Maintance fees....points vs week?

[bdurstta]

I just read on another board that Marriott maintenance fees for points owners and weeks owners are different? I only own a week...but was considering adding some "points". Is this true?

 

[Fasttr]

MF on points are currently 58 cents each. MF on your week (enrolled or unenrolled) would not change, even if you purchased points.

 

[bdurstta]

Thanks. When I first started timesharing 20 years ago...maintenance fees were much cheaper than hotels....but maintenance fees seem to be going up!

 

[Fasttr]

^^^ Truer words have never been typed. ;-)

 

[TheTimeTraveler]

I just read on another board that Marriott maintenance fees for points owners and weeks owners are different? I only own a week...but was considering adding some "points". Is this true?

If you own a week then you pay whatever the fee is that the individual Resort has established for your week each year.

If you own points then it is a blended rate per point based upon the maintenance fees needed to run Trust supported properties... Note; Most trust supported properties have week owners as well points owners. Some Trust properties have zero week owners such as Pulse in San Diego and New York City.

Hopefully someone else can better put into words what I am trying to say....




.

 

[davidvel]

I just read on another board that Marriott maintenance fees for points owners and weeks owners are different? I only own a week...but was considering adding some "points". Is this true?

What year did you buy your week?

 

[JIMinNC]

Thanks. When I first started timesharing 20 years ago...maintenance fees were much cheaper than hotels....but maintenance fees seem to be going up!

Sure maintenance fees are going up, but so are hotel rooms, particularly in resort areas where most timeshares are located. I remember in the early-mid 90s when we booked an oceanfront hotel room at the Hyatt in Maui including taxes for around $200/night. Now, it's closer to $600 all-in. Over the 25 years, that's a growth rate of about 4.5% to 5% per year. I bet that's pretty close to the growth rate for maintenance fees over the same period. Obviously, this is just one data point, but I bet many other areas are similar.

 

[jme]

To the OP, regarding "Should you buy points?"

We have a mix of Gold and Platinum, Oceanfront and Oceanside, weeks at Grande Ocean (half are enrolled).
All of the maintenance fees are currently $1450.

As an example, one enrolled Gold Oceanside week generates 4200 DC Points (if I elect them).
If I bought 4200 DC Points today, the maintenance fee on those points would be about $2436 (per stated 58 cents per point, above).

so.....$1450 MF vs $2436 MF.......lots of ways to look at that discrepancy in terms of flexible usage, etc, etc......

BUT, would it be worth it to buy 4200 points, spending $46,000-52,000 on upfront costs (depending on your deal)
and then incur an additional annual $2436 MF????

That is, considering a resale Gold OS week could be had currently in the $6000 range
(but generating zero DC Points, which by the way, could be rented from someone at 55-65 cents per point,
with NO upfront cost or MF!!!)

So, please, somebody, try to convince me to buy points, but I won't ever do it.

 

[bdurstta]

What year did you buy your week?

We bought YEARS ago. I don't believe we will buy any points at the current prices/maintenance fees.

 

[Quilter]

To the OP, regarding "Should you buy points?"

We have a mix of Gold and Platinum, Oceanfront and Oceanside, weeks at Grande Ocean (half are enrolled).
All of the maintenance fees are currently $1450.

As an example, one enrolled Gold Oceanside week generates 4200 DC Points (if I elect them).
If I bought 4200 DC Points today, the maintenance fee on those points would be about $2436 (per stated 58 cents per point, above).

so.....$1450 MF vs $2436 MF.......lots of ways to look at that discrepancy in terms of flexible usage, etc, etc......

BUT, would it be worth it to buy 4200 points, spending $46,000-52,000 on upfront costs (depending on your deal)
and then incur an additional annual $2436 MF????

That is, considering a resale Gold OS week could be had currently in the $6000 range
(but generating zero DC Points, which by the way, could be rented from someone at 55-65 cents per point,
with NO upfront cost or MF!!!)

So, please, somebody, try to convince me to buy points, but I won't ever do it.

So sorry to (gently, nicely, lovingly) correct you Marty but a GO Gold Oceanside generates 3325 DC points/$1491.38 MF.

It's the Platinum that generates 4200.

https://docs.google.com/spreadsheet...q0JNlWNC4hQJqfpnh3lm_67VDQ/edit#gid=974211081

 

[4Sunsets]

MF at Marriott goes up whether it needs to or not, like clockwork. Even during the worst economic downturn in history, where real cost of wages and expenses for everyone else inthe industry fell, Marriott raised MF consistently all through it.

AND it will continue, Marriott just had a bad quarter in the stock market, and the only bright spot was "Marriott's ability to consistently RAISE management fees".

 

[Big Matt]

All the talk about management fees is interesting to me. Pick any popular Marriott property and ask yourself whether the resort and units were better 15 years ago. I can't give you any examples other than some units had better views before trees grew (Newport Coast, Grande Ocean). The kitchens, baths, furniture, TVs are all way better. So, yes fees are going up, but so are the furnishings. Same with outside. Most have fire pits, yard games, good pool bars, free bags of ice for coolers, etc. I would say that the activities used to be better back in the day.

 

[jme]

So sorry to (gently, nicely, lovingly) correct you Marty but a GO Gold Oceanside generates 3325 DC points/$1491.38 MF.

It's the Platinum that generates 4200.

https://docs.google.com/spreadsheet...q0JNlWNC4hQJqfpnh3lm_67VDQ/edit#gid=974211081

you're right, it's my typo. (I feel the love) thanks for the correction.

 

[BreakingAway]

you're right, it's my typo. thanks for the correction.

If a GO Oceanside Gold week (3325 destination club points) were to reserved with points in the Gold Season the last week of May or first two weeks of June, it would require 4500 points to reserve one of those weeks.

 

[4Sunsets]

All the talk about management fees is interesting to me. Pick any popular Marriott property and ask yourself whether the resort and units were better 15 years ago. I can't give you any examples other than some units had better views before trees grew (Newport Coast, Grande Ocean). The kitchens, baths, furniture, TVs are all way better. So, yes fees are going up, but so are the furnishings. Same with outside. Most have fire pits, yard games, good pool bars, free bags of ice for coolers, etc. I would say that the activities used to be better back in the day.

Not really, the interiors were refurb'd to catch up with the times and not looked dated comparatively. These days a brushed finish vs white/black finish cost is negligible when purchasing 100s at a time. A few $ literally.

Regarding moving from soft floorings to hard floorings and such, this is done for a variety of reasons. Hard surfaces last considerably longer, they wear well, they endure spills, etc. They also help deter the spread of infestations (bed bugs, etc).

As examples. Not also saying how ridiculous it is to ask buyers to spend $80K (the current price of points for a Maui week) as example and then have them see units on property with bargain rent furnishings. AND 80K x 52 = $4.1million per unit. So yeah, the furnishings should absolutely look the part even while Marriott hoovers up all the profits for management fees.

 

[JIMinNC]

As examples. Not also saying how ridiculous it is to ask buyers to spend $80K (the current price of points for a Maui week) as example and then have them see units on property with bargain rent furnishings. AND 80K x 52 = $4.1million per unit. So yeah, the furnishings should absolutely look the part even while Marriott hoovers up all the profits for management fees.

Be careful with the $80K x 52 calculations. Remember, as much as 50% of that $80K is to cover marketing/sales costs. So you shouldn't compare that full $4.1 million to a similar non-timeshare condo, which would not have anywhere near those levels of marketing costs. If you back out the 50% marketing/sales, then the resulting $2 million is probably a much better number to compare to similar condos, and many condos don't have the super pools and other amenities top-tier timeshares do.

There's also an unfortunate tendency for folks to criticize corporations like Marriott for "hoovering up" profits (in this case, from management fees), but that is their business and making profits is what their shareholders want them to do. I don't own any VAC shares, but I know I certainly want the companies I do own shares in to make as much money as they reasonably can.

 

[Big Matt]

Not really, the interiors were refurb'd to catch up with the times and not looked dated comparatively. These days a brushed finish vs white/black finish cost is negligible when purchasing 100s at a time. A few $ literally.

Regarding moving from soft floorings to hard floorings and such, this is done for a variety of reasons. Hard surfaces last considerably longer, they wear well, they endure spills, etc. They also help deter the spread of infestations (bed bugs, etc).

As examples. Not also saying how ridiculous it is to ask buyers to spend $80K (the current price of points for a Maui week) as example and then have them see units on property with bargain rent furnishings. AND 80K x 52 = $4.1million per unit. So yeah, the furnishings should absolutely look the part even while Marriott hoovers up all the profits for management fees.

You are making crazy generalities. I've stayed in about 15 Marriott's and all have had major overhauls to bathrooms, and kitchens with the exception of a couple of the newer ones that are hanging on to what was built 10-15 years ago. A kitchen redo with cabinets, granite, new sink, disposal, faucets, and back splash will run at least $20k per unit. The materials can be bought in bulk, but labor is labor. That doesn't count the appliances. New beds, TVs, furniture, etc. Flooring isn't markedly different between carpet and tile, so that could actually save money over time per your point.

And then there are things like increasing wages for the workers, inflation, etc. The bigger resorts require a team of well over 100 employees/contractors.

 

[4Sunsets]

You both really sound more like Marriott sales... LOL... Good luck with all that.

Speaking of wild crazy numbers thrown around, I completely and totally doubt it takes Marriott $2m in sales/marketing to sell 1 $2m unit. That would be insane and unsustainable. With numbers like those the 200 unit build out of KoOlina would cost Marriott $400m in sales/marketing to sell. Seriously doubt it. Unsustainable hogwash.

 

[JIMinNC]

Speaking of wild crazy numbers thrown around, I completely and totally doubt it takes Marriott $2m in sales/marketing to sell 1 $2m unit. That would be insane and unsustainable. With numbers like those the 200 unit build out of KoOlina would cost Marriott $400m in sales/marketing to sell. Seriously doubt it. Unsustainable hogwash.

Call it hogwash if you will, but here are some numbers from Marriott Vacations Worldwide's 2018 Form 10-K filing with the SEC. These are audited financials. For the Development/Sales business line, the 10-K reports their Development Margin, which is essentially their equivalent of Gross Margin for the resort development and sale business line. Here are the numbers for 2018:

Sales of vacation ownership products: $990 million

Cost of vacation ownership products: $260 million
Marketing and sales: $513 million

Development Margin: $217 million (21.9%)

Marketing and Sales represents over 50% of total sales revenue, and it's almost twice the cost of the underlying timeshare intervals.

You may think it's insane and unsustainable, but my numbers were based on audited 10-K financials, not just supposition.

Somebody has to pay for all of those incentives MVC gives out to get prospects in the door, including the cheap discounted vacation packages. Those get bundled into marketing/sales expenses.

 

[dioxide45]

You both really sound more like Marriott sales... LOL... Good luck with all that.

Speaking of wild crazy numbers thrown around, I completely and totally doubt it takes Marriott $2m in sales/marketing to sell 1 $2m unit. That would be insane and unsustainable. With numbers like those the 200 unit build out of KoOlina would cost Marriott $400m in sales/marketing to sell. Seriously doubt it. Unsustainable hogwash.

Reading the 1Q19 VAC earning results, they made $301M on Sale of Vacation Products. Their Marketing and sales expense was $188M. Well over 50%. So believe it!

 

[4Sunsets]

Call it hogwash if you will, but here are some numbers from Marriott Vacations Worldwide's 2018 Form 10-K filing with the SEC. These are audited financials. For the Development/Sales business line, the 10-K reports their Development Margin, which is essentially their equivalent of Gross Margin for the resort development and sale business line. Here are the numbers for 2018:

Sales of vacation ownership products: $990 million

Cost of vacation ownership products: $260 million
Marketing and sales: $513 million

Development Margin: $217 million (21.9%)

Marketing and Sales represents over 50% of total sales revenue, and it's almost twice the cost of the underlying timeshare intervals.

You may think it's insane and unsustainable, but my numbers were based on audited 10-K financials, not just supposition.

Somebody has to pay for all of those incentives MVC gives out to get prospects in the door, including the cheap discounted vacation packages. Those get bundled into marketing/sales expenses.

Lacking a fundamental understanding of the underlying numbers, I don't doubt that you believe what you are saying is factual.

To know the truth of the facts, one must look forward and back at all the numbers AND have an understanding of how those numbers are put together. One must also look at the correct company's 10-K, MVC in this case, and use the correct numbers when making suppositions.

Here's the real 10-K for MVC:

http://ir.marriottvacationsworldwide.com/static-files/46710127-c3c2-404f-9ecc-25cbfea24150

2018 Vacation Ownership Segment Revenues % of Consolidated MVW
Revenue Line Sale of vacation ownership products. . . . . . . . . . . . . . . . $ 990 100%
Resort management and other services . . . . . . . . . . . . . . 359 72%
Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352 95%
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 99%
Cost reimbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 920 99%
TOTAL REVENUES . . . . . . . . . . . . . . . . . . . . . . . . $ 2,803 94%

2018 Exchange & Third-Party Management Segment Revenues % of Consolidated MVW Revenue Line
Management and exchange . . . . . . . . . . . . . . . . . . . . . . . $ 109 22%
Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 5%
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1%
Cost reimbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 4%
TOTAL REVENUES . . . . . . . . . . . . . . . . . . . . . . . . $ 161 5%

Fiscal Years(1) (in millions, except per share amounts and members) 2018 2017(2) 2016(2) 2015(2) 2014(3)
Income Statement Data Revenues . . . . . . . . . . . . . . . . . . . . . . . . $ 2,968 $ 2,183 $ 2,000 $ 2,067 $ 1,716
Revenues net of total expenses . . . . . . . . . . . . . . . . . . 267 246 200 225 156
Net income attributable to common shareholders. . . . 55 235 122 127 81

Balance Sheet Data
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,018 $ 2,845 $ 2,320 $ 2,351 $ 2,531
Securitized debt, net . . . . . . . . . . . . . . . . . . . . . . . . . 1,694 835 729 676 700
Debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,124 260 8 3 3
Mandatorily redeemable preferred stock of consolidated subsidiary, net. — — — 39 39
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,552 1,804 1,425 1,372 1,451

MVW shareholders' equity . . . . . . . . . . . . . . . . . . . . . 3,461 1,041 895 979 1,080
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . 5 — — — —
Operating Statistics Vacation Ownership Consolidated contract sales $ 1,073 $ 826 $ 741 $ 719 $ 699

You all can review the consolidated results which follow in the 10-K if you'd like.

One must also understand what is consolidated into each category. For example, the consolidated marketing and sales entry reflects all sales and marketing operations, not just the portion of the sales and marketing teams focused on selling vacation products. Dig through the 10-K and look at all those other sources of revenues to see what all the Sales and Marketing operations teams are actually doing and where they earn money for MVC from.

 

[JIMinNC]

Lacking a fundamental understanding of the underlying numbers, I don't doubt that you believe what you are saying is factual.

To know the truth of the facts, one must look forward and back at all the numbers AND have an understanding of how those numbers are put together. One must also look at the correct company's 10-K, MVC in this case, and use the correct numbers when making suppositions.

Here's the real 10-K for MVC:

http://ir.marriottvacationsworldwide.com/static-files/46710127-c3c2-404f-9ecc-25cbfea24150

2018 Vacation Ownership Segment Revenues % of Consolidated MVW
Revenue Line Sale of vacation ownership products. . . . . . . . . . . . . . . . $ 990 100%
Resort management and other services . . . . . . . . . . . . . . 359 72%
Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352 95%
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 99%
Cost reimbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 920 99%
TOTAL REVENUES . . . . . . . . . . . . . . . . . . . . . . . . $ 2,803 94%

2018 Exchange & Third-Party Management Segment Revenues % of Consolidated MVW Revenue Line
Management and exchange . . . . . . . . . . . . . . . . . . . . . . . $ 109 22%
Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 5%
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1%
Cost reimbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 4%
TOTAL REVENUES . . . . . . . . . . . . . . . . . . . . . . . . $ 161 5%

Fiscal Years(1) (in millions, except per share amounts and members) 2018 2017(2) 2016(2) 2015(2) 2014(3)
Income Statement Data Revenues . . . . . . . . . . . . . . . . . . . . . . . . $ 2,968 $ 2,183 $ 2,000 $ 2,067 $ 1,716
Revenues net of total expenses . . . . . . . . . . . . . . . . . . 267 246 200 225 156
Net income attributable to common shareholders. . . . 55 235 122 127 81

Balance Sheet Data
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,018 $ 2,845 $ 2,320 $ 2,351 $ 2,531
Securitized debt, net . . . . . . . . . . . . . . . . . . . . . . . . . 1,694 835 729 676 700
Debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,124 260 8 3 3
Mandatorily redeemable preferred stock of consolidated subsidiary, net. — — — 39 39
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,552 1,804 1,425 1,372 1,451

MVW shareholders' equity . . . . . . . . . . . . . . . . . . . . . 3,461 1,041 895 979 1,080
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . 5 — — — —
Operating Statistics Vacation Ownership Consolidated contract sales $ 1,073 $ 826 $ 741 $ 719 $ 699

Uh, that was the same REAL 10-K that I pulled my info from. Same company. It's not that I BELIEVE the information is factual - it is. It's right there in black-and-white. You will note that your $990 million in sale of vacation ownership products is the same number as mine. Your numbers only show the revenue side for ALL business lines, including the resort management, rental, financing, etc lines of business. So, it's not that meaningful to the discussion about Marketing expenditures. When trying to determine what portion of product sales marketing represents, you have to go into the detail within the 10-K and look at the discussion of Development Margin, which is what I did. You will find the discussion of Development Margin in Part II, Item 7 on page 59 of the 2018 MVW 10-K in the detail discussion section on the Vacation Ownership business line.

I'm not sure what point you are trying to make, but as dioxide45 also pointed out from the first quarter 10-Q, it's very clear what the numbers say, and I believe that both dioxide45 and I have a basic understanding of what the numbers say, and what they mean. I do listen to every Marriott Vacations Worldwide investor conference call after all.

 

[4Sunsets]

Not to beat a dead horse, but I've seen mention of Marriott's $20k cost to refurbish a unit used a few times as a reason/excuse for high MF around here. Um, again, this is inconsistent with the facts and how Marriott manages hard/soft/building maintenance.

Generally, Marriott follows a 5/7/10 or 5/7/12 model:

Soft goods (mattress, pillows, etc) replaced every 5 years
Hard goods (furniture and such) replaced every 7 years
Interior refurbs and such (remodels) every 10 or 12 years

Let's give this a hypothetical cost of:

$5k for soft goods per 5 years
$10k for hard goods per 7 years
$20k for refurb per 10 years

So in a 10 year period, Marriott spends:

$5k + $5 + $10K + 1/2 $10K + $20K

Or a total of $45K on maintenance of a particular unit in 10 years.

Meanwhile, using a fairly typical $1500 MF per unit week (52 unit weeks per unit x $1500). Marriott collects MF of $78K per year or $780K over 10 years.

 

[4Sunsets]

Uh, that was the same REAL 10-K that I pulled my info from. Same company. It's not that I BELIEVE the information is factual - it is. It's right there in black-and-white. You will note that your $990 million in sale of vacation ownership products is the same number as mine. Your numbers only show the revenue side for ALL business lines, including the resort management, rental, financing, etc lines of business. So, it's not that meaningful to the discussion about Marketing expenditures. When trying the determine what portion of product sales marketing represents, you have to go into the detail within the 10-K and look at the discussion of Development Margin, which is what I did. You will find the discussion of Development Margin in Part II, Item 7 on page 59 of the 2018 MVW 10-K in the detail discussion section on the Vacation Ownership business line.

I'm not sure what point you are trying to make, but as dioxide45 also pointed out from the first quarter 10-Q, it's very clear what the numbers say, and I believe that both dioxide45 and I have a basic understanding of what the numbers say, and what they mean. I do listen to every Marriott Vacations Worldwide investor conference call after all.

Like, I said, I don't doubt you believe that you understand the numbers. You just don't really understand how the numbers are part together.

Your supposition is that 100% of the sales and marketing operation is laser focused on new sales of timeshares and that these timeshare sales account for 100% of the revenue from the sales and marketing operations. That is patently false and a gross mischaracterization.

 

[JIMinNC]

Like, I said, I don't doubt you believe that you understand the numbers. You just don't really understand how the numbers are part together.

And exactly what part of "how they are put together" do you think is relevant and that you understand better than the rest of us? As a publicly traded company, MVW is required to follow generally accepted accounting practices. If you read the 10-K discussion I noted above about Development Margin, you will see it fairly clearly lays out the items that make up that component of their business. If that was misleading in some material way, then they would have a big problem with the SEC and the stock analysts that follow the stock.

If you know more about that topic than we do, please enlighten us.