# Unlike Greedy Marriott, Disney 'changes the game" the RIGHT way!



## WelcomeHome (Jan 18, 2011)

Unlike Marriott's, one-sided, "the customer comes last" Destination Club program, Disney just "turned the tables" on the timeshare game the RIGHT way.

Since the Marriott DC Club was announced, I've felt rejected and ashamed to be a Marriott owner - and so incredibly pround to be a Disney DVC owner since they just announced their new program. Disney did it with class, total respect for its customer base, and a clear understanding that customer loyaly and satisfaction is the ONLY key to success.

Marriott's getting what it deserves with the poor responses to the DC club (which they have the nerve to attempt to portray as a success with only approximately 10% of the membership falling for their skim scam - I'm insulted by how stupid Marriott assumes their customers must be).

Look at what a class act Disney maintains while desperate Marriott resorts to disgraceful policies and tactics. Disney does it with idgnity - no smoke and mirrors, no fees and no needs for customers' chasing the truth! Disney did it with just a few paragraphs of fair, honest talk!  Take a look at how Disney plays the winning hand by respecting their customers:

http://dvcnews.com/index.php/news-p...dvc-to-create-direct-purchase-benefit-program

You're getting what you deserve Marriott - you should be ashamed of yourself!

We Marriott owners should be asking Marriott how Disney came up with such a simple, easy way of accomplishing their corporate adjenda without really hurting anyone while all Marriott came up with is a selfish, slanted new program which negatively affects about 90% of their entire customer base?

Best wishes,
Dave


----------



## SueDonJ (Jan 18, 2011)

WelcomeHome said:


> Unlike Marriott's, one-sided, "the customer comes last" Destination Club program, Disney just "turned the tables" on the timeshare game the RIGHT way.
> 
> Since the Marriott DC Club was announced, I've felt rejected and ashamed to be a Marriott owner - and so incredibly pround to be a Disney DVC owner since they just announced their new program. Disney did it with class, total respect for its customer base, and a clear understanding that customer loyaly and satisfaction is the ONLY key to success.
> 
> Marriott's getting what it deserves with the poor responses to the DC club (which they have the nerve to attempt to portray as a success with only approximately 10% of the membership falling for their skim scam - I'm insulted by how stupid Marriott assumes their customers must be).



Actually I'm more insulted by your insinuation that every person who chooses to enroll Week(s) in Marriott's DC is "stupid."  If I felt a need to insult anyone, i'd say the "stupid" ones are the ones who refuse to acknowledge that it works for some and doesn't work for others depending on the Weeks that are owned.



WelcomeHome said:


> Look at what a class act Disney maintains while desperate Marriott resorts to disgraceful policies and tactics. Disney does it with idgnity - no smoke and mirrors, no fees and no needs for customers' chasing the truth! Disney did it with just a few paragraphs of fair, honest talk!  Take a look at how Disney plays the winning hand by respecting their customers:
> 
> http://dvcnews.com/index.php/news-p...dvc-to-create-direct-purchase-benefit-program
> 
> ...



It's fairly obvious how Disney came up with it - they copied Marriott's blueprint of giving the MRP-exchange benefit to only those who purchased direct (prior to the advent of the DC) and now to those who enroll their Week(s).

FWIW, DVC'ers on the disboards.com are not all as happy with Disney today as you are.  Check out Direct Buy vs. Resale - Is this just the first step? and other similar threads over there today.  There is some legitimate concern that Disney will now differentiate usage options between direct-purchases and external-resales, which some expect will cause a further decrease in already-plummeting DVC resale values.


----------



## WelcomeHome (Jan 18, 2011)

SueDonJ said:


> Actually I'm more insulted by your insinuation that every person who chooses to enroll Week(s) in Marriott's DC is "stupid."  If I felt a need to insult anyone, i'd say the "stupid" ones are the ones who refuse to acknowledge that it works for some and doesn't work for others depending on the Weeks that are owned.
> .



Please forgive me if I offended you in any way but I believe you misunderstood me. I stated that Marriott assumes their customers are stupid for believing the salespeoples' story that "everyone is enrolling in the program" when the reality is only a small minority of owners have converted.

And secondly, I completely agree that the new program is EXCELLENT for people with sufficient points to reach the priority status level - I'm the FIRST to admit it works for some people but unfortunately that is only the small minority of Marriott owners. I don't think anyone would contest the premise that the majority of owners with only insufficient points to reach the priority levels are not very happy campers.

So most importantly, I apologize if I incorrectly offended you in any way - it was certainly not my intention.

My point was that Disney found a much better solution and as a member of both the Marriott boards and the Disney boards, I can tell you without hesitation that the Disney boards has never seen such an outpouring of poor reactions and negative threads that have appeared on this Marriott board since the release of the new DC program (at least since 2004 when I purchased DVC).

I still believe that Disney found a much better, lower impact and customer friendly solution to the problem.

Sincere best wishes,
Dave


----------



## JanT (Jan 18, 2011)

You know, I am really tired of all the Marriott bashing.  Recognize that the DC program works for some and not for others.  No, we didn't join the DC and don't intend to.  I'm not particularly happy with all aspects of it and I understand people being upset but really....let's move on from all the temper tantrums.  

And if you can't, and your distaste for Marriott is so strong, do us all (and yourself actually) a favor, sell your Marriott weeks - even if you have to give it (them) away, get out of the Marriott system and buy somewhere else.  Your blood pressure will thank you!!!


----------



## SueDonJ (Jan 18, 2011)

WelcomeHome said:


> Please forgive me if I offended you in any way but I believe you misunderstood me. I stated that Marriott assumes their customers are stupid for believing the salespeoples' story that "everyone is enrolling in the program" when the reality is only a small minority of owners have converted.
> 
> And secondly, I completely agree that the new program is EXCELLENT for people with sufficient points to reach the priority status level - I'm the FIRST to admit it works for some people but unfortunately that is only the small minority of Marriott owners. I don't think anyone would contest the premise that the majority of owners with only insufficient points to reach the priority levels are not very happy campers.
> 
> ...



Thanks for the response, Dave.

I agree with you that some (most?) Marriott reps have resorted to ridiculous statements in order to garner DC sales.  No question.  But it's only some - since the advent of the DC I've spoken to my sales rep a few times, two different Marriott execs several times and a different VOA every time I've called to check on availability for reservations.  I must be the exception to the TUG rule because none of them have told me that "everyone is enrolling in the program" - I've only heard that assertion here on TUG.  The Marriott reps that have talked about their expectations of the new DC program with me have said that it appears it will be a success because they're in the process of reaching their enrollment/sales goals, so I don't have any experience with reps who are making ridiculous statements to try to sell a "skim scam" to me.  And that's what I objected to in your post, Dave, that line about "10% of the membership falling for a skim scam."  Those of us who see actual usage value in the DC have not fallen for a scam of any kind, because we've had the benefit of knowledge and expertise from decent Marriott reps as well as TUGgers.

TUG is such a valuable resource and I'm so thankful for it because it allows all of us to dissect and analyze every aspect of timesharing, including the inevitable changes that every timeshare company makes to their business.  Without the speculation thread before the advent of Marriott's DC and all of the posts since its release, none of us Marriott owners would have been as informed as we were when we made our choice whether to enroll or not.  I believe that we're as hurt by hyperbolic "all or nothing" statements from TUGgers, as we are by those from any Marriott reps who stray from the truth in order to make their point.

About DVC?  I love the product and if Don was as big a Disney freak as me then maybe I could convince him to buy in.     But DVC isn't any more insulated from the market effects on timeshares than any other company, and there have always been rogue DVC salespeople who will say anything to make a sale.  With this statement today you can bet that will ramp up across the entire sales force because now they'll be able to say that there is a tangible difference between the direct-purchase and external-resale product.  And their sales pitch will not be 100% forthcoming in the same way that their statement today isn't - in that it doesn't address at all the effects that their newly-announced usage differential will have on resale values that are already plummeting (mostly because Disney has stopped exercising ROFR on all but two resorts.)

Timeshare sales are a struggling market no matter which name is on the resorts.  The companies are all responding in ways that will better serve their businesses, and I don't think it can be said of any of them that everything they do is either 100% good or bad.  We've always had to evaluate the particular products and the companies' rights to change their product, for good or bad, and in that respect Marriott is no better or worse than DVC or Starwood or Hilton, etc.


----------



## Werner Weiss (Jan 18, 2011)

WelcomeHome said:


> Unlike Marriott's, one-sided, "the customer comes last" Destination Club program, Disney just "turned the tables" on the timeshare game the RIGHT way.



I guess I don't see how today's DVC policy change announcement demonstrates that "Disney just 'turned the tables' on the timeshare game the RIGHT way." 

Disney is now adopting the timeshare industry's offensive practice of artificially reducing the value of resales. 

In the past, DVC treated developer and resale members/owners exactly the same. It was one of the ways that DVC demonstrated the highest level of integrity in the timeshare industry.

DVC announced today that as of March 21, 2011, new DVC resale members/owners will no longer be able to use their DVC points for the Concierge Collection (luxury hotels), the Disney Collection (DCL cruises and non-DVC Disney resorts) or the Adventurer Collection (active vacations). They will still be able to use their DVC points for DVC resorts and timeshare exchanges through RCI and two smaller timeshare entities, with no change in the rules.

Disney's new policy is not as obnoxious as Marriott's policy of extracting substantial money from resale buyers of "beneficial interests" (Marriott DC Trust points) to make those points normally usual for Marriott Vacation Club resorts. At least the ability to use DVC points for DVC resorts is built into the points and conveys fully to resale buyers.

(The paragraph above is not "Marriott bashing." It's a legitimate comparison of how Disney and Marriott treat resale points differently.)

The ironic thing is that when resales are artificially made less desirable, the people who lose the most are those of us who bought from the developer. We now own something that sells at a lower price than it should. So if we want to sell (or need to sell), we get less than we should. On the other hand, the resale buyer pays what it's worth. Because it's worth less (or perceived to be worth less), the resale buyer pays less. It's a bad deal for the developer customer and a good deal for the resale customer.


----------



## Mr. Vker (Jan 18, 2011)

JanT said:


> You know, I am really tired of all the Marriott bashing.  Recognize that the DC program works for some and not for others.  No, we didn't join the DC and don't intend to.  I'm not particularly happy with all aspects of it and I understand people being upset but really....let's move on from all the temper tantrums.
> 
> And if you can't, and your distaste for Marriott is so strong, do us all (and yourself actually) a favor, sell your Marriott weeks - even if you have to give it (them) away, get out of the Marriott system and buy somewhere else.  Your blood pressure will thank you!!!



I completely agree with your post. We dont like the points and arent joining. Others do and thats great. However, I will get frustrated if the changes do prohibit me from using my weeks the way I was told I could when originally purchased. I never want to be forced into points. I know Marriott II exchanges are never guaranteed, but I dont want them becoming impossible now when that was a big selling point with weeks.


----------



## wof45 (Jan 18, 2011)

Mr. Vker said:


> I completely agree with your post. We dont like the points and arent joining. Others do and thats great. However, I will get frustrated if the changes do prohibit me from using my weeks the way I was told I could when originally purchased. I never want to be forced into points. I know Marriott II exchanges are never guaranteed, but I dont want them becoming impossible now when that was a big selling point with weeks.



I also don't understand the point of slamming Marriott for adding a new feature that might or might not be a benefit, but does not have a cost if you don't join.

Yes, a lot of people who have not joined are concerned about what trades they might get through II in the future, but that is all speculation since the experiences we have seen reported are with both II trades and also with DC points purchases -- so it appears to me that Marriott has messed up their inventory process rather than taking things away.

It also appears to be comparing apples and oranges, since Marriott started a new points system, while Disney already has a points system and suddenly made resale buyers 2nd class citizens if you want more than reserving for occupancy or trading.  If you look at the DC points resale documentation, it also says a resale will only be able to make reservations and trade, but not through the corporate II account.

I also find the whole skim discussion a little childish.  They offer points for what you own, and they have a price list for what you can get for points.  If you don't like it, you can either not enroll your weeks, or if you same enough on fees to make enrollment beneficial, you can not turn your legacy weeks into points.  Is that really any different than the discussion about MRP and that people would like to receive more and would like to spend fewer for stays.


----------



## Scott_Ru (Jan 18, 2011)

Actually, the assumption that the new program is entirely separate from the old one that we had originally signed up for ... and that consequently it will not impact us at all ... is still be seen.  I suspect that with all the new pushing for partial weeks, the new separate holdings for those with Destination Points (and by the way we did opt in just to protect ourselves), etc. it just might become much more difficult to get our desired locations in the future.

Time will tell.  But I do think that the strikely negative response to the new program, and the way that Marriott rolled it out, suggest that Marriott did not consider it's customer base very well.  The single most telling thing for me is that if I swap any or all of my Marriott weeks for Destination Points, I will not have sufficient points to get back into my own property.  I cannot see how that cannot be viewed as other than devaluation.

Just my thoughts.


----------



## rickandcindy23 (Jan 18, 2011)

> And if you can't, and your distaste for Marriott is so strong, do us all (and yourself actually) a favor, sell your Marriott weeks - even if you have to give it (them) away, get out of the Marriott system and buy somewhere else. Your blood pressure will thank you!!!



This post is just mean, and I don't believe the OP deserved it.  

DVC shouldn't deny any member the same rights, whether resale or developer, but at least they took away the worst parts of DVC, like trading through RCI.


----------



## Werner Weiss (Jan 18, 2011)

rickandcindy23 said:


> DVC shouldn't deny any member the same rights, whether resale or developer, but at least they took away the worst parts of DVC, like trading through RCI.



All DVC "members" (owners) can still trade through RCI, including resale buyers after the new policy goes into effect.


----------



## hotcoffee (Jan 18, 2011)

Werner Weiss said:


> . . . The ironic thing is that when resales are artificially made less desirable, the people who lose the most are those of us who bought from the developer. We now own something that sells at a lower price than it should. So if we want to sell (or need to sell), we get less than we should. On the other hand, the resale buyer pays what it's worth. Because it's worth less (or perceived to be worth less), the resale buyer pays less. It's a bad deal for the developer customer and a good deal for the resale customer.



I argued this point way back when the rumors of the new program started getting posted here on TUG.  At that time, there was some suggestion that resale purchases might be penalized or excluded.  All of us have lost by the tanking of the resale market.  The more one originally paid, the bigger one loses.

What is surprising about this thread is the implication that the DVC has done things better.  I read through the DVC announcement in the OP link, and it looks to me like Disney has taken a page from the Marriott book.  I see absolutely nothing positive about that announcement.  DVC is penalizing resales.  Worse, the DVC announcement might be a hint that resale purchases are going to continue to be penalized industry-wide.


----------



## myoakley (Jan 18, 2011)

The ironic thing is that when resales are artificially made less desirable, the people who lose the most are those of us who bought from the developer. We now own something that sells at a lower price than it should. So if we want to sell (or need to sell), we get less than we should. On the other hand, the resale buyer pays what it's worth. Because it's worth less (or perceived to be worth less), the resale buyer pays less. It's a bad deal for the developer customer and a good deal for the resale customer.[/QUOTE]

I concur 100% that this approach will cause resale prices to fall.  And the greater the discrepancy between the developer price and the resale price, the more likely it is that buyers will decide to forgo the developer "perks" and opt for the cheaper resale price.  It seems to me that the developers are hurting themselves in the long run - and those who purchased from them.


----------



## wof45 (Jan 18, 2011)

hotcoffee said:


> What is surprising about this thread is the inplication that the DVC has done things better.  I read through the DVC announcement in the OP link, and it looks to me like Disney has taken a page from the Marriott book.  I see absolutely nothing positive about that announcement.  DVC is penalizing resales.  Worse, the DVC announcement might be a hint that resale purchases are going to continue to be penalized industry-wide.



I think that Disney just gave up on what at Marriott was ROFR -- or the market price support.  The economy is still a mess in the vacation markets, so this is not a surprise as the corporations (Marriott, Disney and the others) decide how they can survive and perhaps keep sales moving.


----------



## rickandcindy23 (Jan 18, 2011)

Werner Weiss said:


> All DVC "members" (owners) can still trade through RCI, including resale buyers after the new policy goes into effect.


Werner, I apparently read that wrong, and I have been wanting to buy DVC for a long time, but Rick and I still need to get a round tuit to do it.  I wouldn't use RCI.  Sounds like no cruises with points...is that correct?

Love your website, as a Disney lover, born in 1955, same year Disneyland was born.


----------



## SueDonJ (Jan 18, 2011)

rickandcindy23 said:


> This post is just mean, and I don't believe the OP deserved it. ...



Hmmmm.  What's to say that anybody on this site deserves to be spoken to/written about in any negative way?

I misinterpreted the OP's comment about "stupidity" and he's since come back and explained that further.  But IMO the OP was mean by referring to the Owners who have enrolled their Week(s) as "... approximately 10% of the membership falling for [Marriott's] skim scam."  (I'm pretty sure that's the OP's opinion - no Marriott rep has referred to the DC as a "skim scam.")


----------



## hotcoffee (Jan 18, 2011)

wof45 said:


> I think that Disney just gave up on what at Marriott was ROFR -- or the market price support.  The economy is still a mess in the vacation markets, so this is not a surprise as the corporations (Marriott, Disney and the others) decide how they can survive and perhaps keep sales moving.



It would not surprise me if the industry tries to penalize resales purchases even more.  With people picking up resales dirt cheap, I think they will still need to improve the incentives a lot more to make developer sales attractive enough to entice people to forego resales.


----------



## Werner Weiss (Jan 18, 2011)

rickandcindy23 said:


> Werner, I apparently read that wrong, and I have been wanting to buy DVC for a long time, but Rick and I still need to get a round tuit to do it.  I wouldn't use RCI.  Sounds like no cruises with points...is that correct?


New DVC resale members/owners on and after March 21 won't have option to use the Concierge Collection (luxury hotels), the Disney Collection (DCL cruises and non-DVC Disney resorts) or the Adventurer Collection (active vacations). There's also the concern that now that Disney has adopted the practice of having two classes of owners, other restrictions could follow.

The good news is that when it comes to booking reservations at DVC resorts or making exchanges to other timeshares, resale buyers of DVC points after March 21 will still have all the same rights and rules as those who bought from Disney.

If I read DVC's Public Offering Statement correctly, the ability to use DVC point system is an integral part of a DVC member's ownership. That means there should never be a need for resale buyers to spend thousands of dollars to make their points usable (and an artificial corresponding decrease in resale value by a similar amount for the original owner).

I don't like what Disney announced today, but it's not nearly as obnoxious as how Marriott deals with the resale of "beneficial interests" (DC Trust points).



rickandcindy23 said:


> Love your website, as a Disney lover, born in 1955, same year Disneyland was born.


Thank you!


----------



## BocaBoy (Jan 18, 2011)

SueDonJ said:


> Thanks for the response, Dave.
> 
> I agree with you that some (most?) Marriott reps have resorted to ridiculous statements in order to garner DC sales.  No question.  But it's only some - since the advent of the DC I've spoken to my sales rep a few times, two different Marriott execs several times and a different VOA every time I've called to check on availability for reservations.  I must be the exception to the TUG rule because none of them have told me that "everyone is enrolling in the program" - I've only heard that assertion here on TUG.  The Marriott reps that have talked about their expectations of the new DC program with me have said that it appears it will be a success because they're in the process of reaching their enrollment/sales goals, so I don't have any experience with reps who are making ridiculous statements to try to sell a "skim scam" to me.....Those of us who see actual usage value in the DC have not fallen for a scam of any kind, because we've had the benefit of knowledge and expertise from decent Marriott reps as well as TUGgers.



Thank you for an excellent post.  We need to keep some balance at TUG and not just believe the opinions of a few (including me) represent the vast majority of owners.  I do not like some things about the new program, but everything I see says that their sales are going very well and a lot of owners are buying extra points.  My salesman in Maui told me this week that many are using the new program to add points to an existing week so that between the week's points and the extra points they have enough to go to a higher end resort than before.  It is similar in that regard to their former equity upgrade program where an owners could trade in a week as partial payment on a more expensive week.  I have enough exchange points available that I won't buy any more, but it makes sense to me that many owners would find that attractive.

I am in Maui this week and I can tell you that the sales office is selling A LOT of points to existing owners.


----------



## windje2000 (Jan 18, 2011)

BocaBoy said:


> Thank you for an excellent post.  We need to keep some balance at TUG and not just believe the opinions of a few (including me) represent the vast majority of owners.  I do not like some things about the new program, but everything I see says that their sales are going very well and a lot of owners are buying extra points.  My salesman in Maui told me this week that many are using the new program to add points to an existing week so that between the week's points and the extra points they have enough to go to a higher end resort than before.  It is similar in that regard to their former equity upgrade program where an owners could trade in a week as partial payment on a more expensive week.  I have enough exchange points available that I won't buy any more, but it makes sense to me that many owners would find that attractive.
> 
> I am in Maui this week and I can tell you that the sales office is selling A LOT of points to existing owners.



The last stats I have seen indicated 19,500,000 points sold from inception to 12/15/2010.

Assume an average price of $9.50.

Total $ sales = $185 million.  For just less than half a year, including the summer which should be prime selling time.  I don't believe the post Xmas months are prime selling time for timeshare.

That's a run rate of about $370 million per year, assuming no seasonal.   

They were doing a lot better selling weeks.  


Timeshare contract sales were 

$1.2 billion in 2007

$1.1 Billion in 2008

$0.7 Billion in 2009

Source: Marriott 2009 Annual Report, p 35 Business Segment Information


----------



## SueDonJ (Jan 18, 2011)

windje2000 said:


> The last stats I have seen indicated 19,500,000 points sold from inception to 12/15/2010.
> 
> Assume an average price of $9.50.
> 
> ...



Wouldn't their business plan have consisted of looking to the future and comparing how well Weeks would sell relative to the inventory that would be available?  No question that if they were able to continue developing new resorts and selling the same product as before then Weeks might possibly out-sell Points.  But with limited development funds available as well as a depressed timeshare market, I think it's unreasonable to expect that future development of new resorts and selling of prime Weeks at such resorts would have continued at the same pace much beyond 2010 as those periods you're referencing.

There have been reports on TUG of a new Marriott system for several years; this wasn't a hastily-prepared incomplete idea for Marriott and was actually implemented after the original target date.  If they hadn't introduced the DC as a vehicle to move the non-prime Weeks that were sitting unsold; as a means to generate revenue among a certain number of existing Owners by enhancing their previously-purchased products; and, in the form of a product that could be purchased by new customers for less than the $60K-plus Weeks at the newer resorts (Crystal Shores, Maui, etc.) then IMO Marriott's entire timeshare business would have suffered to a far greater degree than its reputation has among some existing Owners who don't stand to gain an advantage from the DC.


----------



## wof45 (Jan 18, 2011)

SueDonJ said:


> There have been reports on TUG of a new Marriott system for several years; this wasn't a hastily-prepared incomplete idea for Marriott and was actually implemented after the original target date.  If they hadn't introduced the DC as a vehicle to move the non-prime Weeks that were sitting unsold; as a means to generate revenue among a certain number of existing Owners by enhancing their previously-purchased products; and, in the form of a product that could be purchased by new customers for less than the $60K-plus Weeks at the newer resorts (Crystal Shores, Maui, etc.) then IMO Marriott's entire timeshare business would have suffered to a far greater degree than its reputation has among some existing Owners who don't stand to gain an advantage from the DC.



I totally agree.  I have been wondering how they were going to sell the silver and bronze weeks with the same high MF as the platinum and gold weeks.  With DC points, all they need to do is reserve the bad weeks for fewer points, and reserve great weeks for higher points.

And this really is a way to reserve at any property rather than just the one you own, and  then hope to trade for another.

They just don't present it very well.  But maybe it does present well to TS newbies


----------



## windje2000 (Jan 18, 2011)

SueDonJ said:


> Wouldn't their business plan have consisted of looking to the future and comparing how well Weeks would sell relative to the inventory that would be available?  No question that if they were able to continue developing new resorts and selling the same product as before then Weeks might possibly out-sell Points.  But with limited development funds available as well as a depressed timeshare market, I think it's unreasonable to expect that future development of new resorts and selling of prime Weeks at such resorts would have continued at the same pace much beyond 2010 as those periods you're referencing.
> 
> There have been reports on TUG of a new Marriott system for several years; this wasn't a hastily-prepared incomplete idea for Marriott and was actually implemented after the original target date.  If they hadn't introduced the DC as a vehicle to move the non-prime Weeks that were sitting unsold; as a means to generate revenue among a certain number of existing Owners by enhancing their previously-purchased products; and, in the form of a product that could be purchased by new customers for less than the $60K-plus Weeks at the newer resorts (Crystal Shores, Maui, etc.) then IMO Marriott's entire timeshare business would have suffered to a far greater degree than its reputation has among some existing Owners who don't stand to gain an advantage from the DC.



Business plan?  Forecasts are at best educated guesses and at worst bald faced lies.  Most fall somewhere in the middle of these extremes, but virtually all are in some way self serving.  Since weeks sales didn't continue in parallel with points sales, we'll never know how weeks sales would have fared.

I respectfully disagree with the notion that this was anything but a hastily prepared quick fix for a huge decline in sales.  I cannot think of one well executed aspect of this program.  Just looking at how disorganized the legal docs are and the lack of preparedness by the staff on day one for early adopters suggests exactly the opposite.

The objective of the exercise was to sell timeshare interests.  Timeshare sales will probably be half of what they were in 2009 despite an improving economy and owner demographics which probably were less affected by the economic decline.


----------



## amyhwang (Jan 18, 2011)

On a slightly different note, I just spent 2 nights at Marriott's Harbour Lake, then the following 7 nights at Disney's Boardwalk Villas.  I absolutely have always LOVED the Boardwalk Villas, and the Epcot resort area.  We've taken our kids at least 15 times, and almost always stay in that area (BWV, Swan, Dolphin, BWI).

This time, I noticed that we went from an immaculate Marriott villa, with tons of space and a real dining table, plus a kitchen that was better stocked, to a villa in need of renovation, which was much smaller, with a small table for 2 for eating (and I did cook a few meals).

Years back, I had really wanted to buy into DVC, but even with the inconvenience of driving, in Orlando I'd prefer Marriott.  Yes, I've loved Disney (to a fault, and spent tons of $$$ there) but have been so pleased with Marriott that it's our first choice now.

I also have some friends that bought Ko Olina prior to it being built (we visited years back while on Oahu) as well as some other properties, and for them, if they join the new points system, they will have a HUGE advantage.  For me, it won't work, as I don't like the skim.  But, Disney and Marriott to me is apples to oranges.  With Disney, you pay for the convenience of being right there in the resort.


----------



## dioxide45 (Jan 18, 2011)

I think one thing Disney did right was setting a drop dead date in the future. This allowed people currently in the closing process to complete their transfer and still have access under the old way. Marriott rolled out their new system without any warning (other than rumor) and set the date of roll-out to be the date that they begun excluding resale purchases. DVC did better than Marriott in this case.

Also, I think there is a misconception that most of the weeks in the trust are all dog weeks in low season. While I am sure there are lots of them, the trust is made up primarily of weeks they couldn't sell because they were just plain too expensive. There are lots of Hawaii, Oceana Palms, and Marco Island weeks in the trust. Many of them platinum and platinum plus. I don't think Harbour Lake had any weeks initially deposited in to the trust, and there were not many Branson weeks either. Of what was built at those resorts, the inventory available was mostly sold out.

The problem is that Marriott was holding on to some very overpriced inventory, even after their write downs. They had to sell it somehow. And the DC Trust afforded that opportunity.


----------



## kjd (Jan 18, 2011)

Maybe I didn't catch it but does anyone know what Disney is charging resale owners to join the program before March?  Also, was Disney ever a deeded weeks program?  I had always heard that their product (points) had an expiration time of something like thirty years.  A lot of us are unfamiliar with Disney because we are not interested in their theme parks.  It's a meaningless comparison for many of us.


----------



## dioxide45 (Jan 18, 2011)

The problem with the Marriott system is they created something that only appeals to a very small percentage of their overall ownership base. I think most can agree that if a company came up with an enhancement to try to sell to current customers and were only able to sell to 10% of them, that would be considered a failure. The program works for the 10% that bought in, however this doesn't make it an overall benefit to the ownership base.

Marriott can spin this however they want, but overall it would have to be considered a failure if their goal was to enroll current owners. a success would be more like 80% enrollment with ancillary fees for years to come, instead of a large upfront profit with low ancillary fees in future years. IMO enrollments in the DC Exchange Company would have to be considered a failure.

Of course this wasn't their goal. Their goal was to unload a glut of inventory that was holding them back. Current owners were seen as a base to sell more inventory to. I think one would think if you could sell more of an overpriced product (DC Trust Points) to 5% of your current owners, that may be considered a success in the current market.

So DCs success won't be measured in enrollments or DC conversions. It will be measured on how well it allows Marriott to unload inventory.

Marriott may have been thinking through this DC program for years; however, given how the initial documents looked when they rolled this out, I think they were forced to push it out faster than it really should have been. There was very poor training of the sales and customer service staff.

The problem is that Marriott thought a huge percentage of people would plop down anywhere from $595 to $1995 to enroll. Because it was from Marriott it had to be good. Of course as we know for most, the money spent isn't worth the benefit. For those that have enrolled, I am happy that the program as designed works for you. However, wouldn't you be happier if it worked for most everyone else too?

Had they given this a little more though, they could have had a higher enrollment rate, more DC conversions, and an overall happy ownership based. Their enhancement would have been seen as one by the majority of their ownership base. They could have still converted unsold inventory to a trust and sold points going forward.

They did their surveys and heard from their customers that said they didn't like II and didn't like not knowing if their exchange would come through. They didn't like the al la carte fees. Of course they only hear from the people that complain, not from the people that are perfectly happy with how things are. They created a system that appeals to 10% of their current owners because it is likely that only 10% of the current base was unsatisfied.

I agree with the OP to a degree. Marriott got a greedy with this. They decided to charge a large upfront fee hoping for a huge gain if a large percentage of people enrolled. That isn't happening. They could have taken the steady stream of annual fee income for years to come and offered much cheaper enrollment fee (if not free). Their greed has backfired on them somewhat. Do they care, do they see it that way? Who knows.


----------



## Mr. Vker (Jan 18, 2011)

wof45 said:


> I also don't understand the point of slamming Marriott for adding a new feature that might or might not be a benefit, but does not have a cost if you don't join.
> 
> Yes, a lot of people who have not joined are concerned about what trades they might get through II in the future, but that is all speculation since the experiences we have seen reported are with both II trades and also with DC points purchases -- so it appears to me that Marriott has messed up their inventory process rather than taking things away.
> 
> ...



In short, its because the features they added (imho) negatively impact selling points they pushed when we bought. Now, you are correct, we dont know the actual impact. But to listen to the sales reps and their scare tactics, II exchanges will be next to impossible etc. Thats all. A lot has to play out. I hope ( and have some optimism) that we will all be fine and continue to enjoy the aspects of the plan that fits each of us best.


----------



## Werner Weiss (Jan 18, 2011)

kjd said:


> Maybe I didn't catch it but does anyone know what Disney is charging resale owners to join the program before March?



DVC owners who purchased their DVC points on the re-sale market prior to March 21, 2011, are grandfathered in, as though they purchased from Disney. There is no enrollment fee or other fee involved, and it's really not a case of "joining" a program. It's simply a case of having the same portfolio of options that's been around for years.

As of March 21, some usage options will considered "special Member benefits" only offered to those who purchased from Disney Vacation Development (and those who were grandfathered), not to owners of *new* resale contracts. Frankly, these are not particularly valuable options, but the big news is that Disney will have two tiers of owners. Until now, Disney has treated all owner the same.



kjd said:


> Also, was Disney ever a deeded weeks program?  I had always heard that their product (points) had an expiration time of something like thirty years.  A lot of us are unfamiliar with Disney because we are not interested in their theme parks.  It's a meaningless comparison for many of us.


Disney was a point program from day one. It was never a weeks program. The points represent deeded real estate lease interests at a specific resort (not in a trust of multiple resorts), and, yes, they do expire. The leases typically last around 50 years, so for some older properties that means the year 2042.

The ability to use the points is part of that deeded interest. So Disney resale buyers who simply want to stay at DVC resorts and/or exchange through RCI (and two other timeshare systems) can still get a great value -- especially if Disney's new policy depresses resale prices.


----------



## dioxide45 (Jan 18, 2011)

I would have to agree that for the most part when developers choose to exclude resale purchasers to a benefit, the benefit usually doesn't outweigh the extra cost of a direct purchase. This was the case with the trade for MRP option. To many it wasn't worth the extra thousands or tens of thousands of dollars to get that option. DVC seems to have gone the same way.

The problem with Marriott given how they have setup their trust is that DC Trust beneficial interests purchased externally are ultimately useless without huge fees paid to Marriott.


----------



## Werner Weiss (Jan 18, 2011)

dioxide45 said:


> The problem with Marriott given how they have setup their trust is that DC Trust beneficial interests purchased externally are ultimately useless without huge fees paid to Marriott.


That's worth repeating.

Marriott DC Trust beneficial interests are essentially worthless unless the resale buyer pays thousands to Marriott. That reduces the resale value by the same amount. After all, the resale buyer is concerned about the complete price to get a usable points. That hurts anyone (or their heirs) who will ever sell their DC Trust beneficial interest for any reason.

In defense of Disney, DVC Ownership Interests (DVC points) purchased on the resale market do not require any sort of huge fee to Disney to make them "whole." For DVC resort stays and other timeshare exchanges, they are the same as those purchased from Disney.


----------



## SueDonJ (Jan 19, 2011)

dioxide45 said:


> The problem with the Marriott system is they created something that only appeals to a very small percentage of their overall ownership base. I think most can agree that if a company came up with an enhancement to try to sell to current customers and were only able to sell to 10% of them, that would be considered a failure. The program works for the 10% that bought in, however this doesn't make it an overall benefit to the ownership base.
> 
> Marriott can spin this however they want, but overall it would have to be considered a failure if their goal was to enroll current owners. a success would be more like 80% enrollment with ancillary fees for years to come, instead of a large upfront profit with low ancillary fees in future years. IMO enrollments in the DC Exchange Company would have to be considered a failure.
> 
> ...



It isn't that I disagree with your thinking or don't understand it, but there's another way of looking at Marriott's new program that we as existing Owners are maybe not seeing.  Marriott recognized at least five years ago that they needed to change their timeshare product in a drastic way because the Weeks model doesn't work without continuing development of new resorts, yet the nature of continuing development results in a glut of lesser-demand Weeks which become a financial burden to Marriott rather than an enticing product for new customers.

As you pointed out, the lesser-demand Weeks don't represent the only Weeks which weren't selling and which can be given new life by virtue of the new Points-based Trust model.  The higher-priced newer resorts were not selling either.  Marriott's newer resorts - Crystal Shores, Maui, etc. - are absolutely stunning by all reports but that class of resort isn't possible without a steep price.  Those Weeks couldn't be pitched to what had been Marriott's typical customer base in the best of economic times, at least not to the extent that Marriott needed to sell them to sustain the model.  And all bets were off when the economy tanked and Marriott's source of development funding vanished along with every other developer's.

I really don't think that the Trust model was developed with existing Owners as the target market, and I don't think either that the success of the new model is dependent upon participation/enrollment of a majority of the existing previously-sold Weeks.  I think they need just enough Weeks to fuel the exchange opportunities for all DC members - Exchange and Trust - and I believe that the 20% number that's been kicked around will suffice for that purpose (especially when you consider that Marriott has written the T&C's for the Weeks and Points models in such a way that they do have a whole lot of leeway to move inventory among the "buckets" to reach their goals.)

About your, "For those that have enrolled, I am happy that the program as designed works for you. However, wouldn't you be happier if it worked for most everyone else too?"  Well sure, of course, it would be great if everyone was happy with the DC offering.  But I don't think it's possible for any business, Marriott included, to develop a product that makes every prospective customer happy.  And that's what we all became when the DC was introduced - new prospective customers as a source of both revenue and inventory.

What if making every existing Weeks owner happy translates to the Trust model becoming overloaded with "unnecessary" inventory that could lead to its failure?  If Marriott's business plan determined that the Trust model couldn't support participation from a majority of the Weeks, because most vacationers don't want to travel during off-season periods and Marriott is already holding a good amount of that inventory, then it makes good business sense for them to price it in such a way that all existing Weeks Owners would not be happy with it.  And ultimately, that's what will benefit all of us, if Marriott's timeshare business is able to continue successfully despite the market forces working against every timeshare company.

About the legal paperwork, I think there really isn't much difference in how the legalese reads between the Weeks model documents and the Trust model's.  Marriott could certainly have prepared much better for the roll-out by training their employees on the nuances of they system, putting more employees to work answering calls, getting their email and snail mail systems up to speed with the volume, etc...  But when you think about it, there have always been discussions on TUG about the ambiguity in Weeks docs, the reluctance of Marriott to put certain practices in writing, the misrepresentations and contradictions that are offered by Marriott reps, etc.  I'm not saying that Marriott is correct to continue those negative aspects of ownership with the Trust model, but only that it doesn't surprise me.

Ultimately what will make us all happy is the same thing, the reason we all purchased Marriott timeshares in the first place - we want to vacation in a certain style at nice locations.  I hope that the advent of the DC doesn't erase that possibility for any of us whether we choose to enroll our Weeks or not.  But I think it's important to recognize that changes had to be made if Marriott is to continue as a successful timeshare company, and not all of the changes will be embraced by all of us.  (And I'm including myself here - not everything about the DC is wonderful in my eyes either.)


----------



## dioxide45 (Jan 19, 2011)

SueDonJ said:


> I really don't think that the Trust model was developed with existing Owners as the target market, and I don't think either that the success of the new model is dependent upon participation/enrollment of a majority of the existing previously-sold Weeks.



If Marriott didn't develop the trust model with current owners as a target market, I think this would be a fundamental error. In the past weeks model, current owners made up a huge percentage of new unit sales. If they decided to forgo that and try to target a whole new customer base, a base that already has a negative view of timeshares, it could lead to disastrous consequences.


----------



## windje2000 (Jan 19, 2011)

Werner Weiss said:


> That's worth repeating.
> 
> Marriott DC Trust beneficial interests are essentially worthless unless the resale buyer pays thousands to Marriott. That reduces the resale value by the same amount. After all, the resale buyer is concerned about the complete price to get a usable points. That hurts anyone (or their heirs) who will ever sell their DC Trust beneficial interest for any reason.
> 
> In defense of Disney, DVC Ownership Interests (DVC points) purchased on the resale market do not require any sort of huge fee to Disney to make them "whole." For DVC resort stays and other timeshare exchanges, they are the same as those purchased from Disney.



Werner, I'm not sure a resale buyer of Marriott points even has the option of enrolling them in DClub by paying money.  See the post at this link.  

LINK

Thank you for Yesterland - I especially enjoy your site.


----------



## windje2000 (Jan 19, 2011)

SueDonJ said:


> It isn't that I disagree with your thinking or don't understand it, but there's another way of looking at Marriott's new program that we as existing Owners are maybe not seeing.  Marriott recognized at least five years ago that they needed to change their timeshare product in a drastic way because the Weeks model doesn't work without continuing development of new resorts, yet the nature of continuing development results in a glut of lesser-demand Weeks which become a financial burden to Marriott rather than an enticing product for new customers.
> 
> Five years ago Marriott was selling more than $1B in timeshare.  If they were 'stuck' with a glut of lesser demand weeks, their pricing was incorrect, and keep in mind that the price of purchasing includes the value of the committment to pay the maintenance fee every year.
> 
> ...



Marriott's business plan caused it's timeshare development business to suffer as the economy decreased discretionary spending.  

That's to be distinguished from resort management business, which should not be affected at all by the development of new resorts.

I, too, like the resorts.  A lot.  The management of the resorts can continue to be outstanding even if Marriott never sells another week or point.


----------



## wof45 (Jan 19, 2011)

dioxide45 said:


> If Marriott didn't develop the trust model with current owners as a target market, I think this would be a fundamental error. In the past weeks model, current owners made up a huge percentage of new unit sales. If they decided to forgo that and try to target a whole new customer base, a base that already has a negative view of timeshares, it could lead to disastrous consequences.



I'm a little breath taken by this one.

how do you explain current owners making up a huge percentage of new unit sales, when also saying that new customers should buy resale rather than new units?

if current owners buy resale instead, it sounds like they are not providing any sales revenue to Marriott, so why would Marriott change the description to make people happy who will use their product but not pay for it?


----------



## RBERR1 (Jan 19, 2011)

*Agree with Dioxide*



dioxide45 said:


> I think one thing Disney did right was setting a drop dead date in the future. This allowed people currently in the closing process to complete their transfer and still have access under the old way. Marriott rolled out their new system without any warning (other than rumor) and set the date of roll-out to be the date that they begun excluding resale purchases. DVC did better than Marriott in this case.
> 
> Also, I think there is a misconception that most of the weeks in the trust are all dog weeks in low season. While I am sure there are lots of them, the trust is made up primarily of weeks they couldn't sell because they were just plain too expensive. There are lots of Hawaii, Oceana Palms, and Marco Island weeks in the trust. Many of them platinum and platinum plus. I don't think Harbour Lake had any weeks initially deposited in to the trust, and there were not many Branson weeks either. Of what was built at those resorts, the inventory available was mostly sold out.
> 
> The problem is that Marriott was holding on to some very overpriced inventory, even after their write downs. They had to sell it somehow. And the DC Trust afforded that opportunity.



Setting the drop dead date in the future was something that DVC saw was a real thorny issue with Marriott roll-out and decided to do it better.
I wonder what Marriott would have done differently if they had to do it again as hindsight is always 20/20.


----------



## hotcoffee (Jan 19, 2011)

A while back, I was scanning the Internet looking for statistics on the profitability of the timeshare segment of Marriott's business.  One article I came across had a comment about Marriott being advised by some financial analysts to drop the timeshare segment because it was unprofitable.  Marriott's response was that they believed it could return to profitability.  Perhaps they had in mind the DC program when they talked about future profitability.  Even though I enrolled and expect to have an exchange advantage over non-enrollees, I am not particularly thrilled about Marriott's money grab.  They used existing inventory to make money that could not have been made under the weeks system.  I suspect that if the DC program does not show the profit they hoped for, they will make changes to it. Some of the changes might even reduce resale values even further.  I would not even be surprised if they were to put an additional squeeze on the non-enrollees by making it more difficult to get consistent good exchanges outside of the program.


----------



## BocaBoy (Jan 19, 2011)

windje2000 said:


> The last stats I have seen indicated 19,500,000 points sold from inception to 12/15/2010.



How many total points were in the Trust?  I thought it was something around 40 million, but I cannot find the information now.  If it is around 40 million, that would mean that the Trust is already half sold out in 7 months.  The sales people in Maui that I know and trust are quite happy to be selling the points, which surprised me greatly.  They say that the average sales price is now much lower, of course, but that they are selling to a lot more people.  They say that most are existing MVCI owners (especially at mid-price resorts) buying new points so they can easily choose to stay at a more expensive resort than where they own.

Interestingly, their main concern seems to be that Marriott will soon be running low on inventory to sell and they hope Marriott will develop a program to buy back weeks that can then be put into the Trust and re-sold as points.


----------



## windje2000 (Jan 19, 2011)

hotcoffee said:


> A while back, I was scanning the Internet looking for statistics on the profitability of the timeshare segment of Marriott's business.  One article I came across had a comment about Marriott being advised by some financial analysts to drop the timeshare segment because it was unprofitable.  Marriott's response was that they believed it could return to profitability.  Perhaps they had in mind the DC program when they talked about future profitability.  Even though I enrolled and expect to have an exchange advantage over non-enrollees, I am not particularly thrilled about Marriott's money grab.  They used existing inventory to make money that could not have been made under the weeks system.  I suspect that if the DC program does not show the profit they hoped for, they will make changes to it. Some of the changes might even reduce resale values even further.  I would not even be surprised if they were to put an additional squeeze on the non-enrollees by making it more difficult to get consistent good exchanges outside of the program.



The timeshare segment had income from operations (pretax) of more than $300 million in 2007.  It declined to $28 million in 2008. 

The segment had a loss from operations of $679 million in 2009.  Virtually all of that loss was attributable to an asset value impairment charge of just over $700 million.  The company recognized it couldn't sell the timeshare assets it owned for the carrying values per books, and wrote them down.

Source:  pages 35 and 87 of the 09 Marriott Annual report, available on the website as a .pdf file.


----------



## BocaBoy (Jan 19, 2011)

SueDonJ said:


> The higher-priced newer resorts were not selling either.  Marriott's newer resorts - Crystal Shores, Maui, etc. - are absolutely stunning by all reports but that class of resort isn't possible without a steep price.


Just a very minor quibble, because generally I agree with this point.  My only quibble is Maui--TUGGERs seem to have accepted as fact that there is a lot of Maui inventory in the Trust.  In reality, Maui was something like 97% or 98% sold out when the DC program was launched.  As for the highest priced weeks, Lahaina Tower has been completely sold out (except for literally a handful of fixed unit, fixed weeks) for a couple of years and the Napili Tower unsold inventory was modest, although some expensive weeks did remain unsold when the new program was introduced.  Ko Olina had a lot of unsold inventory because of its new tower, and Kauai Lagoons was new, but Waiohai and the Kauai Beach Club were essentially sold out, even more so than Maui.


----------



## windje2000 (Jan 19, 2011)

BocaBoy said:


> How many total points were in the Trust?  I thought it was something around 40 million, but I cannot find the information now.  If it is around 40 million, that would mean that the Trust is already half sold out in 7 months.  The sales people in Maui that I know and trust are quite happy to be selling the points, which surprised me greatly.  They say that the average sales price is now much lower, of course, but that they are selling to a lot more people.  They say that most are existing MVCI owners (especially at mid-price resorts) buying new points so they can easily choose to stay at a more expensive resort than where they own.
> 
> Interestingly, their main concern seems to be that Marriott will soon be running low on inventory to sell and they hope Marriott will develop a program to buy back weeks that can then be put into the Trust and re-sold as points.



I believe it was initially loaded with 42M points, but I have seen a post(s) by Dioxde which updated that figure.


----------



## wof45 (Jan 19, 2011)

windje2000 said:


> The timeshare segment had income from operations (pretax) of more than $300 million in 2007.  It declined to $28 million in 2008.
> 
> The segment had a loss from operations of $679 million in 2009.  Virtually all of that loss was attributable to an asset value impairment charge of just over $700 million.  The company recognized it couldn't sell the timeshare assets it owned for the carrying values per books, and wrote them down.
> 
> Source:  pages 35 and 87 of the 09 Marriott Annual report, available on the website as a .pdf file.



It will be interesting to see if the impaired amount is changed in 2010.  It sound like they may have set themselves to show a large profit since they might be selling DC trust points for a lot more than the book value.


----------



## windje2000 (Jan 19, 2011)

wof45 said:


> It will be interesting to see if the impaired amount is changed in 2010.  It sound like they may have set themselves to show a large profit since they might be selling DC trust points for a lot more than the book value.



Neither SFAS 144 nor SFAS 142 permit the recovery of a previous impairment loss. Under U.S. GAAP, the recognition of an impairment loss is permanent.


----------



## SueDonJ (Jan 19, 2011)

SueDonJ said:


> ... I really don't think that the Trust model was developed with existing Owners as the target market, and I don't think either that the success of the new model is dependent upon participation/enrollment of a majority of the existing previously-sold Weeks.  I think they need just enough Weeks to fuel the exchange opportunities for all DC members - Exchange and Trust - and I believe that the 20% number that's been kicked around will suffice for that purpose (especially when you consider that Marriott has written the T&C's for the Weeks and Points models in such a way that they do have a whole lot of leeway to move inventory among the "buckets" to reach their goals.) ...





dioxide45 said:


> If Marriott didn't develop the trust model with current owners as a target market, I think this would be a fundamental error. In the past weeks model, current owners made up a huge percentage of new unit sales. If they decided to forgo that and try to target a whole new customer base, a base that already has a negative view of timeshares, it could lead to disastrous consequences.





windje2000 said:


> ... When you historically get nearly 60% of your business from existing customers, abandoning them as a target market is lunacy. I don't think they planned to abandon the owners -- they're still leaving messages on the resort phone system about signing up for a presentation. ...



Sometimes, especially at 2 in the morning, it doesn't matter how many words I use because a million of them still don't get the point across that I'm trying to make.

Of course existing Weeks owners are looked at by Marriott as prospective customers, but more as DC Points purchasers than Weeks-enrollers.  I really don't think that Marriott needs or WANTS all of the previously-purchased Weeks to be enrolled in the DC, because that would result in an overload of inventory that wouldn't be requested for exchanges by either Weeks or Points Owners.  Some reps have kicked around the 20% figure as an expected enrollment; that figure was actually explained to me as the number of enrollments _of certain inventory_ necessary for the success of the new program.

That's why every sales presentation is more a push to purchase Points than it is to enroll Weeks, that's why the sales staff and other reps tout the benefits of Premier and Premier Plus Owner status, that's why the glossy brochures (of which we're seeing more and more) focus more on the flexibility of Points and the expanded options than on how a Week can be integrated into the new system.

We're all potential customers of the new Points product, but look how easily we've been dismissed when we focus on our Weeks in sales presentations.  There have been many reports on TUG of folks who have been told outright by reps that enrolling their one Week into the DC is not a good move, at least not without tacking on a Points purchase to the enrollment.  "You're not buying?  Next!"

There've only been a few reports, you can probably count them on one hand, from folks like me who have been told that Marriott won't bother trying to sell us Points because they know our Weeks enrollments give us enough Points to work the system and get more exchange value than what we'd traditionally been getting from II.  They worked us only as long as it took to get our enrollments because our high-Point-value Weeks are the ones they need to fuel the Exchange Company.  "You're enrolled?  Next!"

No, the target market for the DC is the person who sat through a sales presentation three years ago but didn't buy because a single Week at the newer high-priced resorts did not fit their vacation budget.  Those are the people Marriott can now go back to and say, "Look, we re-tooled our product so that you can spend only what you can afford, but you'll still have access to our wonderful resorts.  Perhaps you'll only be able to visit them every other year or every third year, but our new banking and borrowing options will allow you to do that."  Or the people who said they wanted the flexibility of shorter stays or more-convenient one-stop shopping - they're the target now.  "Look, you can choose any number of days at any of our wonderful resorts, and we can take care of it all with one simple phone call!"  Marriott already had all of us Weeks Owners who like the old style of timesharing; they needed to branch out into the style that Disney made famous. 



BocaBoy said:


> How many total points were in the Trust?  I thought it was something around 40 million, but I cannot find the information now.  If it is around 40 million, that would mean that the Trust is already half sold out in 7 months.  The sales people in Maui that I know and trust are quite happy to be selling the points, which surprised me greatly.  They say that the average sales price is now much lower, of course, but that they are selling to a lot more people.  They say that most are existing MVCI owners (especially at mid-price resorts) buying new points so they can easily choose to stay at a more expensive resort than where they own. ...



And this speaks to the remaining Weeks Owners, those with one Week of in-demand inventory or several Weeks that can be combined to reach almost-to-There with Points and will purchase a small amount to get There.  "There" being Premier status, of course.

***
Here's the link for dioxide's thread which details Trust conveyances.  Looks like they were at approx 65M after the November expansion.


----------



## SueDonJ (Jan 19, 2011)

BocaBoy said:


> Just a very minor quibble, because generally I agree with this point.  My only quibble is Maui--TUGGERs seem to have accepted as fact that there is a lot of Maui inventory in the Trust.  In reality, Maui was something like 97% or 98% sold out when the DC program was launched.  As for the highest priced weeks, Lahaina Tower has been completely sold out (except for literally a handful of fixed unit, fixed weeks) for a couple of years and the Napili Tower unsold inventory was modest, although some expensive weeks did remain unsold when the new program was introduced.  Ko Olina had a lot of unsold inventory because of its new tower, and Kauai Lagoons was new, but Waiohai and the Kauai Beach Club were essentially sold out, even more so than Maui.



Thanks for correcting me.  I knew the Crystal Shores inventory wasn't selling along with something in Hawaii that involved a new tower.  Now I know it was Ko'Olina and not Maui, thanks.


----------



## wof45 (Jan 19, 2011)

windje2000 said:


> Neither SFAS 144 nor SFAS 142 permit the recovery of a previous impairment loss. Under U.S. GAAP, the recognition of an impairment loss is permanent.



that just means that they will make a bigger profit selling written down weeks for $10 per point.


----------



## wof45 (Jan 19, 2011)

to add to Sue's comment --
this is the reason why they offer virtually no enrollment points for bronze and few points for silver weeks.  They just don't want them.


----------



## windje2000 (Jan 19, 2011)

SueDonJ said:


> *"You're not buying?  Next!"*
> 
> *"You're enrolled?  Next!"*



Seinfeldian -- have they become 'points nazis'?

Seriously, I think we agree that the sole objective of the whole exercise is to sell points . . . and they could give a rip about anything else.


----------



## wof45 (Jan 19, 2011)

windje2000 said:


> Seinfeldian -- have they become 'points nazis'?
> 
> Seriously, I think we agree that the sole objective of the whole exercise is to sell points . . . and they could give a rip about anything else.



I think the unsimplified view is that they want to sell points, so they will support whatever makes buying points attractive to buyers. 

And they want the cash flow from managing resorts, so they want to make sure that the majority of people occupying enjoy their stays.


----------



## SueDonJ (Jan 19, 2011)

windje2000 said:


> Seinfeldian -- have they become 'points nazis'?
> 
> Seriously, I think we agree that the sole objective of the whole exercise is to sell points . . . and they could give a rip about anything else.





wof45 said:


> I think the unsimplified view is that they want to sell points, so they will support whatever makes buying points attractive to buyers.
> 
> And they want the cash flow from managing resorts, so they want to make sure that the majority of people occupying enjoy their stays.



Yep, we're definitely in agreement.  I'd expand it a little more to them wanting certain Weeks inventory to fuel the Exchange Company, and that's why the DC is more or less attractive to Weeks Owners depending upon what is owned.  It's completely by design that some Owners get more usage value from their Weeks in the DC than others.


----------



## windje2000 (Jan 19, 2011)

Wof posted this comment



wof45 said:


> It will be interesting to see if the impaired amount is changed in 2010.  It sound like they may have set themselves to show a large profit since they might be selling DC trust points for a lot more than the book value.



And I responded with



windje2000 said:


> Neither SFAS 144 nor SFAS 142 permit the recovery of a previous impairment loss. Under U.S. GAAP, the recognition of an impairment loss is permanent.



This exchange with wof got me thinking -- maybe Marriott has another motivation to its move to selling points.

Marriott is the largest owner of timeshares, and they are not selling.  In 2009, the auditors believed it necessary to recognize an impairment of value.  Those low resale values may well have come back to bite Marriott.  Here's why.

It is relatively simple to calculate an impairment when one is selling weeks - What's the latest price and what's the book amount.  The auditors may well have looked at recent resale values in the course of assessing the size of the haircut Marriott took on owned timeshare inventory values in 2009.  

So they changed the product.  The new product separates the value of the weeks from the product they are selling.   

They 'securitized' the weeks in the land trust.  They are selling points.  (Just like the AAA rated CDOs containing the toxic mortgages.)

But in this case I wonder if an additional objective is to prevent another incremental impairment hit to earnings.  

When the auditors review timeshare inventory carrying value in 2010, Marriott can justifiably point to the sales of points and take the position that the points sale transactions support the inventory carrying value.  Marriott is selling points at this price, and the Trust owns a portfolio of timeshare interests very similar to the Marriott holdings yet to be contributed to the Trust.  

Presto chango - no further impairment hit.

That would also explain why they are seemingly very reluctant to establish any mechanisms for points reseller - they don't want any points value indicators available that would differ from the Marriott list price.

If this is on target, the Marriott CFO and his advisors have sharp pencils.


----------



## dioxide45 (Jan 19, 2011)

SueDonJ said:


> ***
> Here's the link for dioxide's thread which details Trust conveyances.  Looks like they were at approx 65M after the November expansion.



I was just trying to search that out. But you already posted it. I always just search by "recorded" and it comes up on the first page of my search.

While there are 65MM points in the trust, we really don't know if this encompases all of the unsold or reaclaimed weeks that Marriott owns. I would think it does, at least through to some point in October 2010, but we won't ever really know for sure.


----------



## dioxide45 (Jan 19, 2011)

I think what I am reading here and what may be suggested is that the DC program will be for the upper echelon of owners, resorts, and inventory. Meaning it will be encompassed of mostly prime weeks at prime resorts in prime times. Those looking to use it will also be looking to exchange in to those prime weeks. For those that want to get the lower demand weeks, Marriott can just pull those from II.


----------



## GregT (Jan 19, 2011)

dioxide45 said:


> I think what I am reading here and what may be suggested is that the DC program will be for the upper echelon of owners, resorts, and inventory. Meaning it will be encompassed of mostly prime weeks at prime resorts in prime times. Those looking to use it will also be looking to exchange in to those prime weeks. For those that want to get the lower demand weeks, Marriott can just pull those from II.



Dioxide,

That's a very nice summary of what appears to be happening here.  The 20% owners that may ultimately enroll (40% of total weeks?) would probably represent much of the Platinum week ownership in the Marriott system.

Interesting strategy.

Best,

Greg


----------



## GregT (Jan 19, 2011)

windje2000 said:


> Marriott is the largest owner of timeshares, and they are not selling.  In 2009, the auditors believed it necessary to recognize an impairment of value.  Those low resale values may well have come back to bite Marriott.  Here's why.
> 
> It is relatively simple to calculate an impairment when one is selling weeks - What's the latest price and what's the book amount.  The auditors may well have looked at recent resale values in the course of assessing the size of the haircut Marriott took on owned timeshare inventory values in 2009.
> 
> ...




I would definitely agree that they are selling product now that has been written down to almost zero -- making the margin on current sales astronomical.

No one remembers the P&L hit from last year -- but today they've sold $170M worth of stuff for probably $150M in gross margin.



windje2000 said:


> Neither SFAS 144 nor SFAS 142 permit the recovery of a previous impairment loss. Under U.S. GAAP, the recognition of an impairment loss is permanent.




And by the way, Windje, that has to be the first reference ever in TUG history to SFAS (by a poster, versus quoting a press release).  Nice work, on behalf of my CPA colleagues.

Best,

Greg


----------



## SueDonJ (Jan 19, 2011)

GregT said:


> I would definitely agree that they are selling product now that has been written down to almost zero -- making the margin on current sales astronomical.
> 
> No one remembers the P&L hit from last year -- but today they've sold $170M worth of stuff for probably $150M in gross margin.
> 
> ...



When you all get talking like this I usually tell Don, "they're speaking accounting gobbledygook again, can you please listen and tell me what they're saying."  Windje, he says you're right on with the sharp pencils.  But then he said we all think way too much about what's supposed to be simple vacations.  :rofl:


----------



## BocaBoy (Jan 20, 2011)

dioxide45 said:


> .....there are 65MM points in the trust...



Even at 65 million points, they have already sold about 1/3 of the available points.  I am afraid that looks to me like a success so far.  If they continue to have success, they will within a year or two need to get more inventory, either through buybacks or opening new resorts.


----------



## m61376 (Jan 20, 2011)

Reading through all the posts the salient thing that strikes me is that Marriott is selling all these points to buyers expecting to make those prime reservations, but really most of the points they have represent off season inventory (with the exceptions as noted above of Marco Island, Kaui Lagoons, some Ko'Olina, etc., as well as some other prime scattered weeks converted to points). It is all well and good to sell small amounts of points to supplement existing ownership so as to allow those owners to make prime reservations elsewhere, but what happens when those Holiday ski weeks or Caribbean weeks, or July in HH, etc., that people envisioned just aren't there?

Every lesser value property owner that they entice to buy more points is now a candidate for those more premium reservations. Every premium owner who enrolls also will want perhaps those peak reservations elsewhere. It seems to me that it will take a lot more than 20% enrollment to fuel the inventory, since at this point in time the bulk of premium weeks are controlled by legacy owners, and will be so for the foreseeable future unless Marriott starts building in a big way.

Personally, I think this program was designed as a means to sell inventory that was difficult to sell. The old model where all weeks paid the same MF was sustainable 5, 10 or 15 years ago, when MF's were low. At the program inception 2 decades or so ago no one thought about triple digit MF's, so having all ownerships pay the same MF seemed like a practical thing. Now Marriott has to face the reality of MF's exceeding rental rates, making it harder and harder to pre-sell vacations; that, coupled with easy information access at one's fingertips (Google is a wonderful thing, but a bane to developers) has made direct sales, esp. of off season weeks, harder and harder. Then along came the economic turmoil and Marriott was forced to create discounts in the form of extended limited time discounts, heretofore unheralded. Once they began their sales, they reached a point of no return to the previous model. The most troublesome part of all of this is that they are not selling point packages with the expectation of booking mud weeks, but with the illusion of prime availability; people are buying with expectations that Marriott does not own the inventory to fulfill. At least before if you bought a Plat. week at least you knew at least one of the weeks in your season was guaranteed.

Maybe it will work with 20% enrollment, but that's assuming that that 20% of legacy owners aren't still vying for prime weeks along with a large percentage of point owners. Competition for those prime weeks could become fierce over time, since all inventory is now being sold that way. It's a win-win for Marriott today but, as pointed out, goodwill is easily destroyed, and disgruntled owners are easily created when reservations can't be made. At least before an unhappy owner (or one whose lifestyle has changed) could at least sell their ownership; without entry into the club, at the moment there is really no resale value to those $10 per point.

When I sat down to a weeks presentation they regaled me with the concept of pre-paid vacations, and showed me how it paid for itself over 10 years or so. Even using the formula posted somewhere on Tug, taking resale value into consideration the purchase still made sense, not only emotionally but also purely financially. How does one justify a purchase today with rental rates low and with no inherent value????


----------



## windje2000 (Jan 20, 2011)

GregT said:


> I would definitely agree that they are selling product now that has been written down to almost zero -- making the margin on current sales astronomical.
> 
> No one remembers the P&L hit from last year -- but today they've sold $170M worth of stuff for probably $150M in gross margin.
> 
> ...



I'm not sure about the size of the gross margin - I am guessing they didn't write the stuff down to near zero.  I believe the rule would be to write it down to where the expected selling price covers the cost of selling the interest plus a 'normal' margin over a 'normal' marketing time.  Who knows - they may have talked the auditors into considering the expected sales of the Trust as an indicator of value.

We'll see what the year end numbers disclose about profitability by segment soon enough.


----------



## windje2000 (Jan 20, 2011)

SueDonJ said:


> When you all get talking like this I usually tell Don, "they're speaking accounting gobbledygook again, can you please listen and tell me what they're saying."  Windje, he says you're right on with the sharp pencils.  But then he said we all think way too much about what's supposed to be simple vacations.  :rofl:





Don's absolutely correct - vacations are supposed to be simple . . . which is why I always liked the weeks model.


----------



## windje2000 (Jan 20, 2011)

dioxide45 said:


> I was just trying to search that out. But you already posted it. I always just search by "recorded" and it comes up on the first page of my search.
> 
> While there are 65MM points in the trust, we really don't know if this encompases all of the unsold or reaclaimed weeks that Marriott owns. I would think it does, at least through to some point in October 2010, but we won't ever really know for sure.



My guess is that it doesn't represent anywhere near all the unsold inventory.  

They took a more than $700M write down on inventory in 2009.  I don't believe they wrote it down to zero.  

65M points @ $10 = $650M.  There is likely plenty more to sell.


----------



## wof45 (Jan 20, 2011)

m61376 said:


> Reading through all the posts the salient thing that strikes me is that Marriott is selling all these points to buyers expecting to make those prime reservations, but really most of the points they have represent off season inventory (with the exceptions as noted above of Marco Island, Kaui Lagoons, some Ko'Olina, etc., as well as some other prime scattered weeks converted to points). It is all well and good to sell small amounts of points to supplement existing ownership so as to allow those owners to make prime reservations elsewhere, but what happens when those Holiday ski weeks or Caribbean weeks, or July in HH, etc., that people envisioned just aren't there?



I believe the key to usage of points is the points chart.  It prices the prime time very high and the unpopular weeks very low, so many people will decide to use multiple bad weeks rather than the prime week.  Or people will only be able to take a prime location every other year.

Marriott will have to carefully monitor the point chart and keep it in line with actual reservations.  But to an extent, it is not a lot different from the weeks reservations -- a lot of people want presidents week or Christmas / new years week, but settle for another week in season when the week they prefer is not available.


----------



## Fredm (Jan 20, 2011)

windje2000 said:


> I'm not sure about the size of the gross margin - I am guessing they didn't write the stuff down to near zero.  I believe the rule would be to write it down to where the expected selling price covers the cost of selling the interest plus a 'normal' margin over a 'normal' marketing time.  Who knows - they may have talked the auditors into considering the expected sales of the Trust as an indicator of value.
> 
> We'll see what the year end numbers disclose about profitability by segment soon enough.



Marriott also downsized and consolidated sales and administrative functions. Overhead  costs are lower. It will impact margin. (assuming VPG remains constant).
VPG = Volume Per Guest. It is the gross sales revenue divided by the number of sales presentations required to produce it.  As marketing cost is the critical variable, it can have a major impact on profitability.


----------



## GregT (Jan 20, 2011)

m61376 said:


> Reading through all the posts the salient thing that strikes me is that Marriott is selling all these points to buyers expecting to make those prime reservations, but really most of the points they have represent off season inventory (with the exceptions as noted above of Marco Island, Kaui Lagoons, some Ko'Olina, etc., as well as some other prime scattered weeks converted to points). It is all well and good to sell small amounts of points to supplement existing ownership so as to allow those owners to make prime reservations elsewhere, but what happens when those Holiday ski weeks or Caribbean weeks, or July in HH, etc., that people envisioned just aren't there?
> 
> *Every lesser value property owner that they entice to buy more points is now a candidate for those more premium reservations. Every premium owner who enrolls also will want perhaps those peak reservations elsewhere. *It seems to me that it will take a lot more than 20% enrollment to fuel the inventory, since at this point in time the bulk of premium weeks are controlled by legacy owners, and will be so for the foreseeable future unless Marriott starts building in a big way.



Marilyn,

You raise good points here --- but some of these issues were key areas from my thread "Sources of Inventory".

I believe Marriott has found a way to get inventory from Interval International and is using it to stock the Exchange Inventory in advance of a reservation request, and therefore there will be plenty of inventory for the DClub points users.   *I think it doesn't matter to Marriott's inventory strategy (critical for filling reservations) how many weeks owners actually enroll -- the source of inventory is not the enrolled owners -- it's II *-- and even more clever -- it's II's inventory sourced from both enrolled and unenrolled owners -- any week that II has at Month 12-13 is a candidate.

People who enroll can't be counted on as reliable sources of weeks (they may not redeem their weeks for points), and definitely not if they have until September 30 ahead of their use year to redeem -- so Marriott must have found an alternative way to get the critical inventory.

I'm not sure how to prove it -- other than to continue to find evidence of inventory availability in DClub (for points) where inventory doesn't exist in II (and where there isn't anything in the Trust).

Initial thoughts are Platinum Aruba and Summer Hilton Head -- there must be others too, I just haven't looked hard enough yet.

Good luck to all,

Greg


----------



## puckmanfl (Jan 20, 2011)

good morning....

just a couple of thoughts...

Will not re-hash the source of inventory thread, but it is my opinion that there is tons of inventory even at the primo joints.  MVCD"s worst nightmare is a customer that purchased 5000 pts of the street, getting stuck in a 'doggy week".  Right of the bat, I have snagged Park City ski weeks and Summer Surfwatch HHI. Also snagged Kauai Lagoons , with additional summer inventory on Kauai available as well.

MVCD had to ensure a system is in place to make sure this stuff is available before the rollout...

Interestingly, IMO  enrollees have best access to the "good stuff" because according to my guru the average purchase from "off the street" newbies is about 1500-2000 pts + the average enrolled owner that bought additional BI's is only purchasing the 1500 pt. minimum.  Thus , only the multiple week legacy enrollees that have large numbers of points can snag these 4000-5000 pt weeks.

We can debate the DC until the end of thime but the bottomline is that I called a VOA, converted to points and snagged multiple 13 week reservations in Park City.  For the cost of the skim, I became in actuality a ski week owner with a GV  purchase!!!  My partner who owns 4 weeks at Summitt does exactly the same thing!!!


----------



## hotcoffee (Jan 20, 2011)

GregT said:


> . . . *I think it doesn't matter to Marriott's inventory strategy (critical for filling reservations) how many weeks owners actually enroll -- the source of inventory is not the enrolled owners -- it's II *-- and even more clever -- it's II's inventory sourced from both enrolled and unenrolled owners -- any week that II has at Month 12-13 is a candidate.
> . . . .



I expect DC enrollees to do very well in exchanges (assuming they have enough points to make it worthwhile).  It is now pretty clear to me that Marriott will be able to get weeks from II when needed.  Ultimately, we will have to wait and see, but I think the early results clearly support what I was told.  I don't think this spells gloom-and-doom for non-enrollees.  II will always have inventory for them.  But, enrollees have more sources from which an exchange request can be satisfied.


----------



## BocaBoy (Jan 20, 2011)

windje2000 said:


> My guess is that it doesn't represent anywhere near all the unsold inventory.
> 
> They took a more than $700M write down on inventory in 2009.  I don't believe they wrote it down to zero.
> 
> 65M points @ $10 = $650M.  There is likely plenty more to sell.



Using your own figures, if they wrote their inventory down 50%, then having 65M points in the trust is about right.  This thread contains 2 different concepts of inventory.  One is having enough inventory to satisfy requests.  That is not the inventory I am talking about.  I am talking about inventory that they can SELL to new purchasers.  That is where they may have an inventory problem in the near future.


----------



## wof45 (Jan 20, 2011)

BocaBoy said:


> Using your own figures, if they wrote their inventory down 50%, then having 65M points in the trust is about right.  This thread contains 2 different concepts of inventory.  One is having enough inventory to satisfy requests.  That is not the inventory I am talking about.  I am talking about inventory that they can SELL to new purchasers.  That is where they may have an inventory problem in the near future.



Maybe if they sell enough points, they will start building again.  Hopefully, they will choose places that people want to go to all months.


----------



## windje2000 (Jan 20, 2011)

BocaBoy said:


> Using your own figures, *if they wrote their inventory down 50%*, then having 65M points in the trust is about right.  This thread contains 2 different concepts of inventory.  One is having enough inventory to satisfy requests.  That is not the inventory I am talking about.  I am talking about inventory that they can SELL to new purchasers.  That is where they may have an inventory problem in the near future.



Inventory on the books at the end of 2009 was $1.4 B.  That's after the haircut of $700M.  (Marriott 2009 Annual Report)

They sold about $185 million (19.5 M points @ 9.50) through 12/15/10.  That period include the summer seasonal (which is probably prime selling season) and excludes the winter seasonal (which is probably lousy.) 

So the $185 is probably more than 50% of a full year's sales.  

They have a boatload of inventory.    

Not to worry Boca, they won't be sold out for years.


----------



## hotcoffee (Jan 20, 2011)

wof45 said:


> Maybe if they sell enough points, they will start building again.  Hopefully, they will choose places that people want to go to all months.



If and when they get close to selling everything they have in the Trust at that time, and there is nothing more to add, I am guessing that they will purchase inventory and bring it up to Marriott standards.  I doubt that they are going to build any more big resorts any time soon.  Considering that people who purchase points are not purchasing large amounts, it seems to me that it does not make sense to build luxurious resorts that cost too much in points for Trust owners to reserve.  As it now stands, much of that Hawaiian inventory in the Trust will probably never get used by Trust owners.


----------



## dioxide45 (Jan 20, 2011)

windje2000 said:


> Inventory on the books at the end of 2009 was $1.4 B.  That's after the haircut of $700M.  (Marriott 2009 Annual Report)
> 
> They sold about $185 million (19.5 M points @ 9.50) through 12/15/10.  That period include the summer seasonal (which is probably prime selling season) and excludes the winter seasonal (which is probably lousy.)
> 
> ...



So according to this they have sold about 1/7th of their inventory. But looking at points sold vs total trust points, they have already sold 1/3rd. Seems like they are golding something back.


----------



## wof45 (Jan 20, 2011)

dioxide45 said:


> So according to this they have sold about 1/7th of their inventory. But looking at points sold vs total trust points, they have already sold 1/3rd. Seems like they are golding something back.



the trust is mainly US-based inventory, and their total inventory is world-wide, accounting for some of the difference.


----------



## GregT (Jan 20, 2011)

dioxide45 said:


> So according to this they have sold about 1/7th of their inventory. But looking at points sold vs total trust points, they have already sold 1/3rd. Seems like they are golding something back.



It appears (from the inventory in the Trust) that they deposited mostly "higher point" inventory into the Trust first -- versus any remaining Gold/Silver low point stuff.

When they need more points inventory to sell, they can ROFR the high point stuff -- Maui/Ko Olina/Waiohai/etc.  ROFR'ing Platinum weeks inexpensively is a whole lot better than the risk associated with timeshare development.

I think it will be a long time before they need to build/acquire anything brand new.   

Best,

Greg


----------



## windje2000 (Jan 21, 2011)

dioxide45 said:


> So according to this they have sold about 1/7th of their inventory. But looking at points sold vs total trust points, they have already sold 1/3rd. Seems like they are golding something back.



Actually, I should have made something more clear in that post.  

The retail list price of a point ($10 ) covers Marriott's sales and marketing expense (historically about 40%) and profit margin (historically about 20%)  

The cost of building the timeshare represents the balance - 40% of the retail price.  

Conceptualize this concept by thinking of a company like Tiffany - their 'selling price' is a lot more than their 'cost of product.'  Big margins.  Inventory carrying values represent cost.

To compare points sales to the carrying value of inventory, adjust for the cost of selling and margin.  Given the building cost is about 40% of the retail prices, divide the inventory value by 0.4 to gross it up to retail.  (That assumes it is all finished goods.  If it is not, there's even more.  But the objective here is a rough calculation of inventory turnover.)

The retail value or selling price of $1.4B (post haircut) of finished timeshare inventory  would be about $3.5B.  ($1.4B/0.4)  

EDITED TO ADD:  Another calculation would be to gross up to retail the 'pre-haircut' inventory value, which is $1.4B + $0.7B = $2.1B.  

Then gross up inventory cost to retail price. ($2.1B/.4 = $5.25B)  This probably defines the upper end of the range.  

END OF ADDITION

But the point is these are the numbers you want to compare the $185M of points sales to. Otherwise, you are comparing apples to oranges.

EDITED TO ADD: Annualizing the $185M points sales from 6/20 - 12/15 yields about $370M, assuming no seasonal.

The inventory numbers calculated above suggest they have between 9.5 and 14 years sales in inventory.  
END OF ADDITION

Either way, they have a boatload of inventory at this sales run rate.


----------



## hotcoffee (Jan 21, 2011)

GregT said:


> It appears (from the inventory in the Trust) that they deposited mostly "higher point" inventory into the Trust first -- versus any remaining Gold/Silver low point stuff.



Has this been confirmed?  Having a lot of high demand inventory in the Trust is good news for enrollees because most of us have far more points than new points buyers are buying.  They buy the points and we use the inventory.



GregT said:


> When they need more points inventory to sell, they can ROFR the high point stuff -- Maui/Ko Olina/Waiohai/etc.  ROFR'ing Platinum weeks inexpensively is a whole lot better than the risk associated with timeshare development.



Even in this bad economy I still wonder why they are not ROFR'ing more of the eBay sales.  Now seems like the time for them to pick up some cheap inventory.  If they wait until the economy improves, resale prices might rebound a little and make ROFR'ing less attractive.



GregT said:


> I think it will be a long time before they need to build/acquire anything brand new. . . .



I'm betting they will eventually add inventory via acquisition rather than building.  I could be wrong, but I'm betting we have seen the last of the big resort construction projects - perhaps even permanently.


----------



## wof45 (Jan 21, 2011)

we have seen notes about completing some current projects, like the second tower at Oceana Palms and the 2nd pool and buildings at Frenchman's Cove.   Wasn't Crystal Shores originally built as a condo development?


----------



## dioxide45 (Jan 21, 2011)

hotcoffee said:


> Even in this bad economy I still wonder why they are not ROFR'ing more of the eBay sales.  Now seems like the time for them to pick up some cheap inventory.  If they wait until the economy improves, resale prices might rebound a little and make ROFR'ing less attractive.



The problem is that much of that cheap inventory is low season. Low season weeks carry a high MP/point ratio if they put them in to the trust. Marriott doesn't want to load the trust up with off season weeks with high MF/point ration as it will cause the MF they have to charge Trust Point owners to go up. That is bad for sales.

Once they sell a big bunch of points and they are a few years in, then perhaps they will start soaking up some off season cheap weeks via ROFR. The trust point owners at that point will then be stuck.



hotcoffee said:


> I'm betting they will eventually add inventory via acquisition rather than building.  I could be wrong, but I'm betting we have seen the last of the big resort construction projects - perhaps even permanently.



According to a former Marriott employee that used to frequent this board, Marriott has enough inventory to carry them for many many years to come. I remember hearing the 5 year number kicked around.



wof45 said:


> we have seen notes about completing some current projects, like the second tower at Oceana Palms and the 2nd pool and buildings at Frenchman's Cove.   Wasn't Crystal Shores originally built as a condo development?



Completing current projects can help them to add to the trust. I think Marco has another tower to build as does Oceana Palms. Marco was built and intended to be a timeshare project as far as I can recall. They still have lots of room to build out at Harbour Lake and Lakeshore Reserve in Orlando


----------



## windje2000 (Jan 22, 2011)

dioxide45 said:


> According to a former Marriott employee that used to frequent this board, Marriott has enough inventory to carry them for many many years to come. I remember hearing the *5 year* number kicked around.



That's entirely consistent with my calculations earlier in this thread, since the sales run rate has declined precipitously since the peak sales level of about $1.2 B per year for the four years 2004 - 2007.


----------

