Why is Marriott Vacations struggling?

[VacationForever]

I hear what everyone is saying that it is difficult to book prime weeks in the trust, but on the other hand it takes so much more points to book high demand season. We like to travel in shoulder season and it works for us. It feels like a bargain. The more low season weeks in the trust the better for us. However, I still really dislike MVC management and how it is treating owners. We are going to dump our MVC portfolio within the next 7 years, or when our MVC MF hits $20K, whichever comes first.

 

[DRH90277]

Question - My understanding is that points are sold and then VAC, the public entity, can transfer units into the Trust. In other words, "a unit in the Trust for every equivalent points unit sold." Of course, there would be a profit generated for VAC as units are transferred into the Trust. So, if VAC buys other timeshare assets as they have with these large resort buys, they must hold these unsold inventories until sold as points (and moved into the Trust)? So, it seems, the acquired entity units would remain on the outside just as my resale weeks do with no impact on my maintenance fees. Maintenance fees assessed on owned units would still reflect actual costs of the timeshare units as approved by local BOD's including MVC administrative charges.

First, I need to understand this. If this is true, VAC, the public entity, should be absorbing substantial costs associated with these buys as such costs should not be our expense or an expense of the timeshare owners of the acquired entities. Are we as legacy owners protected from any allocation from VAC's forays into these purchases? By stripping point ownership out of my portfolio, am I able to protect my owned and resale week portfolio for the future?

Gosh, I may be totally wrong on this and appreciate any insight.

PS - With respect to VAC's profitability and forecast, could they have taken on buys and expensive integration costs, the profits of which are slow in coming due to a slowdown in selling points?

 

[dioxide45]

Question - My understanding is that points are sold and then VAC, the public entity, can transfer units into the Trust. In other words, "a unit in the Trust for every equivalent points unit sold." Of course, there would be a profit generated for VAC as units are transferred into the Trust. So, if VAC buys other timeshare assets as they have with these large resort buys, they must hold these unsold inventories until sold as points (and moved into the Trust)? So, it seems, the acquired entity units would remain on the outside just as my resale weeks do with no impact on my maintenance fees. Maintenance fees assessed on owned units would still reflect actual costs of the timeshare units as approved by local BOD's including MVC administrative charges.

First, I need to understand this. If this is true, VAC, the public entity, should be absorbing substantial costs associated with these buys as such costs should not be our expense or an expense of the timeshare owners of the acquired entities. Are we as legacy owners protected from any allocation from VAC's forays into these purchases? By stripping point ownership out of my portfolio, am I able to protect my owned and resale week portfolio for the future?

Gosh, I may be totally wrong on this and appreciate any insight.

PS - With respect to VAC's profitability and forecast, could they have taken on buys and expensive integration costs, the profits of which are slow in coming due to a slowdown in selling points?

You have it mostly right, just the order is off. When MVC has reacquired or newly acquired inventory, they convey it to the trust. That inventory is assigned a certain number of points and Beneficial Interests. Only then can they sell those points or beneficial interests. MVC is responsible for paying the associated maintenance fee for any unsold points. They can rent out nights on Marriott.com to cover those fees and also make a profit. Marriott earns considerable amounts of revenue from rental activity.

 

[DRH90277]

You have it mostly right, just the order is off. When MVC has reacquired or newly acquired inventory, they convey it to the trust. That inventory is assigned a certain number of points and Beneficial Interests. Only then can they sell those points or beneficial interests. MVC is responsible for paying the associated maintenance fee for any unsold points. They can rent out nights on Marriott.com to cover those fees and also make a profit. Marriott earns considerable amounts of revenue from rental activity.

Thank you.

Does MVC spiffy up the units prior to placing them in the Trust? I'm concerned the handoff may require the point holders to assume the costs of bringing the units up to some acceptable standard including reserve levels through the point MF's. Is there any sense of fairness or is this a "closed to scrutiny" internal matter? I can only hope VAC is circumspect in their treatment of the owners.

 

[dioxide45]

Thank you.

Does MVC spiffy up the units prior to placing them in the Trust? I'm concerned the handoff may require the point holders to assume the costs of bringing the units up to some acceptable standard including reserve levels through the point MF's. Is there any sense of fairness or is this a "closed to scrutiny" internal matter? I can only hope VAC is circumspect in their treatment of the owners.

No. The unit renovations are based on a schedule by the HOA. The trust may only acquire one week in one unit at a resort. They can't really spiffy up just the one week. The trust is responsible for paying the same fees for the same weeks as a weeks based owner would be.

 

[GTLINZ]

I also think they've sorely discounted, or even ignored, the power of the Internet. When we first "discovered" timesharing, kinda by hapchance, in '06 I had to do a but of digging to find info. on resales, and really TUG was THE resource (not that it still isn't the best ).

Totally agree. And many of us did make savvy resales purchases years ago. I have loved our vacations and I believe i have benefited from owning. I got into owning AFTER being on TUG and being aware there were risks that I was willing to take.

But the playing field keeps changing. I don't think they can muster up a more "savvy" sales pitch because the opportunity to derive value from owning is dwindling. Just like Marriott, Hyatt has layered a points trust on top of our weeks ownerships and I am watching my access decline. But they can keep making money over and over, so they do - which they are responsible to do for their shareholders.

The industry has a terrible reputation because of their actions - both with sales and this topic itself. The real issue is that they can change the rules - the original "risk" i decided to take. And they can and do change the rules, because you ownly own "a slice" of actual real estate. Reselling and rebranding until the product is watered down, but more expensive as already lamented.

Very compelling discussion and lots of new insights.

 

[DRH90277]

A possible purchase alternative -

Considering the way newly purchased entity weeks as well as legacy Marriott weeks are integrated into the points program, a new entrant might be motivated to just buy resale weeks from both MVC owners and newly acquired owners and bypass the Trust system entirely. One would then have ownership (surer reservations), Interval, and rental avenues available for reservations.

Considering experience with our legacy resale weeks, I'm thinking this might be a good avenue. Owning a few points, bought resale or retail, and adding some rented points (dirt cheap), could be an acceptable and lower cost portfolio approach. The points option is the most expensive at purchase (retail) and in ongoing MF's.

 

[DanCali]

The points option is the most expensive at purchase (retail) and in ongoing MF's.

For anyone interested in Platinum weeks and , to a somewhat lesser extent some Gold weeks, this has been the same since the launch of the points program in 2010... Not to mention that if you buy a resale week you don't automatically lose 50% of your upfront cost like you do with resale points (due to junk fees).

But weeks are certainly not what they used to be either, and the value is getting more questionable over time. Take for example NCV Platinum - it converts to 3475 points. In 2022 MFs were $1433, or $0.41/pt. Now that it's $1905 in 2024, that's $0.55/pt which is about where Trust points were in 2018. If I didn't like Trust points in 2018 then, like you, I also definitely don't like them in 2024. But the value of legacy weeks has also eroded substantially. NCV MFs went up 33% in 2 years, but its rental value has been flat at best over that post-pandemic period. This is just one example but applies to the vast majority of MVC weeks to various degrees.

If I was a new entrant now, as opposed to 15 years ago, I'd probably hold off on MVC altogether both direct and resale, and both points and weeks.

 

[Red elephant]

For anyone interested in Platinum weeks and , to a somewhat lesser extent some Gold weeks, this has been the same since the launch of the points program in 2010... Not to mention that if you buy a resale week you don't automatically lose 50% of your upfront cost like you do with resale points (due to junk fees).

But weeks are certainly not what they used to be either, and the value is getting more questionable over time. Take for example NCV Platinum - it converts to 3475 points. In 2022 MFs were $1433, or $0.41/pt. Now that it's $1905 in 2024, that's $0.55/pt which is about where Trust points were in 2018. If I didn't like Trust points in 2018 then, like you, I also definitely don't like them in 2024. But the value of legacy weeks has also eroded substantially. NCV MFs went up 33% in 2 years, but its rental value has been flat at best over that post-pandemic period. This is just one example but applies to the vast majority of MVC weeks to various degrees.

If I was a new entrant now, as opposed to 15 years ago, I'd probably hold off on MVC altogether both direct and resale, and both points and weeks.

I take alot of recommendations here very seriously . I am interested in Grand Ocean resale gold season and have an accepted offer for $5500 Oceanside. I have not been able to book this and I end up at Barony sometimes because MGO is just not available and it’s even way more expensive if available at Marriott .com.

 

[dannybaker]

I believe the maintenance fees have gone crazy. I own other timeshares and maintenance fees have stayed the same or gone up very little. We spend twenty weeks a year in timeshares and seem to be spending less time in Marriotts and moving towards other resorts.

i Wonder if there will be a lot of people dumping their Marriott’s this year.

 

[dioxide45]

i Wonder if there will be a lot of people dumping their Marriott’s this year.

There may be, especially people who only travel one or two weeks a year. For us, there is still good value in our weeks even though the fees have gone way up. We own enrolled 2BR lock off units with Marriott and can usually get 4 weeks in a 2BR from those. Since our weeks are enrolled, we don't pay any II exchange fees and at most would pay for any upgrade fees, but sometimes we upgrade in the 59 day Flexchange window for free. I shouldn't say this, but fees would probably have to go up a lot more before we stopped being able to get decent value from our ownership.

 

[Superchief]

You have it mostly right, just the order is off. When MVC has reacquired or newly acquired inventory, they convey it to the trust. That inventory is assigned a certain number of points and Beneficial Interests. Only then can they sell those points or beneficial interests. MVC is responsible for paying the associated maintenance fee for any unsold points. They can rent out nights on Marriott.com to cover those fees and also make a profit. Marriott earns considerable amounts of revenue from rental activity.

Just to clarify, if MVC acquires a gold week at Canyon Villas, wouldn't the number of trust points they add (then sell) have to match the VC points value for that week (1825 points)? It is likely much easier for them to acquire the lower valued properties and weeks, but I would expect these will increase their trust maintenance fees.

 

[DRH90277]

I believe the maintenance fees have gone crazy. I own other timeshares and maintenance fees have stayed the same or gone up very little. We spend twenty weeks a year in timeshares and seem to be spending less time in Marriotts and moving towards other resorts.

i Wonder if there will be a lot of people dumping their Marriott’s this year.

Interesting - All Marriott - we bought 5 timeshares at about $30k each before buying 11 in the resale market. We paid through the nose for the first 5 but had reasonable maintenance fees. Then we bought the resales at bargain prices, always less than a third of retail and some for much less. Marriott made lots of money selling those initial 5 units as they do now by selling overpriced points.

Now, the model seems to be flipping. MF's are going up but we can buy many resale weeks at even lower prices. If one amortizes the resale week cost over a reasonable period of years and adds this to the MF's, it might not look so bad. I think there are a lot of smart folks out there who have figured this out. Plus, the resale unit initial cost can be resold later for about what one pays.

Trust Point prices are very high in relation to value in use and the combination of the high up-front cost coupled with the high MF's makes the Point system extraordinarily expensive. The value proposition for points has taken a direct hit from the high point cost. Then, there is the difficulty in getting the reservations wanted using points, a big problem. We're not buying any more points, but we may buy a resale unit or two.

 

[dioxide45]

Just to clarify, if MVC acquires a gold week at Canyon Villas, wouldn't the number of trust points they add (then sell) have to match the VC points value for that week (1825 points)? It is likely much easier for them to acquire the lower valued properties and weeks, but I would expect these will increase their trust maintenance fees.

The number of points are similar, but not exactly the same. I believe each week added must be in 250 point increments. So that CV week they add may only give them 1,750 points added to the trust.

 

[davidvel]

A possible purchase alternative -

Considering the way newly purchased entity weeks as well as legacy Marriott weeks are integrated into the points program, a new entrant might be motivated to just buy resale weeks from both MVC owners and newly acquired owners and bypass the Trust system entirely. One would then have ownership (surer reservations), Interval, and rental avenues available for reservations.

Considering experience with our legacy resale weeks, I'm thinking this might be a good avenue. Owning a few points, bought resale or retail, and adding some rented points (dirt cheap), could be an acceptable and lower cost portfolio approach. The points option is the most expensive at purchase (retail) and in ongoing MF's.

Not just possible, people do this everyday, and people here recommend it everyday.

 

[GTLINZ]

Interesting - All Marriott - we bought 5 timeshares at about $30k each before buying 11 in the resale market. We paid through the nose for the first 5 but had reasonable maintenance fees. Then we bought the resales at bargain prices, always less than a third of retail and some for much less. Marriott made lots of money selling those initial 5 units as they do now by selling overpriced points.

Now, the model seems to be flipping. MF's are going up but we can buy many resale weeks at even lower prices. If one amortizes the resale week cost over a reasonable period of years and adds this to the MF's, it might not look so bad. I think there are a lot of smart folks out there who have figured this out. Plus, the resale unit initial cost can be resold later for about what one pays.

Trust Point prices are very high in relation to value in use and the combination of the high up-front cost coupled with the high MF's makes the Point system extraordinarily expensive. The value proposition for points has taken a direct hit from the high point cost. Then, there is the difficulty in getting the reservations wanted using points, a big problem. We're not buying any more points, but we may buy a resale unit or two.

A sound approach. Another sound approach is a deeded week owner who enrolls their week (or purchases in conjuction with) with the purchase of a minimum number of trust points. The key is that they retain control over their week.

The owner of a week that usually uses what they own is always a great situation. But the allure of shorter stays and cheap midweek costs is always there. And the 2 month discount ....

That is the great compromise.

As said before, someone with points looking for non peak weeks is often the winner in the points game.

 

[DanCali]

Plus, the resale unit initial cost can be resold later for about what one pays.

I used to think the same, but that was true as long as MFs increased moderately.

Resale prices will be inversely proportional to MFs. If MFs exceed rental values, resale prices go to zero. Sometimes it can happen even before that if the dues are "high enough" (see Harborside at Atlantis in the Vistana world) because many of the owners don't want to pay those high dues even if rental costs are higher and there just aren't enough new buyers willing to take those weeks even for free.

Last time I looked (about a year ago) people were paying $35K for Westin Oceanfront 2BR weeks. Some recent sales appear to be at similar prices. Do you think that will last now that MFs are $4400 after a 15% hike in 2024?

 

[DanCali]

I take alot of recommendations here very seriously . I am interested in Grand Ocean resale gold season and have an accepted offer for $5500 Oceanside. I have not been able to book this and I end up at Barony sometimes because MGO is just not available and it’s even way more expensive if available at Marriott .com.

How much more expensive would it be to rent a Gold week from an owner on Redweek vs. paying the dues? My concern is that the MFs are out of control and rental prices are flat at best. That rapidly changes the rent vs. buy consideration.

Also, don't assume that if you own the week you will be able to book what you want, especially at 12 months out. Personally, I have very strong suspicions that the trust is "sucking" the good inventory away from weeks owners. Nobody knows how trust inventory is allocated once owners elect points, and I'm sure it will stay that way... We actually bought a Gold view week at MCS with the intention to primarily use (similar consideration to yours). But I have been unable to reserve the July week we wanted with a Saturday checkin even at 14 months out and for most summer weeks Saturday checkins are extremely hard to get from what I can tell, and it's not like we own the 3BR GF penthouse units of which there are only 2. I also tried to book Thanksgiving week exactly at 12 months out and they didn't have a single checkin day available despite the fact they insist that they least 50% of inventory at 12 months out - not even the Thursday checkin that ends on Thanksgiving day, which is probably undesirable for most. And yes, I know how to call at 9:00:00 given ~15 years of training with Platinum NCV... - it was definitely not an issue calling late or being on hold although I suppose the online bookers could have beat me to it (I had an existing reservation for another week in the season so I had to call in to try to modify it).

 

[Red elephant]

How much more expensive would it be to rent a Gold week from an owner on Redweek vs. paying the dues? My concern is that the MFs are out of control and rental prices are flat at best. That rapidly changes the rent vs. buy consideration.

Also, don't assume that if you own the week you will be able to book what you want, especially at 12 months out. Personally, I have very strong suspicions that the trust is "sucking" the good inventory away from weeks owners. Nobody knows how trust inventory is allocated once owners elect points, and I'm sure it will stay that way... We actually bought a Gold view week at MCS with the intention to primarily use (similar consideration to yours). But I have been unable to reserve the July week we wanted with a Saturday checkin even at 14 months out and for most summer weeks Saturday checkins are extremely hard to get from what I can tell, and it's not like we own the 3BR GF penthouse units of which there are only 2. I also tried to book Thanksgiving week exactly at 12 months out and they didn't have a single checkin day available despite the fact they insist that they least 50% of inventory at 12 months out - not even the Thursday checkin that ends on Thanksgiving day, which is probably undesirable for most. And yes, I know how to call at 9:00:00 given ~15 years of training with Platinum NCV... - it was definitely not an issue calling late or being on hold although I suppose the online bookers could have beat me to it (I had an existing reservation for another week in the season so I had to call in to try to modify it).

They are asking $3500 for gold season at MGO on redweek that’s $1500 more than maintenance fee right now. We go every year as I live in Georgia. This year could not get a week there and got Barony garden in Abound and same for next here in June. So figure I could get it at 13 months if I owned there.

 

[Red elephant]

How much more expensive would it be to rent a Gold week from an owner on Redweek vs. paying the dues? My concern is that the MFs are out of control and rental prices are flat at best. That rapidly changes the rent vs. buy consideration.

Also, don't assume that if you own the week you will be able to book what you want, especially at 12 months out. Personally, I have very strong suspicions that the trust is "sucking" the good inventory away from weeks owners. Nobody knows how trust inventory is allocated once owners elect points, and I'm sure it will stay that way... We actually bought a Gold view week at MCS with the intention to primarily use (similar consideration to yours). But I have been unable to reserve the July week we wanted with a Saturday checkin even at 14 months out and for most summer weeks Saturday checkins are extremely hard to get from what I can tell, and it's not like we own the 3BR GF penthouse units of which there are only 2. I also tried to book Thanksgiving week exactly at 12 months out and they didn't have a single checkin day available despite the fact they insist that they least 50% of inventory at 12 months out - not even the Thursday checkin that ends on Thanksgiving day, which is probably undesirable for most. And yes, I know how to call at 9:00:00 given ~15 years of training with Platinum NCV... - it was definitely not an issue calling late or being on hold although I suppose the online bookers could have beat me to it (I had an existing reservation for another week in the season so I had to call in to try to modify it).

MCS has a lot in the trust so I have been able to book there for the past couple of years.

 

[winger]

MCS has a lot in the trust so I have been able to book there for the past couple of years.

What's MCS?

 

[jwalk03]

They are asking $3500 for gold season at MGO on redweek that’s $1500 more than maintenance fee right now. We go every year as I live in Georgia. This year could not get a week there and got Barony garden in Abound and same for next here in June. So figure I could get it at 13 months if I owned there.

You can only book a week at 13-months if you own 2 weeks and are booking them concurrently or consecutively. If you are only booking 1 week the window to book is 12-months not 13.

 

[VacationForever]

What's MCS?

Crystal Shores?

 

[jp10558]

From an investor's perspective, the question I always try to answer is: what in the future will increase growth, what will keep existing customers coming back and recommend the product?

AirBnB has certainly put a dent in MVCs's future prospects. Any seeing the challenges from insides from a customer's perspective, I would not be an investor at this time. Why pay a for timeshare and be 'stuck' with annual fees and hard to reserve places unless you reserve over 10-12 months out when you can reserve a 2-4 bedroom for the same cost (or less or more) almost last minute?

I don't follow VAC, but taking a loss is sometimes OK when there are so many more better companies/stocks to purchase.

I think AirBnB competition is changing a lot right now. With the different laws, bad press, and ever increasing prices and fees there too - I'm not at all sure the pricing and convenience will stay the same as it was over the last couple years. That said, as far as I know, timeshare companies are just not going to be able to take advantage of what would potentially be some good arguments vs AirBnB because of their (frankly to me weird) business models.

The other thing that doesn't make a lot of sense is - if you're actually constantly at full capacity at 1 year out, doesn't that scream to build another property if at all possible so you can bring in more owners?

 

[VacationForever]

The other thing that doesn't make a lot of sense is - if you're actually constantly at full capacity at 1 year out, doesn't that scream to build another property if at all possible so you can bring in more owners?

You have the same problem where high demand is only during peak season and low demand in shoulder season. Empty properties in off season is bad for the timeshare model.

New construction is expensive. Easier to pick up what is in the market and add to the trust.