SPINCO's 9-30-2011 SEC filing

[SueDonJ]

This has been an interesting and illuminating discussion, but it highlights one of the sad truths about this forum and the timeshare industry. The industry is so precarious that it makes no sense for interested and informed buyers (like those populating this board) to buy points (or weeks) from a developer at the prices they must ask to support their business model. Yet, without those sales, the industry cannot support the successful properties that all of us want.

A very sad state of affairs. But, I intend to enjoy my weeks for as long as I can and not dwell on all the negatives. Our timeshare investments may not be turning out as we hoped, but we are continuing to receive value from our investments (in the form of enjoyable stays are nice properties) and very few of us are going hungry because out timeshare investments have not panned out. I've made far worse mistakes in my life -- I'm not going to lose sleep or waste time wringing my hands over this.

I'm in complete agreement!

 

[windje2000]

IMO the most important question to ask now is, what negative effects can our ownerships suffer because Spinco has been introduced into the picture, that we would not suffer if Spinco wasn't in the picture?

The $50 million annual payment from SPINCO to MAR for use of Marriott name.

 

[Bunk]

$50 million is the minimum license fee:

See page 8 of filing:
"We will agree to pay royalties to Marriott International and Ritz-Carlton under the License Agreements, including a fixed annual fee of $50 million to Marriott International and certain variable fees to Marriott International and Ritz-Carlton based on our sales volumes."

 

[SueDonJ]

The $50 million annual payment from SPINCO to MAR for use of Marriott name.

Yep, that's one thing that's a direct result of the introduction of Spinco. So with an estimated 400,000 owners it works out to $125 per owner per year - do you think Spinco will put this entire burden on the owners' shoulders, part of it, any guess is good?? I really don't know what to guess.

$50 million is the minimum license fee:

See page 8 of filing:
"We will agree to pay royalties to Marriott International and Ritz-Carlton under the License Agreements, including a fixed annual fee of $50 million to Marriott International and certain variable fees to Marriott International and Ritz-Carlton based on our sales volumes."

I'd guess any fees due for "sales volumes" will be included in the costs of any new sales, not foisted off on existing owners. Of course it's possible we'll be robbed in such a way, but that would practically guarantee Spinco alienating their existing customer base. Maybe I'm overly optimistic but I don't see the sense in Spinco deliberately sabotaging itself in that fashion from the get-go.

 

[windje2000]

Yep, that's one thing that's a direct result of the introduction of Spinco. So with an estimated 400,000 owners it works out to $125 per owner per year - do you think Spinco will put this entire burden on the owners' shoulders, part of it, any guess is good?? I really don't know what to guess.

If you can identify anyone other than owners who might be willing to shoulder any portion of that $50MM burden, I'm sure that those 400,000 owners will be quite grateful.

 

[SueDonJ]

If you can identify anyone other than owners who might be willing to shoulder any portion of that $50MM burden, I'm sure that those 400,000 owners will be quite grateful.

Well, I think that one way for Spinco to not completely alienate existing owners by putting the total burden on them, is for Spinco to take a portion of the 10% management fee already being paid by owners and paying it to MAR for the naming rights. Another way the owners' burden could be reduced is by Spinco paying MAR a portion of the fees they're collecting from all the entities who are involved in the new DC Collections offerings. Presumably the companies with which the DC has partnered are paying fees for the privilege, yes?

I'm not so naive as to think that we won't see some additional costs in our yearly fees as a direct result of Spinco's introduction. But I really don't think that the Spinco BOD is naive enough to believe that existing owners will simply accept every new fee that comes down the pike. Certainly not when they're legally required to give notice to the existing owners that a new corporate structure is being put in place.

Again, maybe I'm overly optimistic, but I think reasonableness must be what Spinco aims to achieve if it expects to be successful. It's reasonable, IMO, that as an owner I'll sacrifice a little bit IF I see Spinco making similar sacrifices.

 

[dioxide45]

This is from the first quarter MAR earnings call:

While all terms of the transaction are not yet complete, post spin-off,
the company expects the new timeshare company will pay a franchise fee to Marriott International totaling approximately 2 percent of developer contract sales plus a flat $50 million annually for use of Marriott’s brands. The franchise fee is also expected to include a periodic inflation adjustment.

The 2% sales based fee seems reasonable and can be easily built in to the cost of new sales. It is about $0.20 per point.

I truly think the $50MM fee is absurd. We know that there are approximately 400,000 owners, but this fee really should be spread across unit weeks, not owners. I have seen the 800,000 unit weeks number thrown out there. Though I don't think this includes the Ritz brand. If that 800,000 is accurate, it is closer to $65 per unit week.

In the end the customer pays for everything. That burden will at some point fall on owners. Perhaps not until current management contracts are renewed. Though perhaps Spinco can somehow work it in as a line item in the annual budget for each resort before current contracts come up for renewal.

It is great when the fox is watching the hen house. MAR is developing this franchise fee while MVCI is still a part of the company. Just like all the underlying condo documents are written by the developer. MAR is hoping to see Spinco as a cash cow. Honestly $50MM? I am still aghast.

 

[gblotter]

If you can identify anyone other than owners who might be willing to shoulder any portion of that $50MM burden, I'm sure that those 400,000 owners will be quite grateful.

If predictions are true, Spinco hopes to become a timeshare exchange enterprise to replace II. Exchange fees could be an additional source of income to pay the $50MM fee to Marriott. In addition, Spinco will be renting out a significant number of the timeshare units to non-owners (just look at all that unsold inventory). That rental revenue could also be used to pay the $50MM Marriott fee.

I agree - the owners will likely shoulder the burden. I'm just trying to think outside the box here.

With the first 20% maintenance fee increase, we will likely see massive owner defaults on maintenance fee payments. As a result, some HOA boards will try to end their resort management contract with Spinco. That's when it will get interesting.

 

[kjd]

If renting unsold inventory comes to pass doesn't that change the nature of the timesharing experience for present owners? Part of the reason for purchasing deeded weeks or points for that matter, is that owners might treat the property more respectfully and that longer stays remove the transient nature of a resort. When I invision a resort as a rental project it conjures up images of additional security concerns, lack of guest's concern for rules, units used as hospitality suites for businesses or parties, etc.

A hotel has much better security because it is less spread out than most timeshare resorts. Effectively changing a timeshare into a hotel probably affects locations like Orlando, Las Vegas, Hilton Head, Palm Beach more than others. My concerns may not be realistic but I have observed several condos going rental and it was a bad experience for the owners. Many condo associations have limits on rentals for that reason. I'm not sure there are any limits presently on timeshare units. It's something to think about if the Spinco is going in that direction.

 

[SueDonJ]

But Marriott and II have been renting unsold inventory for years, haven't they? You can go on marriott.com to rent any un-reserved inventory at the Marriott timeshares, and II makes un-exchanged deposited inventory available through weekly Getaways and nightly Resort Deals (click on the Travel tab at the top of the screen then Resort Deals on the left.) What's the difference if it's now Spinco facilitating the rental and collecting the revenue, as opposed to marriott.com or II?

 

[SueDonJ]

... It is great when the fox is watching the hen house. MAR is developing this franchise fee while MVCI is still a part of the company. Just like all the underlying condo documents are written by the developer. MAR is hoping to see Spinco as a cash cow. Honestly $50MM? I am still aghast.

I agree, $50M sounds ridiculous if it's based solely on the 400K owners/800K Weeks that exist in MVCI. But is that the sole basis? Is it possible that the other Spinco ventures are expected to bring in income that makes that figure realistic? Several Spinco BOD members are moving over from MAR - would they be doing so if they were expecting the new company to fail? That's what I don't understand - some TUGgers seem to think that the only reasonable outcome based on what we know about Spinco is that failure is certain unless we owners open our pocketbooks W - I - D - E. How can the MAR board members, especially the ones moving to Spinco, possibly expect from their insider knowledge that we'll simply accept it? That we won't mutiny en masse which will ruin the timeshare developments they've built over the years, and drag Spinco down with them?

I wish we knew what they know. I wish we could get our hands on whatever accounting materials gave them the idea that $50M is a reasonable amount for naming rights.

 

[SueDonJ]

... With the first 20% maintenance fee increase, we will likely see massive owner defaults on maintenance fee payments. As a result, some HOA boards will try to end their resort management contract with Spinco. That's when it will get interesting.

That's it, right there. This is why I think owners are NOT in a position where Spinco can just do whatever it wants, force whatever fees on us it needs, to make their business a success.

I do think that there are probably MVCI resorts which Spinco expects to sever ties with sometime within the first five years. Maybe older resorts, or resorts which have very few unsold Weeks and/or owners enrolled in the DC. Alienating them through higher fees, forcing them to play their cards to sever the management agreement, could be a way for Spinco to get what it wants. But raising fees exorbitantly across all resorts would put Spinco at risk of that outcome occurring where they don't want it. And realistically, all Spinco really has to do to sever the relationships with non-performing (to their business) resorts is wait for the current management agreement contracts to expire and then not elect to re-sign.

 

[kjd]

As I previously pointed out my concern about renting may be ridiculous given the past history of rentals. Most of the rentals have been on a weekly basis and are normally acquired through a number of means. If you're talking about building new daily rental buildings (Crystal Shores) or converting the yet to be built twin towers (Grand Chateau) that could be an entirely different matter and changes the character of the timeshare.

Do daily renters and weekly timeshare owners mix well? I think that's an open question. Hotel condos have been for the most part a flop whereever they have been tried.

 

[SueDonJ]

As I previously pointed out my concern about renting may be ridiculous given the past history of rentals. Most of the rentals have been on a weekly basis and are normally acquired through a number of means. If you're talking about building new daily rental buildings (Crystal Shores) or converting the yet to be built twin towers (Grand Chateau) that could be an entirely different matter and changes the character of the timeshare.

Do daily renters and weekly timeshare owners mix well? I think that's an open question. Hotel condos have been for the most part a flop whereever they have been tried.

Oh. Hmmm. I'm not sure I understand what you mean. If further development is continued at any of the unfinished resorts, are you thinking that the new buildings will not be available as timeshare units? That they'll be hotel properties under the direction of Marriott and not Spinco? Or, I'm sorry if I'm way off your topic here into Neverland.

About your question that I bolded - we should get a pretty good idea of how daily renters and weekly owners mix in the next few years, because the DC Points option now makes daily rentals quite enticing for many members. I happen to agree with you that for the most part owners may take more pride, and therefore cause less damage and wreak less havoc, in the units they own (although some don't agree with this view, and certainly Aruba Week 3 doesn't fit this mold.) But I wonder if DC Points owners will have that same pride and concern without their ownership being tied to a specific resort?

 

[windje2000]

It is great when the fox is watching the hen house. MAR is developing this franchise fee while MVCI is still a part of the company. Just like all the underlying condo documents are written by the developer. MAR is hoping to see Spinco as a cash cow. Honestly $50MM? I am still aghast.

Tradenames and trademarks tell you about the business or product.

The McDonalds name and marks tell you what to expect from its thousands of licensed restaurants worldwide. The licensees of the McDonalds name pay for using that name because it attracts customers seeking that experience. They get a huge benefit from paying for that name.

The Marriott name was attractive to many considering purchasing timeshare. Like McDonalds, the buyer attracted to Marriott had certain expectations regarding the experience associated with the occupancy.


Marriott was paid handsomely for its name by every developer purchaser for every unit it sold. Its profit margins were huge.


The proposed annual $50MM SPINCO charge raises the following question:

"What continuing benefit will I be receiving as an owner from the use of the Marriott name?"

I can't think of one.

• I'd be just as happy with my occupancy experience no matter what the name.
  
• The name is useful to those who rent the units, but that's a pretty small population of owners and making a habit of renting is prohibited. Marriott certainly could charge owners who rent a fee for use of the name as they are receiving a financial benefit from exploiting the name.
  
• The Marriott name no longer makes much if any difference in resale value, which is where it might have had an impact.

So the next question I have is:

"Why should any owner be required to make an annual payment (either directly or indirectly since the cost will be part of the SPINCO overhead) for use of the Marriott name?"

Unlike any other component of the MF, the payment generates no benefit.



As noted earlier, Marriott was paid handsomely in exploiting its name when the units were sold.

How many times should Marriott be paid for the name?

Once is enough.

 

[kjd]

To clarify my comment. I'm fairly confident that daily renters who are point system members will be no different that the weeks owner when it comes to respecting the property and enjoyment of other guests. It's the "off the street" business that concerns me in places that have a lot of convention business or transiant guests.

Hotels are another breed of cat. They are set up to handle these problems much better than a timeshare resort. Hotels do a good job of keeping a safe and enjoyable enviornment. It just seems to me that in some of these unfinished resorts there's the possibility of turning the property into a condo hotel rather than a weeks based timeshare. That's not what we purchased.

 

[dioxide45]

I don't think it's productive right now to dwell on what disclosures were made in the past.

To me, looking to the future, the more important questions include: (i) Is there funding available to complete the underdeveloped projects i.e. Oceana Palms, Grand Chateau, Lakeshore Reserve, Crystal Shores, Kuau'i Lagoons; (ii) If the underdeveloped projects are completed, will Spinco be able to sell enough points packages to pay for this; (iii) Do the underdeveloped projects in their present condition generate enough income from sales, maintenance and rent to pay for their costs (keep in mind they must absorb more of the overhead since the unbuilt portions of the project won't pay a proportionate share; and (iv) What is the financial condition of the Ritz-Carlton portion of the Spinco umbrella.

We do know that Oceana Palms will be completed. They have started construction on the second tower. Now I don't know if all "promised" amenities will be finished completed, but there may not be very many more of them to complete.

Ko'Olina is another one that you need on your list. I believe they are finishing out the units in the third building, but I think that there is/was a fourth building planned that may not happen any time soon.

 

[SueDonJ]

... The proposed annual $50MM SPINCO charge raises the following question:

"What continuing benefit will I be receiving as an owner from the use of the Marriott name?"

I can't think of one.

• I'd be just as happy with my occupancy experience no matter what the name.
  
• The name is useful to those who rent the units, but that's a pretty small population of owners and making a habit of renting is prohibited. Marriott certainly could charge owners who rent a fee for use of the name as they are receiving a financial benefit from exploiting the name.
  
• The Marriott name no longer makes much if any difference in resale value, which is where it might have had an impact.

So the next question I have is:

"Why should any owner be required to make an annual payment (either directly or indirectly since the cost will be part of the SPINCO overhead) for use of the Marriott name?"

Unlike any other component of the MF, the payment generates no benefit. ...

But just like the McDonald's name means that you're practically guaranteed a standard, the same is true with Marriott. Owners suffer higher MF's but know that a certain brand standard will keep their resorts maintained, updated and performing to the purchased level.

Most important to me is that the Marriott name means that there's a management contract between Marriott and the resort. It means that owners are afforded protections by that agreement which prevent splinter/minority ownership groups from foisting unwanted changes upon majority owners such as sub-standard maintenance, questionable bylaw revisions, etc. Sure, theoretically a minority ownership group can never gain control if all owners participate, but we've seen here on TUG how 100% owner participation never happens. We've seen that Marriott's resources are probably what's needed to fend off a minority take-over because owner apathy allows the possibility of the minority becoming a voting majority. And yes, we pay for that protection by conceding power to Marriott in most ownership-related matters - but if the majority ownership DOES want out and actively seeks it, those protections shift from Marriott to the majority.

The tie-in with the Marriott Rewards program is a benefit that we make use of with 99% of our non-timeshare travel. Even if it were probable that my resorts could function materially exactly the same as they do now if the Marriott name were removed (which I don't believe they would,) I would vote against such a change simply because I wouldn't want to lose that MR connection.

You left the exchange value out of the equation. Despite knowing that II practically guaranteed a downtrade for our particular units, I still knew that the Marriott name would garner better exchange possibilities to other Marriotts than a non-Marriott resort would, and the Marriott priority is a plus. Now with the DC our particular units can garner even more exchange value than what was possible in II. Exchange value isn't the highest priority on our list but when we do exchange, we limit ourselves to other Marriotts because we like the security that comes with knowing we're exchanging to similar-standard resorts.

Like you the renting value doesn't mean anything to us - we don't use our timeshares as rental income and don't expect to get into owner-to-owner trades. With respect to resale value, I think the Marriott name doesn't prop it up artificially but in most cases it does keep it among the highest within a certain geographical area and/or class of resorts. That's about all we could ever ask from the resale market, realistically.

Honestly, I don't like the idea of Spinco costing us more money. But the one constant over the years has been that timesharing pretty much equates to escalating fees; there's no getting around it. I just hope, like I said, that reasonableness prevails.

 

[windje2000]

But just like the McDonald's name means that you're practically guaranteed a standard, the same is true with Marriott. Owners suffer higher MF's but know that a certain brand standard will keep their resorts maintained, updated and performing to the purchased level.

That's why Marriott got the sale and gets an annual management fee that's generous compared to most other TS.

Most important to me is that the Marriott name means that there's a management contract between Marriott and the resort. It means that owners are afforded protections by that agreement which prevent splinter/minority ownership groups from foisting unwanted changes upon majority owners such as sub-standard maintenance, questionable bylaw revisions, etc. Sure, theoretically a minority ownership group can never gain control if all owners participate, but we've seen here on TUG how 100% owner participation never happens. We've seen that Marriott's resources are probably what's needed to fend off a minority take-over because owner apathy allows the possibility of the minority becoming a voting majority. And yes, we pay for that protection by conceding power to Marriott in most ownership-related matters - but if the majority ownership DOES want out and actively seeks it, those protections shift from Marriott to the majority.

I repeat - That's why Marriott gets a management fee. The incremental payment for the use of the name is irrelevant to the issue of whether or not there is owner apathy.

The tie-in with the Marriott Rewards program is a benefit that we make use of with 99% of our non-timeshare travel. Even if it were probable that my resorts could function materially exactly the same as they do now if the Marriott name were removed (which I don't believe they would,) I would vote against such a change simply because I wouldn't want to lose that MR connection.

You've paid for that relationship when you bought Marriott TS.

You left the exchange value out of the equation. Despite knowing that II practically guaranteed a downtrade for our particular units, I still knew that the Marriott name would garner better exchange possibilities to other Marriotts than a non-Marriott resort would, and the Marriott priority is a plus. Now with the DC our particular units can garner even more exchange value than what was possible in II. Exchange value isn't the highest priority on our list but when we do exchange, we limit ourselves to other Marriotts because we like the security that comes with knowing we're exchanging to similar-standard resorts.

You bought a unit (3BR SW IIRC) that is inefficient as a trader, because the population of 3BR in II is low. That is NOT II's fault despite your constant II bashing. You are one of the few who do better in DC. We get it.

Like you the renting value doesn't mean anything to us - we don't use our timeshares as rental income and don't expect to get into owner-to-owner trades. With respect to resale value, I think the Marriott name doesn't prop it up artificially but in most cases it does keep it among the highest within a certain geographical area and/or class of resorts. That's about all we could ever ask from the resale market, realistically.

Somehow I think I've read about other systems doing a little better than Marriott at retaining value.

Honestly, I don't like the idea of Spinco costing us more money. But the one constant over the years has been that timesharing pretty much equates to escalating fees; there's no getting around it. I just hope, like I said, that reasonableness prevails.

Escalating fees over time for services rendered are expected; prices change over time.

But layering an incremental $50MM ANNUAL expense on SPINCO . . . that will inevitably affect the owners MF . . . which (IMHO) provides the owner no incremental ongoing benefits . . . is just gouging.

The Marriott name has sold and continues to sell timeshare at high margins for Marriott's benefit. True of both weeks and points.

The question to be considered is - Does the incremental ANNUAL payment for the use of the name (at the price $50MM initial price Marriott will charge SPINCO) provide existing owners with ongoing benefits worth $50MM ANNUALLY. . . or not?

 

[Bunk]

But just like the McDonald's name means that you're practically guaranteed a standard, the same is true with Marriott. Owners suffer higher MF's but know that a certain brand standard will keep their resorts maintained, updated and performing to the purchased level.

Most important to me is that the Marriott name means that there's a management contract between Marriott and the resort. It means that owners are afforded protections by that agreement which prevent splinter/minority ownership groups from foisting unwanted changes upon majority owners such as sub-standard maintenance, questionable bylaw revisions, etc. Sure, theoretically a minority ownership group can never gain control if all owners participate, but we've seen here on TUG how 100% owner participation never happens. We've seen that Marriott's resources are probably what's needed to fend off a minority take-over because owner apathy allows the possibility of the minority becoming a voting majority. And yes, we pay for that protection by conceding power to Marriott in most ownership-related matters - but if the majority ownership DOES want out and actively seeks it, those protections shift from Marriott to the majority.

The tie-in with the Marriott Rewards program is a benefit that we make use of with 99% of our non-timeshare travel. Even if it were probable that my resorts could function materially exactly the same as they do now if the Marriott name were removed (which I don't believe they would,) I would vote against such a change simply because I wouldn't want to lose that MR connection.


s.

I don't have enough information/knowledge/experience to know whether the $50 million annual fee is reasonable.

My concern is that this is not an arms length transaction with respect to the legacy owners. Does anybody doubt this new system been set up to benefit Marriott; and not Spinco and certainly not the legacy owners nor the points owners. It is clever of Marriott to have devised a system that seems to reduce its potential liability and in addition pay it $50 million annually. Whether this is sum a reasonable amount I don't know. Whether the $50 million dollar tribute is an obscene way to suck out more money from a system that will ultimately fail, I don't know. Hell, I can't even figure out at this point whether Spinco has has a fiduciary duty to the legacy or points owners. Spinco may even have more of a fiduciary duty to its shareholders, i.e., the Marriott family, than to us.

But it doesn't look like anything will collapse in the near future, so I agree that the best thing for the moment is to make the best use we can of the present system.

 

[dioxide45]

Spinco may even have more of a fiduciary duty to its shareholders, i.e., the Marriott family, than to us.

Spinco's main responsibility will be to it's shareholders. Sure they want to make sure owners and customers are happy. With unhappy customers there won't be a need for shareholders because the company will ultimately fail.

 

[timeos2]

The preliminary rating of "Spinco" as B- does not bode well for this spinoff. That is saying they see this as being woefully underfunded as a going company - a stance I would agree with. The only real way they can raise dollars required quickly is to hit maintenance fees as there is nothing at all certain about sales to prop up this shaky enterprise right from the start.

It has every sign of a very troubled company before it is even out of the mother ship. It's been said many times here before. Owners: Beware. You are the potential ATM for this group.

 

[gblotter]

Does anybody doubt this new system been set up to benefit Marriott; and not Spinco and certainly not the legacy owners nor the points owners. It is clever of Marriott to have devised a system that seems to reduce its potential liability and in addition pay it $50 million annually. Whether this is sum a reasonable amount I don't know. Whether the $50 million dollar tribute is an obscene way to suck out more money from a system that will ultimately fail, I don't know. Hell, I can't even figure out at this point whether Spinco has has a fiduciary duty to the legacy or points owners. Spinco may even have more of a fiduciary duty to its shareholders, i.e., the Marriott family, than to us.

You have phrased it well. The only assured winner from this arrangement is Marriott International. Given the current dismal state of the economy and the declining timeshare industry, it seems evermore difficult to see a profitable/bright future for Spinco. But Marriott will make money regardless through management contracts and $50M licensing fees.

Does anyone want to wager on what the percentage plunge in Spinco stock price will be on the first day of the spinoff?

 

[GregT]

All,

I'm not nearly as negative about SpinCo's prospects (and I think OldPantry and I are going to have a beer or two one day over this very topic).

Yes -- $50M+ is a big nut to pay (effectively sucking out the net profit from the base business) and Yes, this company remains dependent on asset sales to sustain its $1.5B revenue run-rate. The entire world is under financial pressure and no one is buying time shares like they used to.

But....the model of selling $20K chunks of points to new buyers shouldn't be dismissed. $20K is not the same as building a business model (and related level of operating expenses) that depend on $50K - $75K sales. Can SpinCo sell $700M of points each year? That's 100 new purchasers per day -- buying in $2K increments? That's 10 sales per day at the high volume sales offices? From a sales force operating on commission? The Marriott/Ritz network is a marketable commodity.

New buyers of points will keep re-upping and buying more as they realize they don't have enough points from their first purchase (like they do with Disney). And SpinCo's acquisition cost for those points is low (either current inventory, partially written down) and also ROFR of good properties that are selling for pennies.

This is not to suggest that I think SpinCo is going to be widely successful, nor a great investment. But I believe its operational viability is good.

I agree that we as owners should expect higher fees, the real question will be are we getting anything of value for those higher fees. And can SpinCo find a way to entice existing owners to want to buy points -- why should I buy Trust Points??

I expect they will start to add features like the following and charge for them:

1) Pay to rescue your points, ie instead of banking by June 30, you can still extend them to next year as late as December 31 (for $75 -- like HGVC)

2) Enroll your post June 20, 2010 resale purchase -- as long as you buy 2,000 Trust Points (like Starwood, where it is called "re-qualify")

3) Buy single-use points for $1 per point from Marriott to cover your shortfall (instead of renting them from my board) -- for the last night only (like Wyndham)

#1 and #3 will be modest revenue sources -- selling points and financing the sales will remain the core revenue engine -- Can they achieve the sales volumes I noted above????

There will be many changes in the years ahead -- and I think SpinCo will definitely make it (and will have their primary responsibility to their shareholders, as they should).

But can they be successful AND maintain a happy, loyal ownership base??? That's the real question, to me. Only Disney and HGVC appear to have been able to do that to date.

Best,

Greg

 

[dioxide45]

You have phrased it well. The only assured winner from this arrangement is Marriott International. Given the current dismal state of the economy and the declining timeshare industry, it seems evermore difficult to see a profitable/bright future for Spinco. But Marriott will make money regardless through management contracts and $50M licensing fees.

Spinco will be the one making the profit from the management contracts, not Marriott International. MI makes money no matter what, and I agree they are the only assured winner here.

Does anyone want to wager on what the percentage plunge in Spinco stock price will be on the first day of the spinoff?

Will the price plunge? Will it even have a price attached to it when they give shares to current MI stockholders? I am sure the first day trading price won't be good, but it will place a market cap on the new company.