VSN Features/Benefits Reduction and Elimination Post Abound Launch [Call to Action]

[Racing2007]

I do not think you understand the new program and how it works. I also think you are an extreme pessimist. Plus only Vistana owners who see value in Abound will elect Abound points. You are essentially saying that Vistana owners should not have free choice to elect Abound points if they see value in Abound. If Abound is as bad as you say, then no Vistana owners will elect Abound points.

That could be true, but as the years go by and if owners in their own resort decide to sell their deeded property, is it possible that Marriott can buy those ownerships and put them in the overall trust, thus decreasing individual resort ownership? Then they could offer more Abound ownerships and dilute individual resort ownership. It will take a long time to get there, but it could happen. They may eventually try to offer owners incentives to sell their property specific individual deeded properties. Am I missing something?

 

[Jayco29D]

That could be true, but as the years go by and if owners in their own resort decide to sell their deeded property, is it possible that Marriott can buy those ownerships and put them in the overall trust, thus decreasing individual resort ownership? Then they could offer more Abound ownerships and dilute individual resort ownership. It will take a long time to get there, but it could happen. They may eventually try to offer owners incentives to sell their property specific individual deeded properties. Am I missing something?

They have not done this in huge numbers with the Marriott weeks post-2010. So doubt they will do it with Vistana weeks post-2022.

 

[DanCali]

WKOVRN 2BR OF was about $14,000 for EOY (including closing costs) when I bought it not all that long ago and gets 8300+ points EOY. Works out to about $1.70 pp.

I think you need to double that number because it's 8300 EOY (so more like 4150 per year).

 

[DanCali]

140 million dollars in rental revenue last quarter is not exactly pocket change

Their annual report clearly states: "Our principal source of revenue is the sale of vacation ownership interests."

Yes, $140M is substantial, but it's all relative and it also matters what "rental" is exactly. They need to rent inventory they hold for sale, but I don't think they buy inventory with the intent to rent as was implied. Rental is not their primary source of income... they make more revenue from "contract sales" and "management fees and other services" (golf/spa etc). Also, if you read where that rental income is coming from, it's both from inventory they hold for sale as well as from "inventory we control because alternative usage options elected by owners" (I assume both elected Bonvoy points and "skim"). Approximately 7% of weeks converted to DC points go to them as skim. I assume they make good use of it...

 

[jabberwocky]

Their annual report clearly states: "Our principal source of revenue is the sale of vacation ownership interests."

Yes, $140M is substantial, but it's all relative and it also matters what "rental" is exactly. They need to rent inventory they hold for sale, but I don't think they buy inventory with the intent to rent as was implied. Rental is not their primary source of income... they make more revenue from "contract sales" and "management fees and other services" (golf/spa etc). Also, if you read where that rental income is coming from, it's both from inventory they hold for sale as well as from "inventory we control because alternative usage options elected by owners" (I assume both elected Bonvoy points and "skim"). Approximately 7% of weeks converted to DC points go to them as skim. I assume they make good use of it...

The rental top line might be high, but its the amount that falls to the bottom line that counts. Margins on rentals are only around 11-12% for VAC after you consider expenses (such as MF).

If you contrast this with the ownership sales which have margins around 25% (after commissions and marketing costs) and are a magnitude larger, it’s clear that the make their cash from moving product, not renting it out and having it sit on their books.

 

[Helios]

Correction, I heard min $40K purchase.

 

[Grandma2016]

Sorry, I just can’t figure out what to do with these Abound points. So far I see more value with my Staroptions points than Abound points. I might change my mind later, as I’m still figuring out. I still don’t see any Marriott resorts I like to go with these points yet. If I like Vistana/SPG/Starwood more than Marriott has to be called pessimist, just let it be. But I do own Marriott timeshare.

I agree. Nothing in Marriott looks appealing to me. My vistana ownership gives me 57k mvc points which is quite a few. I would only do this to try for OF consecutive weeks in Maui .

 

[dioxide45]

Also, if you read where that rental income is coming from, it's both from inventory they hold for sale as well as from "inventory we control because alternative usage options elected by owners" (I assume both elected Bonvoy points and "skim"). Approximately 7% of weeks converted to DC points go to them as skim.

Don't forget also that those "alternative usage options" are from Explorer Collection offerings. Something like 20% of the point utilization is going through Explorer. I doubt they make much on the skim. Skim is likely more to hedge against breakage. Sure they might have a night here or there that is broken that they can rent out, but many of their destinations aren't really in markets that are good for one or two night rentals. I suspect most skim breakage is just lost.

 

[timsi]

I would say that 11-12% margin sounds about right for this kind of business, but they had rental revenues of 140 millions last quarter with only 87 millions of associated costs. That’s pretty good and I assume it is for the reasons mentioned here: the skim (oh, so maybe they are not so generous with the “free” transaction fees) and they can rent the units that are not booked. By the way, for the latter, is there a formula to compensate the resorts since we pay the maintenance fees for those units? I understand that they can rent them, according to the rules, but nowhere says we shouldn't get anything.



I believe that 140 millions in revenue last quarter is significant (half a million nights rented if not more depending on the average price) especially since this amount does not include the sales tours that they record as marketing. It is also significant because they solicit those tourists to buy from them and it is new blood in the system since the existing owners can only buy so much. I assume their business would be stale eventually if they only met existing owners all day long.

 

[Jayco29D]

I think you need to double that number because it's 8300 EOY (so more like 4150 per year).

Yes you are right.

 

[Jayco29D]

I know people here like ROFR.net. But it's also subject to abuse where sellers can just enter bogus numbers to try to get a higher price for their weeks. I'd take it with a grain of salt...



This is kind of what I was alluding to. My point was that they can add:

6200 points for $15K (OV/IV prices at WKORV/N) - this is $2.40/point
~8000 points for $35-$40K (OF weeks) - this is about $4.50/point

So they would purchase the IV/OV weeks, not OF. They sell the points at the same retail price so margins would be higher...

WKOVRN OF weeks were going for about $28,000 not that long ago, pre-Covid. I even heard of some people getting them for less. Have they gone up in price? For many people, their cost per point for OF will be closer to $3.40 pp based on recent prices.

So from an upfront cost, the ratio for OV/IV seems more efficient. But from a MF perspective, the OF week is more efficient. Is that correct?

I have heard there is often an inverse relationship with upfront costs vs MFs.

 

[DanCali]

OF weeks were going for about $28,000 not that long ago. I even heard of some people getting them for less. Have they gone up in price?

So from an upfront cost, the ratio for OV/IV seems more efficient. But from a MF perspective, the OF week is more efficient. Is that correct?

I have heard there is often an inverse relationship with upfront costs vs MFs.

I have not been following prices on Maui but I have at several others. What I observed is a serious decline in prices in 2020 and the first half of 2021 and then a quick rebound later to prices higher than they were pre-covid. I wouldn't be surprised if Hawaii had a similar pattern with some lag due to covid restrictions that lasted longer. I do know that OF weeks on Maui were going for $35K+ earlier this year.

That differential in upfront cost of 100%+ between OF and OV/IV is hard to justify based on Staroptions or Abound points or rental values. It's simply supply and demand - people are willing to pay for the OF view and there simply aren't that many units in that category at WKORV to satisfy that demand.

Generally, if MFs go up, resale values go down. But what also matters are rental prices. As long as MFs are significantly lower than rental prices (even if both are high), resale prices should reflect that differential. I use a multiple to figure out if something is relatively "cheap" or "expensive". Say that something has a rental value of $2K over MFs. I might be willing to pay 5-6x that difference (so $10K-$12K).

 

[timsi]

Speaking of their growing rental business, I spoke with a couple that came back from Lagunamar and they were getting daily cleaning. They rented through Marriott.com.
What is the line in the resort budget which specifies that Vistana/Marriott reimburse the ownership association for the daily housekeeping costs of the non-owners that book through online channels?

 

[dioxide45]

Speaking of their growing rental business, I spoke with a couple that came back from Lagunamar and they were getting daily cleaning. They rented through Marriott.com.
What is the line in the resort budget which specifies that Vistana/Marriott reimburse the ownership association for the daily housekeeping costs of the non-owners that book through online channels?

I beleive it is a credit to the housekeeping fee line item. You don't see it listed separately, it just reduces the housekeeping line item.

 

[timsi]

I beleive it is a credit to the housekeeping fee line item. You don't see it listed separately, it just reduces the housekeeping line item.

I do not think this is how it is supposed to work. What is your source?

As far as I can tell it does not exist and I looked at the budget of more than one resort. It should be recorded as a revenue for the resort. Another item that does not seem to exist (or I cannot find) is reimbursement for the units that we own and Vistana rents through Marriott.com when they are not booked by owners or deposited.

 

[dioxide45]

I do not think this is how it is supposed to work. What is your source?

As far as I can tell it does not exist and I looked at the budget of more than one resort. It should be recorded as a revenue for the resort. Another item that does not seem to exist (or I cannot find) is reimbursement for the units Vistana rents through Marriott.com but we pay maintenance fees for.

My source is from attending a couple of annual BOD budget meetings for Grande Vista.

As for your last item, unreserve units, usually at 75 days out, end up coming under control of Vistana. Just how it is, they wrote the rules into the CC&R. An owner may have paid a MF on that line item, or it may be a week that is delinquent, but they belong to Vistana. No reimbursement necessary.

 

[timsi]

My source is from attending a couple of annual BOD budget meetings for Grande Vista.

As for your last item, unreserve units, usually at 75 days out, end up coming under control of Vistana. Just how it is, they wrote the rules into the CC&R. An owner may have paid a MF on that line item, or it may be a week that is delinquent, but they belong to Vistana. No reimbursement necessary.

I do not know about Marriott but Vistana has been pretty detailed with any amount received from the developer and recorded as revenue but this is not there. Do not think this is a trivial matter, daily cleaning for a lot of renters could mean a very significant portion of the housekeeping budget.

Concerning "no reimbursement necessary", just because it is not mentioned, it does not mean that it should not be a compensation. The way I look at it, the CC&R does not mention that there should not be a compensation, it just allows them to grab them. I think a smart lawyer can have a field day with this.

 

[dioxide45]

I do not know about Marriott but Vistana has been pretty detailed with any amount received from the developer and recorded as revenue but this is not there. Do not think this is a trivial matter, daily cleaning for a lot of renters could mean a very significant portion of the housekeeping budget.

Concerning "no reimbursement necessary", just because it is not mentioned, it does not mean that it should not be a compensation. The way I look at it, the CC&R does not mention that there should not be a compensation, it just allows them to grab them. I think a smart lawyer can have a field day with this.

I plan to attend the Sheraton Vistana Villages annual meeting this year. I will see if I can ask and get an answer on how this will be handled for the resort and how they manage it for cash reservations.

 

[jabberwocky]

I do not know about Marriott but Vistana has been pretty detailed with any amount received from the developer and recorded as revenue but this is not there. Do not think this is a trivial matter, daily cleaning for a lot of renters could mean a very significant portion of the housekeeping budget.

They should probably set it up as a contra account to the housekeeping line (essentially reducing HK) as it is an expense offset.

Recording it as revenue distorts the financials, because it’s not really coming from the customers and has no margin - it’s just a reimbursement of expenses for something the HOA has not received MF from.

 

[dioxide45]

I also don't think there is a line item that shows revenue from the VSN housekeeping fees that are charged to StarOptions guests when they make reservations beyond the number of contracts they own.

 

[pchung6]

Here is the latest price for Maui timeshare that I just picked up the sheet today.

 

[Ken555]

Here is the latest price for Maui timeshare that I just picked up the sheet today.

I’m here and overheard others mention ocean front resale was priced at $70k, so can only assume that’s what they were offered by the sales team at the resort. Of course, I said “too expensive!”


Sent from my iPad using Tapatalk

 

[Jayco29D]

I have not been following prices on Maui but I have at several others. What I observed is a serious decline in prices in 2020 and the first half of 2021 and then a quick rebound later to prices higher than they were pre-covid. I wouldn't be surprised if Hawaii had a similar pattern with some lag due to covid restrictions that lasted longer. I do know that OF weeks on Maui were going for $35K+ earlier this year.

That differential in upfront cost of 100%+ between OF and OV/IV is hard to justify based on Staroptions or Abound points or rental values. It's simply supply and demand - people are willing to pay for the OF view and there simply aren't that many units in that category at WKORV to satisfy that demand.

Generally, if MFs go up, resale values go down. But what also matters are rental prices. As long as MFs are significantly lower than rental prices (even if both are high), resale prices should reflect that differential. I use a multiple to figure out if something is relatively "cheap" or "expensive". Say that something has a rental value of $2K over MFs. I might be willing to pay 5-6x that difference (so $10K-$12K).

I understand your point. From what I have heard, in general, people buy Maui OF because they want to use it and they value the view.

On Redweek, North OF asking price is ranging from $29K to $32K with some outliers at $35K, $42K and $45K. There is also an OV outlier at $35K. The pricing is irrational.

 

[Jayco29D]

Here is the latest price for Maui timeshare that I just picked up the sheet today.

We are talking about Westin, not Hyatt or Marriott. Usually I look at Redweek to see asking prices. For WKOVRN OF, the asking prices start at $29,000 right now.

 

[TravelTime]

Their annual report clearly states: "Our principal source of revenue is the sale of vacation ownership interests."

Yes, $140M is substantial, but it's all relative and it also matters what "rental" is exactly. They need to rent inventory they hold for sale, but I don't think they buy inventory with the intent to rent as was implied. Rental is not their primary source of income... they make more revenue from "contract sales" and "management fees and other services" (golf/spa etc). Also, if you read where that rental income is coming from, it's both from inventory they hold for sale as well as from "inventory we control because alternative usage options elected by owners" (I assume both elected Bonvoy points and "skim"). Approximately 7% of weeks converted to DC points go to them as skim. I assume they make good use of it...

Half a billion dollars+ is nothing to sneeze at.

No wonder MFs keep going up. Poor Marriott does not make enough rental income to make it worth doing as a business.