Marriott Vacations Worldwide to Acquire ILG to Create a Leading Global Provider of Premier Vacation

[dsmrp]

The cost for resale owners to enroll their weeks in DC when it was first introduced was more expensive. $595/$695 for direct purchasers vs $1495/$1995 for resale owners. If they find a way to merge the programs, I suspect it would be the same. They aren't worries about annoying direct owners and they really don't have anything to lose by doing this. The motivator to buy more points is not based on how someone else got in to the system, it would be based on the need of the individual. Marriott did very well selling DC points to both direct week owners as well as those that bought resale. They need to feed the system with inventory and getting as many people to enroll as possible would be the goal.

I did say in my earlier post that I thought the direct purchasers would likely pay less than the resale owners to get into any new club program. Possibly the terms of agreement for ILG sale might have some provisions for direct vs resale; maybe not... Marriott can't make it too prohibitive for Vistana and Hyatt owners to join the club if they want inventory. I know they have to make up for the purchase price and then some.

We own deeds for Vacation Ownership Interests (VOIs) at resorts that have agreements between the management companies that run the resort (as empowered via their HOAs) and "the club" AKA VSN. From the 2015 club rules (maybe there's an update version out there now): "Membership in the Network also is dependent on the continued affiliation between the Network and the Club Resort where the Network Member owns a VOI." Any one of our resorts or VSN could cease to do business together if one party was in breach or if the agreement were to simply expire. Its also possible for parties to try to renegotiate if they saw fit to do so. Not that I would expect to have my SVV Bella no longer have star options but it COULD happen and I would simply have a right to stay in my season in the unit type at SVV Bella. Nothing in the deed will protect me from that. I'll paraphrase: VSN exists because of an agreement and is not something guaranteed on anyone's deeds.

I think if Marriott could find a legal way to get out of the mandatory membership in the VSN, they would. Because those mandatory resales won't make them any money and diverts from potential developer sales. Maybe not so many people out there know about the mandatory resorts, WKV and SVV, but it's still a "hole".
All these networks and options, trust and points are just additional contrived $$ layers to sell us more choices than the ones we have with our home resorts. I'll wait and see what
Marriott eventually offers. I don't like their skim either. If it's too rich for my blood, I don't think it would be difficult to external exchange for the Vistana non-Hawaii resorts.
I'm glad my other TS unit is in HGVC and Hawaii...

 

[TravelTime]

I did say in my earlier post that I thought the direct purchasers would likely pay less than the resale owners to get into any new club program. Possibly the terms of agreement for sale might have some provisions for direct vs resale; maybe not... Marriott can't make it too prohibitive for Vistana and Hyatt owners to join the club. I know they have to make up for the purchase price and then some.




I think if Marriott could find a legal way to get out of the mandatory membership in the VSN, they would. Because those mandatory resales won't make them any money and diverts from potential developer sales. Maybe not so many people out there know about the mandatory resorts, WKV and SVV, but it's still a "hole".
All these networks and options, trust and points are just additional contrived $$ layers to sell us more choices than the ones we have with our home resorts. I'll wait and see what
Marriott eventually offers. I don't like their skim either. If it's too rich for my blood, I don't think it would be difficult to external exchange for the Vistana non-Hawaii resorts.
I'm glad my other TS unit is in HGVC and Hawaii...

I agree that Marriott is probably scheming to get out of the VSE mandatory resorts. I own at WKOVR-N ocean front 2 bedroom. I get 176K SOs. If Marriott offers me enough DC points to convert and allows me to then exchange in their 100+ resorts, I would be a happy camper because I would have more equivalent exchanges in the combined program than through the current VSE SO program. I suspect WKOVR will retain its value even if SOs or DC Points do not transfer because the Westin Maui resorts are cheaper than the equivalent Maui Marriott resorts. We really wanted to buy Marriott Napili/Lahaina Towers but it was too expensive. So for those of us who own deeded Westin timeshares in Hawaii, I think we would be better off under a combined new program.

 

[DannyTS]

I agree that Marriott is probably scheming to get out of the VSE mandatory resorts.

what do you base it on?

 

[TravelTime]

This thread is about theories and hypotheses. I think Westin owners of Hawaii and St John properties will end up better off. I am excited about the future possibilities!

 

[DannyTS]

This thread is about theories and hypotheses.

As I understand it, most people with knowledge to the legal details take the view that it will not happen but i agree with you, we are all speculating.

 

[Markus]

All Marriott has to do is buy Vistana resales on the open market. They sell at a fraction of the price of new inventory. The margins are huge for them. They will get enough product to populate any type of flex product and they can then cross pollinate with Marriott inventory and market a new hybrid product. They avoid any legal issues, keep the current owners happy, and get a new product to their salesforce. Let’s remember the on site sales offices are full of new clients. This is where the money is. They can keep the legacy ownership programs going for quite some time before the become a significant drag on operations. This transaction is about more opportunities for sales, a significant revenue source, all the while being able to make the claim that these are the best resorts....and they are.

This begs the question of where do the new or re-developped properties go.....likely the new product.

Markus

 

[dioxide45]

All Marriott has to do is buy Vistana resales on the open market. They sell at a fraction of the price of new inventory. The margins are huge for them. They will get enough product to populate any type of flex product and they can then cross pollinate with Marriott inventory and market a new hybrid product. They avoid any legal issues, keep the current owners happy, and get a new product to their salesforce. Let’s remember the on site sales offices are full of new clients. This is where the money is. They can keep the legacy ownership programs going for quite some time before the become a significant drag on operations. This transaction is about more opportunities for sales, a significant revenue source, all the while being able to make the claim that these are the best resorts....and they are.

This begs the question of where do the new or re-developped properties go.....likely the new product.

Markus

They could, but developers usually don't go out to the open market. The open market is somewhat of a gray area full of PCCs and brokers they probably don't want to get involved with. They are more likely to offer a buyback program directly to their owner base. They did this a few years ago to Marriott owners. Usually offering a premium over what they could have bought them for on the open market. It seems to be easier for them as they can control the process better.

 

[TravelTime]

All Marriott has to do is buy Vistana resales on the open market. They sell at a fraction of the price of new inventory. The margins are huge for them. They will get enough product to populate any type of flex product and they can then cross pollinate with Marriott inventory and market a new hybrid product. They avoid any legal issues, keep the current owners happy, and get a new product to their salesforce. Let’s remember the on site sales offices are full of new clients. This is where the money is. They can keep the legacy ownership programs going for quite some time before the become a significant drag on operations. This transaction is about more opportunities for sales, a significant revenue source, all the while being able to make the claim that these are the best resorts....and they are.

This begs the question of where do the new or re-developped properties go.....likely the new product.

Markus

Yes, I agree. I don’t think Marriott will have any legal problems with resale buyers. As an owner of a Westin mandatory resort purchased on the resale market, I can say if they make me a fair offer, I would prefer to be part of the new DC Points program than the SO program. I would get more choices and the opportunity for equivalent views to what I own - oceanfront. I will not exchange or trade in SOs or II because I can’t easily beat my Westin Kannapali Maui unit or view. Plus I pay big dollars in MFs for Maui. It is a waste to exchange for a downgrade. Only WSJ or the other Westin Kannapali oceanfront units are equivalent. But within Marriott, I would have so many more choices for a Hawaii or Caribbean oceanfront units to exchange for with DC Points.

 

[Markus]

They could, but developers usually don't go out to the open market. The open market is somewhat of a gray area full of PCCs and brokers they probably don't want to get involved with. They are more likely to offer a buyback program directly to their owner base. They did this a few years ago to Marriott owners. Usually offering a premium over what they could have bought them for on the open market. It seems to be easier for them as they can control the process better.

This would work also, and would treat owners wanting to sell or deed back more fairly.

Markus

 

[TravelTime]

All I care about is a fair program. Marriott seems to do the right thing. I have no doubt that if they integrate the 3 programs, they will be fair to current owners (whether they bought resale or from developers). Some of us will benefit more than others based upon how desirable our locations are, but I believe the end result will be fair.

 

[controller1]

As I understand it, most people with knowledge to the legal details take the view that it will not happen but i agree with you, we are all speculating.

What is the "it" that will not happen?

 

[TravelTime]

No one on this thread has any legal experience in this area. We are all speculating. I think a lawsuit would be frivolous. I am sure I will be happy with whatever the new VAC develops because I truly think Marriott will do the right thing for business reasons. I am not so tainted as to believe that business and ethics can’t work in tandem. Ethical business decisions lead to better business results. Eventually unethical businesses fail. I think Marriott is an ethical business or I would not have bought any timeshares from them.

 

[dioxide45]

No one on this thread has any legal experience in this area. We are all speculating. I think a lawsuit would be frivolous. I am sure I will be happy with whatever the new VAC develops because I truly think Marriott will do the right thing for business reasons. I am not so tainted as to believe that business and ethics can’t work in tandem. Ethical business decisions lead to better business results. Eventually unethical businesses fail. I think Marriott is an ethical business or I would not have bought any timeshares from them.

Not sure that a lawsuit would be frivolous. It would seem if Vistana was able to get rid of mandatory resales, they would have done so by now. The issue is that they simply can't. The issue will come up if Marriott tries to replace VSN with DC and say that DC is not The Club as spelled out in the CCRs for the mandatory resorts. I don't think they will try do to that. I think they will just add another option allowing Vistana weeks to be enrolled in DC. They know that they won't get 100% of Vistana owners to enroll their weeks, just like they didn't get 100% or even 50% of Marriott owners to enroll.

 

[DannyTS]

No one on this thread has any legal experience in this area. We are all speculating. I think a lawsuit would be frivolous. I am sure I will be happy with whatever the new VAC develops because I truly think Marriott will do the right thing for business reasons. I am not so tainted as to believe that business and ethics can’t work in tandem. Ethical business decisions lead to better business results. Eventually unethical businesses fail. I think Marriott is an ethical business or I would not have bought any timeshares from them.

I agree that in general they have to keep owners moderately happy since we are their best source of income and future sales. At the same time, bad things can happen and big companies have to be reminded when they goof up.

 

[TravelTime]

Not sure that a lawsuit would be frivolous. It would seem if Vistana was able to get rid of mandatory resales, they would have done so by now. The issue is that they simply can't. The issue will come up if Marriott tries to replace VSN with DC and say that DC is not The Club as spelled out in the CCRs for the mandatory resorts. I don't think they will try do to that. I think they will just add another option allowing Vistana weeks to be enrolled in DC. They know that they won't get 100% of Vistana owners to enroll their weeks, just like they didn't get 100% or even 50% of Marriott owners to enroll.

Makes sense. My point is I believe Marriott will be fair. I personally do not believe in lawsuits. It would need to be really terrible for me to participate in a lawsuit. A change in a vacation club program that attempts to make me whole would not justify a lawsuit, IMO.

 

[DannyTS]

Not sure that a lawsuit would be frivolous. It would seem if Vistana was able to get rid of mandatory resales, they would have done so by now. The issue is that they simply can't. The issue will come up if Marriott tries to replace VSN with DC and say that DC is not The Club as spelled out in the CCRs for the mandatory resorts. I don't think they will try do to that. I think they will just add another option allowing Vistana weeks to be enrolled in DC. They know that they won't get 100% of Vistana owners to enroll their weeks, just like they didn't get 100% or even 50% of Marriott owners to enroll.

% of the overall business, the few mandatory resorts are a much smaller problem for Marriott than for the current Vistana so you would have expected Vistana to have been much more motivated to do it.

 

[DannyTS]

Makes sense. My point is I believe Marriott will be fair. I personally do not believe in lawsuits. It would need to be really terrible for me to participate in a lawsuit. A change in a vacation club program that attempts to make me whole would not justify a lawsuit, IMO.

I would, at least out of principle. Besides, these are not like personal lawsuits that need you to be very actively involved.

 

[TravelTime]

% of the overall business, the few mandatory resorts are a much smaller problem for Marriott than for the current Vistana so you would have expected Vistana to have been much more motivated to do it.

If I could keep my SOs in VSE, my deeded week and enroll my WKOVR-N OF into DC Points, that would be the best of all worlds. I am just being realistic that we will probably need to compromise eventually. Probably not immediately but I would assume over the longer term, Marriott will try to combine the 3 programs. However, I think they will be fair and offer Vistana owners a fair amount of DC points in exchange of SOs.

 

[TravelTime]

I would, at least out of principle. Besides, these are not like personal lawsuits that need you to be very actively involved.

Lawsuits are a good way to increase MFs.

 

[DannyTS]

Lawsuits are a good way to increase MFs.

They also hurt Marriott's bottom line. Since some people assume that Marriott is prepared to do the first step, unfair and i believe illegal, they should be aware of the possible consequences. It is rather unproductive to advance the idea that owners will not defend their rights because this invites abuse. But again, I take a positive view, i do not think that it will be necessary.

 

[nokaoi9]

If SVV Bella is currently worth 81,000 StarOptions, which is also the equivalent of a 1BR at Westin Kannapali, what are the thoughts on how this would work if Marriott tries to offer DC points in place of StarOptions? I suspect the points offered for the Bella unit would not be enough to get a week at Westin Kannapali.

 

[TravelTime]

If SVV Bella is currently worth 81,000 StarOptions, which is also the equivalent of a 1BR at Westin Kannapali, what are the thoughts on how this would work if Marriott tries to offer DC points in place of StarOptions? I suspect the points offered for the Bella unit would not be enough to get a week at Westin Kannapali.

The problem is not how much SOs a resort is worth but where is your home resort. At 8 months, it is nearly impossible to book Kaanapali with SOs especially in high seasons or with the best views. So the point value is almost irrelevant. I suspect any Orlando resort would not be worth much in DC Points. Have you been able to book a 1 br at Westin Kaanapali at 8 months with SVV Bella? If so, what season, what view type, what room size, how often and for how long?

 

[nokaoi9]

Yes, I’ve been able to book pretty regularly. We’ve booked Spring Break a couple times but tend to go in Fall, which is off season but what we prefer.

 

[DannyTS]

If SVV Bella is currently worth 81,000 StarOptions, which is also the equivalent of a 1BR at Westin Kannapali, what are the thoughts on how this would work if Marriott tries to offer DC points in place of StarOptions? I suspect the points offered for the Bella unit would not be enough to get a week at Westin Kannapali.

Traveltime is correct. And for some reasons all the weeks in Hawaii are platinum although the II TDI shows a different picture. I guess that they were trying to balance somewhat.

 

[TravelTime]

Yes, I’ve been able to book pretty regularly. We’ve booked Spring Break a couple times but tend to go in Fall, which is off season but what we prefer.

Then I would hope you would get a good conversion rate for your 81,000 SOs if (and that’s a big if) Marriott combines the programs so you can continue your travels to Hawaii using SOs, DC Points or whatever new “currency” they develop. Hopefully, the merger will be a win-win for current owners.