Buy now or wait?

[justJT]

We are considering a resale, but wondering if we should move ahead or wait until August after we hear about Marriott details. Anyone have any thoughts on this? It is a mandatory property meeting our price and SO desires.

Thanks!
JT

 

[VacationForever]

SOs rights cannot be taken away. If you are looking at a cheap SVV there is not much to lose. Any post acqusition plans will involve bringing more money to VAC stockholders. I will rather hold onto something cheap prior to announcement, which will be long after August, than wait until then to buy.

This is just my opinion, of course.

 

[DannyTS]

I am not an attorney but i looked extensively into public info concerning the status of the mandatory resorts. For what it is worth, my assessment is that at least in the short to medium term nothing will change for the mandatory resorts, they will have to be treated the same way as the developer sold deeds as part of the club. The language in very strong in the Declaration of condominiums and the deeds make reference to that document. The mandatory status has also been confirmed with every letter of estoppel that Vistana (and Starwood before) has sent.

 

[YYJMSP]

I am not an attorney but i looked extensively into public info concerning the status of the mandatory resorts. For what it is worth, my assessment is that at least in the short to medium term nothing will change for the mandatory resorts, they will have to be treated the same way as the developer sold deeds as part of the club. The language in very strong in the Declaration of condominiums and the deeds make reference to that document. The mandatory status has also been confirmed with every letter of estoppel that Vistana (and Starwood before) has sent.

while being mandatory cant be easily changed (your unit has to be a member of the club), the details of the club are separate from the deed, correct?, so the rules/value of exchanging within the club (VSN) can change dramatically

 

[DannyTS]

while being mandatory cant be easily changed (your unit has to be a member of the club), the details of the club are separate from the deed, correct?, so the rules/value of exchanging within the club (VSN) can change dramatically

yes, but they would have to do it for everyone (resale and retail) which would mean big PR and legal headaches. Not worth it for them, if it was worth the change, Vistana and Starwood would have done it a long time ago. If you look at the recent history of mandatory SVV for example, you will see that they have marginally increased in price in the last year so the market seems to validate this thinking.

 

[canesfan]

Why does everyone keep referring to August? That is when MAR the hotel brands are rolling out their new rewards program. I haven't read anywhere that is when the new deal between ILG & MVC is going to be finalized. In any case, I really would not worry about buying a mandatory resort. If they are going to do anything, it will be a slow integration and personally if I were going to buy I'd buy it before not after.

 

[CalGalTraveler]

They may be more lenient on ROFR now

 

[taterhed]

They may be more lenient on ROFR now

By all indications, they are MUCH more lenient now.
If you've identified a property at a better than expected price......I'd hit it.

 

[VacationForever]

Why does everyone keep referring to August? That is when MAR the hotel brands are rolling out their new rewards program. I haven't read anywhere that is when the new deal between ILG & MVC is going to be finalized. In any case, I really would not worry about buying a mandatory resort. If they are going to do anything, it will be a slow integration and personally if I were going to buy I'd buy it before not after.

You are right. A correction here for the thread is that closing is expected in the 2nd half of the year.

"The transaction, which is expected to close in the second half of 2018, is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by shareholders of both companies."

http://ir.marriottvacationsworldwid...s-worldwide-acquire-ilg-create-leading-global

 

[canesfan]

Reading the earnings call, they spoke about how ILG didn't not take advantage of buying back "week" properties and that they were going to be more aggressive with it in the future. They spoke about how they didn't think that ILG were very successful with their points program. Although they were positive in their wording about our points program already being in place, said there was improvement ($) to be made there. So I think from what I read, that we will see them taking advantage of ROFR and also more aggressive to buy back properties to place into points. I would've copy & pasted but it wanted me to sign up after I read for so long. They were also positive about the fact that we had new properties in the pipeline to be sold, so they didn't have to develop so much on their own. Target for the finalization is end of September but that is dependent on FTC approval.

If anyone wants to read it, search for the latest earning call and read the Q&A

 

[justJT]

Thank you all who have weighed in. Sounds like it is a good time to move on this.

 

[DannyTS]

Reading the earnings call, they spoke about how ILG didn't not take advantage of buying back "week" properties and that they were going to be more aggressive with it in the future.

since many Vistana resorts do not have ROFR, i wonder what avenue they will take to buy back more properties. Can they theoretically add properties to the ROFR list?

 

[dioxide45]

since many Vistana resorts do not have ROFR, i wonder what avenue they will take to buy back more properties. Can they theoretically add properties to the ROFR list?

They seem to be aggressively buying back weeks by selling flex points. On person reported selling back five weeks and only paying $17,000 for the transaction. They used to have a $20K new money, but that seems to be out the window.

 

[canesfan]

Doesn't MVC has a program where you can buy directly from them? Do they take back deeds?

Here is the conversation:
"Patrick Scholes

Okay, fair enough. Then lastly going back to revenue opportunities with the acquisition. One thing I think about is you folks have grown your inventory repurchase program considerably and it's a little bit of an unknown what's going on with Interval with them. I'm wondering how your repurchase program compares to Interval's and --.

Steve Weisz

Yes. We think ours is a little bit more robust than what we see in the ILG space, and we think the volumes that we put through the -- our repurchase program is a little higher than what we see in the ILG side. There may be opportunities there. Obviously, one of the benefits of that is it allows people that have been very happy owners an exit path that we think is appropriate. Plus it allows us to recycle some inventory at a very reasonable inventory cost."

 

[canesfan]

"John Geller

Yes. I mean, to be fair, Patrick, we've talked about this before. The Points product that we have really enables that to be very effective in reselling it because we put it into the Points product and sell it. And historically, they've sold more of a week-space product. They've gone to the Points, which actually will help facilitate that, but they, to Steve's point, I'm not sure they've done a lot of that. And as we've talked about, because with the week-space, when you repurchase those, you don't have certainty to -- to get that into the system and resell it. So folks that sell week-space product have a much harder time efficiently recycling that week-space product.

Patrick Scholes

Okay, thank you. And then a last question for now. A large part of the Interval's -- the ILG story was all of the inventory for sale coming up in the next couple of years. Certainly, they had a massive amount. With this acquisition and that large amount of inventory, does that change how you think about your -- or the legacy Marriott Vacations spend on inventory the next couple of years?

John Geller

Yes. One of the nice benefits that we get, which is never captured in anybody's EBITDA multiple, is ILG's made significant investments in their inventory pipeline and have -- I believe it's 700, 800 of completed units down -- they have obviously down in Cabo, their [Nanaya] project. So that's great for us because that's a lot of good inventory. We don't need to go out. I think over time, Patrick, we would look to do a very similar model like we do today, which is we're looking to add new flags, add new sales distributions and time the spending of our inventory to replace what we're selling off the shelf each year. And so that's strategy long term. In the near term, we're going to have the opportunity, because of a lot of great locations they've built, to look at near-term opportunities on our inventory spend. So obviously, we'll be updating you on that as our plans get a little bit clearer and we determine what we're doing."

 

[DannyTS]

Doesn't MVC has a program where you can buy directly from them? Do they take back deeds?

Here is the conversation:
"Patrick Scholes

Okay, fair enough. Then lastly going back to revenue opportunities with the acquisition. One thing I think about is you folks have grown your inventory repurchase program considerably and it's a little bit of an unknown what's going on with Interval with them. I'm wondering how your repurchase program compares to Interval's and --.

Steve Weisz

Yes. We think ours is a little bit more robust than what we see in the ILG space, and we think the volumes that we put through the -- our repurchase program is a little higher than what we see in the ILG side. There may be opportunities there. Obviously, one of the benefits of that is it allows people that have been very happy owners an exit path that we think is appropriate. Plus it allows us to recycle some inventory at a very reasonable inventory cost."

When they mention an exit path for happy owners it seems to me that they are talking about buying back a large number of weeks and reselling them as points to completely new owners which offers a much higher profit margin than re-conversions . Conversions are ok for the hungry sales people that need some activity but are peanuts for the company itself