# Maui Presentation - 6/2018.



## StevenTing (Jun 4, 2018)

Just finished attending my presentation and here are my thoughts.

MVC has set aside $180 Million for ROFR and plans to exercise more resales.  No mention of a planned super trust how how they will combine all of the resorts from ILG.

I asked about the ILG merger  It was implied that the only reason that MVC acquired ILG was to acquire Starwood.  This is only speculation but salesperson thinks that MVC will spin off Westin/Hyatt/Interval, etc and just keep Starwood.  Supposedly MVC has been trying to acquire the Starwood resorts but ILG said no, so they purchased all of it.  Westin/Hyatt/Etc would be spun off because those that bought into those resorts wanted that brand.  It would take 51% of owners to agree to a name change.  It's likely that Westin/Hyatt would want to acquire back their named resorts as they wouldn't want those owners being encouraged to stay at Marriott Hotels.

I asked about Cancun and whether MVC would keep the Westin resort their and rebrand to Marriott, and then possibly sell their vacant lot.  That's was part of the discussion above about the 51% owners.

Usual talk of new properties, etc  I asked about build-out vs. conversion.  Didn't get a straight forward answer but I think we all assume there will be a lot of conversions.

Sales pitch was the same 3000/4000/5000 point purchase to enroll 1/2/3 weeks that were purchased after 6/2010.  Same 20% discount from $13.86 per point.  No mention of price increase. Same financing offer of 10.99%.  If held for 18 months, they would provide the same number of one-time use points after 18 months but the first 18 payments must be at the specified payment, you couldn't over pay.   For 4000 points, it would be $559 per month.  Also their special sign up bonus was 4000 additional points for the current use year.

The one new approach that they did this time was to change the perspective of buying the additional points.  Since I purchased my 2 Maui weeks resale for $68000, the 4000 points needed to have these enrolled would be $44352  plus closing of $1366.  This would mean my total investment would be $113718 and my weeks would covert to 20,400 points, plus the 4000 points I purchased.

So total investment of $113,718 divided by 24,400 points means that I cost per point on this combined purchase with my prior weeks is $4.66 per point.  Very creative way to change perspective, even though you're paying the $13.86 per point for the 4000.  It made me consider it, but the answer was still no.

He did present another option for rentals at a specific location at a certain time.  I need to track that one down but it has potential.

On the Marriott Reward status, he indicated that the Platinum Status for Presidential/Chairman would map over to Platinum Premier.  That Executive would be Platinum 50 in the new program, since it is currently gold.

He mentioned something about Yachts being available for Chairman's and that new benefits would likely be added to Chairman in the future.  No real detail

Two different encore packages offered.  Maui specific package that had to be used within 2 years that was either $1495 or $1595 and included 25K MRP or the general package to be used within 18 months at one of 25 locations for $995 and included 50K MRP.  The $995 was the base rate and could increase by $300 or $600 depending on location and season.  For example, Ski weeks in Park city were $1595.  These packages were all 6 days/5 nights.

That's all I have for now.  Heading to the beach but I welcome questions as that will help jog my memory.  Total presentation time with Salesperson, Finance person, and closer was 1 hour and 12 minutes.


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## catharsis (Jun 4, 2018)

Thanks steven for the Detail

One quibble - isn't Westin a Starwood brand: - I know in Avon, CO the Sheraton Mountain Vista and Westin RiverFront are sister properties after a fashion?


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## JIMinNC (Jun 4, 2018)

As catharsis says, that's the one thing that doesn't make sense. Westin and Sheraton were both part of Starwood. The idea that they might eventually spin off Hyatt Residence Club and Interval International has been advanced before, and would not seem that far-fetched. But both Westin and Sheraton are now Marriott International-owned brands, so "Westin" *is* Marriott. The statement that "Westin would want to acquire back their named resorts as they wouldn't want those owners being encouraged to stay at Marriott Hotels" makes absolutely no sense because Westin is owned by Marriott hotels. They are the same company now.


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## StevenTing (Jun 4, 2018)

Okay. Like I said, these are some quick details.  If Westin is part of Marriott now, I’m sure they’ll keep it.  I just couldn’t remember all of the brands coming from ILG.  

In short, what’s not currently Marriott will likely get spun off.  That was the speculation from the sales person.  That’s one way for Marriott to reach their end goal and to reduce the cost of the acquisition.


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## mjm1 (Jun 4, 2018)

I agree with Jim and catharsis about the Westin comment. That doesn't make sense. In addition, the Westin resorts are the higher end resorts in Vistana. I would think MVC would want to keep them and try to leverage the owners.

Best regards.

Mike


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## GregT (Jun 4, 2018)

That's very interesting about the possibility to sell back the Hyatt properties to Hyatt (I think that's what Steven meant, and not the Westin properties).

I would have thought that the original transaction from Hyatt to ILG would have contemplated out to treat the Hyatt properties if ILG was acquired by a third party -- that's kind of an obvious scenario.   I would think there were restrictions on the ability to promote any other brands at the HRC locations, and therefore Hyatt timeshares can continue to be marketed independently and as currently operated, with no mention of Marriott and Starwood.   I think that could easily be enforced and Marriott would not violate it.

So I don't think we will see a sale back to Hyatt, but time will tell.

I appreciate the other information Steven posted on, and interesting to see the current offerings.   Enjoy 6206 Steven!!

Best,

Greg


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## Steve Fatula (Jun 4, 2018)

I think Chairman level probably will get some enhancements. There's little value there now over Presidential. But there should be. I agree the Westin and Sheraton resorts are unlikely to be spun off. Of course, it's unlikely the salesman is privy to too much info.

My presentation in Spain did say the same thing about MR mapping (old level to new) that Steven heard. I do think that is likely what will happen.


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## GregT (Jun 4, 2018)

StevenTing said:


> MVC has set aside $180 Million for ROFR and plans to exercise more resales.



Thinking further about Steven's post, I think this will not be an issue for us.

$180M in resale purchases -- let's assume an average of $5,000 per ROFR -- that's 36,000 weeks that would be repurchased (aren't there only 700K in the entire system?).   Assume that they only exercise MM1 2BR OF's @ $25K each -- that's 7,000 weeks (about double the entire number of 2BR OFs).

I would not be surprised to see increased ROFR activity and new buyback programs, but I think we will find the purchase experience is not that different from what we saw a few years ago.  It will be interesting to see what happens.

Best,

Greg


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## StevenTing (Jun 5, 2018)

I think the 180 Million figure was meant to impress/intimidate the uninformed. 

On the point side, that’s potentially 60 million points, which sounds like a lot since most transactions are 1000-5000 points.


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## taterhed (Jun 5, 2018)

Funny.....

I too would think that Marriott would keep the premier brands (Westin, Hyatt...) and try to build a mega-points system patterned on DC points for the premium locations and properties. Hard to do/imagine, but it makes some sense. 

But, if a salesperson's mouth is moving.....well, you know the rest.

Great report.


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## mas (Jun 5, 2018)

Don't have a clue what MVC is thinking/plotting and it's all speculation at this point anyway.  However, I for one, would love to see us get some sort of an inside track to the Hyatt HRC inventory.

Steve, thanks much for the presentation synopsis.


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## StevenTing (Jun 18, 2018)

I'm back from Vacay and have had a little time to look things through.  I see that Westin is now part of Marriott so it will probably stay.  It seems like the only items that don't fit the Marriott bucket are Interval and HRC.

My speculation is that HRC gets sold off back to Hyatt.  I can agree with the sales person on that.

However, with Interval, Marriott could keep it and still make it work for them.  I think this could go either way.  Interval would allow Marriott to monetize unsold/unreserved inventory.  It could also open up the bucket to Destination Escapes and bolster the usage for 60 day holding accounts. The Holding accounts and the 60 day limit are the weak spot for Marriott.  It would be nice to use holding points to book instead of the stupid accommodation certificates that never really work for me.


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## JIMinNC (Jun 18, 2018)

StevenTing said:


> It seems like the only items that don't fit the Marriott bucket are Interval and HRC.


There are actually a few more smaller ones, if you look at the list of ILG companies from their website: https://ilg.com/sites/ilg/home/companies.html

Aqua-Aston (condo and hotel resort management)
VRI Americas & VRI Europe (resort and HOA management)
Trading Places International (a smaller exchange company)


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## GaryDouglas (Jun 20, 2018)

The "conjecture" I received from the sales person earlier this month at MOC about how the newly aquired timeshare resorts will turn out was that all unsold units would be put into the trust.

He also stated the dollar amount of the MOC villa refresh this fall was going to be.  It was so high and I may have mis-heard it so I get it from a reliable source...


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## Pocky87 (Jun 24, 2018)

Have a query below.


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## bazzap (Jun 24, 2018)

GaryDouglas said:


> The "conjecture" I received from the sales person earlier this month at MOC about how the newly aquired timeshare resorts will turn out was that all unsold units would be put into the trust.
> 
> He also stated the dollar amount of the MOC villa refresh this fall was going to be.  It was so high and I may have mis-heard it so I get it from a reliable source...


It wouldn’t perhaps be too surprising to hear that villa refresh costs are going to be very high, if these are one of the 5 or 7 year or... scheduled major refresh programmes.
What is probably far more important is whether these are already properly budgeted for or an additional cost to be covered by a hike in MFs or a Special Assessment - hopefully neither of these?


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## Pocky87 (Jun 24, 2018)

StevenTing said:


> Just finished attending my presentation and here are my thoughts.
> 
> MVC has set aside $180 Million for ROFR and plans to exercise more resales.  No mention of a planned super trust how how they will combine all of the resorts from ILG.
> 
> ...



Hi steven, with regards to the Marriott Rewards status. Do you meant they will honor presidential/chairman to platinum premier and select/executive to platinum 50?

I saw that you missed out select level as they are currently giving this level gold status. It’s quite worrying for select level members like me who might be downgraded if they only upgrade the executive level.

Thanks


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## StevenTing (Jun 24, 2018)

It was implied that the tiers would map across like the regular Marriott statuses. 

Presidential and Chariman to Platinum Premier
Select and Executive to Platinum 50

We have 5 weeks till beginning of August.  I’m just in a wait and see mode till then.


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## Bill4728 (Jun 25, 2018)

Wyndham bought worldmark and shell several years ago and basically run them as separate companies ( Yes there is some very small overlap) 

And Diamond has bought a half dozen or more TS systems ( like Club Intrawest, Monarch Grand ect) and found a way to roll them all into Diamond

So it is anyone's guess which way MVC will go  BUT I'm guessing they will do like Wyndham and have some small overlap but most keep them all separate.


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## BocaBoy (Jun 26, 2018)

Bill4728 said:


> Wyndham bought worldmark and shell several years ago and basically run them as separate companies ( Yes there is some very small overlap)
> 
> And Diamond has bought a half dozen or more TS systems ( like Club Intrawest, Monarch Grand ect) and found a way to roll them all into Diamond
> 
> So it is anyone's guess which way MVC will go  BUT I'm guessing they will do like Wyndham and have some small overlap but most keep them all separate.


I agree.  I would be very surprised to see them all combined into one system any time soon, if ever.


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## JIMinNC (Jun 27, 2018)

BocaBoy said:


> I agree.  I would be very surprised to see them all combined into one system any time soon, if ever.



I agree it won't be any time soon, but given what VAC paid for ILG, wouldn't it make sense that they have to find some way to eventually drop more benefit to the bottom line than just the estimated $75 million in operational/administrative savings? How else can they benefit from the merger unless they find a way to make it attractive for folks to buy more product and boost the top line? There seems to be no easy way to leverage the merger to increase top line sales unless they eventually find a way to allow DC points users to use their points at Vistana properties and for StarOptions to be used in some fashion at MVC properties.


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## VacationForever (Jun 27, 2018)

JIMinNC said:


> I agree it won't be any time soon, but given what VAC paid for ILG, wouldn't it make sense that they have to find some way to eventually drop more benefit to the bottom line than just the estimated $75 million in operational/administrative savings? How else can they benefit from the merger unless they find a way to make it attractive for folks to buy more product and boost the top line? There seems to be no easy way to leverage the merger to increase top line sales unless they eventually find a way to allow DC points users to use their points at Vistana properties and for StarOptions to be used in some fashion at MVC properties.


I expect them to follow Wyndham model where each system's developer-bought points can book across the other 2 systems at a reduced booking window.  Resale point owners can pay a significant junk fees to make the points whole for the same privilege of booking across the other 2 systems.


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## GaryDouglas (Jun 27, 2018)

GaryDouglas said:


> ...He also stated the dollar amount of the MOC villa refresh this fall was going to be.  It was so high and I may have mis-heard it so I'll get it from a reliable source...



$14MM


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## GaryDouglas (Jun 27, 2018)

bazzap said:


> ... What is probably far more important is whether these are already properly budgeted for or an additional cost to be covered by a hike in MFs or a Special Assessment - hopefully neither of these?



It was in the budget already.  They reviewed and nixed items that made sense not doing like not painting the ceilings, etc.  How close they come to the money already set aside was not stated, but they were probably close.  We'll see it in next years financials...


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## BocaBoy (Jun 27, 2018)

JIMinNC said:


> I agree it won't be any time soon, but given what VAC paid for ILG, wouldn't it make sense that they have to find some way to eventually drop more benefit to the bottom line than just the estimated $75 million in operational/administrative savings? How else can they benefit from the merger unless they find a way to make it attractive for folks to buy more product and boost the top line? There seems to be no easy way to leverage the merger to increase top line sales unless they eventually find a way to allow DC points users to use their points at Vistana properties and for StarOptions to be used in some fashion at MVC properties.


I agree that limited overlap such as you suggest is likely, but I don't consider that to be merging the systems.  It is more analogous in concept to Explorer offerings, where DC points or Star Options could be used to book stays in the sister systems.  I would not be at all surprised to see that.


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## DanCali (Jul 30, 2018)

Long time since I posted on tug but we just got back from a Hawaii vacation so I figured I'd check some info I was tole in Westin and Marriott presentation and came across this thread.

My prior assessment of the points system (from many years ago) was that it was quite iffy but we did end up enrolling our 2 NCV Platinum weeks into the system for $2k+ so we can grandfather into Executive with 6950 points. I figured that it would be worth doing just to reduce the pressure to buy 1500 points when we attend a presentation because we were short 50 points for the next status... Overall the decision to enroll into the points system for that amount was probably worth it even though we mostly still use or rent our NCV weeks, with the exception of a trade for this recent Hawaii trip. I like having the ability to rent points from others when needed and we couldn't do that if we were not enrolled. We actually did that last year (thanks vacationpointexchange.com!) to add 1 night in St. Thomas to a week in St. John and also for a couple of short stays in Orlando. When you consider the cost of renting points compared to points MFs, it makes buying points very questionable imo unless you have status in mind.

So we just attended a presentation in Kauai (traded 1 NCV week for 5 nights island view - decent trade I guess). After telling them I was not excited with buying points at all, we got a pitch to buy a resale week from Marriott along with 2000/3000 points (depending on the destination points the week converted into) and get to enroll the resale week into the points system ("goal" was to get us Presidential status). So for example, you have an Orlando week that converts to ~2500 points and you buy 2000 points and this costs around $30K (this is all ballpark). When they do the math this way it does indeed look like you are buying points for around $6.50/point but you are paying $6000+ for a deeded week in Orlando that is pretty much worthless on the resale market and is very hard to resell or rent (and renting the destination points it converts to may not cover MFs). They did also offer a couple of more attractive weeks, but that required a 3000 point purchase and the price of the deeded weeks we also much higher that actual broker/ebay resale value. A better approach is probably to buy resale fgirst then attend the presentation - that would lower the cost of adding the week to the system, but as the OP pointed out thigs still get expensive in absolute dollar terms when you buy points. We got 25K points to attend.

A couple of questions:

I was curious about buying resale points so I called owner services and asked about fees. I was told it's $750 per 250 points. Is that true? From what I see on tug it's more like $500 per BI and a few other small fees. Given that it started out at $200, went to $500 and now maybe even more it seems like Marriott can destroy resale value of destination points at will - the higher the fees, the less people would be willing to pay for the points on the resale market...

Also, per the OP "Platinum Status for Presidential/Chairman would map over to Platinum Premier. That Executive would be Platinum 50 in the new program, since it is currently gold." - In our Kauai presentation we were also told that if we were Presidential that would convert to Platinum 75. To be honest, I was not even aware that Executive came with Gold status - I already had Marriott Gold via the Amex Platinum card (which gives Starwood Gold), and also via United Gold (which I have for life), but none of those would be eligible for Platinum 50 - they would convert to the inferior Gold in the new rewards system. So I called Owner Services to ask about that and they couldn't confirm that our Marriott Gold status due to being Executive would convert to Platinum 50 in the new rewards system. They guy I spoke with asked his supervisor and the answer was "we weren't told". Is this something that has been actually confirmed beyond the words of a salesperson?


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## Steve Fatula (Jul 30, 2018)

DanCali said:


> Long time since I posted on tug but we just got back from a Hawaii vacation so I figured I'd check some info I was tole in Westin and Marriott presentation and came across this thread.
> 
> My prior assessment of the points system (from many years ago) was that it was quite iffy but we did end up enrolling our 2 NCV Platinum weeks into the system for $2k+ so we can grandfather into Executive with 6950 points. I figured that it would be worth doing just to reduce the pressure to buy 1500 points when we attend a presentation because we were short 50 points for the next status... Overall the decision to enroll into the points system for that amount was probably worth it even though we mostly still use or rent our NCV weeks, with the exception of a trade for this recent Hawaii trip. I like having the ability to rent points from others when needed and we couldn't do that if we were not enrolled. We actually did that last year (thanks vacationpointexchange.com!) to add 1 night in St. Thomas to a week in St. John and also for a couple of short stays in Orlando. When you consider the cost of renting points compared to points MFs, it makes buying points very questionable imo unless you have status in mind.
> 
> ...



The fee from Marriott increased this year (I think), used to be $500, now it's $750 per BI. Not sure about hurting resale, paying $4 per pt + $3 per pt fees is still $7 per point, much cheaper than Marriott, half. It is unclear that Platinum will map to Platinum Premier, that's never been confirmed by Marriott for MVCI as far as I know. Yes, a few timeshare salesmen have said that. We'll see. 

6950 points is not executive, 7000 points is....


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## DanCali (Jul 30, 2018)

Steve Fatula said:


> The fee from Marriott increased this year (I think), used to be $500, now it's $750 per BI. Not sure about hurting resale, paying $4 per pt + $3 per pt fees is still $7 per point, much cheaper than Marriott, half. It is unclear that Platinum will map to Platinum Premier, that's never been confirmed by Marriott for MVCI as far as I know. Yes, a few timeshare salesmen have said that. We'll see.
> 
> 6950 points is not executive, 7000 points is....



Thanks for the response.

7000 for Executive is now. It used to be 6500 and if you enrolled your weeks before April 2016(?) you got grandfathered with 6500+. That was pretty much the main catalyst for me.


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## Steve Fatula (Jul 30, 2018)

DanCali said:


> Thanks for the response.
> 
> 7000 for Executive is now. It used to be 6500 and if you enrolled your weeks before April 2016(?) you got grandfathered with 6500+. That was pretty much the main catalyst for me.



Aha, did not know that history. It would really stink to be 50 points short! The best thing about Presidential IMHO is the 60 day discount window. I just love using those for extending weeks stays cheaply. That and 1.5 years banking.


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## DanCali (Jul 30, 2018)

Yes, with 30 days for Executive there is probably not much left over.

My point regarding the Marriott resale fee per BI was as follows: Say resale buyers are willing to pay $6-7 per point. If the Marriott fee was $0, then you may be willing to pay $7 on the resale market for points or buyers would bid the prices up to that point via competition - more in the pocket of the seller. If the fee was $1500/BI ($6/point) then points would likely be almost worthless on the resale market and buyers would just pay high fees to Marriott. Marriott has an incentive to eventually raise the fees that high to (i) buy points for cheap (via ROFR) and resell at full price and (ii) pocket higher fees if a resale does go through. Both of these increase their margins. Going from $200 to $750 in 3-4 years really has no economic justification.​


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## Steve Fatula (Jul 30, 2018)

DanCali said:


> Yes, with 30 days for Executive there is probably not much left over.
> 
> My point regarding the Marriott resale fee per BI was as follows: Say resale buyers are willing to pay $6-7 per point. If the Marriott fee was $0, then you may be willing to pay $7 on the resale market for points or buyers would bid the prices up to that point via competition - more in the pocket of the seller. If the fee was $1500/BI ($6/point) then points would likely be almost worthless on the resale market and buyers would just pay high fees to Marriott. Marriott has an incentive to eventually raise the fees that high to (i) buy points for cheap (via ROFR) and resell at full price and (ii) pocket higher fees if a resale does go through. Both of these increase their margins. Going from $200 to $750 in 3-4 years really has no economic justification.​



I understand, but, at the same time, the points price keeps rising too, the standard selling price from Marriott (though not as fast lately). A couple of years ago when I bought resale points, I paid $2.25 or so per point (forgot exact number). Today, the going rate seems to be around $4. I do agree with you though, it (obviously) lowers what the seller can get.


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## Fasttr (Jul 30, 2018)

Steve Fatula said:


> Aha, did not know that history. It would really stink to be 50 points short!


FYI.... See lower right corner....last 4 lines at this link....https://www.marriottvacationsworldwide.com/common/cms/mvcau/pdfs/benefits-at-a-glance-chart-US.pdf


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## JIMinNC (Jul 30, 2018)

DanCali said:


> ...the price of the deeded weeks we also much higher that actual broker/ebay resale value. A better approach is probably to buy resale fgirst then attend the presentation - that would lower the cost of adding the week to the system, but as the OP pointed out thigs still get expensive in absolute dollar terms when you buy points. We got 25K points to attend.



But resale weeks bought from an external broker or eBay after June 2010 are generally not eligible to be converted to points, even if you buy a point bundle. So, you are paying a premium price for the resale week from Marriott in exchange for the right to enroll it with the purchase of matching points. From time-to-time Marriott will offer a promotion that allows typically-unenrollable external resale weeks to be brought into the points system, but only for a limited time frame each year and only with the purchase of at least 3000 points.


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## DanCali (Jul 30, 2018)

Yes, that's what we were told. Still, since the purchase price of points (~$12-$13) and the resale value of points (~$4), and assuming you really don't want/need the points and would like to just turn around and sell them to get rid of the MF liability, you are essentially "paying" $25K+ to enroll a week. But if you do want to buy points, it's certainly an added bonus to enroll an extra week and you can view it as a price reduction in some way, or a justification to buy from the developer. 

The problem is that most buyers don't even know there is a resale market and what the value is. If you lost 70% on a car or house as soon as you bought them, would you still buy them? To me, the idea of flushing away 70%+ of what I pay sickens me  so the less points I am "forced" to buy to enroll a week, the better! I can envision possibly doing this someday but I also imagine deals would get better at some point. This points system launched in 2010 and never experienced a recession - not many people would spend $40K+ when money is tighter and a public company will have pressure to keep sales going at any price. Maybe they'll let you enroll a week if you bought 1500 points? Or maybe I'm delusional...  Either way, given that the VAC stock has moved 6x-7x in 6.5 years tells me they are making way too much money


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## JIMinNC (Jul 30, 2018)

DanCali said:


> Yes, that's what we were told. Still, since the purchase price of points (~$12-$13) and the resale value of points (~$4), and assuming you really don't want/need the points and would like to just turn around and sell them to get rid of the MF liability, you are essentially "paying" $25K+ to enroll a week. But if you do want to buy points, it's certainly an added bonus to enroll an extra week and you can view it as a price reduction in some way, or a justification to buy from the developer.



Certainly, no one would buy points "just" to enroll a week, only to turn around and sell the points. Would make no sense. It only makes sense if you want and need the points. We need more points ourselves and will probably take advantage of a future post-2010 enrollment promo to get more points and get our unenrolled resale week enrolled. Usually those deals can result in an averaged cost per point of $6 or less. But since our only current unenrolled week is just an Every Other Year week, we plan to wait until we possibly acquire a second EOY week, since the minimum 3000 point purchase can enroll up to two EOY weeks, based on the way that promo has always been structured.



DanCali said:


> The problem is that most buyers don't even know there is a resale market and what the value is. If you lost 70% on a car or house as soon as you bought them, would you still buy them? To me, the idea of flushing away 70%+ of what I pay sickens me  so the less points I am "forced" to buy to enroll a week, the better!



No one would logically buy a car, house, or points if their intent was to turn around and sell what they bought almost immediately. I paid $40K for my car eleven years ago, and it's lost about 90% of its value, but I don't regret that purchase. If I buy points and use them for 10-15 years or more, and then sell them for 25% of what I paid, as long as I've been smart in using them and received value in vacations, then it's not necessarily a bad deal, as long as I make a smart purchase (like the purchase options that average down the per point cost to $5-$7/point).


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## DanCali (Jul 30, 2018)

JIMinNC said:


> No one would logically buy a car, house, or points if their intent was to turn around and sell what they bought almost immediately. I paid $40K for my car eleven years ago, and it's lost about 90% of its value, but I don't regret that purchase. If I buy points and use them for 10-15 years or more, and then sell them for 25% of what I paid, as long as I've been smart in using them and received value in vacations, then it's not necessarily a bad deal, as long as I make a smart purchase (like the purchase options that average down the per point cost to $5-$7/point).



Cars usually depreciate 50% of value every in 3 years as a good rule of thumb - so you lose 50% after 3 years, 50% of the remaining 50% after 6 years etc... And "true" real estate you hope doesn't depreciate at all over time because it's more like an investment. But timeshares basically lose 70%-90% of value after 7 days, once you can rescind. It's a pretty unique animal and hard to compare to anything else.

It's fine to justify as making good use and then losing 80% after X number of years, but if you do that remember to include not just the value erosion in the calculations but also the opportunity cost. If I spend $50K and recover $10K after 10 years, I lost $4K/year in principal but I also lost whatever that initial $50K would have earned in a savings account, bond fund, stock fund etc. If you assume a 6% opportunity cost (not an unrealistic number for a long-run annualized stock market return) that's another $3000/year you will not have earned/saved because you didn't have that money invested (I'm ignoring compounding and time value of money in all this, which makes things look even worse). So in this example the actual cost is ~75% higher than just looking at depreciation ($7000/year instead of just $4000). This cost is harder to think about because it's uncertain, but it's a real cost. At the very minimum you can assume a 3% opportunity cost since that is what you can get these days almost risk free - and it's probably going higher. For example, a 10 year government bond yields 3% so just buy that for $50K, hold it to maturity, and get $65K+ back by the end of the 10 years (an extra $1500+/year). Or you can get almost 2% with a savings account at Amex (https://www.americanexpress.com/personalsavings/home) - still a real opportunity cost.


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## JIMinNC (Jul 30, 2018)

The opportunity cost argument has been debated frequently here on TUG. Some insist you have to include it, others disagree.

My personal view is it should be factored in for a theoretical economic argument, but in a practical sense, it really depends on each individual. For someone who stays optimally invested and keeps minimal uninvested cash, then the opportunity cost is real. For someone who tends to keep larger amounts in money market accounts or other very low or no interest accounts, the opportunity cost argument may be more academic than real. I know we have never sold stock, mutual funds, or other investment assets to buy a timeshare week or points. It's always come from liquid discretionary cash that was earning little or nothing. I know an academic economist would probably cringe at that rationale, but we don't feel that we've given up any meaningful ROI on the money we've spent on timeshares over the years. It was earning us little to nothing already.

People don't usually do ROI/opportunity cost calculations on their car purchases either. And you can't compare timeshares to regular real estate. Two totally different animals for many, many reasons.


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## DanCali (Jul 30, 2018)

JIMinNC said:


> The opportunity cost argument has been debated frequently here on TUG. Some insist you have to include it, others disagree.
> 
> My personal view is it should be factored in for a theoretical economic argument, but in a practical sense, it really depends on each individual. For someone who stays optimally invested and keeps minimal uninvested cash, then the opportunity cost is real. For someone who tends to keep larger amounts in money market accounts or other very low or no interest accounts, the opportunity cost argument may be more academic than real. I know we have never sold stock, mutual funds, or other investment assets to buy a timeshare week or points. It's always come from liquid discretionary cash that was earning little or nothing. I know an academic economist would probably cringe at that rationale, but we don't feel that we've given up any meaningful ROI on the money we've spent on timeshares over the years. It was earning us little to nothing already.
> 
> People don't usually do ROI/opportunity cost calculations on their car purchases either. And you can't compare timeshares to regular real estate. Two totally different animals for many, many reasons.



As for me I am as close as they come to the academic economist you describe. "Optimally" invested is a very subjective thing, but I am pretty close to "fully" invested (and I also consider money market funds as investments since they give close to 2% these days) - I can't even pay a homeowners insurance bill or maintenance fees on all my timeshares without selling something... so when I go to a presentation and get asked to invest $40K-$60K I can't help thinking of what that money would be could in 10-20 years, especially knowing what the timeshare or points would be worth the following week. Aside from the "lost decade" of 2000-2009, which had 2 major crashes, it's hard to think of another 10 year period where it would not have been beneficial to be invested in the stock market. 

You should at least check out that Amex personal savings link - 1.75% is better than close to nothing, and becomes meaningful if you have large sums just sitting there. May even cover the maintenance fees for some of your points or weeks. 
​


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## JIMinNC (Jul 31, 2018)

DanCali said:


> Aside from the "lost decade" of 2000-2009, which had 2 major crashes, it's hard to think of another 10 year period where it would not have been beneficial to be invested in the stock market.



Totally agree with this. I have been actively invested in stocks since I was in my 20s and I'm now in my early 60s, but I tend to prefer to keep a little more liquidity than some people do, and as we get older, that bias toward liquidity will probably only increase. I think I would drive myself crazy if every time I needed to spend money on something (whether that expenditure is a car, a non-timeshare vacation like our upcoming Mediterranean cruise, or some other larger expenditure), I started thinking about what that money could be worth in 10 years if I didn't spend it and instead invested it in a growth stock. Heck, if instead of spending almost $40,000 to buy a car in 2007, I had used that same money to buy Apple stock, it would be worth well over $500,000 now. I did buy Apple stock in late 2008 during the fall crash, and have done very well with it since, but I used my "investment money" not my "spending money." I have to keep those in separate buckets in my mind or I might never want to spend anything, thinking about what that money could earn if invested.


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## csalter2 (Jul 31, 2018)

DanCali said:


> As for me I am as close as they come to the academic economist you describe. "Optimally" invested is a very subjective thing, but I am pretty close to "fully" invested (and I also consider money market funds as investments since they give close to 2% these days) - I can't even pay a homeowners insurance bill or maintenance fees on all my timeshares without selling something... so when I go to a presentation and get asked to invest $40K-$60K I can't help thinking of what that money would be could in 10-20 years, especially knowing what the timeshare or points would be worth the following week. Aside from the "lost decade" of 2000-2009, which had 2 major crashes, it's hard to think of another 10 year period where it would not have been beneficial to be invested in the stock market.
> 
> You should at least check out that Amex personal savings link - 1.75% is better than close to nothing, and becomes meaningful if you have large sums just sitting there. May even cover the maintenance fees for some of your points or weeks.
> ​



With your thinking, I’m surprised you ever bought any timeshares even if you bought them resale. There’s always opportunity cost no matter what you buy. You have to also remember that there are some who have bought timeshares, usually resale, but not always, that have been able to have to use rentals of their units to exceed maintenance fees and turn a profit. Examples of this are seen in places like Aruba and Maui where units are at times rented for more than double the maintence fees. In addition, depending on how some people utilize their weeks, they can get great value and opportunity cost being lost is totally irrelevant. For example, what about people who rent one side of their unit and vacation in the other, or those who get two weeks out of their lockoff units. Those are substantial savings. 

Not everyone will view their investment in timeshare as a lost opportunity cost. I am closing on a purchase of two weeks with Marriott that will cost me $52,000 upfront. However, they are oceanview and oceanfront lock off units that rent well and are platinum weeks. In addition, they provide me with 9450 points to use. Buying the points in the weeks saved me lots of money because from a points value cost it is under $6.00 per point. Now my upfront cost is killer. That is an opportunity cost I’ll lose. However, I look at it like this. I can rent these two units for as much as $3000+ or more each. I didn’t buy them to rent but to be able to have the option convert to points and extend stays, to take dantage of Sunday - Thursday stays during retirement and summers which I have off. Those are substantial savings. With these two new additions, I become Presidential level and achieve some cost saving perks.  Free breakfasts at Marriott hotels, discounts on points on reservations made 60 days  or less. I see savings there during retirement and summers. So there are opportunity costs that are lost but there are also savings that can be gained. I won’t go into incentives that actually shaved off some of this cost, but everyone is not crazy to buy timeshares and value can still be derived from them in my opinion. When I’m not shelling out money to a restaurant for food (opportunity cost) and my family can eat breakfast for the week or two in the unit, I’m saving money or recouping losses. So there is give and take. 

I know that when I put my money in the market, it loses some days and gains on others. However over time we are hoping long term, it will be a wise investment. I think over time my timeshare will be a wise investment for my family. 

This summer I spent three weeks in Hawaii. I was on three different islands each week. Each was a two bedroom one was a Marriott. I looked at package after package to find anything comparable for air fare/accommodations/car rental. No travel group came close. Their best rates usually had a regular room, if you wanted an oceanview room, you had to come out of your pocket substantially to see the water. Accommodations are the difference maker.

One last thing remember that Marriott wantsGot cater to the high end consumer,.


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## dansimms (Jul 31, 2018)

For those of us grandfathered into a category, there is a savings in that. We stretched for the Chairman rank when it only took 13000 about 5 years ago.  In our first 10 years at Chairman, that will save us about $10,000 in maintenance fees, while enjoying the highest status.


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## DanCali (Jul 31, 2018)

You raise some good points, Carlito and dansimms. It's hard to quantify intangibles, and we've also had great vacations with our weeks and lots of flexibility being able to use timeshares in 2 systems.

My weeks are indeed all resale but I tried to buy at places where rental value substantially exceeds maintenance fees + opportunity cost + depreciation. For example, NCV summer weeks rent around $2500 and maintenance fees + taxes run around $1400. I bought those weeks for $10K each about 10 years ago so rental is still a good option even after factoring in opportunity cost (say $500/year) and some additional depreciation in resale value over the past decade (say $300/year). But with the inevitable rise in maintenance fees (it was ~$800 ten years ago) those margins have been shrinking over time. And of course there is a risk of not even being able to reserve a summer week at NCV given the way the 7-month long Platinum season there.

I guess it's good to know what the options are and always try to minimize the cost. If I ever decide to pull the trigger on one of these combo deals, it's probably better to buy the resale week on the resale market in advance rather than from Marriott's resale dept. The one rule that always seems to hold is that the less you buy directly from Marriott, the cheaper things get.


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## csalter2 (Jul 31, 2018)

DanCali said:


> You raise some good points, Carlito and dansimms. It's hard to quantify intangibles, and we've also had great vacations with our weeks and lots of flexibility being able to use timeshares in 2 systems.
> 
> My weeks are indeed all resale but I tried to buy at places where rental value substantially exceeds maintenance fees + opportunity cost + depreciation. For example, NCV summer weeks rent around $2500 and maintenance fees + taxes run around $1400. I bought those weeks for $10K each about 10 years ago so rental is still a good option even after factoring in opportunity cost (say $500/year) and some additional depreciation in resale value over the past decade (say $300/year). But with the inevitable rise in maintenance fees (it was ~$800 ten years ago) those margins have been shrinking over time. And of course there is a risk of not even being able to reserve a summer week at NCV given the way the 7-month long Platinum season there.
> 
> I guess it's good to know what the options are and always try to minimize the cost. If I ever decide to pull the trigger on one of these combo deals, it's probably better to buy the resale week on the resale market in advance rather than from Marriott's resale dept. The one rule that always seems to hold is that the less you buy directly from Marriott, the cheaper things get.




If you just want to rent and exchange, then plain buying a week from another owner works and that’s still the most economical way to go. However, if you want points or enroll that resale week into the DC program, Marriott has figured out a way to make you pay for the privilege to pay them more. The $3.00 per point they charge you for you to bring your resale points in is no joke. On the resale market, there are no longer $2.50 per point sale offers because people have paid more per point so now $3-$4 per point is the what people are asking. Thus, with the Marriott fee attached it’s more like $6-$7 per point. It’s crazy! I also chose the weeks because the maintenance fee per point is better than the DC  maintenance fee  per point. The DC maintenance fee is about .55 per point, while my weeks route is .39 per point. 

Ultimately, everyone pays to relax and most importantly to spend time with their loved ones and to make lasting memories. At least that’s my purpose. My kids appreciate that I gave them the love of travel. I hope that I can pass that same gift to my grand children.


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## GregT (Aug 1, 2018)

DanCali!  Welcome back to TUG, it has been many years!   I hope you’ve been traveling well!

I am one of those who also think that someday there will be an amnesty period and people will be allowed to enroll post-2010 weeks for a (hefty) fee.  I’m guessing June 2020 (10 year anniversary) and $10K for the fee.   We will see.   I share your views about the increasing fees and destruction of value of the Trust Points, but it’s kind of what we expected (unfortunately).   I’m glad the system has been successful, because I’d hate for Marriott to have exited completely and sold to Wyndham but it’s disappointing to see some of the actions taken.   We will see.  

Welcome back and glad you enjoyed your Kauai trip!

Best,

Greg


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