brigechols
TUG Member
Is this a gold or plat MGV that you are using.
A 3BR platinum MGV.
Is this a gold or plat MGV that you are using.
A 3BR platinum MGV.
A 3BR platinum MGV.
Do you know of anyone who used a 3BR MGV to exchange into a 3 BR at Crystal Shores? For an instant exchange, I need to use the entire 3BR MGV just to see a 2 BR at Crystal Shores.
Mine passed at 6,000 last year.
Bought a 2nd MGV platinum and was informed today that Marriott exercised at 6,000
Marriott has the same 2BR Plat for $8900 on their resale website. After the 40% sales commission, it is down to $5400. That is how much they pay the seller.
Makes no sense at all.
Marriott has the same 2BR Plat for $8900 on their resale website. After the 40% sales commission, it is down to $5400. That is how much they pay the seller.
Makes no sense at all.
I believe the difference is how they account for these two transactions.
If it is correct that the resale website is weeks they are listing on behalf of a third party, and all they earn is the 40% commission on sale, then when they sell it, they have $3,500 of revenue (for the commission earned on the week shown) and the cost of the revenue is $0 (because it's someone else's week), so their margin is 100% on that week. That's tremendously profitable.
However, if they ROFR that same identical week for $6,000 and now own it, then it is their "inventory" and they have to make sure they care re-sell it profitably (Note, I don't think they care where the week is, only that they have now acquired inventory that is worth 2,775 points when converted to Trust Points and resold). Once they've cycled that week into points, they will be able to sell those points for $27,750, at the ROFR cost of $6,000. Their margin on this sale is 78%. If their current margins (on their entire business) are below 78% then this transaction increases their overall margin and makes them a more profitable organization.
It is likely that they have a rigid formula they follow when ROFRing something, and are very disciplined in only ROFRing weeks when they meet their target profitability.
So...the resale week and the ROFR week are different transactions for Marriott.
In my opinion, Marriott is currently targeting a ROFR cost of no more than 23% for the points equivalent value and that they will indiscriminately ROFR stuff that is less than 23% (which translates into a >77% gross margin) irrespective of where the week is located. They may pass on Silver/Bronze, but I think it would be the exception when we see Platinum/Gold passing at less than 23%.
This is my speculation of course, but in my own business, we are heavily focused on gross margin and increasing the margin by even 1% is a big deal.
Best,
Greg
The 3BR may just not exist in II but it running an OGS using another 3BR would be fun. September may get a match at some point.
I believe the difference is how they account for these two transactions.
If it is correct that the resale website is weeks they are listing on behalf of a third party, and all they earn is the 40% commission on sale, then when they sell it, they have $3,500 of revenue (for the commission earned on the week shown) and the cost of the revenue is $0 (because it's someone else's week), so their margin is 100% on that week. That's tremendously profitable.
However, if they ROFR that same identical week for $6,000 and now own it, then it is their "inventory" and they have to make sure they care re-sell it profitably (Note, I don't think they care where the week is, only that they have now acquired inventory that is worth 2,775 points when converted to Trust Points and resold). Once they've cycled that week into points, they will be able to sell those points for $27,750, at the ROFR cost of $6,000. Their margin on this sale is 78%. If their current margins (on their entire business) are below 78% then this transaction increases their overall margin and makes them a more profitable organization.
It is likely that they have a rigid formula they follow when ROFRing something, and are very disciplined in only ROFRing weeks when they meet their target profitability.
So...the resale week and the ROFR week are different transactions for Marriott.
In my opinion, Marriott is currently targeting a ROFR cost of no more than 23% for the points equivalent value and that they will indiscriminately ROFR stuff that is less than 23% (which translates into a >77% gross margin) irrespective of where the week is located. They may pass on Silver/Bronze, but I think it would be the exception when we see Platinum/Gold passing at less than 23%.
This is my speculation of course, but in my own business, we are heavily focused on gross margin and increasing the margin by even 1% is a big deal.
Best,
Greg
We've come up with an unofficial metric of what passes ROFR. Most that pass are above 23% of the Trust Points value.
2BR Grand Vista is worth 2,775 points or $27,750 roughly in points value if sold at retail.
An offer of $6,400 or more (I speculate) would have a high probability of passing. Below that, it's much more difficult to predict.
$5,500 is approx 20% ROFR metric, so I think you have risk of not passing. It still may pass if the Trust is deep in 2BR GVs but I do not know.
Please let us know if it passes and I hope that it does.
Best,
Greg
Yeah, what Greg said :rofl:
Seriously, I'd go with Greg's more scientific approach. I more or less took the Marriott Resales price and multiplied by 60% (since I think Marriott typically likes to have a margin of 40% before expenses). Since your offer is slightly above that ($5500 vs $5340), I said a good chance of passing given that it is Orlando, where general inventory is not as scarce as in other locations.
Good luck!
This is very true, but once their ROFR threshold exceeds 60% of list then the resell website sellers have no reason to continue to list and instead should opt for the buyback since the proceeds are higher. Why should MVCI pay $6K when they already have a list of people willing to take $5,400? I think this is what samara64 was getting at.
It could also be that the ROFR threshold actually exceeds the buyback offer. Why lower the open buyback offer amount when those will come along willingly? ROFR'ing for a higher amount makes sense because it's still a hefty margin.
I am betting the unit Marriott exercised ROFR was a 3 bedroom platinum Grande Vista, not a 2 bedroom. The 3 bedroom Marriott resales has the 3 bedroom listed for $12,600.
We just purchased Surfwatch platinum 2 bedroom (garden view) and passed ROFR in February for $8000 plus 2015 maintenance fees. Marriott resales lists it for $19,400.
Why should MVCI pay $6K when they already have a list of people willing to take $5,400? I think this is what samara64 was getting at.
Again for your formula: Marriott Grande Vista 3br annual plat: just passed ROFR @ $8500
While the $6K ROFR is very surprising I am not surprised at the lack of sense in the lower brokered net amount. They have not always updated their info in a timely manner. It could be that there isn't any inventory left on the list and it's just not updated. It could also be that they were not proactive and did not call the listers to offer the higher buyback amount.
Usually when this happens they would increase the list amount or remove it entirely. Either way, $6K is alot for a direct buyback. I wonder if it included free usage which would make more sense.
Just FYI A 2BR MGV Gold EOY ODD got exercised this morning for $1500.
I have a pending Contract for a 2BR Platinum at the Grand Vista for $5500 any feedback on my chances to be able to get by the FROR?