Why is Marriott Vacations struggling?

[Ken555]

Noted. I think one of the issues I see with your FL aversion is that FL is a big state in terms of distances. I live in FL and I'm closer to the HHI resorts than I am any of the FL MVC Beach resorts and it's another 3 hrs further for the western part of the Panhandle.. The panhandle area and gulf coast in general are simply not well served with timeshares. There are few good options on the West Coast and the Panhandle. You've got Embarc/HGVC in Sandestin, Wyndham in PCB which is a great location but only OK resort and the Wyndham in Clearwater Beach. While there are an other options, I can't think of any others that are very good resorts AND in truly good locations. Wyndham has several in Destin but none measure up in terms of what we've been discussing. The other 2 best ones in II in the Panhandle are LE and Wyndham's Harborwalk which are not draws for most people. But no one items or even any combination will fit everyone's needs. I'd just love to get some new great resorts anywhere that people will use even if they aren't the ones I'd visit.

I get it. You’re biased toward Florida. I’m not.


Sent from my iPad using Tapatalk

 

[JIMinNC]

Do you really think we need more resorts in Florida?


Sent from my iPad using Tapatalk

I agree with @Dean that there are parts of Florida that are underserved, particularly on the west coast from Clearwater down to Naples. We do prefer the Southwest Coast of Florida to the East Coast of Florida ourselves. I think that is a big reason why Crystal Shores on Marco Island is such a big success. I think the biggest impediment to those kinds of locations is the cost of real estate now that coastal prices have soared. Even basic availability may be a challenge. I suspect few, if any, developable properties remain on beaches in Florida. Developing a timeshare would likely mean finding an older hotel to renovate or even raze/rebuild. Buying and renovating a whole ownership condo would be difficult or impossible given the need to negotiate and buy out many owners. I suspect MVW looks at the cost of something like that and questions whether they could sell such a property in the Trust without crushing their development margins.

But if I could have a new Marriott or Westin Vacation Club anywhere, it would be on Seven Mile Beach in the Cayman Islands. They have two hotels there - a Marriott and a Westin - so maybe they could find a way to work an asset-light deal with the owner of one of those properties and convert one wing to ownership like they did in Waikoloa.

I do find it interesting that in the comments in one of their recent investor presentations they commented that the upcoming Savannah location would likely be branded Westin and that the Charleston location might be as well. I saw these as Pulse locations.

 

[Ken555]

I agree with @Dean that there are parts of Florida that are underserved, particularly on the west coast from Clearwater down to Naples. We do prefer the Southwest Coast of Florida to the East Coast of Florida ourselves. I think that is a big reason why Crystal Shores on Marco Island is such a big success. I think the biggest impediment to those kinds of locations is the cost of real estate now that coastal prices have soared. Even basic availability may be a challenge. I suspect few, if any, developable properties remain on beaches in Florida. Developing a timeshare would likely mean finding an older hotel to renovate or even raze/rebuild. Buying and renovating a whole ownership condo would be difficult or impossible given the need to negotiate and buy out many owners. I suspect MVW looks at the cost of something like that and questions whether they could sell such a property in the Trust without crushing their development margins.

Good insight. I don't know that area of Florida very well, though I have visited in the past. I do know that for myself I would not fly to spend time there.

But if I could have a new Marriott or Westin Vacation Club anywhere, it would be on Seven Mile Beach in the Cayman Islands. They have two hotels there - a Marriott and a Westin - so maybe they could find a way to work an asset-light deal with the owner of one of those properties and convert one wing to ownership like they did in Waikoloa.

Yes, deals like that - if possible - would be good. A resort in the Cayman Islands would be a good addition, IMO.

I do find it interesting that in the comments in one of their recent investor presentations they commented that the upcoming Savannah location would likely be branded Westin and that the Charleston location might be as well. I saw these as Pulse locations.

Hmm... that's interesting. Looking forward to seeing what happens with that.

 

[Dean]

I get it. You’re biased toward Florida. I’m not.


Sent from my iPad using Tapatalk

As I noted previously, I'm not answering this for the resorts I want to see but rather how I see them creating great successful actual resorts. So from my standpoint it's not about bias. I'd point out that I stretched the area of consideration all the way to TX, not just FL. The seasonality of most locations is a major problem and even between the upper Gulf and Tampa area, there's a fairly large difference there in terms of weather and seasonality. It sounds to me that you are biased against FL and as you stated previously, you're answering for where you want to go not an objective opinion of what will be best overall from a system & resort quality standpoint. I don't see anywhere you must fly to as being a good choice currently, esp with travel as it is right now even though there are places I'd like to visit but wouldn't go to routinely. I can't speak for outside the Western Hemisphere, I'll leave it to those who are more aware of Europe, Asia, Africa, Australia to opine whether they see similar opportunities for those more local even if it wouldn't be something I'd do personally.

 

[dioxide45]

I suspect few, if any, developable properties remain on beaches in Florida. Developing a timeshare would likely mean finding an older hotel to renovate or even raze/rebuild.

Even Crystal Shores wasn't empty land. The Osprey Tower was a previous hotel resort that was converted.

 

[JIMinNC]

Good insight. I don't know that area of Florida very well, though I have visited in the past. I do know that for myself I would not fly to spend time there.

The southwest Florida beaches are softer white powdery sand than what is on the east coast. You'll also see more seashells on the SW Florida beaches than about anywhere. SW Florida from Punta Gorda down to Marco Island also has a more laid-back feel than the freeways, congestion, and urban hustle-bustle of Southeast Florida. The west coast of Florida is also the only place in the US other than California, Oregon, Washington, and Hawaii where you can watch the sunset over the water from the beach!

 

[dioxide45]

The west coast of Florida is also the only place in the US other than California, Oregon, Washington, and Hawaii where you can watch the sunset over the water from the beach!

Don't forget about Michigan!

 

[JIMinNC]

Don't forget about Michigan!

Somehow sitting on a beach overlooking beautiful Lake Michigan just doesn’t seem the same. Plus you can only do that like one or two months a year without a parka, right?

 

[Rmelnyk]

I am not able at this time get into my Lawrence Welk, Cathedral City time share account. It seems I no longer have a L.W.account.

Do I have to go thru the Marriott V web site, or am I being to optimist? I dread talking to someone.
Have they sent any info on what take over?
I have really been out of circulation for about 4 years, (medical.)

 

[dioxide45]

I am not able at this time get into my Lawrence Welk, Cathedral City time share account. It seems I no longer have a L.W.account.

Do I have to go thru the Marriott V web site, or am I being to optimist? I dread talking to someone.
Have they sent any info on what take over?
I have really been out of circulation for about 4 years, (medical.)

You should ask your question in the Welk forum. You won’t use the MVC website.

Hyatt Vacation Club - Welk Timeshares

topics and discussions about the Legacy Welk Resorts Timeshare system now rebranded Hyatt Vacation Club

tugbbs.com

 

[bazzap]

Almost any additional International resort locations would be very welcome.

 

[ljmiii]

I do wonder why MVC has such an aversion to seasonal beach resorts. Hotels, RE investment firms, and individuals have no problem pouring money into real estate between Montauk and Virginia Beach. Yes, the hotel and rental rates for high summer can be five or ten times the rates in the dead of winter...but so what?!? There is no reason a points chart can't reflect those values. And yes, MVC would have to staff seasonally like the hotels do...but again so what?!?

I would think that a beach resort that is drivable those who live in and around the 'Amtrak corridor' between DC and Boston would be a ready market. It is a mystery to me.

 

[dioxide45]

I do wonder why MVC has such an aversion to seasonal beach resorts. Hotels, RE investment firms, and individuals have no problem pouring money into real estate between Montauk and Virginia Beach. Yes, the hotel and rental rates for high summer can be five or ten times the rates in the dead of winter...but so what?!? There is no reason a points chart can't reflect those values. And yes, MVC would have to staff seasonally like the hotels do...but again so what?!?

I would think that a beach resort that is drivable those who live in and around the 'Amtrak corridor' between DC and Boston would be a ready market. It is a mystery to me.

Seasonality means lower point values for villas for several months of the year. That then means fewer points to sell. That said, you would think land acquisition costs outside Florida might be cheaper to help off set those lower total points available for sale. Back when they sold weeks, I am sure they struggled to sell off season weeks. Even in lower season there isn't that much difference in overall costs of running the resort. Sure there might be fewer staff, but in many cases they still run 80% occupancy and the room still need to be cleaned.

 

[JIMinNC]

I do wonder why MVC has such an aversion to seasonal beach resorts. Hotels, RE investment firms, and individuals have no problem pouring money into real estate between Montauk and Virginia Beach. Yes, the hotel and rental rates for high summer can be five or ten times the rates in the dead of winter...but so what?!? There is no reason a points chart can't reflect those values. And yes, MVC would have to staff seasonally like the hotels do...but again so what?!?

I would think that a beach resort that is drivable those who live in and around the 'Amtrak corridor' between DC and Boston would be a ready market. It is a mystery to me.

I don't know the answer to your question, but just thinking about it, these could be some of the factors at play:

• Hotels on Northeast beaches have other ways to fund cash flow in the off season - hosting business meetings, weddings, holiday parties, etc. Anything to cover fixed costs during the winter months with profit being generated from May-October (just guessing on the months). Timeshares don't have these other ancillary revenue streams - it's just maintenance fees, which would be the same regardless of season.
• The east coast areas from South Carolina through Florida have "reasonable-to-good" temperatures 12 months out of the year. The most changeable weather is in SC, but as we've learned in the almost five years we've owned a condo in Hilton Head, while November-March isn't usually "sitting on the beach" weather, it can be good "walking on the beach in a sweatshirt" weather (even in shorts a good bit of the time) and excellent golf weather. We've been at our condo all this week while interior re-painting is being done at our Charlotte home, and temps all week have been in the low-to-mid 60s. It seems to me that the beaches in the northeast corridor can't offer the same usability 12 months out of the year. (Admittedly, this is only my perception, one that may be influenced by my "southern bias".)
• In the old weeks days, and with the weather difference noted above, I could see a timeshare company feeling they had something they could reasonably sell in South Carolina and Florida 12 months out of the year, but at different price points in different seasons. I could then see them looking at the northeast corridor's much shorter useable season and wonder if the could EVER sell those December-March weeks, since the maintenance fee cost would need to be the same as the prime summer weeks. With such disparate seasons, the gulf may have been too wide to bridge.
• In the points-based trust world, the number of points they could reasonably allocate to the 12 month year would need to be considered so as to reflect the appeal/demand/development cost of that location vis-a-vis resorts in other areas. Given the huge seasonal differences in the northeast corridor, in order for the winter months to be offered at low enough points costs that it might attract some bookings, the points values allocated for high summer season might then have to carry a disproportionate share of the load, making those points costs so high that they would not compare well to other high demand areas. If they set the total 12 month points allocations so that the summer weeks were in line with other high season destinations, then the total point value allocated to the resort, given the low points probably required for winter, the total sale-able points generated for the trust might not be enough to justify the development cost.

As I said, these are just "throwing spaghetti at the wall" ideas.

 

[jmhpsu93]

Responding (agreeing with) to @JIMinNC without quoting...

Very good observations. I'm thinking the "line of demarcation" for year-round beach resorts is probably Hilton Head, and then Myrtle Beach might get you ten months or so. We've been in HHI in December and February and both times have had some really nice days that like you said not "swim in the ocean" but hang out on the beach or pool just fine. And HHI businesses remain open year-round. Now whether owning a bronze week in MVC system in HHI is a good value is subject to debate for sure, but at least it's worth going there.

Let's contrast that to the biggest resort town in the mid-Atlantic, Ocean City, MD. That place is a ghost town from New Year's to about Easter every year, despite them trying to have conventions, etc. there in the winter months. Most business close for three months, and it's not really all that warmer than Philly/Baltimore/DC. I can rent a week for about $600-800 in Ocean City in March.

 

[Superchief]

I think that a resort in an Eastern mountain area like Greenbriar, Asheville, or in TN could be appealing. More people are becoming interested in hiking and other outdoor activities and enjoying the tranquility of the mountains. As long as there is golf and skiing available in the area, it could have similar seasonality as the Western mountain resorts and is more accessible to people in the East and Midwest.

 

[Superchief]

MVC should also consider opportunities to add timeshares to their larger resort properties, similar to Marriott World Center and the JW's in Phoenix and Palm Desert. I recommend having 2-3 BR villas with lock-offs to accommodate families as well as rental opportunities for the studio portions. Most of these resorts have golf courses and plenty of things to do. The conventions at the resort minimize low occupancy periods and offer rental revenue sources during large meetings. I frequently stayed at Royal Palms when attending conferences at the World Center. My MF's were cheaper than the cost for the hotel, and my family could travel with me. There would also be little need for the MVC to provide activities. The challenge will be to find resort owners who are willing to work with MVC, but it really is a win-win.

 

[dioxide45]

MVC should also consider opportunities to add timeshares to their larger resort properties, similar to Marriott World Center and the JW's in Phoenix and Palm Desert. I recommend having 2-3 BR villas with lock-offs to accommodate families as well as rental opportunities for the studio portions. Most of these resorts have golf courses and plenty of things to do. The conventions at the resort minimize low occupancy periods and offer rental revenue sources during large meetings. I frequently stayed at Royal Palms when attending conferences at the World Center. My MF's were cheaper than the cost for the hotel, and my family could travel with me. There would also be little need for the MVC to provide activities. The challenge will be to find resort owners who are willing to work with MVC, but it really is a win-win.

They also did it with Los Suenos in Costa Rica. That said, I don't really see it happening as much anymore now that MVC is split off from the parent brand. We also have the dynamic where mostly independent corporations or even REITs own most of the hotel properties. They are now in it for the big dollar and just look to try and milk the cow, the cow being timeshare owners. It isn't so much about cost sharing of shared amenities anymore. It is more about how much the hotel operator can make off the timeshare owners who wish to visit from a colocated property.

 

[jwalk03]

They also did it with Los Suenos in Costa Rica. That said, I don't really see it happening as much anymore now that MVC is split off from the parent brand. We also have the dynamic where mostly independent corporations or even REITs own most of the hotel properties. They are now in it for the big dollar and just look to try and milk the cow, the cow being timeshare owners. It isn't so much about cost sharing of shared amenities anymore. It is more about how much the hotel operator can make off the timeshare owners who wish to visit from a colocated property.

Yeah I think with the deteriorating relationships we have seen between many of the co-located timeshare/hotel properties I don’t think we will see more of these- at least not domestically. Maybe more likely with international properties like the Costa Rica example.

 

[bazzap]

Yeah I think with the deteriorating relationships we have seen between many of the co-located timeshare/hotel properties I don’t think we will see more of these- at least not domestically. Maybe more likely with international properties like the Costa Rica example.

Club Son Antem in Mallorca has been an interesting case.
Marriott International lost the management contract for the co-located hotel at the resort a good few years ago now.
It stumbled along fairly unsuccessfully under several other management companies since then.
Thankfully MI has regained the management contract and it was rebranded as an Autograph Collection hotel, once again with good synergy and collaborative agreements with the MVC resort.

 

[tourproto]

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.

What an interesting thread (as a Vistana owner, trying to figure out of Marriott points are worth it). I have not been to a "Marriott" presentation yet, just the Vistana ones (my last one was at the Westin Princeville in 2021).

I hope Marriott doesn't implode the Vistana side of things. I am happy with my 2 WKVs and looking to add 2-3 more because there are only 3-5 properties I care about (Princeville, the 3 Maui resorts), Palm Desert and Kierland. And I understand the Vistana system well enough to make it work for me and make money renting when I can't use my weeks.

 

[Retired2025 aka AlmostRetired]

I understand the Vistana system well enough to make it work for me

Sage words indeed no matter what brand you own.

 

[DRH90277]

Struggling MVC and VAC - Perhaps Crime doesn't pay

 

[JIMinNC]

Maybe the worst is behind Marriott Vacations Worldwide and they are turning things around. I wasn't able to listen to the Earnings Conference Call this morning, but VAC seemed to have a positive earnings report this time around. The market is at least responding positively to their results and commentary as the stock is up over $7 per share today (8%) to $95 at around midday today.

Here is a link to the earnings release:

VAC 4th Quarter 2023 and Full Year 2023 Results

The recording of the call is posted online, so I may try to listen in the next day or so.

 

[dioxide45]

The recording of the call is posted online, so I may try to listen in the next day or so.

There was a question from one of the investors on the call about maintenance fees and if there was concern that they could reach a "tipping point".