# Marriott Vacations Worldwide Investor Day Presentation-October 4



## JIMinNC (Oct 4, 2019)

Listening to this livestream this morning. In a break right now, so here are a few nuggets from the first two presenters - CEO Steve Weisz and Ovi Vitas, EVP of Brand and Digital.

Weisz

50% of earnings came from vacation ownership sales a few years ago, now sales is only 28% as management and change has become a bigger part of the earnings.
Moving to points has allowed them to create "perpetual sales centers" that sell the system rather than location-based centers that close after sell out. They are never really sold out and it makes low cost inventory re-acquisition more viable as well.
Increasing their anticipated savings from ILG merger to $125 million by end of 2021.
The market is moving away from strict 7 night weekly stays and demand for shorter vacations and more flexible options has ballooned since 2008
II moving to offer shorter stays through Getaways and offering Getaways to non-timeshare owners as rentals.
Vitas

There has been 28% compound growth of online points transactions from 2016 to 2018
Online transactions now account for 40% of total transactions vs. 29% in 2016. Target is >50% by 2022.
The Interval International Mobile App is very highly rated and they hope to leverage that team to vastly improve the mobile experience across all of their brands
Plan to expand Vistana's "Community Planning Tools" across all of the brands.
Will be adding the ability to book sale tour packages online for prospects

More later.


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## JIMinNC (Oct 4, 2019)

News on Future Product Form.

Will be two phases:
1) Link usage between MVC, Westin, Vistana, Sheraton using a common points currency. Lots of legal and technology hurdles, but targeting announcement for mid-late 2020.
2) Will move to selling a single points-based product for all brands. No time frame disclosed. Lots of legal and technology hurdles.

Also new Costa Rica location officially announced with 24 2BR units.

More later.


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## alameda94501 (Oct 4, 2019)

JIMinNC said:


> News on Future Product Form.
> 
> Will be two phases:
> 1) Link usage between MVC, Westin, Vistana, Sheraton using a common points currency. Lots of legal and technology hurdles, but targeting announcement for mid-late 2020.
> ...



I just looked over the Oct 4 investor slide presentation before work, but nothing really on Hyatt / HRC right, Jim? Every slide looked like Hyatt was on its own, but still has World of Hyatt as a membership benefit.


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## JIMinNC (Oct 4, 2019)

alameda94501 said:


> I just looked over the Oct 4 investor slide presentation before work, but nothing really on Hyatt / HRC right, Jim? Every slide looked like Hyatt was on its own, but still has World of Hyatt as a membership benefit.



Correct. The "Future Product Form" they discussed was only for the Marriott Vacation Club, Westin Vacation Club, and Sheraton Vacation Club Brands. All indications are HRC will continue to be operated totally independent from the other brands long-term with World of Hyatt as the loyalty program for that part of their business. This slide clearly shows HRC separated graphically from the others:



 

Lots more information presented on future growth areas/potential locations, but no time to post right now as the second break is almost over. More later.


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## CalGalTraveler (Oct 4, 2019)

JIMinNC said:


> Listening to this livestream this morning. In a break right now, so here are a few nuggets from the first two presenters - CEO Steve Weisz and Ovi Vitas, EVP of Brand and Digital.
> 
> Weisz
> 
> ...



Thanks for summarizing. Very helpful. If you are able to obtain a copy of the slide set, please send along.

"II moving to offer shorter stays through Getaways and offering* Getaways to non-timeshare owners as rentals.*"

This is concerning as one of the benefits of ownership is having access to discounted II stays. This is a devaluation which makes owning less attractive and renting a more viable option.

This movement to grab inventory and rent externally seems to be a trend with all of the TS companies. I am now finding Vistana rentals on Expedia and even the hotel websites for about the cost of MF for many resorts.  Why own when you can rent?

Like the airlines devaluing their points currency to the point that people don't collect points or sign up for their credit cards anymore, the TS companies seem to be on a slower but similar path.

Does anyone know where they make these getaway rentals available to the public?


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## Mcjohan (Oct 4, 2019)

Is this the correct slide set?

http://ir.marriottvacationsworldwide.com/static-files/3d88de06-ad2b-45ef-9c4b-91edaecc2024


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## DannyTS (Oct 4, 2019)

JIMinNC said:


> News on Future Product Form.
> 
> Will be two phases:
> 1) Link usage between MVC, Westin, Vistana, Sheraton using a common points currency. Lots of legal and technology hurdles, but targeting announcement for mid-late 2020.
> ...


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## SteelerGal (Oct 4, 2019)

@alameda94501 Did post the full deck on a Hyatt thread this morning.


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## alameda94501 (Oct 4, 2019)

SteelerGal said:


> @alameda94501 Did post the full deck on a Hyatt thread this morning.



Yes, here it is:

https://tugbbs.com/forums/index.php?threads/marriott-investor-day-presentation-available.296148/


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## CalGalTraveler (Oct 4, 2019)

@DannyTS It could also be interpreted to mean Flex. Don't read too much into this. It's corporate speak.


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## DannyTS (Oct 4, 2019)

thank you @JIMinNC for posting. 
This is the page 85 of the presentation. It seems that MVC, Westin and Sheraton club are on equal basis, that Westin and Sheraton will not be absorbed by the MVC


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## DannyTS (Oct 4, 2019)

CalGalTraveler said:


> @DannyTS It could also be interpreted to mean Flex. Don't read too much into this. It's corporate speak.


I do not think it is Flex since this would disenfranchise the retail owners that bought pre-Flex from the developer.


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## JIMinNC (Oct 4, 2019)

DannyTS said:


> this is suggesting a conversion rate between DP and SO and not a specific number of DP for every Vistana resort. It also appears that the mandatory resorts are the winners. I am curious if the enrollment of the voluntary resorts is still on the table.
> 
> thank you @JIMinNC for posting.
> This is the page 85 of the presentation. It seems that MVC, Westin and Sheraton club are on equal basis, that Westin and Sheraton will not be absorbed by the MVC
> View attachment 14457



They were not specific on what the Future Product Form would look like. There was a comment I partially missed while writing down my notes where Lee Cunningham, COO of Vacation Ownership, did mention something to the effect that they would be leveraging their experience with the Destination Club Points system in connection with his discussion of the "common points currency" that would be developed for introduction in the second half of 2020. If they post a replay or transcript of the presentation, I would love to go back and re-listen to that quote again verbatim, but I didn't pick it up completely because I was frantically writing down what he said about the development of a common points currency.

At this point, I think the term "common points currency" is the most important words we have to dissect. I interpret that to mean that they would create a common point currency across all brands - whether that is based on Destination Club, StarOptions, or something totally new is not clear. But to me, that terminology sounds like a consistent currency across all three brands, not just a conversion ratio. Any new "currency" probably implies some sort of conversion ratio to create that new currency, but since he explicitly used the term "common points currency" I think that implies we may see a more integrated exchange system than just a conversion ratio - a consistent points currency across all three brands. But that's just my interpretation of a probably intentionally vague statement.

Also, the fact that the diagram you posted shows the three current product circles combining into a "Target" single circle, implies a truly consolidated program, not just an overlay, although that might not be truly fully realized until Phase Two - selling a common points product across all brands.


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## DannyTS (Oct 4, 2019)

JIMinNC said:


> They were not specific on what the Future Product Form would look like. There was a comment I partially missed while writing down my notes where Lee Cunningham, COO of Vacation Ownership, did mention something to the effect that they would be leveraging their experience with the Destination Club Points system in connection with his discussion of the "common points currency" that would be developed for introduction in the second half of 2020. If they post a replay or transcript of the presentation, I would love to go back and re-listen to that quote again verbatim, but I didn't pick it up completely because I was frantically writing down what he said about the development of a common points currency.
> 
> At this point, I think the term "common points currency" is the most important words we have to dissect. I interpret that to mean that they would create a common point currency across all brands - whether that is based on Destination Club, StarOptions, or something totally new is not clear. But to me, that terminology sounds like a consistent currency across all three brands, not just a conversion ratio. Any new "currency" probably implies some sort of conversion ratio to create that new currency, but since he explicitly used the term "common points currency" I think that implies we may see a more integrated exchange system than just a conversion ratio - a consistent points currency across all three brands. But that's just my interpretation of a probably intentionally vague statement.
> 
> Also, the fact that the diagram you posted shows the three current product circles combining into a "Target" single circle, implies a truly consolidated program, not just an overlay, although that might not be truly fully realized until Phase Two - selling a common points product across all brands.


you are right, it is to vague to draw a conclusion from this and especially too vague to know how this will change our ownership experience in the future. The only solid thing here is that it confirms once and for all that the products will be integrated in the future.


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## Dean (Oct 4, 2019)

DannyTS said:


> you are right, it is to vague to draw a conclusion from this and especially too vague to know how this will change our ownership experience in the future. The only solid thing here is that it confirms once and for all that the products will be integrated in the future.


Or that there at least will be some type of crossover option.


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## JIMinNC (Oct 4, 2019)

Here are a few more nuggets from the Investor Day that would be of interest to TUGgers on topics *other than* the combined program:

*New Locations and Growth Focus*

Bali Nusa Dua Terraces, located at the Renaissance hotel, opening in 2020
New Marriott Vacation Club at Marriott Los Suenos in Costa Rica to open in 2021. Announced signing agreement to purchase 24 two-bedroom units from their capital light development partner.
Owners and prospects are asking for more city-center, urban vacation destinations, and they plan to focus on providing more urban locations to meet the customer demand for these locations. _My read - more Pulse locations will be coming._
Hawaii remains a top-requested destination, so they want to continue to offer more options there. Specifically mentioned Waikiki and the Big Island. Hawaii locations also help their Asia-Pacific division, which is a major focus (see below). _My read - maybe a Pulse in Waikiki and perhaps they will eventually convert Marriott Waikoloa to 100% timeshare (just a guess)._
Beach and Caribbean locations generally run at full capacity, so they will continue to look at any cost-effective opportunities in these kinds of locations.
Asia-Pacific will be a major focus for growth, with Japan, Okinawa, and Thailand as a focus.
Focus on conversion of existing assets for cost-effective growth.
Sales inventory will be generated 67% from new development and 33% from repurchases
Currently just over two years worth of points inventory on hand in their various programs for sale; target is 1.5 to 2 years. The current slight excess is primarily driven by excess inventory they acquired from Vistana.
*Repurchases*

Their target is spending $80 million to $85 million per year on repurchased inventory (ROFR, buy-backs, foreclosure, etc)
All repurchases go directly to fund their points for sale inventory and represent a below-market way to acquire inventory at a low cost and help them meet their target of inventory cost of 25% of sales.
CEO Weisz said they have been more aggressive in repurchases than most others in the industry, and they made a strategic decision ten years ago to be very active in the repurchase market. They intentionally structured their Land Trust to be able to accept individual weeks rather than requiring an entire unit to be deeded into the Trust (some other Trusts are structured to require full units). That was an intentional design decision to facilitate low-cost repurchases.
Weisz said repurchases are a win-win. For owners, it provides an easy way out of their ownership when they have life changes, and often they can exit with a check in their pocket. For MVW, they get inventory to sell at a cost that is well below the development replacement cost.
*The Resale Market*
During the Q&A, there was a question about why the resale market for their products is not more robust. Steve Weisz replied with several factors that cause the resale market to be difficult:

He said they encumber sales through their right to exercise ROFR when someone is selling at an attractive price. They can step in and replace the buyer in the transaction.
Certain product usage rights don't convey to resale owners, and that is an intentional product design to give them more control over the value proposition and price they can charge.
It's not easy to sell timeshares, so without a integrated sales model for resales, it becomes very hard for people to resale in the fragmented resale market. It's hard to just "put something on eBay and sell it" he said.
They monitor the resale market 24 hours a day
Every few years they turn on a more aggressive repurchase program to "clear out the market."
*Target Markets and Sales*

Their target market is households with a median household income of $130K and a median net worth of $1.5 million.
Vistana had some sales programs targeting families with incomes in the $50K to $75K range and that negatively impacted Vistana's close rate on those prospects, so MVW is terminating those programs and waiting for the remaining tour packages to be redeemed, then they will no longer market to these segments.
Their sales are 57% to Baby Boomers and 33% to Millennials and Gen-X
Gen X buyers are now outpacing Baby Boomers in average Volume Per Guest (a measure they use that averages close rate and dollar size of the sale). They said that is because the Gen X segment is age 39-55, which is the prime life-stage for their product.
Millennials are still not a major contributor since the oldest is 38, and Millennials are marrying later and buying homes later. They feel they will eventually move into their target market, but may want different, more flexible products than Boomers and Gen X. They are working on new "short-term products" and "membership programs" that will have a lower cost of entry and may be more attractive to Millennial lifestyles. No definition of what those were.
They will be using advanced analytics and machine learning to target their tour packages, incentive offers, and sales approach. Not every owner or prospect will get the same offer or sales pitch. They are mining their data on how owners use their ownership to better target them for sales.
A typical $30K initial sale of a vacation ownership interest will generate $60K of total revenue for MVW over the first five years. That additional $30K comes from: $20K of additional purchases, $6K in financing revenue, and $4K in management fees, ancillary rental, etc.
New owners sales growth was 13% from 2016 to 2018, outpacing growth of sales to existing owners.
Consistent 91% guest satisfaction scores since 2014.
It takes $0.50 in sales and marketing to generate $1 of vacation ownership sales.
Consumer confidence in the US has a high correlation to sales close rates. As confidence falls, so do close rates. But they have tools like "better first day benefits" and "pricing strategy" to counter downturns to some extent. But they added that owners will still use their "paid for" units, even during a recession, and their target market segments generally are not impacted by a typical recession as much as lower tier segments might be impacted.
*Interval International and Exchange *

They view Interval International and their Management and Exchange business as a stable revenue stream that does not decline during economic downturns. From 2007 through 2010, II member revenue was very stable despite GDP per capital falling precipitously during the Great Recession.
Interval wants to leverage its product portfolio to reach new customers, including non-timeshare owners, through non-exchange products and memberships. The example they used was their Leisure Time Passport that is being marketed to Planet Fitness members to allow them to access excess II inventory
There is 93% utilization of Interval International Inventory through either exchange or rental.
II has 88% member retention since 2014.
About 57% of all Exchange and Getaway transaction are now handled through digital channels
The Interval mobile app is highly rated and that development team will be leveraged throughout MVW to enhance the mobile experience.


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## JIMinNC (Oct 4, 2019)

Dean said:


> Or that there at least will be some type of crossover option.



I went back and looked in more detail at the cryptic notes I scribbled when they were discussing the "New Product Form" and I may have a little more color/insight. So let me edit my original text from post #2 here. Just a couple minor additions, but they may be instructive:

*New Product Form*
They said their integrated product will be made a bit easier because Marriott, Westin, and Sheraton were all operating with points-based programs. While the conversion will still be complex, that makes it a bit easier. There will be two phases:

1) Phase One will be linking usage between MVC, Westin, Vistana, Sheraton using a "common points currency". Lots of legal and technology hurdles, but targeting announcement for mid-late 2020.
2) Phase Two will move them to selling a single points-based product for *all* three brands. No time frame disclosed. Lots of legal and technology hurdles.

In the meantime, until the single points-based product is developed, they will continue to grow resorts and sales for all brands.

---

So, after going through this again, my interpretation is Phase One will be some sort of linkage, in the form of a "common points currency" of some sort, that will facilitate cross-booking between the Marriott, Westin, and Sheraton vacation clubs, but each "club" will continue to sell their individual programs to some degree. I think the term "linkage" is key - the programs will be linked through some common currency that is TBD, but not truly consolidated.

Then, at some undetermined point after 2020, they will develop a truly consolidated points product for the entire company.

That's my 2-cents.


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## DannyTS (Oct 4, 2019)

JIMinNC said:


> I went back and looked in more detail at the cryptic notes I scribbled when they were discussing the "New Product Form" and I may have a little more color/insight. So let me edit my original text from post #2 here. Just a couple minor additions, but they may be instructive:
> 
> *New Product Form*
> They said their integrated product will be made a bit easier because Marriott, Westin, and Sheraton were all operating with points-based programs. While the conversion will still be complex, that makes it a bit easier. There will be two phases:
> ...


too bad there was no TUGger there to ask more precise questions. The devil of course is in the details and we are no further in our guess game about how each program (MVC and the 3 Flex plus the VSN) will access inventory of the other programs


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## TXTortoise (Oct 4, 2019)

JIMinNC said:


> Here are a few more nuggets from the Investor Day that would be of interest to TUGgers on topics *other than* the combined program:
> 
> *New Locations and Growth Focus*
> 
> ...


Awesome summary.  Thanks


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## controller1 (Oct 4, 2019)

TXTortoise said:


> Awesome summary.  Thanks



Agree.  Great summary @JIMinNC THANKS!


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## Fasttr (Oct 4, 2019)

Jim....the bigger question, are you buying, holding or selling VAC stock??  ;-)


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## StevenTing (Oct 4, 2019)

After reading all of this and the language about a common point currency, this leads me to believe there will be a big amnesty period where all resales post 2010 will be put into the new system.  Anyone else get the similar vibe?  

With Westin/Sheraton going to a new point system, seems only natural to include the rest of the Marriott weeks as well, regardless of status.  The big question will be to see if they try to monetize this access to the common point currency.  Charge too much and owners will balk, especially Marriott owners that may have already paid a fee.  Charge nothing and they'll see rapid adoption and see point/reservation activity increase.


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## mjm1 (Oct 4, 2019)

JiminNC, thank you for listening and sharing your notes and insights. I had hoped to listen, but just couldn't get up early enough (5am PT). So, another 9-12 months of speculation regarding what they will develop. At least we do know that they are working on linkage of the programs and ultimately a combined program. It will be interesting to see what the sales people will have to say during their presentations. Of course, they won't know any more than we do. Fun times!

Best regards,

Mike


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## SteelerGal (Oct 4, 2019)

Thanks @JIMinNC .  I always look forward to your insight.


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## teddyo333 (Oct 4, 2019)

Thank you @JIMinNC. The summary was very helpful. I wonder if this will cause an increase in the resale prices for Vistana Mandatory resorts.


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## VacationForever (Oct 4, 2019)

My own speculation is that all Flex points owners and all MVC Destination Club enrolled weeks and points get automatic access/enrollment into the "future product form".  All other ownerships may get enrolled by buying varying number of points in the new system, based on a scale of current ownership, to play in the "future product form"


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## DannyTS (Oct 4, 2019)

the audio can be listened to here (after registration)
https://livestream.com/ICENYSE2/marriottwebcast

the part that refers to the integration is at 1:44:33 slide 85


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## DannyTS (Oct 4, 2019)

VacationForever said:


> My own speculation is that all Flex points owners and all MVC Destination Club enrolled weeks and points get automatic access/enrollment into the "future product form".  All other ownerships may get enrolled by buying varying number of points in the new system, based on a scale of current ownership, to play in the "future product form"


Flex is a new program. They cannot disenfranchise some of their best Vistana owners because they happened to buy 10 or 3 years ago rather than last year. Additionally, the Flex inventory is so limited it would be a drop in the ocean for the big MVC family. I rather think it is going to be Staroptions.


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## DannyTS (Oct 4, 2019)

From what i hear in the presentation, some locations will continue to sell what they have been selling even after the integration: Caribbeans, Mexico, etc.; they mention that they will be able to sell the new integrated points system _almost everywhere_ in North America.


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## JIMinNC (Oct 4, 2019)

Fasttr said:


> Jim....the bigger question, are you buying, holding or selling VAC stock??  ;-)



I bought back in mid-August at $85. Now almost $103. Been as high as $110 in the last few weeks. One analyst opined he thought the stock was still undervalued, and of course management agreed!


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## JIMinNC (Oct 4, 2019)

DannyTS said:


> the audio can be listened to here (after registration)
> https://livestream.com/ICENYSE2/marriottwebcast
> 
> the part that refers to the integration is at 1:44:33 slide 85



Thanks for the link to the archive. Here is the verbatim quote from Lee Cunningham, EVP and Chief Operating Officer:

*"One of the greatest attributes of our acquired brands is that they too sell a points-based product. Given that our three largest vacation ownership brands in North America - Marriott Vacation Club, Sheraton Vacation Club, and Westin Vacation Club - are all licensed from Marriott International, we have a great opportunity to enhance the overall value of these products by linking them together to benefit our owners. We see this evolution occurring in two steps.

The first step will be to link usage by owners of these brands in a seamless fashion using a common points currency. As you might imagine, there are numerous usage rules and technologies that need to be integrated to achieve that objective. We hope to be in a position to announce and deliver this first step some time mid-to-late next year.

The second step of the evolution will be to transition to selling a single points-based product that is able to accommodate nearly all of the Marriott, Sheraton, and Westin resorts in North America. Not only will this be a win for our owners, providing them with additional usage options and enhanced flexibility, it will enable us to better leverage the capital efficient nature of our legacy MVC points program that Lani will speak to shortly.

Again, there are numerous technology, legal, and product hurdles to overcome prior to taking this step. However, the business and customer benefits of consolidating to a single product for the Marriott-licensed portion of the North America vacation ownership business definitely makes the journey worthwhile.

In the meantime, we will continue to grow our network of resorts and sales centers for all brands to help fuel our longer term growth targets."
*
So that's it, word-for-word. Parse and dissect however you see fit.

For my part, for Step 1, I think the key phrase is *"link usage by owners of these brands in a seamless fashion using a common points currency."* I think the word "seamless" might be a key one. What option would be the most seamless?

For Step 2, the key phrase may be "*able to accommodate nearly all of the Marriott, Sheraton, and Westin resorts in North America." * That would imply maybe some international resorts might not be accommodated in the new product (although presumably they would be part of the Step 1 common currency). That may just be a reflection of not being able to put some international locations into a Trust.

Also, not sure what significance there might be to "*enable us to better leverage the capital efficient nature of our legacy MVC points program". *Could that mean the current MVC Trust points structure will be the surviving common product in Step 2?


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## dioxide45 (Oct 4, 2019)

So without actually reading all 30+ posts, I take it we know very little more today than we knew yesterday?


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## dioxide45 (Oct 4, 2019)

DannyTS said:


> Flex is a new program. *They cannot disenfranchise some of their best Vistana owners *because they happened to buy 10 or 3 years ago rather than last year. Additionally, the Flex inventory is so limited it would be a drop in the ocean for the big MVC family. I rather think it is going to be Staroptions.


They certainly can, but will they?


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## JIMinNC (Oct 4, 2019)

dioxide45 said:


> So without actually reading all 30+ posts, I take it we know very little more today than we knew yesterday?



Not really. We know more. We now know they are developing a common currency to link MVC, Westin, and Sheraton that will provide “seamless” access to all three brands for owners, and the target is mid-to-late 2020. We also now know their ultimate goal is to sell one common points product that will encompass all three brands. No timeframe given for that second phase.

See the post right before yours for the verbatim statement, and you can draw your own conclusions.


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## DannyTS (Oct 4, 2019)

dioxide45 said:


> They certainly can, but will they?


Well you are right, they _can_. I did not mean that it is not in their ability to do so but rather they cannot do something that does not make sense and it will alienate such a big percentage of the owners. Time will tell.


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## GregT (Oct 4, 2019)

Jim,

That's very interesting, thank you for posting this.  As Dioxide45 has noted, nothing here is actionable, but I think that's more because it's so cumbersome to combine all of these (or they would have already).   It's interesting that they are announcing a common currency to link all systems -- not sure what to think of that.  I don't know if it's a SuperCharged Trust Point (that you have to buy) or the traditional Trust Point that we've become familiar with.

Very interesting -- but I appreciate your patience and diligence in posting this....

Best,

Greg


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## VacationForever (Oct 4, 2019)

DannyTS said:


> Flex is a new program. They cannot disenfranchise some of their best Vistana owners because they happened to buy 10 or 3 years ago rather than last year. Additionally, the Flex inventory is so limited it would be a drop in the ocean for the big MVC family. I rather think it is going to be Staroptions.


But Flex is the points program which they are selling, not staroptions.  Integration is planned around the points program, i.e. Westin and Sheraton Flex points and MVC trust points.


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## DannyTS (Oct 4, 2019)

VacationForever said:


> But Flex is the points program which they are selling, not staroptions.  Integration is planned around the points program, i.e. Westin and Sheraton Flex points and MVC trust points.


Flex is not mentioned anywhere in the presentation. They only mention Westin Club and Sheraton Club. As we know, Vistana has had a points system from the very beginning, Staroptions. It is not relevant to me what they are selling now. 
In Aruba, Europe etc MVC still sells weeks if I am not mistaken. It just does not matter IMO


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## CalGalTraveler (Oct 4, 2019)

DannyTS said:


> Flex is not mentioned anywhere in the presentation. They only mention Westin Club and Sheraton Club. As we know, Vistana has had a points system from the very beginning, Staroptions. It is not relevant to me what they are selling now.
> In Aruba, Europe etc MVC still sells weeks if I am not mistaken. It just does not matter IMO



It sounds like they didn't mention staroptions either.

@JIMinNC thanks for the detailed notes. I believe there are many interesting datapoints to dissect here beyond the points integration story.


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## Dean (Oct 4, 2019)

Yes, thanks Jim for ALL the information, most helpful and most appreciated.





StevenTing said:


> After reading all of this and the language about a common point currency, this leads me to believe there will be a big amnesty period where all resales post 2010 will be put into the new system.  Anyone else get the similar vibe?
> 
> With Westin/Sheraton going to a new point system, seems only natural to include the rest of the Marriott weeks as well, regardless of status.  The big question will be to see if they try to monetize this access to the common point currency.  Charge too much and owners will balk, especially Marriott owners that may have already paid a fee.  Charge nothing and they'll see rapid adoption and see point/reservation activity increase.


Personally I still think that either it will be tied to the DC/Trust system in some way or as a minimum that the higher DC/Trust levels will be grandfathered in if it's a new additional layer.  Time will tell.


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## jabberwocky (Oct 4, 2019)

DannyTS said:


> Flex is a new program. They cannot disenfranchise some of their best Vistana owners because they happened to buy 10 or 3 years ago rather than last year. Additionally, the Flex inventory is so limited it would be a drop in the ocean for the big MVC family. I rather think it is going to be Staroptions.



VAC probably won't see it as disenfranchising anyone, instead it is giving them the "opportunity" to upgrade to the shiny new system.  

I remember when we did our first owner's update just a couple years after we bought our developer unit and they were rolling out Sheraton Flex.  I think the sales pitch for the "new" product will be very similar ("no availability with StarOptions, everything will be booked by owners of the new BonOptions...blah...blah...blah")


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## DannyTS (Oct 4, 2019)

jabberwocky said:


> VAC probably won't see it as disenfranchising anyone, instead it is giving them the "opportunity" to upgrade to the shiny new system.
> 
> I remember when we did our first owner's update just a couple years after we bought our developer unit and they were rolling out Sheraton Flex.  I think the sales pitch for the "new" product will be very similar ("no availability with StarOptions, everything will be booked by owners of the new BonOptions...blah...blah...blah")


Thank Lord this is not a problem I have since I only own resale. Yet I know I would be extremely mad If I had paid $150k to buy from Vistana 5 years ago and they would tell me that I had less rights than someone who paid 10k last year. This is not good business sense IMHO and I would be shocked, truly shocked if they came up with such a scheme.


----------



## VacationForever (Oct 4, 2019)

DannyTS said:


> Flex is not mentioned anywhere in the presentation. They only mention Westin Club and Sheraton Club. As we know, Vistana has had a points system from the very beginning, Staroptions. It is not relevant to me what they are selling now.
> In Aruba, Europe etc MVC still sells weeks if I am not mistaken. It just does not matter IMO


Westin Club and Sheraton Club are specific to Flex.  They won't and cannot change staroptions structure for the 5 mandatory resorts.  For the other developer voluntary weeks that were sold, there is specific language that SVN club enrollment can be altered or disenrolled.  I suspect that deveoper purchased weeks will be given an option to convert or enroll into the future product form.


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## DannyTS (Oct 4, 2019)

VacationForever said:


> Westin Club and Sheraton Club are specific to Flex.


If you google Westin vacation club you will find mentions that proceed the Flex programs by many, many years


----------



## Superchief (Oct 5, 2019)

GregT said:


> Jim,
> 
> That's very interesting, thank you for posting this.  As Dioxide45 has noted, nothing here is actionable, but I think that's more because it's so cumbersome to combine all of these (or they would have already).   It's interesting that they are announcing a common currency to link all systems -- not sure what to think of that.  I don't know if it's a SuperCharged Trust Point (that you have to buy) or the traditional Trust Point that we've become familiar with.
> 
> ...


I attended a sales presentation at Mountainside a few weeks ago. It was probably the best one I've had. The rep had reviewed our portfolio and tailored his presentation to our situation. We have 1500 trust points and are chairman level. He indicated we will be in good shape with the new system because the point values/requirements for the Sheraton/Westin properties would likely be matched to similar ones with MVC. He believes we will be able to access these new properties since we already own trust points. He did say that chairman level will likely rise to 17000 points, but we are grandfathered in so it won't impact us. I actually learned a lot and he learned a lot, so it was a worthwhile experience for both. He made no promises, but believed what he told us based on currently available information.


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## Dean (Oct 5, 2019)

DannyTS said:


> Thank Lord this is not a problem I have since I only own resale. Yet I know I would be extremely mad If I had paid $150k to buy from Vistana 5 years ago and they would tell me that I had less rights than someone who paid 10k last year. This is not good business sense IMHO and I would be shocked, truly shocked if they came up with such a scheme.


If you're expecting the Vistana/Westin/Hyatt owners to be on equal footing going forward with any new version or options, I think you'll be truly shocked.


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## DannyTS (Oct 5, 2019)

Dean said:


> If you're expecting the Vistana/Westin/Hyatt owners to be on equal footing going forward with any new version or options, I think you'll be truly shocked.


so what should I expect?


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## Dean (Oct 5, 2019)

DannyTS said:


> so what should I expect?


My personal opinion is that the higher level MVC owners will be in a better position comparatively than any of the acquired systems. I think it likely that the highest levels of MVC will be grandfathered to any new system or crossover option.  I doubt this will be the same for anyone from the other systems.  How much discrepancy is the question as I see it.  It's not that they want to alienate but they do want to extract $$$ going forward.  I think the most likely for any super system is that that they will raise the limits on various levels, grandfather at least the 2 highest levels with MVC and do add purchase inclusion for the rest.  At some point going forward they will likely tie any unified system to the Marriott Trust though they may rename it.  And I do not see this as unfair given the specifics of the situation though I'm sure some will.  YMMV.


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## echino (Oct 5, 2019)

Sounds like the common points currency will be the existing Marriott points. Vistana owners will likely be given an opportunity to enroll.


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## DannyTS (Oct 5, 2019)

Dean said:


> My personal opinion is that the higher level MVC owners will be in a better position comparatively than any of the acquired systems. I think it likely that the highest levels of MVC will be grandfathered to any new system or crossover option.  I doubt this will be the same for anyone from the other systems.  How much discrepancy is the question as I see it.  It's not that they want to alienate but they do want to extract $$$ going forward.  I think the most likely for any super system is that that they will raise the limits on various levels, grandfather at least the 2 highest levels with MVC and do add purchase inclusion for the rest.  At some point going forward they will likely tie any unified system to the Marriott Trust though they may rename it.  And I do not see this as unfair given the specifics of the situation though I'm sure some will.  YMMV.


Again, I am a poor resale owner so I do not have a dog in this fight. But my expectation is for the Vistana owners and the MVC owners to have similar status based on the number of points they own in the common currency even if their points come solely  from converting their Staroptions. The clear clue IMO is that they are talking about increasing the number of DC points needed for each level because of the Vistana integration so clearly they are expecting the Vistana ownership to count. Of course they can also grandfather some MVC owners that would no longer qualify but that does not change the big picture of equal rights, again IMO


----------



## Dean (Oct 5, 2019)

DannyTS said:


> Again, I am a poor resale owner so I do not have a dog in this fight. But my expectation is for the Vistana owners and the MVC owners to have similar status based on the number of points they own in the common currency even if their points come solely  from converting their Staroptions. The clear clue IMO is that they are talking about increasing the number of DC points needed for each level because of the Vistana integration so clearly they are expecting the Vistana ownership to count. Of course they can also grandfather some MVC owners that would no longer qualify but that does not change the big picture of equal rights, again IMO


One thing's for certain, it's going to be interesting the next year or 2.  And we'll have other opportunities to have this discussion I'm sure.  But I do expect it to be Marriott Trust/DC centric no matter the specifics.  And there's no way to make an omelet without scrambling a few eggs so I'm sure some will be upset just like some were upset with the Trust/DC system when it rolled out and frankly, I think some still are.


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## DannyTS (Oct 5, 2019)

Dean said:


> One thing's for certain, it's going to be interesting the next year or 2.  And we'll have other opportunities to have this discussion I'm sure.  But I do expect it to be Marriott Trust/DC centric no matter the specifics.  And there's no way to make an omelet without scrambling a few eggs so I'm sure some will be upset just like some were upset with the Trust/DC system when it rolled out and frankly, I think some still are.





Dean said:


> One thing's for certain, it's going to be interesting the next year or 2.  And we'll have other opportunities to have this discussion I'm sure.  But I do expect it to be Marriott Trust/DC centric no matter the specifics.  And there's no way to make an omelet without scrambling a few eggs so I'm sure some will be upset just like some were upset with the Trust/DC system when it rolled out and frankly, I think some still are.



they brag that 90% of the owners are happy so it must mean something to them. I also have to point out that the earnings that come from selling VOIs are diminishing in importance (28% in 2018 vs 42% in 2017) so clearly keeping the existing owners happy is paramount. I expect that trend to continue and the sales force to diminish its influence in the future.


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## Fasttr (Oct 5, 2019)

DannyTS said:


> I also have to point out that the earnings that come from selling VOIs are diminishing in importance (28% in 2018 vs 42% in 2017) so clearly keeping the existing owners happy is paramount. I expect that trend to continue and the sales force to diminish its influence in the future.



That change is merely due to the II exchange earnings now being part of the equation.  There is not a lot of growth in that.  Growth comes from point sales.  The importance of the sales force will not diminish, instead it will become more important as a way to move the earnings needle.


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## dioxide45 (Oct 5, 2019)

Fasttr said:


> That change is merely due to the II exchange earnings now being part of the equation.  There is not a lot of growth in that.  Growth comes from point sales.  The importance of the sales force will not diminish, instead it will become more important as a way to move the earnings needle.


ILG also had several other management arms to it, Trading Places, VRI, Aqua Aston. That is why the big difference in the pie chart today vs a couple years ago. It like comparing apples to oranges.

Aqua Aston seems like an odd fit here. Should MVC really be in the hotel management business? I suspect they will try to sell this off, but who knows.


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## VacationForever (Oct 5, 2019)

DannyTS said:


> Again, I am a poor resale owner so I do not have a dog in this fight. But my expectation is for the Vistana owners and the MVC owners to have similar status based on the number of points they own in the common currency even if their points come solely  from converting their Staroptions. The clear clue IMO is that they are talking about increasing the number of DC points needed for each level because of the Vistana integration so clearly they are expecting the Vistana ownership to count. Of course they can also grandfather some MVC owners that would no longer qualify but that does not change the big picture of equal rights, again IMO


A poor resale owner has a lot in the dog fight, in the hopes that resale owners get to play in the new sandbox as other direct purchase owners.  The reality is that any timeshare system will first take care of owners who have paid money directly to them first.  They will also find creative way for resale owners to pay substantial money to get their ownership accepted in the new system.


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## JIMinNC (Oct 5, 2019)

dioxide45 said:


> Aqua Aston seems like an odd fit here. Should MVC really be in the hotel management business? I suspect they will try to sell this off, but who knows.



It definitely seems like an odd fit, but the comments management made yesterday, and have said previously in earnings calls, seems to indicate they like the more predictable revenue stream that comes from the broader management business. I could see them selling it as a non-strategic asset if an attractive offer came along, but I could also see them keeping it as a small hedge against economic slowdowns.


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## Dean (Oct 5, 2019)

DannyTS said:


> they brag that 90% of the owners are happy so it must mean something to them.


Important to a point but they also realize that you can't make everyone happy and stirring the pot a little is often good business.  I've seen this idea that the timeshare company has to cater to the owners and keep them happy but it really only comes from the owners side.  I've seen Marriott and DVC over the years push that envelope.  I've seen empty threat's and predictions of class action lawsuits and similar around this issue as well.  IMO Marriott's history has already proven they are willing to accept a certain amount of negative reaction from owners and likely have used it to their advantage in the sales process and I have no doubt they will do the same in this area.  When they rolled out the Trust/DC system there was a lot of negative reaction, I have no doubt there will be some repeat.  Still, I suspect one can still have what they have already and one of my life's mantra's is that someone else's gain is not my loss.  We'll see.


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## DannyTS (Oct 5, 2019)

@VacationForever and @Dean

every time I look at that sandbox it is rather empty from a value prospective. Flexibility matters but it just can't compare with the bargains that can be found in Interval.
I was referring to the Vistana owners who bought directly from the developer that they should be on equal terms with MVC. I guess that the timeshare  sales reps thinks the company revolves around them but all I was saying was that now a good chunk of the earnings come from other departments, I am sure that others have a seat at the table as well when they make decisions. Companies like growth but they also like stability in the case of adverse economic conditions and Marriott understands the diversity of revenue very well.

As a company that earns a lot from managing the resorts, why would they not treat their owners well regardless of how they joined the club? If you buy a condominium in a complex will the neighbors and the management put you on a different list because you did not buy from the developer? This is absurd and retail owners buy this BS to their own detriment since part of the loss of ownership value is due to the attitude you are referring to. End everyone has to exit... eventually.
I am looking at my ownership, all resale. Between the annual MF and what I buy at the resorts (restaurant, food etc)  I will easily $100k in the next 10-15 years. Is my money not good for MVC? Why me spending an additional $10k-$20k to requal some should change my standing so dramatically?


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## Dean (Oct 5, 2019)

DannyTS said:


> As a company that earns a lot from managing the resorts, why would they not treat their owners well regardless of how they joined the club?


But the reality is that there are different definitions of treating them well.  They don't have to make them happy where they sit but rather make them want the new option enough to get them to pay for it.  And timeshares do treat retail and resale owners differently and truthfully more and more so over the last decade or so for all of the points systems that I have some awareness off.  My guess is they'll try to make them uneasy but not completely unhappy but we'll see.


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## DannyTS (Oct 5, 2019)

Dean said:


> But the reality is that there are different definitions of treating them well.  They don't have to make them happy where they sit but rather make them want the new option enough to get them to pay for it.  And timeshares do treat retail and resale owners differently and truthfully more and more so over the last decade or so for all of the points systems that I have some awareness off.  My guess is they'll try to make them uneasy but not completely unhappy but we'll see.



so I should probably wear this at the next owners update


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## TheTimeTraveler (Oct 5, 2019)

DannyTS said:


> so I should probably wear this at the next owners update
> 
> View attachment 14470






So where can we buy that shirt ?


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## DannyTS (Oct 5, 2019)

TheTimeTraveler said:


> So where can we buy that shirt ?


I did not order it yet but maybe I should lol. You can create any model and use any text and image

https://www.customink.com


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## VacationForever (Oct 6, 2019)

To add to Dean's post, they do want to differentiate treatment of retail and resale owners to entice potential buyers to buy retail.


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## bazzap (Oct 6, 2019)

Apart from
not having the option to convert Resale weeks to Marriott Bonvoy points, which is no longer appealing anyway
not being able to enrol Resale weeks in the DC points programme, which would be appealing but is an understandable decision
I have experienced absolutely no difference whatsoever in almost 20 years between MVCs treatment of retail and resale owners.


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## DannyTS (Oct 6, 2019)

bazzap said:


> Apart from
> not having the option to convert Resale weeks to Marriott Bonvoy points, which is no longer appealing anyway
> not being able to enrol Resale weeks in the DC points programme, which would be appealing but is an understandable decision
> I have experienced absolutely no difference whatsoever in almost 20 years between MVCs treatment of retail and resale owners.



I did not mean that anybody is rude to the the resale owners or anything like that. Far from it but a lot of features are missing because you cannot enroll. Is this not enough?

They treat resale perfectly well except:

·        You cannot book at any other resort (except through Interval, limited availability)

·        You cannot book more or less than a week.

·        You cannot borrow points; you cannot bank points.

·        You do not have any loyalty status.

·        You cannot convert your VOI  to Bonvoy.

·        You cannot book at 13 months.

·        You cannot arbitrage the value of your VOI to convert to points to _potentially_ rent at a higher value than renting your week.

·        You cannot convert (part of) your VOI to pay for incidentals at the resort.

·        You cannot have a higher discount for your cash reservations (Presidential and Chairman's Club DC Members - 35% off)

·        You cannot have a higher discount for 60 days or less DC points reservations. (Presidential and Chairman's Club Members - 30% discount)

The irony is, the retail owners seem to side in general with the developers even if it greatly reduces the value of their ownership when they sell. The fact that the resale owners cannot enroll also reduces the DC inventory (especially at certain locations) and I do not see how this is beneficial to the retail owners. 

More people paying DC fees is good for the company and probably good for everyone. If 200,000 unrolled owners suddenly pay $200 a year in DC fees, this is 400 million dollars that go straight to the earnings in the next 10 years. If they charge $1k for enrollment it adds another 200 millions to their bottom line right away! Does anyone know what kind of growth, what kind of effort they need to match that from the traditional sales? 
To put things in prospective, they make about 150 millions in earnings from selling VOIs. If they increase their sales by 10% they will earn an additional 15 millions a year. 

I have listened now to most of the Investor Day presentation and the feeling I am getting is that they think BIG and want to go FAST. Not only that their revenue is becoming more and more diversified and less dependent on the sales dept (and they are kind of bragging about that) but they will also benefit most from the digitization of their business and from selling _additional_ products and services if they have the biggest tent possible.

Time will tell. In any case, I am happy that I am in the camp that always said that an integration was coming because it made sense. We do not know more than that but that is at lease of of our way. Despite of what reps and those who were listening to reps were telling us.


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## bazzap (Oct 6, 2019)

DannyTS said:


> I did not mean that anybody is rude to the the resale owners or anything like that. Far from it but a lot of features are missing because you cannot enroll. Is this not enough?
> 
> They treat resale perfectly well except:
> 
> ...



OK, I think I understand what you are saying as it applies to more recent Resale purchases.
All the Resale weeks we purchased before the cut-off dates have been enrolled though, so almost all of the exceptions you list here don’t apply to us and although we don’t own points we do have all the enrolled Owner benefits of the points programme.


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## Dean (Oct 6, 2019)

DannyTS said:


> so I should probably wear this at the next owners update
> 
> View attachment 14470


Sure or ? even better, I can wear my TUG T-shirt.  But does it really make any difference other than if we want to be confrontational with person(s) who have no power to change the system and wouldn't if they could?  Unless you're walking in to the corporate office for a meeting with senior management, it really wouldn't serve any purpose other than possibly making you feel like you've done something when you haven't.  



bazzap said:


> Apart from
> not having the option to convert Resale weeks to Marriott Bonvoy points, which is no longer appealing anyway
> not being able to enrol Resale weeks in the DC points programme, which would be appealing but is an understandable decision
> I have experienced absolutely no difference whatsoever in almost 20 years between MVCs treatment of retail and resale owners.


Yes and no.  I would say in contractual usage they do not treat them differently but there are nuances.  For example, they offer a special phone line and advanced Advisors for Customer Service.  And I've had a few mentions over the years when I had called and even at resorts about being resale.  Nothing big or even uncomfortable but a mention here and there.  



DannyTS said:


> They treat resale perfectly well except:
> 
> ·        You cannot book at any other resort (except through Interval, limited availability)
> 
> ...


I can't speak for non Marriott options but I can for Marriott.  NONE of the options you listed are a function of resale vs retail.  Most are a function of enrollment vs fixed/floating weeks.  You ? can enroll if resale but it is more costly so IF you chose to enroll, they do treat you differently if resale (after X cutoff date) vs retail and they may not give enrollment options to resale in the future at all.  You can book at 13 months if resale if booking concurrent or consecutive weeks.  You can book at other resorts in some situations like the FL club but not the same way as for points.  Loyalty status is a function of enrollment and it really only applies if points usage is involved.  Since none of the rest of this is contractual, but rather added on top, it's their choice.  

Getting more philosophical, the idea that companies treat everyone the same never happens through some are more variable than others.  Companies routinely give discounts to loyal customers or to secure additional business.  They'll open late, early, even off days for some groups (even Sam's/Costco).  Even your physician, dentist, accountant, mechanic (etc) has some variability in how they treat people.  Specific to timeshares we all went in knowing (or should have know) there were certain contractual limitations of the POS.  We knew, or should have known, what was being provided and what was not including things like ROFR.  All this integration and points issue is not contractual and it's unrealistic to think they would give away such services without expecting a return.  

Personally I think there will be reasonable options and that many are gong to be pleased with a combined or next tier product but those who feel that anything short of just giving it to them are going to be disappointed.  And I think that those that fall afoul of whatever cutoff they use to count as qualified vs non qualified are going to be unhappy.  I suspect they'll pull dates of qualification from what they already have in place.  I think even using the merger date is likely optimistic as the cutoff but we'll see.  

It's going to be fun around here for quite some time just like it was following the DC roll out.


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## kds4 (Oct 6, 2019)

DannyTS said:


> Again, I am a poor resale owner so I do not have a dog in this fight. But my expectation is for the Vistana owners and the MVC owners to have similar status based on the number of points they own in the common currency even if their points come solely  from converting their Staroptions. The clear clue IMO is that they are talking about increasing the number of DC points needed for each level because of the Vistana integration so clearly they are expecting the Vistana ownership to count. Of course they can also grandfather some MVC owners that would no longer qualify but that does not change the big picture of equal rights, again IMO



Perhaps, but MVC has been steadily raising the required number of points (and adding additional ownership levels as well) even when major things (like the ILG acquisition) weren't happening. So, I'm not sure that is a real thing. They may just be languaging the latest impending increases as 'due to impacts of the ILG acquisition'.


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## DannyTS (Oct 6, 2019)

Dean said:


> Sure or ? even better, I can wear my TUG T-shirt.  But does it really make any difference other than if we want to be confrontational with person(s) who have no power to change the system and wouldn't if they could?  Unless you're walking in to the corporate office for a meeting with senior management, it really wouldn't serve any purpose other than possibly making you feel like you've done something when you haven't.
> 
> Yes and no.  I would say in contractual usage they do not treat them differently but there are nuances.  For example, they offer a special phone line and advanced Advisors for Customer Service.  And I've had a few mentions over the years when I had called and even at resorts about being resale.  Nothing big or even uncomfortable but a mention here and there.
> 
> ...


To me this is a by design method to transfer wealth from the retail owners to the coffers of the company. Nothing more. By design the developers are able to acquire dirt cheap inventory and sell it over and over at full price. Marriott pompously calls this a "capital-efficient acquisition model".
How much are the junk fees to enroll resale points? $3 a point? If you own 4000 points and you sell them, Marriott will make $12,000 from re-enrolling those points even if you paid in full for them already. It is not hard to imagine your listing price is greatly diminished since the buyer will have to factor in the $12k he would pay to Marriott (plus some other fees actually). If they ROFR they will make even more!

This has nothing to do with rewarding your best customers. In most other business and especially in real estate, all features that come with a good or service are transmitted to the next owner.


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## Dean (Oct 6, 2019)

DannyTS said:


> To me this is a by design method to transfer wealth from the retail owners to the coffers of the company. Nothing more. By design the developers are able to acquire dirt cheap inventory and sell it over and over at full price. Marriott pompously calls this a "capital-efficient acquisition model".
> How much are the junk fees to enroll resale points? $3 a point? If you own 4000 points and you sell them, Marriott will make $12,000 from re-enrolling those points even if you paid in full for them already. It is not hard to imagine your listing price is greatly diminished since the buyer will have to factor in the $12k he would pay to Marriott (plus some other fees actually)
> 
> This has nothing to do with rewarding your best customers. In most other business and especially in real estate, all features that come with a good or service are transmitted to the next owner.


I think it's both but no one is required to participate, it can be a win win, I think it is for me.  It's little different than buying a new car which is worth 20% less 20 minutes later.  Timeshares are what they are and Marriott is better than most.  We decide whether to participate but it sounds like you aren't happy participating.  If you're happy with what you contractually own, you should be fine.  One of my life Mantra's in that someone else's gain is not automatically my loss.  See the list you posted above where that would apply.


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## DannyTS (Oct 6, 2019)

Dean said:


> I think it's both but no one is required to participate, it can be a win win, I think it is for me.  It's little different than buying a new car which is worth 20% less 20 minutes later.  Timeshares are what they are and Marriott is better than most.  We decide whether to participate but it sounds like you aren't happy participating.  If you're happy with what you contractually own, you should be fine.  One of my life Mantra's in that someone else's gain is not automatically my loss.  See the list you posted above where that would apply.


My  discussion again is purely theoretical for me since I cannot be frustrated about the lack of additional features because I bought resale completely knowing what I was buying. If anything, I actually benefited from their policy since I was probably able to buy cheaper. Yet, I can still feel for those that may have lost tens of thousands of dollars so that I can benefit from this. I am very happy with what I own. I agree with you , Marriott and Vistana are great companies .


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## jabberwocky (Oct 6, 2019)

DannyTS said:


> To me this is a by design method to transfer wealth from the retail owners to the coffers of the company. Nothing more. By design the developers are able to acquire dirt cheap inventory and sell it over and over at full price. Marriott pompously calls this a "capital-efficient acquisition model".
> How much are the junk fees to enroll resale points? $3 a point? If you own 4000 points and you sell them, Marriott will make $12,000 from re-enrolling those points even if you paid in full for them already. It is not hard to imagine your listing price is greatly diminished since the buyer will have to factor in the $12k he would pay to Marriott (plus some other fees actually). If they ROFR they will make even more!
> 
> This has nothing to do with rewarding your best customers. In most other business and especially in real estate, all features that come with a good or service are transmitted to the next owner.



I'm not going to fault a company for finding a way to make money.  Timeshares have largely always been about arbitrage, whether it is the prime weeks owner getting to stay cheaper than it would otherwise be because of low season owner's, trading in II/RCI for a better property, Vistana owner's using cheap WKV SO's to book into Hawaii.  Where Marriott seems to excel and is taking advantage is to do the arbitrage themselves and gain the surplus. 

Yeah - it doesn't leave much on the table for the smart timeshare owner and personally I'm not sure that I'll want to play the game with Marriott DC (even though my family would be in the prime customer group according to the Investor presentation).  There will still be other areas in the timeshare world where arbitrage is possible and it might be time to migrate there as painful as that might be.  

At this point I'm glad I own where we want to go.


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## Dean (Oct 6, 2019)

DannyTS said:


> My  discussion again is purely theoretical for me since I cannot be frustrated about the lack of additional features because I bought resale completely knowing what I was buying. If anything, I actually benefited from their policy since I was probably able to buy cheaper. Yet, I can still feel for those that may have lost tens of thousands of dollars so that I can benefit from this. I am very happy with what I own. I agree with you , Marriott and Vistana are great companies .


Again, they knew or should have known what they were getting into.  Timeshares, at their core, are intended for personal use.  The POS for every one I've ever seen says this as well as a warning about selling or renting.  It's a statement of expectation though not of requirement even though some want to use this to say one cannot rent.  If one uses it, that's wherein the value lies.  They only lose anything if they are looking to sell which should not be the plan going in though they should understand there are limitations and risks doing so.  I think we all have a dog in the fight if we own with any of these companies or are thinking about buying in but some less than others.  I think you and I are on opposite ends in one sense but the same in another.  We both will likely not lose or gain anything to speak of, or at least we both are assuming so.  For you, it seems whatever they roll out that is not free will be a pass which should not hurt your core usage though it may ultimately limit your availability unless you own fixed weeks. For me as Chairman's club I suspect I'll get free, or nearly free, additional options but that truthfully, will not affect my personal usage and the main downside it is may create additional competition since I don't feel that Vistana/Westin adds much of anything for me.  If they increase the requirements, or add an additional tier (as I suspect), it's still likely I'll be grandfathered.  If that happens I may pick up some peanuts but likely nothing else.  

I think we'll both be happy as long as we keep those understandings in mind alone with the idea that timeshares change over time.  All do and in most cases, not for the better.


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## CalGalTraveler (Oct 6, 2019)

DannyTS said:


> More people paying DC fees is good for the company and probably good for everyone. If 200,000 unrolled owners suddenly pay $200 a year in DC fees, this is 400 million dollars that go straight to the earnings in the next 10 years. If they charge $1k for enrollment it adds another 200 millions to their bottom line right away! Does anyone know what kind of growth, what kind of effort they need to match that from the traditional sales?
> To put things in prospective, they make about 150 millions in earnings from selling VOIs. If they increase their sales by 10% they will earn an additional 15 millions a year.
> 
> I have listened now to most of the Investor Day presentation and the feeling I am getting is that they think BIG and want to go FAST. ...and from selling _additional_ products and services if they have the biggest tent possible.



^^^^^^^^^^ This is an interesting point. The profit margin on mass enrollment is huge, while meeting incremental sales goals are risky (especially with a downturn at some point in the future) and less profitable.  Mass enrollment wouldn't even require a visit to a sales office and could be accomplished via digital outreach to owners, lowering the cost of acquisition.

Which option will pad the CEO's stock and bonus incentives faster and with more certainty? If the figures above are true, mass enrollment for a nominal fee is a no-brainer for a CEO.

The questions of whether one bought retail or resale won't matter if the CEO and the company reaches sizable growth to keep Wall St. happy and their bonuses and stock mushroom over the next few years.

There is also a point made by a poster on the Vistana forum that requal pricing has been discounted to incent more voluntary properties back into the Staroption (SO) trading system. Over the years with developer customers exiting and selling resale, voluntary resort only inventory increased resulting in a shrinkage of SO trading inventory.

So there is a  need to replenish voluntary inventory in the StarOption system at places like Lagunamar, and St. John where there will be significant demand when MVC is integrated. Otherwise customers will be disappointed because there will not be sufficient inventory.

Perhaps there could be a similar push with MVC properties that are unenrolled to keep up with demand especially in places like MOC with owners who didn't want to pay full enrollment because they wouldn't trade much, but would consider for a lower fee for an occasional trade. There could be an argument that these folks missed out on 10 years of DC trading and were unable to rent points, and would not trade much anyway so they should not pay as much as those that got early access privileges since 2010 and heavily utilized the system.


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## csalter2 (Oct 6, 2019)

DannyTS said:


> I did not mean that anybody is rude to the the resale owners or anything like that. Far from it but a lot of features are missing because you cannot enroll. Is this not enough?
> 
> They treat resale perfectly well except:
> 
> ...



What you’re getting from resale is actually what the original bought. He bought a week with the ability to occupy it, rent it or exchange it.  It is very clear on the documents that all of the other goodies are “extras”.  So Marriott has not taken anything away from you. They can change all of the “benefits” any time they want.


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## DannyTS (Oct 6, 2019)

csalter2 said:


> What you’re getting from resale is actually what the original bought. He bought a week with the ability to occupy it, rent it or exchange it.  It is very clear on the documents that all of the other goodies are “extras”.  So Marriott has not taken anything away from you. They can change all of the “benefits” any time they want.


Not the case for resale DC points or for weeks bought from the developer after 2010 that are already enrolled. Those original owners bought with all the features.


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## Dean (Oct 6, 2019)

DannyTS said:


> Not the case for resale DC points or for weeks bought from the developer after 2010 that are already enrolled. Those original owners bought with all the features.


They are getting what they bought and what's contractual which they either knew or should have known at the time of the purchase.  And they do have all the options, at least they have so far off and on, even if the cost is more.  And they are getting what was contractual for the seller as well even if they have different options that one who bought earlier.  I'd know you're really tied to this concept of "fair" but my definition is more in line with the contractual obligations.


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## csalter2 (Oct 6, 2019)

DannyTS said:


> Not the case for resale DC points or for weeks bought from the developer after 2010 that are already enrolled. Those original owners bought with all the features.



DannyTS, there have always been limitations on resale weeks even prior to June, 2010 but those limitations were not as pronounced. If one bought a resale week prior to June, 2010, all they were really missing out on were the option to convert to the then Marriott Rewards Points now known as Bonvoy points.  Those who bought resale weeks prior to June, 2010 are fortunate because they can have the option of enrolling those weeks at no additional cost into the DC program. For them that is a great deal particularly if they have.a week that elects to a high number of DC points. However, resale weeks bought after June, 2010 cannot be enrolled into the Destinations Club or DC program unless they buy into it via a points purchase. The resale owner has a choice. He can buy what the original owner bought contractually which was a week as I stated in my earlier post which was a week to occupy, trade through Interval or rent.  That is the only what they bought and that’s all they can sell to a new owner.  So from a weeks perspective that is all an owner can sell to a potential buyer of his week.  

A resale points buyer can have access to all of the benefits of the DC points system, but they pay an additional $3.00 per point for every point that they purchase from the previous owner plus the previous owner’s price.  That $3.00 per point gives the new points owner all of the privileges and status that Marriott DC points provides without limitation. However, one must know that in that contract, Marriott has total control over those benefits and can add or subtract benefits at anytime.  

The bottom line, you get what you paid for.


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## CalGalTraveler (Oct 6, 2019)

The difference between MVC and Hilton is that MVC made enrolling optional because they charged a higher price. Hilton opted for mandatory enrollment upon purchase for developer and resale for a nominal (but ever increasing) fee.


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## csalter2 (Oct 6, 2019)

CalGalTraveler said:


> The difference between MVC and Hilton is that MVC made enrolling optional because they charged a higher price. Hilton opted for mandatory enrollment upon purchase for developer and resale for a nominal (but ever increasing) fee.



What was the nominal fee for Hilton?


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## CalGalTraveler (Oct 6, 2019)

The latest is $409. It started at $299 I believe.


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## SteelerGal (Oct 6, 2019)

CalGalTraveler said:


> The latest is $409. It started at $299 I believe.


Still a great deal considering.


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## CalGalTraveler (Oct 6, 2019)

@SteelerGal I agree. The HGVC system is very fluid and works because everyone is enrolled automatically. If MVC/Vistana do the same with a mass enrollment with a low fee,  network effects will kick in and it will benefit all.

What the HGVC system doesn't have is the ability to rent points. You can only rent out your home week. I would love to have the option to rent MVC points and would consider purchasing another property if we could easily rent out points in years we don't need them or our priorities change instead of being a landlord.


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## csalter2 (Oct 7, 2019)

CalGalTraveler said:


> @SteelerGal I agree. The HGVC system is very fluid and works because everyone is enrolled automatically. If MVC/Vistana do the same with a mass enrollment with a low fee,  network effects will kick in and it will benefit all.
> 
> What the HGVC system doesn't have is the ability to rent points. You can only rent out your home week. I would love to have the option to rent MVC points and would consider purchasing another property if we could easily rent out points in years we don't need them or our priorities change instead of being a landlord.



You cannot compare the HGVC system to MVC. You’re comparing apples to oranges. Hilton starts their system with points. Marriott started with weeks and then transitioned to points.

Even with that I prefer Marriott’s system to Hilton’s because they have more locations.


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## DannyTS (Oct 7, 2019)

CalGalTraveler said:


> @SteelerGal I agree. The HGVC system is very fluid and works because everyone is enrolled automatically. If MVC/Vistana do the same with a mass enrollment with a low fee,  network effects will kick in and it will benefit all.
> 
> What the HGVC system doesn't have is the ability to rent points. You can only rent out your home week. I would love to have the option to rent MVC points and would consider purchasing another property if we could easily rent out points in years we don't need them or our priorities change instead of being a landlord.


don't jinx it


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## CalGalTraveler (Oct 7, 2019)

csalter2 said:


> You cannot compare the HGVC system to MVC. You’re comparing apples to oranges. Hilton starts their system with points. Marriott started with weeks and then transitioned to points.
> 
> Even with that I prefer Marriott’s system to Hilton’s because they have more locations.



Nope. HGVC is a weeks system with fixed points attached to each deed. No different than an enrolled MVC week (which is the point of this discussion.) It does not offer a trust points system like DC so that's where they differ.

HGVC acts much like a points system because every deed is automatically enrolled in their points program when purchased for a nominal fee. Most HGVC users never use their deeded home week, that's why it is often mistaken for a points only system. This network effect  makes the system highly fluid and easier to book desirable properties because everyone participates. If I want to book an Oceanfront at Hilton Hawaiian Village in Waikiki, I could with sufficient points and early res.

MVC and Vistana have  historically put restrictions on enrollment which makes the trading systems sticky and limited. These systems lose desirable properties in their trading system every year because owners age out and sell to resale which is not automatically enrolled back into the system. The best units command a premium and resale owners who plan to mostly use so won't pay to enroll. II is considered "good enough."

MVC and Vistana mistakenly believe they are penalizing resale but ultimately they devalue the network for dev owners and enrollees because hundreds (if not thousands) of VOIs exit the trading network via resale every year and cannot (e.g. voluntary Vistana) or will not enroll.


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## Old Hickory (Oct 7, 2019)

JIMinNC said:


> Also new Costa Rica location officially announced with 24 2BR units.



I may have missed this in the 4 pages, but, was there an opening set for Costa Rica?


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## TXTortoise (Oct 7, 2019)

Old Hickory said:


> I may have missed this in the 4 pages, but, was there an opening set for Costa Rica?


Yes

https://tugbbs.com/forums/index.php?threads/new-costa-rica-club-in-the-future.293339/


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## bazzap (Oct 7, 2019)

Just sometime in 2021


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## amycurl (Oct 7, 2019)

> *there are numerous technology, legal, and product hurdles*




*peers into her crystal ball*
I can predict that those hurdles will take longer than they think they will, and will not be cleared easily.


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## dioxide45 (Oct 7, 2019)

amycurl said:


> *peers into her crystal ball*
> I can predict that those hurdles will take longer than they think they will, and will not be cleared easily.


The legal hurdles are how to neuter with those pesky Vistana mandatory VOIs.


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## LeslieDet (Oct 12, 2019)

JIMinNC said:


> News on Future Product Form.
> 
> Will be two phases:
> 1) Link usage between MVC, Westin, Vistana, Sheraton using a common points currency. Lots of legal and technology hurdles, but targeting announcement for mid-late 2020.
> ...


You might recall that we had a discussion 2 months ago regarding my comments that there was going to be some sort of currency exchange developed such that MVCI DP owners and Vistana Flex Option owners would be able to ultimately use their ownership to cross-book resorts.  I recall being told that I was inaccurate (or tossing out BS) about both the Flex Options being sold as well as an exchange rate being developed.  

It is good to see that there is going to be some concept to allow point owners to access the trust inventory of the sister entities using some sort of currency exchange rate.  I agree it will be complicated.  I am skeptical that there will be yet another new point system developed for sale to owners that allows direct access to all resorts among the sister timeshare brands.  It seems much more feasible to have that universal point system being developed that exchanges X value for DPs and Y value for Flex Options (Vistana points), and then the "converted" points are used to book in across the board.


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## DannyTS (Oct 12, 2019)

dioxide45 said:


> The legal hurdles are how to neuter with those pesky Vistana mandatory VOIs.


IMO the number of resale owners at the mandatory resorts does not justify the legal and PR  effort to neuter those Options. This is probably more the obsession of few Vistana sales reps.


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## kozykritter (Dec 17, 2019)

JIMinNC said:


> So, after going through this again, my interpretation is Phase One will be some sort of linkage, in the form of a "common points currency" of some sort, that will facilitate cross-booking between the Marriott, Westin, and Sheraton vacation clubs, but each "club" will continue to sell their individual programs to some degree. I think the term "linkage" is key - the programs will be linked through some common currency that is TBD, but not truly consolidated.
> 
> Then, at some undetermined point after 2020, they will develop a truly consolidated points product for the entire company.



Myself and many other VSE (and Marriott) owners are likely reading this and hoping they can move to this common points currency without extra cost to their ownership. That seems unlikely because as the Marriott Vacation Club sales rep put it to me this week, "Marriott doesn't give access for free. We didn't do it when we created the points system for our members in 2009, so why would we do it now?". Given how much of this presentation was on revenue growth and profit, his statement seems likely correct.


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## dansimms (Dec 20, 2019)

Whatever benefit level you are at, they will want to incentivize you to the next one up.


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## Pocky87 (Dec 22, 2019)

To me, they can do whatever they want for the merger...but I’m more concerned over the relationship with Bonvoy and the membership tier.  I  supposed  there are quite a number of members who purchased or topped up at least to a Select or Chairman level just to have their bonvoy account matched to Platinum and Titanium respectively as part of the benefits.

Hope they don’t remove the ongoing benefit... but so far it seem that the benefit got better each year... no?


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## Ralph Sir Edward (Dec 22, 2019)

csalter2 said:


> DannyTS, there have always been limitations on resale weeks even prior to June, 2010 but those limitations were not as pronounced. If one bought a resale week prior to June, 2010, all they were really missing out on were the option to convert to the then Marriott Rewards Points now known as Bonvoy points.  Those who bought resale weeks prior to June, 2010 are fortunate because they can have the option of enrolling those weeks at no additional cost into the DC program. For them that is a great deal particularly if they have.a week that elects to a high number of DC points. However, resale weeks bought after June, 2010 cannot be enrolled into the Destinations Club or DC program unless they buy into it via a points purchase. The resale owner has a choice. He can buy what the original owner bought contractually which was a week as I stated in my earlier post which was a week to occupy, trade through Interval or rent.  That is the only what they bought and that’s all they can sell to a new owner.  So from a weeks perspective that is all an owner can sell to a potential buyer of his week.
> 
> A resale points buyer can have access to all of the benefits of the DC points system, but they pay an additional $3.00 per point for every point that they purchase from the previous owner plus the previous owner’s price.  That $3.00 per point gives the new points owner all of the privileges and status that Marriott DC points provides without limitation. However, one must know that in that contract, Marriott has total control over those benefits and can add or subtract benefits at anytime.
> 
> The bottom line, you get what you paid for.





DannyTS said:


> they brag that 90% of the owners are happy so it must mean something to them. I also have to point out that the earnings that come from selling VOIs are diminishing in importance (28% in 2018 vs 42% in 2017) so clearly keeping the existing owners happy is paramount. I expect that trend to continue and the sales force to diminish its influence in the future.
> 
> 
> 
> ...



I think you are starting to see the impact of the $3 a point transfer fee to the Marriott profit mix.

Every DC transfer puts $3 a point into the Marriott profit bottom line. That's between 20 to 25 percent of the cost of a retail sale.

Consider - The rule of thumb for new time shares sales is that 50% of the retail price goes to sale/marketing. At circa $12 dollars a point (rack rate around $14, but there aren't any incentives included, which occurs in many sales), that means $6 to $7 dollars a point profit to Marriott. Which means 40 to 50% percent of the actualizable profit of a new sale is paid to Marriott for each transfer - with no overhead! (All the actual transfer overhead costs are covered by other fees.) Versus 0 dollars for a week transfer.

This has to have an effect on the bottom line, increasing the fee share of the profit and reducing the sales portion. . .


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## DannyTS (Dec 22, 2019)

*Marriott Vacations Worldwide Corporation Disposes of Excess Parcels*


ORLANDO, Fla., Dec. 19, 2019 /PRNewswire/ -- Marriott Vacations Worldwide (NYSE: VAC) announced today that it has closed the sale of excess parcels in Cancun, Mexico and Avon, Colorado for more than $60 million as part of its strategic decision to reduce holdings in markets where it has excess supply.

"This is the first step in our strategy to dispose of $160 million to $220 million of non-strategic assets, which we announced during our recent investor day," said John Geller, executive vice president and chief financial and administrative officer. 

The Company expects to report a gain from the sales, which will be excluded from its 2019 Adjusted EBITDA, and cash proceeds will be excluded from its Adjusted Free Cash Flow.


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## dioxide45 (Dec 22, 2019)

DannyTS said:


> *Marriott Vacations Worldwide Corporation Disposes of Excess Parcels*
> 
> 
> ORLANDO, Fla., Dec. 19, 2019 /PRNewswire/ -- Marriott Vacations Worldwide (NYSE: VAC) announced today that it has closed the sale of excess parcels in Cancun, Mexico and Avon, Colorado for more than $60 million as part of its strategic decision to reduce holdings in markets where it has excess supply.
> ...


Interesting. THey have been trying to sell that land in Cancun for nearly a decade. A MVCI resort there would have been great, but I expect they are planning to make the two Westin resorts available to MVCI owners in some way through their combined program.


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## bizaro86 (Dec 22, 2019)

Ralph Sir Edward said:


> I think you are starting to see the impact of the $3 a point transfer fee to the Marriott profit mix.
> 
> Every DC transfer puts $3 a point into the Marriott profit bottom line. That's between 20 to 25 percent of the cost of a retail sale.
> 
> ...



It's actually better than that. Last year VAC sold $990 MM of timeshare. They spent $513 MM on sales and marketing, and $260 MM buying the inventory. 

So of a hypothetical $12 point purchase, $3.15 was the cost of the points, and $6.22 was the cost of sales/marketing. That leaves $2.63 in profit. So a resale of existing trust points is probably more profitable for VAC than selling new ones. The sales people don't feel that way, because on a resale $0 goes to them, but VAC shareholders shouldnt care - they get paid either way.

Of course, new point sales potentially allow for new developments (generating new high margin management fees) but upfront it doesn't matter.


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## Dean (Dec 22, 2019)

bizaro86 said:


> It's actually better than that. Last year VAC sold $990 MM of timeshare. They spent $513 MM on sales and marketing, and $260 MM buying the inventory.
> 
> So of a hypothetical $12 point purchase, $3.15 was the cost of the points, and $6.22 was the cost of sales/marketing. That leaves $2.63 in profit. So a resale of existing trust points is probably more profitable for VAC than selling new ones. The sales people don't feel that way, because on a resale $0 goes to them, but VAC shareholders shouldnt care - they get paid either way.
> 
> Of course, new point sales potentially allow for new developments (generating new high margin management fees) but upfront it doesn't matter.


There are admin costs on the resale side so with your numbers they are likely about break even assuming this covers all their costs, including interest and facilities, on the retail side.  In reality every resale is a potential lost retail sale so they are in competition with their retail side.  Obviously not everyone who buys resale would have bought resale without the resale option but a % of them would have.  So I give it roughly a break even using these numbers though SOME of it is additive to retail and some isn't.


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## bizaro86 (Dec 22, 2019)

Dean said:


> There are admin costs on the resale side so with your numbers they are likely about break even assuming this covers all their costs, including interest and facilities, on the retail side.  In reality every resale is a potential lost retail sale so they are in competition with their retail side.  Obviously not everyone who buys resale would have bought resale without the resale option but a % of them would have.  So I give it roughly a break even using these numbers though SOME of it is additive to retail and some isn't.



Yeah, I think roughly break even with a retail sale is probably how they picked the junk fees.

I would comment that Wyndham charges $299 to transfer a points unit in Worldmark. I doubt Wyndham is doing that at a loss, and I doubt MVC's costs are any higher. I think 4 hours of employee time at a $50/hour all in cost is probably more than it takes.


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## JIMinNC (Dec 23, 2019)

Ralph Sir Edward said:


> I think you are starting to see the impact of the $3 a point transfer fee to the Marriott profit mix.
> 
> Every DC transfer puts $3 a point into the Marriott profit bottom line. That's between 20 to 25 percent of the cost of a retail sale.
> 
> ...



While the 50% sales/marketing figure is correct, as bizaro86 noted, I think your numbers are missing the remainder of the cost of sales - namely the cost of the underlying real estate/improvements/ etc. According to the 2018 VAC 10-K, here are the relevant comments of the Development Margin (essentially the gross margin for the Vacation Ownership sales business):

Sale of Vacation Ownership Products: $990 million
Cost of Vacation Ownership Products: $260 million
Marketing and Sales: $513 million

DEVELOPMENT MARGIN: $217 million (21.9%)

So based on this, if the average actual incentivized sales price per point is around $12.50/point, then the roughly 22% Development Margin comes out to $2.75/point, which is very close to the $3/point resale transfer fee.

*Note: I apologize for the duplication, but I posted this before reading the earlier post from @bizaro86 about the same basic numbers. I decided not to delete since I had a couple additional stats in mine to support what bizaro86 posted, but if moderators want to eliminate, OK with me. Note to self, read ALL subsequent posts before posting! *


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## Ralph Sir Edward (Dec 24, 2019)

JIMinNC said:


> While the 50% sales/marketing figure is correct, as bizaro86 noted, I think your numbers are missing the remainder of the cost of sales - namely the cost of the underlying real estate/improvements/ etc. According to the 2018 VAC 10-K, here are the relevant comments of the Development Margin (essentially the gross margin for the Vacation Ownership sales business):
> 
> Sale of Vacation Ownership Products: $990 million
> Cost of Vacation Ownership Products: $260 million
> ...



I must politely point out that there are no addition costs for the underlying real estate. That was paid for by the initial sale. Nor are improvement costs involved. Those are covered by reserved and/or special assessments.

If the Trust wants to expand its real estate, it then needs to sell more point (retail) to pay for it.


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## bizaro86 (Dec 24, 2019)

Ralph Sir Edward said:


> I must politely point out that there are no addition costs for the underlying real estate. That was paid for by the initial sale. Nor are improvement costs involved. Those are covered by reserved and/or special assessments.
> 
> If the Trust wants to expand its real estate, it then needs to sell more point (retail) to pay for it.



That was what both Jim and I were saying. That because of the cost of the marketing and underlying real estate, MVC has gross margins of slightly under $3 per point on retail sales.

Since they charge $3 per point on transfers and the cost would be nominal, their gross margins are slightly under $3 per point there as well.


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## JIMinNC (Dec 24, 2019)

Ralph Sir Edward said:


> I must politely point out that there are no addition costs for the underlying real estate. That was paid for by the initial sale. Nor are improvement costs involved. Those are covered by reserved and/or special assessments.
> 
> If the Trust wants to expand its real estate, it then needs to sell more point (retail) to pay for it.



Of course, the cost of the real estate (land) and the improvements (the buildings) are only relevant to the product actually sold by Marriott, and are irrelevant to the $3/point transfer fee. But that wasn't the point we were making.

My post was mainly in response to your statement above saying, *"At circa $12 dollars a point (rack rate around $14, but there aren't any incentives included, which occurs in many sales), that means $6 to $7 dollars a point profit to Marriott."
*
The reality is that the "gross profit" on the new points sale is not $6-$7 per point, but is more in the $2.60/point to $2.75/point range. It seemed you calculated the $6-$7/point profit by using the roughly 50% marketing/sales cost, but to get true gross profit (or development margin, as they call it) you must consider not just the marketing/sales costs but must also factor in the cost of the product sold. When you do that, you get a real profit margin of about 22% (thus yielding a $2.60/point to $2.75/point profit margin), not 50%. So, based on those numbers, the $3/point transfer fee allows VAC to essentially earn about the same profit margin on a resale points package as they would if they had sold a new points package themselves.


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## Ralph Sir Edward (Dec 27, 2019)

JIMinNC said:


> Of course, the cost of the real estate (land) and the improvements (the buildings) are only relevant to the product actually sold by Marriott, and are irrelevant to the $3/point transfer fee. But that wasn't the point we were making.
> 
> My post was mainly in response to your statement above saying, *"At circa $12 dollars a point (rack rate around $14, but there aren't any incentives included, which occurs in many sales), that means $6 to $7 dollars a point profit to Marriott."*
> 
> The reality is that the "gross profit" on the new points sale is not $6-$7 per point, but is more in the $2.60/point to $2.75/point range. It seemed you calculated the $6-$7/point profit by using the roughly 50% marketing/sales cost, but to get true gross profit (or development margin, as they call it) you must consider not just the marketing/sales costs but must also factor in the cost of the product sold. When you do that, you get a real profit margin of about 22% (thus yielding a $2.60/point to $2.75/point profit margin), not 50%. So, based on those numbers, the $3/point transfer fee allows VAC to essentially earn about the same profit margin on a resale points package as they would if they had sold a new points package themselves.



That actually supports my point. For a points purchase directly from Marriott, by your numbers (not arguing about them), Marriott makes $2.60 to $2.75 a point. On a resale of points, they make $3.00 a point. Both sales have all sorts of junk fees, separate from the $3 a point on resale. Those fees cover the administrative overhead of the purchase(s). The $3.00 fee is pure profit, without having to incur the variable overhead costs of selling. On the old weeks model, there is no equivalent of that $3.00 a point profit.

In theory, if Marriot wanted to stop growing. they could junk the entire sales model and live off of the turnover $3 a point fee. (Of course, they want to grow, so they aren't stopping the sales model.) They have made their new model such that they don't care whether you buy new or used, they make the same corporate profit off of the sale, either way. . .


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## Dean (Dec 27, 2019)

Ralph Sir Edward said:


> That actually supports my point. For a points purchase directly from Marriott, by your numbers (not arguing about them), Marriott makes $2.60 to $2.75 a point. On a resale of points, they make $3.00 a point. Both sales have all sorts of junk fees, separate from the $3 a point on resale. Those fees cover the administrative overhead of the purchase(s). The $3.00 fee is pure profit, without having to incur the variable overhead costs of selling. On the old weeks model, there is no equivalent of that $3.00 a point profit.
> 
> In theory, if Marriot wanted to stop growing. they could junk the entire sales model and live off of the turnover $3 a point fee. (Of course, they want to grow, so they aren't stopping the sales model.) They have made their new model such that they don't care whether you buy new or used, they make the same corporate profit off of the sale, either way. . .


The points I made earlier are still valid.  There are some underlying costs on the resale side and they go beyond just the cost to change the deed though we don't have as clear a picture of the actual costs.  Plus they are actually increasing their costs on the retail side by carrying more inventory due to the fact that they would have lost some retail sales because of the resales.


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## JIMinNC (Dec 27, 2019)

Ralph Sir Edward said:


> That actually supports my point. For a points purchase directly from Marriott, by your numbers (not arguing about them), Marriott makes $2.60 to $2.75 a point. On a resale of points, they make $3.00 a point. Both sales have all sorts of junk fees, separate from the $3 a point on resale. Those fees cover the administrative overhead of the purchase(s). The $3.00 fee is pure profit, without having to incur the variable overhead costs of selling. On the old weeks model, there is no equivalent of that $3.00 a point profit.
> 
> In theory, if Marriot wanted to stop growing. they could junk the entire sales model and live off of the turnover $3 a point fee. (Of course, they want to grow, so they aren't stopping the sales model.) They have made their new model such that they don't care whether you buy new or used, they make the same corporate profit off of the sale, either way. . .



I agree. That's essentially what @bizaro86 and I were saying. We were just pointing out that in your original post you stated that *"40 to 50% percent of the actualizable profit of a new sale is paid to Marriott for each transfer - with no overhead!"*, when, in fact, it's actually much better than that for them -- more like the $3/point resale fee generates essentially 100% of the same profit generated by a "new" sale.


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