Why is Marriott Vacations struggling?

[Bodie]

Probably also why they had the ‘advertisement’ in USA Today a few weeks back to interest the younger crowd. I’m not interested in points, but just bought a resale week which works great for our needs.

That was so transparent it was funny. I can see sales reps whipping out that "advertorial" and showing it to prospective marks who they hope to impress with a "news" story printed by USA Today. Too bad no one reads USA Today or even knows what it is.

 

[bizaro86]

I think the biggest issue facing MVC is that they can only sell to the same onwer a limited number of times before those owners are tapped out. Since the inception of DC (now Abound) Marriott Vacation Club has relied heavily on their existing owner base to make new sales. They say this makes sense because your existing customer is your best future customer. That is true, but only for so long. The people who owned back when they reinvented themselves with the points product are now nearly 15 years older. They may no longer have a need for more timeshare and they are seeing the prices continue to rise. It is hard to sell to the existing customer if they start to see the value proposition start to erode. We also have a bit of a slowdown in the travel industry overall. The riding of the post Covid wave is over and now will be the time to see if the new CEO is up to the task or if he will become early collateral damage. His main objective is to bring value to the shareholder and he isn't doing a very good job of that. Though it isn't like the other two big timeshare brands (T&L and HGV) are soaring. HGV is down year over year, though not by as much as VAC and T&L is mainly at where they were this time last year.

I think the pre-points owner base is probably tapped out. They sold a lot of upgrades to weeks owners who wanted to get to various elite levels.

They need new points owners to be coming in so they have a steady stream of people to sell upgrades to.

The problem is their "entry level" packages of say 1500-2500 points are
1) very expensive
2) not actually very usable

That makes it a tough second sale. When you're trying to convince people to pay another $40k so they can have enough points to use their existing account the way the last salesman said they could use it for the first $40k you're going to get pushback.

 

[RENTER]

Year-over-year comparison of TNL (Wyndham) down 9% versus VAC (Marriott) down 51%.

With VAC, the "trend is definitely not your friend" and it must be for more than just lack of enthusiasm for the timeshare industry or missing the latest quarterly numbers.

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I saw it was 4 things. 1. a decline in VPG which I do not know what that is. 2. a decline in tours. 3. an increase of 59 million in loss provisions and 4. the Maui fires hurt them.

 

[bizaro86]

I saw it was 4 things. 1. a decline in VPG which I do not know what that is. 2. a decline in tours. 3. an increase of 59 million in loss provisions and 4. the Maui fires hurt them.

VPG is value (or volume) per guest. It's total sales divided by number of sales presentations, which gives you the average sales per presentation.

 

[davidvel]

VPG is value (or volume) per guest. It's total sales divided by number of sales presentations, which gives you the average sales per presentation.

Another indicator of a broken sales model: We have been on well over 10 sales visits, having only bought resale (after our first "presentation" thanks to @SeaDoc). The salesperson gets a printout of our history but is helpless to do anything but get us out to the "gifting" desk.

We are still invited every vacation, paid incentives, never buy the TS, but often get an encore (where we are "invited" back for yet another presentation.) We have racked up over $2,500 in incentives plus the great added value of Encores which I estimate to be a similar amount.

Many people report the same. This is absurd wasteful marketing.

 

[dioxide45]

Another indicator of a broken sales model: We have been on well over 10 sales visits, having only bought resale (after our first "presentation" thanks to @SeaDoc). The salesperson gets a printout of our history but is helpless to do anything but get us out to the "gifting" desk.

We are still invited every vacation, paid incentives, never buy the TS, but often get an encore (where we are "invited" back for yet another presentation.) We have racked up over $2,500 in incentives plus the great added value of Encores which I estimate to be a similar amount.

Many people report the same. This is absurd wasteful marketing.

But according to their earnings release, each guest is worth $3000+ (VPG). I say I am helping them with their earnings numbers by making them $3000 just by showing up to a presentation.

 

[pedro47]

In the last few years something has changed with the overall Marriott’s philosophy. I cannot describes the new philosophy of Marriott’s in words.

 

[timsi]

I saw it was 4 things. 1. a decline in VPG which I do not know what that is. 2. a decline in tours. 3. an increase of 59 million in loss provisions and 4. the Maui fires hurt them.

The decline actually started around the time when they launched Abound, not the last quarter.

 

[VacationForever]

I just attended their presentation and I forgot to take note of the number but it was $17.xx per point. The salesperson asked if we were looking to add anything and we said no. He said we should have declined to come in. We told him that we declined but the concierge kept calling us at home and we finally relented. He shook his head. That model sucks for the salesperson, concierge gets commission by getting warm bodies into the sales office even when it is unlikely to be monetized. He offered a 2BR Gold plus week at WKV for $42K.

 

[The Colorado Kid]

I just attended their presentation and I forgot to take note of the number but it was $17.xx per point. The salesperson asked if we were looking to add anything and we said no. He said we should have declined to come in. We told him that we declined but the concierge kept calling us at home and we finally relented. He shook his head. That model sucks for the salesperson, concierge gets commission by getting warm bodies into the sales office even when it is unlikely to be monetized. He offered a 2BR Gold plus week at WKV for $42K.

This continuing pretend disconnect between the concierge messaging to get the victim to attend the presentation and the salesperson's lack of understanding of that exact process is infuriating. I am at times tempted to call the concierge at that very moment on speakerphone when I get this ridiculous comment from the salesperson.

 

[kozykritter]

I just attended their presentation and I forgot to take note of the number but it was $17.xx per point. The salesperson asked if we were looking to add anything and we said no. He said we should have declined to come in. We told him that we declined but the concierge kept calling us at home and we finally relented. He shook his head. That model sucks for the salesperson, concierge gets commission by getting warm bodies into the sales office even when it is unlikely to be monetized. He offered a 2BR Gold plus week at WKV for $42K.

It may appear the concierge is somehow misleading people for gain but in general from my own experience selling Vistana years ago and my friendship with a few current concierges, that is likely not what is happening. They are under extreme pressure from sales/marketing management to meet set penetration rates (book a certain percentage of guests for presentations) and told that people saying they aren't interested in buying is not a valid excuse for not booking them. Why is this? Because a decent percentage of people that do buy ownership go in with the intention that they are not buying anything. The whole philosophy of the sales management is to get the person in front of a sales person and then have them do their job by selling ownership. The old adage "It's a bad workman that blames their tools" comes to mind here. If this sales person fails, they blame the concierge. If they succeed, they claim the success for themselves. In reality, no sales person sells ownership to every prospect nor are they expected to do so. When I was trained, they told us out of 10 prospects, on average 1 or 2 are going to buy no matter what and 2 or 3 are not buying no matter what. Their whole sales approach was focused on converting as many of those middle 5 or 6 prospects to sales as possible. Sales has always been a numbers game so they need to keep feeding people into the process to hit them. Most of the concierges are doing exactly what they've been ordered to do by management to keep the process rolling and keep their jobs.

 

[JIMinNC]

The decline actually started around the time when they launched Abound, not the last quarter.

The decline in VPG is directly linked to Abound/Vistana integration. I missed the last earnings call, but in previous calls they have specifically said the close rate/VPG for Vistana prospects has been lower than the average for MVC prospects. That is pulling down the overall average VPG.

It’s obviously harder to upsell a legacy Vistana owner since they have an existing points model that works well. Harder sell translates to lower close rate and lower VPG.

 

[davidvel]

But according to their earnings release, each guest is worth $3000+ (VPG). I say I am helping them with their earnings numbers by making them $3000 just by showing up to a presentation.

Yes sort of. On average, of course. The goal of sales is to convert every mark. The goal of MARKeting is to focus on the marks with the highest probability and try to exclude the ones you are utterly wasting marketing dollars on. This is so well known in the social media/internet advertising age where "customer acquisition cost" is the gold standard matrix.

MVC is back in the mail order marketing age, which creates a vicious circle: waste marketing dollars on marks that have a horrific chance of buying reduces VPG, requiring increased costs for an unchanged product year over year, leading to less sales and profits. . .

You see this all the time with companies on the decline. They don't innovate or change, but try to increase prices to make up for lost volume and profits. A classic corporate death spiral.

 

[davidvel]

In the last few years something has changed with the overall Marriott’s philosophy. I cannot describes the new philosophy of Marriott’s in words.

The philosophy is poorly executed greed in creating a far inferior product then charging significantly more for it. MVC saw everyone leading the pack with the smoke and mirrors points game where they can trick people into buying an equal currency despite some club points being backed by platinum, others by gold, and lots by mud. They do is without anyone telling anyone what they were buying.

Imagine the weeks system where they sell you a week, and then you get find out later what your season is (or never really do). You paid the same as everyone else but you ended up with a mud week in Tahoe or summer in the desert, while the couple in the next sales booth ended up with oceanfront in the newly built Lahaina Villas. Put another way, what if the weeks system had no seasons or resorts and you're fighting everyone else every year to get what you want? That is what the points system is. It's what I call smoke and mirrors or bait and switch, others call it a scam.

 

[Steve Fatula]

Yes sort of. On average, of course. The goal of sales is to convert every mark. The goal of MARKeting is to focus on the marks with the highest probability and try to exclude the ones you are utterly wasting marketing dollars on. This is so well known in the social media/internet advertising age where "customer acquisition cost" is the gold standard matrix.

MVC is back in the mail order marketing age, which creates a vicious circle: waste marketing dollars on marks that have a horrific chance of buying reduces VPG, requiring increased costs for an unchanged product year over year, leading to less sales and profits. . .

This is very true. I've been literally getting my entire purchase price back by not buying but going to presentations, probably 50 or more. Quite wasteful but ok for me.

 

[Bodie]

Just read Zacks.com review of MVC (3rd quarter). It's not exactly good. MVC is attributing much of its problems to Maui, which is probably true. How long that excuse will last remains to be seen. I'm not good at getting into the weeds of these numbers or what it will mean to the product but it doesn't seem as if it's going to bode well for us.

 

[Steve Fatula]

I'm not good at getting into the weeds of these numbers or what it will mean to the product but it doesn't seem as if it's going to bode well for us.

Well just keeping in mind they are still making money! Just not as much as expected.

 

[JIMinNC]

Well just keeping in mind they are still making money! Just not as much as expected.

That's true, but meeting or exceeding expectations is what management is supposed to do. It's not just about making money, it's about making enough money to make your stock attractive to investors given all of the other places an investor can choose to invest.

To me, it seems they may have over-estimated the accretive revenue potential from the ILG acquisition. They have met and exceeded their pre-consolidation estimates for cost synergies/reductions, but the message that seems to be filtering through is that they are finding driving additional incremental revenue from the acquisition to be more challenging than they may have expected. They took on a lot of debt to buy ILG, so it will take not only cost efficiencies, but also incremental revenue, for the deal to pay off in the long run.

Their new CEO, John Geller, is probably under a lot of pressure right now. VAC stock did incredibly well when Steve Weisz was at the helm, but it has lagged since his retirement. He may have seen the handwriting on the wall and decided to exit on top to preserve his legacy.

 

[VacationForever]

I do believe they missed a huge upsell opportunity when they allowed all weeks in VSN to get enrolled into Abound automatically. If I were to run MVW, I would not have done so. Instead, I would try to entice resale VSN owners to buy MVC Abound/Destination Club points/hybrid bundle to book MVC resorts. Now that the entire group of VSN owners already have access to Abound inventory, there is no reason to buy more. They could always rent more points from the open market.

 

[Hindsite]

I do believe they missed a huge upsell opportunity when they allowed all weeks in VSN to get enrolled into Abound automatically.

They had (and still have) such a terrible time "upselling" MVC weeks owners that they didn't want to repeat that with Vistana owners.
If I recall correctly, there is data in the 2021 and 2022 investor calls that shows how low the enrollment rate is for MVC weeks owners 10 years on.
The surprise was giving mandatory resale owners a free pass. It may be that the legal approach they had to take was an agreement with VSN, and that rolled in mandatory resale owners along the way.

 

[WBP]

The Marriott you know and love is also mainly franchises too. I mean something like 95% of all Marriott hotels are just franchises run by 3rd party group. Marriott Corp manages very few hotels.

I get it, my point of reference is to the "Mother Ship/Parent Company," where, in my opinion, the recipe for the culture, values, operating principles and practices is conceived.

There was a time at MVC, when the "Marriott" culture, values, operating principles and practices, came from Marriott's world headquarters, then in Bethesda. What's left, in my opinion, is a baby, without any bath water.

 

[WBP]

This continuing pretend disconnect between the concierge messaging to get the victim to attend the presentation and the salesperson's lack of understanding of that exact process is infuriating. I am at times tempted to call the concierge at that very moment on speakerphone when I get this ridiculous comment from the salesperson.

That "Concierge" is an IMPOSTER, and a disgrace to the career concierge in the hospitality business, and at Marriott Vacation Club.

In keeping with the unscupulous business practices of Marriott Vacation Club's unscrupulous leaders, someone, once decided to call Marketing representatives, "Concierge," as a way to buy time/acceptance on the phone (or in-person) from the person/people they are trying to enroll in a sales presentation (deceptively referred to, at times, as an "Owner Update").

 

[dioxide45]

Because a decent percentage of people that do buy ownership go in with the intention that they are not buying anything.

I know of only a handful of people that walked into a timeshare presentation with the plan to buy something. 99% are there for the free gift but they still sell to about 10% of the people. Certain products probably have a higher rate of people going in with the plan to buy. The problem is that timeshares don't sell themselves.

 

[dioxide45]

I do believe they missed a huge upsell opportunity when they allowed all weeks in VSN to get enrolled into Abound automatically. If I were to run MVW, I would not have done so. Instead, I would try to entice resale VSN owners to buy MVC Abound/Destination Club points/hybrid bundle to book MVC resorts. Now that the entire group of VSN owners already have access to Abound inventory, there is no reason to buy more. They could always rent more points from the open market.

I think they were expecting Vistana owners to see the value in Abound and want to just buy more after they had elected points from their weeks. I think they were mistaken...

 

[kozykritter]

Not to mention misjudging the anti-Marriott sentiment of many owners going back to the purchase and dismantling of Starwood Hotels and the SPG program, owners that then watched them buy SVO and start to do the same thing to their timeshare program except this time it involves a lot more of their money! Really it was a case of arrogant wishful thinking by MVC, trying to convince themselves that everyone would understand that Marriott was a superior product to what Vistana owners already had and immediately buy in. To quote Julia Roberts in Pretty Woman..."Big mistake. Huge." Nobody likes a bully, particularly one that does it multiple times.