This is just another way these timeshare companies, make money by forcing you to turn your points in for a crappy valuation, such as cruises, airline tickets, guided tours, and things of that nature. They give you only ~60% of your maintenance fees, value, and then they rent it out on marriott.com for .70 to two dollars a point. Most of their profit comes from the arbitrage of taking owners points and renting them out online so I’m interested to see how they exempted themselves since they don’t own most of the inventory.
I think you misunderstand how the business actually works. Marriott makes its money by charging a management fee - the resort charges all owners a MF and Marriott gets its share no matter what. It is ongoing, recurring revenue, that is cost plus because any increases in costs are directly passed to the owners and increase their fees. They also make money selling resorts. That is what causes the problem.
I will illustrate with my resort Manor Club at Williamsburg. When Marriott sold it there were 8 silver weeks, 8 gold weeks, and 36 platinum weeks. The problem is that Williamsburg only really has (generously) 16 actual platinum weeks that would consistently rent for MF. That leaves a problem with the system, there are more weeks worth less than the MF than worth the MF. When someone deposits into II, Marriott reserves one of these trash weeks and passes it to another owner through II. The MF was paid by the owner, they get a trade that they are presumably happy with, another owner gets a Marriott!!! trade that they are happy with, II gets a fee for running the trade system, and a trash week gets recycled. If you trade for a vacation/cruise/bonvoy they have to pay cash for the vacation. They can't reserve a trash week and rent it for the cost of the vacation so they give owners a discounted value that reflects the average value of the trash weeks. If they offered full value then they would either have to eat a loss or reserve all of the true prime weeks to recoup their money. Clearly, for the other owners, reserving all the prime weeks is undesirable, so they offer the reduced value for people who are happy to take an alternative use option. This recycles more trash weeks. They then take the rental risk. They acquired the week for less than MF so they try to get as much as they can by renting on Marriott.com or dumping into the getaway program in II (also getting a potential customer that they can invite to a presentation). They have to pay significant fees to Marriott International for branding and use of the reservation system, so those fees also come out. If a week does not rent they take 100% loss, so that is a drag on the total system. They try to minimize the impact on the system they created by overselling prime season.
The points system tries to address the trash weeks problem by making the system more closely match the actual demand of the users by resort. Trash weeks cost fewer points and prime weeks cost more, weekends more, etc. No system is a perfect match to demand, but Marriott is the only actor who knows the true demand. They have allowed old weeks owners to participate in the new system, but they have balanced the scales in their favor by what we call "skim", which is a tax on the old system to help Marriott to pay for potential demand imbalances weeks owners bring in to the points system. If they screw up they lose less, if they do a good job they make more money but they start with a house advantage.
Which is a long way to say that the Marriott sales system, in trying to maximize sales $$, creates an imbalance that the usage/trade system tries to fix. If they were the true evil empire then they could use their advantages to only reserve prime weeks that rent for the most value and leave the trash weeks to the other owners. This would work in the short term, but would destroy the system over time. That is why I said Marriott deliberately disadvantages themselves in the reservation/rental business. They advantage themselves in the sales business, in the skim business, in the exchange business, but they would be stupid to take advantage by reserving prime weeks and renting them. If the opportunity arises then I am sure they take it (cancellations, unreserved weeks, etc.), but not as a matter of course. If they acted their ownership like we do the system would break down.
Every system has the same problems, which we discussed ad nauseam for 3 years when the Abound system came into being as a rumor in 2008/09 and a reality in 2010/11. Marriott has not chosen the same solutions as every other system has - flat fee + skim being the most novel innovation (if you can call it that), but every system has done something to deal with the over selling of prime time with the promise of prime usage. I think the system works pretty well and I have received great value from it, but it has changed. I used to laugh at the Hawaii owners who traded their $80k weeks into my Horizons $9k week, but every vacation I talked to those owners at the pool. Now with points, they get to laugh at me. They get a ton more points than I do per $MF. Marriott made the choice to benefit the owners who paid the most dollars into the system and I understand that.
If I wanted to be mad at Marriott I would be mad that they sold me a prime week that was not really prime and that their management fee increases even if they do a poor job of managing the property. I would like to see some kind of incentive fee for good performance, but that is probably a pipe dream. YMMV.
