I hope we have more stability next year so we can make some rational decisions...

Best,

Greg


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## timeos2 (Feb 20, 2011)

*Time to bow out on this one*



GregT said:


> Guys, can we close this thread?
> 
> John, we've learned a tremendous amount from you over the years, but I am totally baffled why you keep hammering away at Marriott owners --it seems like schadenfreude?



Greg - Not picking on Marriott as the same things apply to all timeshares and no brand/group is immune - not Hilton, Hyatt, Starwood, DVC, etc.  In this case it happens to be the Marriott owners over-valuing things they hold dear as the forum has that name involved. 

It has been beaten into submission by now and it is time to let some new thoughts and perhaps information take over the spotlight. I think everyone has made their point / view known by now. 

As my final swing I have always liked the units & resorts at most all of the brand names - and when asked I pick Marriott as the best of all in general terms.  I don't know why but it bothers me when owners of an resort/system feel the rules (or market price or quality) apply to every other brand/group / resort but never to what they own!  It is human nature to want to have the best and to justify to yourself why you own what you do. But letting the dream get too far from reality helps no one and does need to be reined in occasionally. 

This type of thread sure seems to accomplish that and makes people re-examine what they hold on to and why. If I owned any of the top brands now I'd want to know what they are really worth so I can make changes if needed. To simply assume that prices are high because I like resort X or group Y isn't a good basis for decision making. If I am at least aware of the trends and factor in the potential bad with the hoped for good the decisions made are much more likely to pay off in good value in a nice vacation which is really what a timeshare is all about.  Finding out at the 11th hour my assumptions were way out of line can be a real shock just when one isn't needed. Better to be informed all along and make choices that have a basis in reality.


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## DanCali (Feb 20, 2011)

Unfortunately, timeshare prices are quite sticky on the way down... It'll be very hard for them to recover.

Take for example a resort from the Starwood collection - Sheraton Vistana Villages in Orlando (Phases 1 and 2). This is a "mandatory" resort which means a resale buyer can trade internally using Staroptions (timeshare points). In late 2009, a 2BR non lockoff was selling for around $5K on eBay. Maintenance fees then were around $1000. With the 81K Staroptions, an owner could reserve a 1BR in Hawaii (usually available any week at 8 monts out) or a dedicated 2BR at Harborside in the summer (hard to find) or maybe 10 or 11 days in a 1BR at Harborside in the summer. $1K in Mfs for an Orlando timeshare is steep, but the trading value was there.

Then in 2010 maintenance fees went up by 35% due to delinquencies (MFs of $1300+) and resale values declined to $1K or less. Over 2010 Starwood got its act in order and in 2011 MFs went down to $1100 or so, much closer to 2009 levels than 2010 levels. But resale values hardly budged... they are still at 2010 levels. Assuming MFs stabilize, this resort actually now offers great value for a buyer (I don't own there) - but timeshare prices don't move up easily...


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## Latravel (Feb 20, 2011)

BocaBoy said:


> How did timeos2 become a moderator on the Marriott board?  Owns no Marriott units (never has), makes up facts and seems to have only one mission--to attack Marriott.  I would think a moderator would be more balanced.



My thoughts exactly!  I cannot read anymore consistently negative posts especially from posters who do not own a Marriott timeshare!  It serves no purpose other than to spread fear without any basis on true fact or knowledge of Marriott practices.  No one has insider knowledge of Marriott plans so this is all heresay. 

I would say if you are so unhappy with the Marriott system, sell and sell quickly, but they don't even own one!  Very strange, indeed.


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## wof45 (Feb 20, 2011)

hotcoffee said:


> Well, they were getting away from selling specific weeks for sure, but I think their biggest motivation was to try to extract some cash from inventory that was not selling very well.  By creating a land trust, they are now able to sell their inventory little-by-little via points.



I think MVCI saw multiple problems with the old model --
one problem was that they needed to sell points at $20,000 rather than a larger number for platinum weeks

second that they needed to sell the bad weeks in addition to the good weeks, and points makes all weeks the same

third they needed to solve the maintenance fee problem so that people with bad weeks did not feel they had a bad deal and stopped paying fees.

selling points solves all of those problems.  With the new model there is no such thing as buying and selling bad weeks


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## wof45 (Feb 20, 2011)

timeos2 said:


> Until you actually sell you won't believe. But you will find out if you sell in the future that prices are in a serious slide downward. Marriott is NOT immune.



would you really expect that the removing the ROFR floor on resales would not have an effect on resales of MVCI weeks?

of course the resale prices for MVCI weeks without ROFR has fallen.


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## wof45 (Feb 20, 2011)

DanCali said:


> Unfortunately, timeshare prices are quite sticky on the way down... It'll be very hard for them to recover.
> 
> Over 2010 Starwood got its act in order and in 2011 MFs went down to $1100 or so, much closer to 2009 levels than 2010 levels. But resale values hardly budged... they are still at 2010 levels. Assuming MFs stabilize, this resort actually now offers great value for a buyer (I don't own there) - but timeshare prices don't move up easily...



I don't think there is nearly enough evidence to support this idea.

Given the current recession with high levels of unemployment and people afraid of losing their jobs, I believe that TS sales are a glut on the market and people are dumping their current obligations to pay MF.

Once we are out of this recession and unemployment levels are more normal, we will see what happens to both the number of weeks resold and the prices.


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## timeos2 (Feb 20, 2011)

wof45 said:


> would you really expect that the removing the ROFR floor on resales would not have an effect on resales of MVCI weeks?
> 
> of course the resale prices for MVCI weeks without ROFR has fallen.



Oh my - we just discussed an end to this round and now ROFR comes up? Quick and once only - ROFR does nothing to support resale value. Zero. University studies have been done to prove it. 

While it sounds like a way to prop up prices the reality (that pesky thing again) is that the SELLER only gets what the low value is that ROFR is supposedly prevent. But it doesn't - it just directs the  better deals to th developer (and why should they get it not a true buyer?) and places yet another unneeded road block in the path of already reluctant and scarce buyers. 

If you look back you'll find many threads about this - we don't need to do that exercise again.  And in any case it's almost moot as it is virtually unused now - even the king of ROFR hasn't used it much if at all recently (DVC) and certainly not Marriott. Which is yet another  problem with ROFR - when needed most the takers - the developers - don't want inventory either so prices droop even lower!  And once down it is very hard to impossible to get them back up. 

ROFR is no answer and in fact is a negative by every measurable way known. Of course once again the believers will disagree but that's what makes interesting threads here!


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## hipslo (Feb 20, 2011)

oldkey said:


> Just a note - we have been renting our weeks at MOC every year - even have President's Week next year rented for one week (that's 2012). All of our 09, 10 & 11 weeks all rented for very good rates. Maybe MOC has been an anamoly, but we haven't seen an issue at all. We were just there last week and it was packed. Everyone we met either owned or was renting for similar rates. ....yes, I had some disappointments in the prices at the Beachwalk Cafe and Longboards was pretty sterile and expensive, but the beach, Whaler's Village, all the hotels - everything was great as always. No doom and gloom anywhere to be found.



My mountainside feb/ march spring break weeks have been renting as well as ever, for rates that net me roughly 6% ROI, after mfs.  No complaints here.  May be buying some more at the currently reduced prices.  Still looking forward to living slopeside for most of the ski season in retirement.

Folks dont seem to understnad the nature of economic cycles.  Things are never as good, or as bad, as they seem.  However, buying on panic and selling on euphoria generally works reasonably well, so long as the time horizon is long enough.


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## hipslo (Feb 20, 2011)

hotcoffee said:


> Correct.  Fewer players means that a larger percentage of the buyers will buy from each surviving company.  Consolidation also means more vacation choices, which, in turn means more incentive to spend money to buy points.  Otherwise, points are of dubious value.  Consolidation might be a way for the major players to survive if they cannot sell their inventory.
> 
> The optimists seem to assume that since people will once again start taking vacations (which might be true), the timeshare industry will recover.  I see it more as a need for the spin-off company to make a profit.  If it cannot make a profit, then things will have to change.



With no new development costs for the forseeable future, very high gross margins on sales of points, and a steady and predictable stream of DC dues, it would be difficult for spinco to be other than profitable.  Whether it can increase profits at a growing rate is really the question, and likely the reason that it was decided to spin it off, as public companies like/ need to show consistent profit growth in order to keep shareholders happy.


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## hipslo (Feb 20, 2011)

MOXJO7282 said:


> Same is true with all the resorts I own, especially the Aruba Surf and my Oceanwatch. As soon as I put those ads up I rent. I then usually leave the ad up to gauge interest and for those resorts the demand is tremendous. I could easily rent 10 weeks if I had them. Even my NCV rent super easily at a fair price.



Same experience here with feb/ march mountainside weeks.


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## wof45 (Feb 20, 2011)

timeos2 said:


> Oh my - we just discussed an end to this round and now ROFR comes up? Quick and once only - ROFR does nothing to support resale value. Zero. University studies have been done to prove it.



proof by thread discussions really doesn't mean much.  thinking it does notmake it true

if ROFR has no effect, then why do we see an effect when it is used?

if ROFR has thread "evidence" why do we see so many threads recently castigating MVCI for no longer taking properties?


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## pgnewarkboy (Feb 20, 2011)

*Rental Prices Will Go UP*

The economy HAS improved and travel is on the upswing.  Hotel chains are already charging MORE for their rooms.  If that trend continues, the rental prices for timeshares will go up as people see the value as compared to a hotel room cauisng demand for timeshare rentals to increase.   I think that re-sales price recovery is a trickier issue because of the bad reputation timeshares have received and the fact that Marriott has dropped out of the timeshare business.  Timeshare prices may recover but IMO it will take approx. 10 years of a sound economy.  I admit that the time frame is nothing more than a guess. It could be much longer or never.  I doubt it would be less time for a recovery in re-sale prices.


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## Fredm (Feb 20, 2011)

hipslo said:


> With no new development costs for the forseeable future, very high gross margins on sales of points, and a steady and predictable stream of DC dues, it would be difficult for spinco to be other than profitable.  Whether it can increase profits at a growing rate is really the question, and likely the reason that it was decided to spin it off, as public companies like/ need to show consistent profit growth in order to keep shareholders happy.



Well said. This sums up the entire spin-off discussion.


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## Big Matt (Feb 20, 2011)

I completely agree with this statement.

My real question for the future will be around their growth strategy.  I want to know if they are going to be buying other timeshare properties and slapping the Marriott brand on them or building new resorts and slapping other brands on them like Host did.



hipslo said:


> With no new development costs for the forseeable future, very high gross margins on sales of points, and a steady and predictable stream of DC dues, it would be difficult for spinco to be other than profitable.  Whether it can increase profits at a growing rate is really the question, and likely the reason that it was decided to spin it off, as public companies like/ need to show consistent profit growth in order to keep shareholders happy.


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## MOXJO7282 (Feb 20, 2011)

I'll add my last comments to this thread. I value and respect all opinion on TUG, even ones I strongly disagree with.


Since I joined TUG probably 9 years ago there has always been major Marriott detractors. Some I guess had reasons, maybe they bought Fla thinking they were trading to Maui easily or they couldn't get a reservation when they wanted, but strangely some that never owned Marriott as well. These individuals would make make gross generalizations that just weren't very accurate.

One such generalization then was *why buy when you can get any week you want without owning Maui?* They would insist they could trade into any week, some saying even with worldmark credits. It was just a gross exaggeration. *Now its I can buy any week for less than $5k*, which again is a gross exaggeration. So there is some consistency with the naysayers at least.

I remember when I bought my first Maui in 2002 how some even though prices were not ridculous then and I got about 750k points and 4 coach tickets to Maui, chastised me for making a foolish decision that they swore I would rue one day.

Almost ten years later it turned out to be the best decision I've made for my family. With that first ownership, I've rented at a premium every year we haven't gone, and have visited Maui 4 times with my family, flying 1st class each time, which was directly related to my ownership. I've since accomplished the same with every other property we own (we have 12 now) with the last 8 being purchased via resale. I have never gotten stuck with a week or actually had to rent for less than a premium price. And I'm not unique in that many others maximize Marriott ownership for great value as well.

Even so there's always been Marriott naysayers. I'm sure most remember Perry M's rants after DC. Well that doomsday never came. Now there is more because of the spin-off.  I guess when your the biggest and one of the best you will always have your detractors so that is what I chaulk it up to.

So what does the next 5-10 years hold? I don't have a crystal ball but I do believe that Marriott TSs will still be a viable vacation system and I'll be close to living my dream which is to spend 2-3 months some where on the beach bemoaning the biggest mistake I ever made which was buying into the Marriott TS system way back in 2002.

Are things as great as they once were? No nothing in life is like that. However they are still pretty darn good from my staandpoint about my Marriott TS and don't think that will change any time soon.

What I want to do is revisit this a few years from now and see where we stand. Just like all the Marriott bashing that's been done for the last 9 years I believe we will see the same thing, all that bluster was unfounded and Marriott ownership is still a valuable product.


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## timeos2 (Feb 20, 2011)

*As Alan says ROFR = ROFL*



wof45 said:


> proof by thread discussions really doesn't mean much.  thinking it does notmake it true
> 
> if ROFR has no effect, then why do we see an effect when it is used?
> 
> if ROFR has thread "evidence" why do we see so many threads recently castigating MVCI for no longer taking properties?



True threads can recycle the same old over & over however the University study, which at least one thread refers back to, without question establishes an unbiased look at ROFR & concludes it is not an effective price support. I'll take that as a final answer as they have no vested interest except to establish facts. 

The perception that it somehow protects pricing causes owners to moan (if they aren't the current seller who is finding out it doesn't work as they had hoped) when it isn't used. Again that is a basic issue with ROFR (isn't there when really needed) but that gets back to the never ending argument.  

Just to offer a solution rather than empty rhetoric remember that there IS a way to prop up resale price that will never fail to work. A guaranteed buy back program. If Marriott, DVC, Hilton etc really think there is a base price that represent s a minimum value then all they have to do to enforce that is say "We'll buy any week at resort X for $$ - npo matter what & at anytime".  Now any buyer has to offer at least that amount or the seller knows they can instantly obtain that price and move on. THAT is price floor protection and, to my knowledge, no American resort or group offers such a rock solid and minimum price fixing process. Why? Because they can't be sure what the bottom value really is and only want to cherry pick the best and leave the rest to fend for themselves.  How often dose ROFR help a low value trade time owner get a better price? How does the high value owner get a higher than low offered price from ROFR (hint - answer is they do not as they only get the ow offer value only the buyer is different). 

ROFR is a bad joke on owners and you are best advised to avoid any resort/group that has it to better protect your personal cost of purchase.


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## timeos2 (Feb 20, 2011)

wof45 said:


> proof by thread discussions really doesn't mean much.  thinking it does notmake it true
> 
> if ROFR has no effect, then why do we see an effect when it is used?
> 
> if ROFR has thread "evidence" why do we see so many threads recently castigating MVCI for no longer taking properties?



By the way here is one link to the studies. Enjoy.


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## dioxide45 (Feb 20, 2011)

MOXJO7282 said:


> Even so there's always been Marriott naysayers. I'm sure most remember Perry M's rants after DC. Well that doomsday never came. Now there is more because of the spin-off.  I guess when your the biggest and one of the best you will always have your detractors so that is what I chaulk it up to.



I only remember PerryM's pre DC rants. After the release of DC, he couldn't quit slobbering all over it. He just love love loves DC. This after all of the negative points he made in the speculation thread CAME TRUE.

It would be interesting to hear Perry's perspective on the spin off, but I won't bother to head over to his site to find out.


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## Stefa (Feb 20, 2011)

pgnewarkboy said:


> The economy HAS improved and travel is on the upswing.  Hotel chains are already charging MORE for their rooms.  If that trend continues, the rental prices for timeshares will go up as people see the value as compared to a hotel room cauisng demand for timeshare rentals to increase.   I think that re-sales price recovery is a trickier issue because of the bad reputation timeshares have received and the fact that Marriott has dropped out of the timeshare business.  Timeshare prices may recover but IMO it will take approx. 10 years of a sound economy.  I admit that the time frame is nothing more than a guess. It could be much longer or never.  I doubt it would be less time for a recovery in re-sale prices.



I agree with most of this, although I'm skeptical resale values will recover for lower-demand weeks and resorts.  As I've said before, there are other factors besides the economy affecting the resale values for many resorts.  

Still I don't think resale values need to recover for Marriott timeshares (Spinco) to continue to be viable.


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## dioxide45 (Feb 20, 2011)

Stefa said:


> I agree with most of this, although I'm skeptical resale values will recover for lower-demand weeks and resorts.  As I've said before, there are other factors besides the economy affecting the resale values for many resorts.
> 
> Still I don't think resale values need to recover for Marriott timeshares (Spinco) to continue to be viable.



I don't think resale values have anything to do with Marriott or any other company being viable. Look at all the other resort companies that were continuing to sell weeks even when current owners can't give their week away.

The fact remains that while someone is on vacation and doing a tour, they aren't thinking about the resale market and only a very small percentage of people really know that one exists. That is how developers can continue to sell weeks for the prices they do.


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## Stefa (Feb 20, 2011)

dioxide45 said:


> I don't think resale values have anything to do with Marriott or any other company being viable. Look at all the other resort companies that were continuing to sell weeks even when current owners can't give their week away.
> 
> The fact remains that while someone is on vacation and doing a tour, they aren't thinking about the resale market and only a very small percentage of people really know that one exists. That is how developers can continue to sell weeks for the prices they do.



Agreed.   And whether or not potential buyers know about resale is much less relevant now since DC isn't available on the resale market anyway.


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## ronparise (Feb 20, 2011)

With 3 pages of comments I didnt read every one as close as I should, so I may be repeating something thats already been said. And I dont own any Marriott, so some may want to ignore my comments. But the primary question posed in the original post seems to have gotten lost with all the discussion about the spinoff

The question as I read it is...."Whats likely to happen with Marriott timeshares if and when the economy picks up?"

First a little personal history.. I worked for Marriott when they were a chain of family restaurants in the Washington DC area. In fact I met JW sr when I tried to direct him away from the kitchen entrance when he and his son (the current Chairman walked in as if they owned the joint (turns out that they did) Later as a stockbroker I saw the split of the hotel ownership from the hotel management side of the business. and sold the stock of both companies

Which brings me to my first comment: This is not the first time Marriott has split the development side from the operations side of one of their businesses. I dont think this will mean a thing to new retail buyers, or resale buyers, or current owners.

Regarding the value of your time share ownership whether it be Marriott or some other brand, I think it has to do with the ratio of its value as a rental against maintenance fees. If it costs as much in maintenance fees as it would rent for, the value of your timeshare is zero. If your week can rent for twice what you pay in maintenance fees, than it has some value.

Regarding the someones comment that no one is bringing new timeshares to market, and shouldn't that make the existing inventory worth more....thats a false assumption. Wyndham has figured out a way to develop more timeshares without any new capital. They are offering themselves as the marketing and sales department (and ultimately the management company) to failed condo projects. They have already done this in 4 locations. and they are actively looking for more. I have read that other companies are looking at this strategy too.

My take on all this is that the state of the economy dosent have anything to do with the value of a timeshare directly, (these things make very little sense financially. but if an improved economy means more vacationers willing and able to pay more for their time away from home, we as timeshare owners may be able to see some  improvement in value for the high demand weeks, as long as the developers dont flood the market with new product, and as long as maintenance fees dont rise as fast as rents


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## timeos2 (Feb 20, 2011)

*When viewed witout bias the answer is very clear. ROFR does not protect sales price*



wof45 said:


> proof by thread discussions really doesn't mean much.  thinking it does notmake it true
> 
> if ROFR has no effect, then why do we see an effect when it is used?
> 
> if ROFR has thread "evidence" why do we see so many threads recently castigating MVCI for no longer taking properties?



And here is one more independent study (hope you can follow all the formulas used!) - note on page 9 that unequivocally that "regular buyers will bid less aggressively (posters note: LOWER) and the average selling price *will be lower *than if a right of first refusal was not granted".

Can't be much clearer than that from a group that couldn't care less what the answer is only that they know the answer. it is that ROFR does not protect resale pricing. Period.


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## OldPantry (Feb 20, 2011)

timeos2 said:


> By the way here is one link to the studies. Enjoy.


I just read that article.  I don't think it supports your point at all.  The gist of it is that a ROFR (here discussed as a Before and After ROFR, which is not what Marriott has in its contracts with owners) is a bad deal for the HOLDER of the ROFR. In our case, that would be Marriott, if it actually applied at all!  Basically, it says that it puts the seller of a property at an advantage over the ROFR holder.  A seller can make an artificially high offer to a buyer (Marriott), have Marriott refuse, then negotiate with another buyer (Joe Blow), and use Marriott's ROFR to coerce a higher purchase price from that second buyer.  
What does all this have to do with our timeshare world?  Does anyone wishing to sell their Marriott timeshare go to Marriott with an unrealistically high sales offer?  And do they then get a better price from Joe Blow as a result?  Of course not.  Citing the article is silly, and irrelevant.  
Yes, Marriott can cherry-pick lowball offers for desirable weeks, if they want.  That low price still stands, though.  However, it could have an effect on a subsequent deal, as the buyer now knows that there's a point below which Marriott will intervene.  The next offer will have to be higher, or it will be snapped up by Marriott again.  
Practiced consistently, exercising ROFRs would absolutely affect resale prices, but would require Marriott to put up cash.  This they are unwilling to do.  Obviously, Marriott believes it has better things to do with its cash (or doesn't have enough cash available to spend on ROFRs).  And that's really the main point.  Marriott is out of the ROFR game for the time being, and prices will fall (or stay depressed) until timeshares make sense as an investment (think rental income vs. maintenance fees).


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## BarbS (Feb 20, 2011)

I don't think anyone can deny the fact that when Marriott was consistently exercising ROFR, resales prices were higher.  Now everyone pretty much lowballs their bids and offers because they don't have to worry about whether the ROFR will be exercised and the week they thought they had bought will be snatched away from them.


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## wof45 (Feb 20, 2011)

timeos2 said:


> By the way here is one link to the studies. Enjoy.



you really should read the links that you provide.

The actual article says that a BA-ROFR does not work to the benefit of the party that has the ROFR.  In this case, it says that this would not benefit MVCI.


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## wof45 (Feb 20, 2011)

Stefa said:


> Agreed.   And whether or not potential buyers know about resale is much less relevant now since DC isn't available on the resale market anyway.



I remember back 20+ years to out first purchase -- we did not even consider resale value, since I remember reading through the documents and thinking that we would will the TS to the kids and were content seeing that it wold last for 40 years before the owners had to decide whether to renew the association.

I would bet that most first time and your buyers still look at it the same way.  Maybe even more so for DC since they would just think that they could add points as desired in the future and not have to decide on which resort to buy into for an additional week.


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## m61376 (Feb 20, 2011)

Let's keep in mind the topic of this thread please; ROFR has been hashed and rehashed elsewhere.


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## wof45 (Feb 20, 2011)

timeos2 said:


> And here is one more independent study (hope you can follow all the formulas used!) - note on page 9 that unequivocally that "regular buyers will bid less aggressively (posters note: LOWER) and the average selling price *will be lower *than if a right of first refusal was not granted".
> 
> Can't be much clearer than that from a group that couldn't care less what the answer is only that they know the answer. it is that ROFR does not protect resale pricing. Period.



I think this one is just as un-supportive of your ROFR thesis.

I talks about a limited number of bidders and a limited number of items being sold -- usually one.  The result is that if a seller offers ROFR (you) to another party (MVCI) that MVCI benefits and you don't.  I think we already knew that MVCI benefitted.

But the article talks about details on why you do not benefit, and it is here that your arguments fall apart.  The major need, since this looked at learge deals with lots of negotiation, is the cost of making the offer -- for TS, the cost of making the offer is almost nothing, so buyers do not pass by the auction but make an ofer and hope it passes ROFR.

For TS sales, there is even a bigger hurdle only slightly mentioned in this study -- there are many items being sold and many buyers.  Any specific buyer will bid on the next and the next and the next item at a price until he gets one.  That is why so few TS sell at a real bargain -- usually the ones listed the wrong place or with the wrong description so that no-one finds it to bid on.

Do you have anything else that actually applies to TS ROFR?


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## wof45 (Feb 20, 2011)

m61376 said:


> Let's keep in mind the topic of this thread please; ROFR has been hashed and rehashed elsewhere.



I believe the issue was if Marriott would resume ROFR when the economy improves, and if that would effect resale prices.


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## OldPantry (Feb 20, 2011)

timeos2 said:


> And here is one more independent study (hope you can follow all the formulas used!) - note on page 9 that unequivocally that "regular buyers will bid less aggressively (posters note: LOWER) and the average selling price *will be lower *than if a right of first refusal was not granted".
> 
> Can't be much clearer than that from a group that couldn't care less what the answer is only that they know the answer. it is that ROFR does not protect resale pricing. Period.


I think there is a problem with this study too: it describes a dynamic where a "regular buyer" is confronting a ROFR offered to a "special buyer" (i.e., Marriott).  Who among is a regular buyer?  Due to the set of special circumstances we face in buying a timeshare on resale (resort, season, unit size, view), we are hardly regular buyers.  I don't think the multiple purchase scenarios described with such excruciating detail and mathematical "precision" really apply.  
We are one-time buyers.  Unless we consistently bought the same thing, over and over, we wouldn't be "regular buyers" at all.  Marriott, on the other hand, is a regular "special buyer" (if they choose to be).  They would be buying repeatedly.  Assuming Marriott exercises a ROFR, our choice in this special circumstance is to renegotiate with another comparable seller at a higher price, or drop out.  Are you really going to go through the process multiple times to snag that Newport platinum at the "correct" price (bidding consistently lower along the way)?  I think the article is an exercise in game theory, turning guys like us (resale buyers) into expert tacticians.  Aren't we really folks who have figured out what we want, and are perhaps willing to go up a bit to get it?   If so, experiencing the exercise of a ROFR might influence us to raise our subsequent offer.
What does remain true is that the ROFR is of little use, or comfort, to an owner who wants to sell.  It simply guarantees that she'll get the minimum price Marriott is supporting at the moment, and you can be sure that it will be a price highly advantageous to Marriott.  But, until Marriott returns to the ROFR world, the discussion is irrelevant.  
However, with purchased vacation points, the ROFR penalty is a real issue.  Forcing points resellers to pay $1/point (a 10% skim on any resale) is a huge problem going forward.  If you think timeshare resales are weak, just imagine how the points owners are going to react when they learn it'll cost them $4000 to offload that many points to another party?  You can be sure the buyer won't add that amount to his offer. You won't need a study to analyze the depressive effect on resales!


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## wof45 (Feb 20, 2011)

OldPantry said:


> You can be sure the buyer won't add that amount to his offer. You won't need a study to analyze the depressive effect on resales!



I think your analysis is a good one.

once we see what MVCI will actually ask for ROFR on DC points, it will be interesting to watch.  It will be interesting to see how the points are listed and priced for resale, and if the ROFR is listed as part of the price, or part of the cost after sale, like settlement costs.  But a buyer in most cases is looking at the total cost for the offer and not the parts.

I think the resale price for DC points will be higher than for the average week, since points will not discriminate on good weeks v bad weeks, or which resort and which weeks are in season.  It would appear that all buyers of DC points would participate in all sales and not just those for specific properties.


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## OldPantry (Feb 21, 2011)

timeos2 said:


> And here is one more independent study (hope you can follow all the formulas used!) - note on page 9 that unequivocally that "regular buyers will bid less aggressively (posters note: LOWER) and the average selling price *will be lower *than if a right of first refusal was not granted".
> 
> Can't be much clearer than that from a group that couldn't care less what the answer is only that they know the answer. it is that ROFR does not protect resale pricing. Period.



Just a quick follow-up on this topic, to which I have already responded.  In looking at the article a second time, it is clear that it proceeds from the assumption that there is an auction, with multiple participants (regular buyers), as well as a special buyer, to whom the ROFR has been granted by the seller.  This would be the situation on an Ebay auction.  I think many folks would shy away from that, precisely because of the winner's curse (overpaying in their eagerness to win).  Sellers of quality timeshares generally avoid auctions too: they're afraid of a lowball winning bid.  Since timeshare resales are generally not auction driven, I think the article has little relevance to our ROFR discussion.
If it were a matter of buying oil leases, sure.  Lots of folks would participate, and all that fancy math regarding ROFR strategies might apply (obviously, I'm in no position to judge).
Instead of bidding in an auction, my preference is to contact a seller, negotiate with that seller, reach an agreement, and submit it to Marriott for a waiver of ROFR.  One-on-one, no third party in on the action.  I'm relatively sure the prospect of a ROFR execution would not LOWER what I am willing to offer.  This might not be "efficient", but as a low-volume buyer, I'm just looking for something at a price I've set in my own mind (private valuation).  I'm probably willing to pay a bit more, but will balk if the price goes above a reasonable relationship to what a rental would bring vis a vis maintenance fees.


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## dioxide45 (Feb 21, 2011)

I think the answer to the ROFR argument is pretty simple. Marriott has ROFR at probably 85-90% of their properties. To date ROFR has done absolutely NOTHING to protect the price any of us have paid for our Marriott weeks. If you need proof, just go look at finished eBay auctions.


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## MOXJO7282 (Feb 21, 2011)

One thing is for sure more people are definitely looking to go on vacation because rental traffic is way up and people are back to renting further out. 

I tentatively agreed last night to rent two of my three GOs at asking prices and same night someone asked about a Maui 2012. I've rented all but one of my 2011 weeks, the remaining which we're using, and we didn't lower pricing other than the obligatory $50 on our ads.

In 2009 and 2010 renters definitely waited much lower to book, within 90 days often, and were haggling about price as well.


Based on what I'm seeing I'm confident that as the economy and employment improves rental prices will go up and resale prices on prime OF/OS beach and ski properties will stay consistent.

And I also think that means Marriott will successfully be able to sell points again, not the $45k packages perhaps, like they used to, but alot of $15k packages where people will take a domestic trip once a year and a big trip every few years by combining or buying supplemental points.

I really believe that because one thing people will do when employed is go on vacation. Its a proven fact.


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## OldPantry (Feb 21, 2011)

dioxide45 said:


> I think the answer to the ROFR argument is pretty simple. Marriott has ROFR at probably 85-90% of their properties. To date ROFR has done absolutely NOTHING to protect the price any of us have paid for our Marriott weeks. If you need proof, just go look at finished eBay auctions.



Well, what makes it simple is that Marriott exited the ROFR business long before Spinco.  If you're not exercising the ROFR, then it can hardly be blamed for failing to "protect" prices.  Marriott clearly stopped doing ROFRs because it got expensive.  Developer timeshare sales collapsed due to the great recession leaving them with heavy fixed expenses (MFs to pay, just like the rest of us); Marriott's other businesses also slumped (hurting cash flow), outside capital got extremely expensive (the whole timeshare boom was fueled by cheap loans), and they decided not fight the tidal wave of resales with their increasingly scarce resources.  ROFR exercise will return, guaranteed, if and when Marriott (now Spinco) sees a prospect of reselling, or otherwise reusing the inventory (think points) they can pick up cheaply.  They won't do it to protect prices, they'll do it to make an easy buck.  They'll focus on the prime weeks, and will ignore the dollar resales on Ebay. 
Could a return to exercising ROFR have an upward effect on timeshare resales?  Well, if resale buyers started losing out to Marriott, I would think some would pay more, or have to sit on the sidelines (game theory aside).


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## dioxide45 (Feb 21, 2011)

OldPantry said:


> Well, what makes it simple is that Marriott exited the ROFR business long before Spinco.  If you're not exercising the ROFR, then it can hardly be blamed for failing to "protect" prices.



Actually it can. The argument is that ROFR will protect prices. The fact that Marriott isn't exercising ROFR doesn't mean that it doesn't exist. The problem with the argument is that Marriott has the ability to exercise or not on any given resale. There is no guaranty. ROFR being a possibility doesn't protect anything, because ROFR is not floor pricing.

I think more along the lines of the theory that Marriott stopped exercising ROFR because the economy tanked. Prices didn't go down because ROFR was dropped. Prices went down because the economy tanked. When the economy picks up and Marriott needs weeks they will begin exercising again. This will likely happen after prices uptick. People will argue that ROFR is bringing prices up, when in reality the fact that the economy has improved and brought prices up, Marriott short on weeks will result in them having to use ROFR again.


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## timeos2 (Feb 22, 2011)

dioxide45 said:


> Actually it can. The argument is that ROFR will protect prices. The fact that Marriott isn't exercising ROFR doesn't mean that it doesn't exist. The problem with the argument is that Marriott has the ability to exercise or not on any given resale. There is no guaranty. ROFR being a possibility doesn't protect anything, because ROFR is not floor pricing.
> 
> I think more along the lines of the theory that Marriott stopped exercising ROFR because the economy tanked. Prices didn't go down because ROFR was dropped. Prices went down because the economy tanked. When the economy picks up and Marriott needs weeks they will begin exercising again. This will likely happen after prices uptick. People will argue that ROFR is bringing prices up, when in reality the fact that the economy has improved and brought prices up, Marriott short on weeks will result in them having to use ROFR again.



You got it! ROFR does nothing to protect prices but does allow the ROFR holder to cherry pick the deals they want without the need to actually do the homework of advertising, negotiating & finding a willing buyer.  Because it doesn't offer any protection but real roadblocks to owners/sellers/buyers it is best to simply avoid any purchase that carries ROFR as part of the terms. There are plenty of equal or better timeshares out there that don't have ROFR - use those and avoid the extra mess and uncertainty ROFR causes.  

If you are buying retail demand that the clause be removed or walk.  Don't support this one sided and owner negative system.  If they won't remove it (and they can as it is simply a line in the contract) walk. If a few people did that they wold quickly rethink the idea (lost sales speak volumes) and the nonsense of dealing with it wold end. Meanwhile don't buy a property that has it is my advice.


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## bdh (Feb 22, 2011)

timeos2 said:


> You got it!



And I thought you were going to "bow out on this one" back at post 52 - but see you're still in it at 89 - the beat goes on, and on, and on.


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## timeos2 (Feb 22, 2011)

bdh said:


> And I thought you were going to "bow out on this one" back at post 52 - but see you're still in it at 89 - the beat goes on, and on, and on.



ROFR is a new sub-topic and one that needs to be clarified for new readers. It has been kicked around plenty before but, occasionally as here, resurfaces for awhile. It is a nightmare to deal with and those that aren't aware it exists need to be informed. That's it. I'm merely watching the other posts now in case any new ideas get an airing.


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## OldPantry (Feb 22, 2011)

dioxide45 said:


> Actually it can. The argument is that ROFR will protect prices. The fact that Marriott isn't exercising ROFR doesn't mean that it doesn't exist. The problem with the argument is that Marriott has the ability to exercise or not on any given resale. There is no guaranty. ROFR being a possibility doesn't protect anything, because ROFR is not floor pricing.
> If you are buying retail demand that the clause be removed or walk.  Don't support this one sided and owner negative system.  If they won't remove it (and they can as it is simply a line in the contract) walk. If a few people did that they wold quickly rethink the idea (lost sales speak volumes) and the nonsense of dealing with it wold end. Meanwhile don't buy a property that has it is my advice.


It's silly to claim that the mere existence of a ROFR will protect prices.  But nobody is claiming that, so you're killing a straw man.  Only the exercise of a ROFR could have that effect.  Without a pattern of exercise, buyers would ignore it, as they do in fact right now.  If Marriott were to consistently exercise a ROFR below some set price (they would set it internally, according to their own perceived self-interest), then that would, in fact, create a bottom, in time.  Folks who still want to buy resales (of the type Marriott is willing to buy) would have to come back and bid above that bottom, or be ROFRed out of the deal again.  You know that is true.  So, a single exercise doesn't set a bottom (Marriott might start by snapping up a 1$ Ebay special), but a consistent series of them would. 
As to refusing a retail deal with a ROFR, well, good luck.  Marriott has almost always insisted on it, both before with timeshares and now with DC points.  You can refuse, but you'll have to play in another ballpark.  I don't like them either, but right now, they're irrelevant, so why worry?


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## dan_hoog (Feb 22, 2011)

+1000.  It is the pattern of expectation that can affect market prices.  If ROFR were routinely exercised, at statistically predictable levels for each scenario, it would affect resale prices.

To have any effect, it has to be somewhat predictable to both buyer and seller, creating an expectation.  The seller wants more than the minimum, the buyer wants the week.

I'm not saying it is an efficient price support mechanism, but it could keep prices above 1$.  



OldPantry said:


> It's silly to claim that the mere existence of a ROFR will protect prices.  But nobody is claiming that, so you're killing a straw man.  Only the exercise of a ROFR could have that effect.  Without a pattern of exercise, buyers would ignore it, as they do in fact right now.  If Marriott were to consistently exercise a ROFR below some set price (they would set it internally, according to their own perceived self-interest), then that would, in fact, create a bottom, in time.  Folks who still want to buy resales (of the type Marriott is willing to buy) would have to come back and bid above that bottom, or be ROFRed out of the deal again.  You know that is true.  So, a single exercise doesn't set a bottom (Marriott might start by snapping up a 1$ Ebay special), but a consistent series of them would.
> As to refusing a retail deal with a ROFR, well, good luck.  Marriott has almost always insisted on it, both before with timeshares and now with DC points.  You can refuse, but you'll have to play in another ballpark.  I don't like them either, but right now, they're irrelevant, so why worry?


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## windje2000 (Feb 22, 2011)

dan_hoog said:


> +1000.  It is the pattern of expectation that can affect market prices.  If ROFR were routinely exercised, at statistically predictable levels for each scenario, it would affect resale prices.
> 
> To have any effect, it has to be somewhat predictable to both buyer and seller, creating an expectation.  The seller wants more than the minimum, the buyer wants the week.
> 
> I'm not saying it is an efficient price support mechanism, but it could keep prices above 1$.



Dan, I don't disagree, but a 'pattern of expectation' essentially transforms Marriott's call option into an owner's put option.  I wouldn't want to bet on that.

For the nonfinancial readers - Here's what that means.

I've always looked at ROFR as an option.

Suppose you could obtain 'last look' at every ebay auction and have the 'option' of stepping into the shoes of the winning bidder after the close of every auction if you chose to do so.  That's exactly what Marriott has with the ROFR.  

Would you pay for that right?  I would.  That is essentially a call option.  A call option represents the right (but not the obligation) to buy an asset pursuant to the terms in the contract.  That option is more likely to be exercised when it is 'in the money'  That is, when the transaction value is perceived by the owner of the option to be at a discount to fair market value.  

The better the deal one gets as a bidder, the more likely it is to be snatched by the option or ROFR holder.  That simply can't help a seller get the best price for the asset in a sale, as the existence of the option probably reduces the universe of potential willing buyers (bidders) who can't be bothered going through the process of winning . . . and then losing.

Marriott currently is not exercising the option frequently.  That does not necessarily mean that the option is not 'in the money.'  It may mean well the option holder has no present appetite for buying that asset.

If Marriott offered a 'put' option, the right of the timeshare owner to force Marriott to repurchase the timeshare at a specified price (related to developer price, less a sales commission), no question that option would create a 'floor value' for resales assuming Marriott had the financial ability to perform.

Can one currently obtain bargains in the resale market?  Will that continue into the future?  Gets back to value propositions.

The following has stood the test of time and is useful in evaluating markets of all kinds.  Substitute the word timeshare for business in the present instance.



> Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success.  He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business.  Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.
> 
> Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market's quotations will be anything but.  For, sad to say, the poor fellow has incurable emotional problems.  At times he feels euphoric and can see only the favorable factors affecting the business.  When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains.  *At other times he is depressed and can see nothing but trouble ahead for both the business and the world.  On these occasions he will name a very low price, since he is terrified that you will unload your interest on him. *
> 
> ...



Personally, I think there has never been a better time to buy resale.  Declining markets tend to be more irrational and emotional than rising markets, and create more opportunity for buyers.  

Will I buy? Nope 

I have no appetite for more timeshare so no sales to me.  Marriott may well develop some appetite down the road as they may reenter actual development cautiously and require deeds to fuel points sales.  Will they move points?  I believe that P.T. Barnum was right so yes they will sell points.


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## mstoyanov (Feb 22, 2011)

It is difficult for me to understand how people can even argue that exercising a ROFR is not raising prices. It is so simple actually - with each ROFR exercised there is a less unit supply on the "resale market". There is one less unit available for purchase for the same amount of buyers. 

windje2000 compared it to "call option" - this is exactly right, but when that "call option" is exercised it becomes a "buy" and it is indistinguishable from any other "buy" - it simply reduces commodity supply from the market. Mere existence of the ROFR does nothing but regularly exercising it raise prices pure and simple.
A very simple case from reality - in the last 6-12 months prices on the secondary market for Hilton resorts rose almost 50% because Hilton start very systematic exercising on most cheap contracts (even silver weeks). 

Oh, and timeos2 and other people that claim that timeshares never going up in price how are going to explain that raise in HGVC prices on EBay (HGVC properties in Las Vegas actually rose more than 50%, while others rose by less but average is ~50%)? 

And just because I lost a week to ROFR at Hilton at the Strip I will not instead rush to buy Polo Towers or Marriott Grand Chateau because these are not perfect substitutes for the product I was looking to buy (i.e. I can not reserve HHV or 57th Street in NY with them). 
But ROFR pushed the prices UP in Flamingo too even though there is no ROFR in that resort - for a very simple reason, Flamingo is a perfect substitute for Hilton on the Strip and Hilton at Karen Ave. So regular ROFR exercising by Hilton actually rose prices for the system as a whole (even subsidiaries with no ROFR saw a price bump)


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## OldPantry (Feb 22, 2011)

dan_hoog said:


> +1000.  It is the pattern of expectation that can affect market prices.  If ROFR were routinely exercised, at statistically predictable levels for each scenario, it would affect resale prices.
> 
> To have any effect, it has to be somewhat predictable to both buyer and seller, creating an expectation.  The seller wants more than the minimum, the buyer wants the week.
> 
> I'm not saying it is an efficient price support mechanism, but it could keep prices above 1$.



Yes, I think you're right, about $1000+.


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## OldPantry (Feb 22, 2011)

windje2000 said:


> a 'pattern of expectation' essentially transforms Marriott's call option into an owner's put option.  I wouldn't want to bet on that.
> If Marriott offered a 'put' option, the right of the timeshare owner to force Marriott to repurchase the timeshare at a specified price (related to developer price, less a sales commission), no question that option would create a 'floor value' for resales assuming Marriott had the financial ability to perform.
> 
> Personally, I think there has never been a better time to buy resale.  Declining markets tend to be more irrational and emotional than rising markets, and create more opportunity for buyers.
> ...


Yes, a pattern of ROFR exercise becomes a put option.  Nicely put.  And yes, I wouldn't want to count on it.
I also agree fully, particularly regarding the timing for resale purchase (highly favorable right now):  1. Everybody's deeply pessimistic.  2. Marriott isn't ROFRing at present, letting prices find a "natural" bottom.  3. The economy is perking up quite nicely.  That should help rental pricing, and eventually resales.  4.  The P.T. Barnum observation is also on point: there will be future suckers to buy points (maybe not at such exaggerated levels as now), and Spinco could easily feel a need to refill the pipeline via ROFR exercise, also an upward impetus to resale prices.


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## windje2000 (Feb 22, 2011)

mstoyanov said:


> It is difficult for me to understand how people can even argue that exercising a ROFR is not raising prices. It is so simple actually - with each ROFR exercised there is a less unit supply on the "resale market". There is one less unit available for purchase for the same amount of buyers.
> 
> windje2000 compared it to "call option" - this is exactly right, but when that "call option" is exercised it becomes a "buy" and *it is indistinguishable from any other "buy"* - it simply reduces commodity supply from the market. Mere existence of the ROFR does nothing but regularly exercising it raise prices pure and simple.
> A very simple case from reality - in the last 6-12 months prices on the secondary market for Hilton resorts rose almost 50% because Hilton start very systematic exercising on most cheap contracts (even silver weeks).
> ...



An ROFR buy is distinguishable from other buys because Marriott did not have to outbid the genuine auction bidder/winner to win the deal.  Moreover, the 'real' bidder did not have the chance to further raise his or her bid to exceed what Marriott paid.  That affects prices realized by sellers.  

Moreover, Marriott is not an end user of timeshare.  It is a seller/reseller of timeshare.  That occupancy will end up back in the market sooner rather than later.

Marriott has become a special case owing to the changeover to points.  They will resell the deed they bought in the form of points rather than simply flip that deed.  Long run, that will depress the supply of deeds.  

That day is probably a long way off.  The current float is plenty to accommodate the trading volume.


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## MOXJO7282 (Feb 22, 2011)

OldPantry said:


> there will be future suckers to buy points (maybe not at such exaggerated levels as now), and Spinco could easily feel a need to refill the pipeline via ROFR exercise, also an upward impetus to resale prices.



My thought from the beginning of this thread was perhaps when the employment picks up Marriott TSs, now as a stand alone, may be OK and have a solid future because of the demand and no growth of inventory. Now the more I think and read about people's vacation plans and the future of the industry I'm starting to feel confident Marriott will come out of this just fine.

Yes they have a glut of inventory, but once the demand comes all the way back, and it will at some point because if there is one thing people do,especially in good times, is travel, things will head in the right direction.

They've also created a points system with a realtively low buy-in that allows you to get to Maui, without buying there.  I think once people start to travel again when they have jobs to afford travel deals they will like that they can buy points to travel however many days they want to wherever they want on borrowed points or extra. 

I really think it appeals to the most common mindset of the traveling population where most are willing to take smaller trips and then every few years pool points to do big trip.


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## taffy19 (Feb 22, 2011)

You guys are so smart explaining it to us (me) who do not understand the market.  I believe that it is an excellent time to buy if you are in the market for more vacations and have the time and money but buy location.   

If more people start traveling again, hotel rooms and rental fees will go up too but so will the fees by the Marriott or Spinco.  I would count on that.


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## taffy19 (Feb 22, 2011)

MOXJO7282 said:


> My thought from the beginning of this thread was perhaps when the employment picks up Marriott TSs, now as a stand alone, may be OK and have a solid future because of the demand and no growth of inventory. Now the more I think and read about people's vacation plans and the future of the industry I'm starting to feel confident Marriott will come out of this just fine.
> 
> Yes they have a glut of inventory, but once the demand comes all the way back, and it will at some point because if there is one thing people do,especially in good times, is travel, things will head in the right direction.
> 
> ...


Not only that as the the market is world wide and not only in the US.  There is a huge demand for travel.


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## mstoyanov (Feb 22, 2011)

windje2000, ROFR buy has exactly the same effect on the supply as the "non-ROFR" buy - it decreases the supply in the "resale market" without affecting much the demand. And ROFR buy is much more analogous to "call option" than to free auction bidding.
As for Marriott buying it only to sell it - this is true but Marriott does not sell timeshares on EBay or any other "resale market". 
They only sell timeshares in "developer market" where prices are set arbitrary by the developer (and not in any other market force) and most of the market participants in this market are participants that do not have enough market/pricing info.
So ROFR buy transfer supply from "resale market" to "developer market" (when Marriott was selling weeks), now if Marriott exercise ROFR week is totally removed from "resale market" and moved to point inventory and sold as a completely different product again on another "developer market".
And I would not even call "developer market" a real market since it is so far from the "perfect marketplace" that in my opinion does not even deserve to be called "market". Term "market" imply trading place where there is a free information about underlying commodity traded (hence strict disclosure laws and punishments against "insider trading") and prices are set by market forces (supply and demand) and none of this describes how Marriott (or any other developer currently sell timeshares). Even legislators recognize how far from the real market is the way timeshare developers sell their products so they fell compelled to help customers with rescission laws. How many other products do you know that have mandatory rescission period in each state?
All that said ROFR does not rise the prices as much as open bidding from developer will and that is why developers use it so much but to say that it doesn't rise prices when it is exercised frequently is pure bunk. Anything that decreases supply without affecting demand raise prices. The real value of ROFR to developers comes from ability to hide real (higher) price at what commodity can be bough on the market and that is the reason why it rise prices slower than open bidding. On the open bidding everyone sees the "winning/prevailing" price but with ROFR only developed know what is the real threshold at which he will not exercise that "call option" so it is another method of removing relevant market information from market participants in "resale market" which functions much closer to normal marketplace.




windje2000 said:


> An ROFR buy is distinguishable from other buys because Marriott did not have to outbid the genuine auction bidder/winner to win the deal.  Moreover, the 'real' bidder did not have the chance to further raise his or her bid to exceed what Marriott paid.  That affects prices realized by sellers.
> 
> Moreover, Marriott is not an end user of timeshare.  It is a seller/reseller of timeshare.  That occupancy will end up back in the market sooner rather than later.
> 
> ...


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## mstoyanov (Feb 22, 2011)

Dan,

The reason why mandatory Vistana Villages sections are not up to previous prices is that what happened there was a rude awakening to many people what may happen to any timeshare and why timeshares has nothing to do with true real estate where cost can be controlled/fixed long term. 
As we discussed in earlier thread in Starwood section I almost bought 2BR-LO SVV for $1k after the prices dropped for the Staroptions but after serious thinking it I decided if my goal is to book Harborside with Staroptions this can easily be changed/totally removed one day by Starwood. Instead I bought EOY WKORV thinking that even if one day Starwood and SVN totally disappear it is much easier to make a direct exchange with Harborside owner. And no - I will not buy timeshare in HRA despite that this is where I want to go and prices are very cheap - MFs are already crazy there and I do not want to own something in foreign country with completely different laws that is very difficult to transfer. So I chose the second most secure way to ensure good chance to obtain summer reservations since a lot more HRA owners will have desire to exchange to Maui than Orlando. 



DanCali said:


> Unfortunately, timeshare prices are quite sticky on the way down... It'll be very hard for them to recover.
> 
> Take for example a resort from the Starwood collection - Sheraton Vistana Villages in Orlando (Phases 1 and 2). This is a "mandatory" resort which means a resale buyer can trade internally using Staroptions (timeshare points). In late 2009, a 2BR non lockoff was selling for around $5K on eBay. Maintenance fees then were around $1000. With the 81K Staroptions, an owner could reserve a 1BR in Hawaii (usually available any week at 8 monts out) or a dedicated 2BR at Harborside in the summer (hard to find) or maybe 10 or 11 days in a 1BR at Harborside in the summer. $1K in Mfs for an Orlando timeshare is steep, but the trading value was there.
> 
> Then in 2010 maintenance fees went up by 35% due to delinquencies (MFs of $1300+) and resale values declined to $1K or less. Over 2010 Starwood got its act in order and in 2011 MFs went down to $1100 or so, much closer to 2009 levels than 2010 levels. But resale values hardly budged... they are still at 2010 levels. Assuming MFs stabilize, this resort actually now offers great value for a buyer (I don't own there) - but timeshare prices don't move up easily...


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## Fredm (Feb 24, 2011)

windje2000 said:


> The better the deal one gets as a bidder, the more likely it is to be snatched by the option or ROFR holder.  That simply can't help a seller get the best price for the asset in a sale, as *the existence of the option probably reduces the universe of potential willing buyers (bidders) who can't be bothered going through the process of winning . . . and then losing.*



According to this Discussion Paper, that is exactly what happens.


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## OldPantry (Feb 24, 2011)

Fredm said:


> According to this Discussion Paper, that is exactly what happens.


Yes, I think there's a concensus that a regular exercise of ROFR will have the effect of reducing willing bidders and soaking up some portion of available inventory, thus reducing supply.  This would tend to move resale prices up.  For timeshare owners, it would be a two-edged sword: they would only get Marriott's version of the "right" price, but that price might still be well above the "natural" (non-manipulated) price.  For a third-party buyer, the ROFR is a clear negative, and potentially discouraging.  
However, Marriott's secret floor price might still be desirable from a buyer's perspective.  Once he or she has an idea what that is (through their own experience, or talking to brokers who are watching the trends), they might find it worthwhile to bid a bit above the floor.  You can be sure that the floor price will still be at a huge discount to the original developer price (or the comparable price in VC points).  More to the immediate point, Marriott isn't ROFRing at all right now.  The best offerings bear a fruitful relationship to rentals at many resorts.  You don't have to worry about Marriott/Spinco snatching your purchase away.  I'd call that a pretty big opportunity.


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## mstoyanov (Feb 28, 2011)

Fredm said:


> According to this Discussion Paper, that is exactly what happens.



Ok, I am getting really tired of this paper being cited each time there is a ROFR discussion even though this paper has ABSOLUTELY NO RELEVANCE to the timeshares.
So lets kill the notion that this paper has any such relevance to the timeshares with ROFR once and for all hoping that anybody who cites it again will bother to read it and try to understand it first.
The whole premise on this paper that somehow ROFR drives buyers out are following 3 "theories" on page 18, 19 and 20. So lets how these relate in anyway to the timeshares:

1st point (pg 18) - "Search and Negotiation Costs" - basically the premise is that since buyer will have to spend significant upfront costs in search and valuation of the property the possibility of ROFR exercise will leave buyer dry with these costs incurred this will lead to fewer buyers willing to risk involving such costs. Ok, while there may be some real and substantial cost involved in buying true real estate or business unit - i.e. appraisal, inspections, financial audit (in the case of business unit) absolutely NONE of this applies to timeshare. My whole "expense" in searching resale timeshares are the 5 minutes of my time to place and monitor "automated search" in EBay and 10 seconds it takes me to place snipe on the auction. To even think that anybody is scared of losing 5 minutes of his time to search and buy timeshares in case ROFR is exercised is absurd. Yes having your great deal being taken by the ROFR does have some "emotional price" - as I have experienced it myself but that not only did not discouraged me but rather motivated me to dig harder to get the next such deal. It also motivate some people to raise their prices which is contrary to the whole paper conclusion. 

2nd point(pg19) - "Insider Idiosyncratic Value" argues that there may be some intrinsic value that makes object of the ROFR more valuable to the holder of that ROFR rather than the general bidding public. While this may be true for the real estate (value of your neighbor land may be higher to you than to a stranger) or business enterprise (like independent company that is GM supplier is more valuable to GM than to many other companies due to affect on GM product lines) this has absolutely no relevance to timeshare business at all. For timeshare developer a unit for sale is nothing more than inventory. In fact I would argue that it is the opposite - there may be such "Idiosyncratic Value" for the parties that do not have ROFR due to advantages to existing private owners (same unit as the one that private buyer already owns in next/previous week, neighbor unit for the same week, 13 month versus 12 month for Marriott or FSA owners and so on). 

3rd point(pg 20) - "Insider Information Advantage" - this again has no relevance to timeshares at all. It may have some very limited relevance to the true real estate (developer know that may want to build mall or dump close to the real estate)  but it is mainly for the shares in corporations. The value to the developer is what he can resell it for and what cost that this will incur (mostly public info). The only real "insider information" that timeshare developer has is the ROFR levels at which it will exercise.
And if developer is good at hiding that value with randomized exercising this will hide some true market information from market participants and this will lead to slightly less increase of the prices on the resale market compared to the situation where developer will publish ROFR levels openly (which will set a really hard bottom and this is not beneficial for developer since they want great deals as much as we want).

So as we can see none of the fundamentals of this paper actually has any relevance to the timeshare resale prices. On top of that the whole paper is actually pretty weak - it is mostly theoretical exercise with no relevant real life data. The only citation of any data is "based on the circumstantial evidence" and as we all know "based on circumstantial evidence" there are WMD in Iraq.

So next time someone decide to post a link to that paper I will ask him/her to actually read it and post why he/she think this may be related in anyway to timeshare resales. Just because a keyword (ROFR) appear in it that is not enough to infer that it is applicable or even relevant.

The only people that will be removed from the market are the ones that realize that the price at which given timeshare can really be bough is higher than what they expected but this is simple supply and demand issue. ROFR shifted(reduced) supply intersects at demand at higher price than some people are willing to pay.


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