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

[kjd]

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]

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]

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.

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]

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.

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]

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]

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]

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.

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]

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]

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]

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.

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.

So they were doing great selling Chevys and were unable to succeed by abandoning Chevys for Cadillacs after which there was an economic downturn. Sounds like their "business plan" was wrong.


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.)

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.


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.

I don't think we're talking about prospective customers, we're talking about actual customers. Any existing customer is a prospective customer for any business, but since they have already purchased your product, are a very special form of prospect. Owner loyalty is called goodwill - the propensity of the customer to return. It can take a lifetime for a business to earn the goodwill of its customers. OTOH, a company can destroy its goodwill in five minutes. (Warren Buffett)

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.

What if it doesn't?

Marriott's prior "business plan" took them to a place that required a $750 million write down of inventory. "Business plans" are not predictions of the flight paths of rockets or other mathematically estimable problems.

I don't own the stock - I own a timeshare . . . that Marriott manages. As an owner, all I care about is the care and feeding of the resorts I vacation at. That's the continuing part of Marriott's business that I care about as an owner. Managing resorts is by definition a slow growth business.

As all businesses eventually reach the limits of revenue growth, and the timeshare market is increasingly saturated with competitors . . . with products that are little differentiated from Marriott's, Marriott needs to figure out other ways of achieving growth.

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.

If you don't agree they have obscured the terms and conditions even more than in the past, I'll just disagree with you.

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.)

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]

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]

Agree with Dioxide

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]

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]

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]

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]

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]

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]

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]

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]

... 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.) ...

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.

... 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.

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]

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]

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]

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]

"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]

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.