Marriott and ILG

[Kal]

The recurring theme of all the investor materials is greater exposure to selling opportunities. The former ILG sales people can sell to Marriott owners and the Marriott hucksters can sell to ILG owners. For that premise to have substance would assume both the ILG and Marriott sales weasels have been ineffective. I wonder if it simply is a matter of the product they are trying to sell.

It would be interesting to measure the impact of Airbnb and VRBO on the timeshare concept.

 

[Sapper]

It will be interesting to see if Hyatt pulls the rug out from under the deal. Wasn't there a clause in their agreement with ILG where they could void the deal if Hyatt came under the control of a competitor brand? I am not sure if this is the case with VAC being an independent company, it would seem that they would have to keep Hyatt as a separate company under VAC. I also would think that Hyatt likes the revenue from the license agreement with is really pure profit.

I mentioned that in one of the other threads on this subject. I was under the impression that in the deal between Hyatt and II, Hyatt could force the removal of their name if it were ever sold to another hotel branded company (IE, Marriott). Maybe they offered Hyatt more money for the name rights?

 

[taffy19]

I mentioned that in one of the other threads on this subject. I was under the impression that in the deal between Hyatt and II, Hyatt could force the removal of their name if it were ever sold to another hotel branded company (IE, Marriott). Maybe they offered Hyatt more money for the name rights?

You mean between Hyatt and ILG? I was also wondering why it is going through so quickly and the Government is not questioning them. Too much consolidation is going on in the Timeshare World and it will hurt the consumer at the end. Thank goodness that we only own one Marriott and Hyatt and not more.

 

[dioxide45]

You mean between Hyatt and ILG? I was also wondering why it is going through so quickly and the Government is not questioning them. Too much consolidation is going on in the Timeshare World and it will hurt the consumer at the end. Thank goodness that we only own one Marriott and Hyatt and not more.

The government hasn't had a chance to challenge it or even look in to it yet. It doesn't mean they will. Just that it usually takes time and perhaps even public comment before the government will step in and sue to stop a merger. The merger between Sprint and AT&T and the one between DirecTV and Dish were announced long before the justice department stepped in to sue to stop the deals.

 

[ivywag]

It wouldn't be easy, but HRC properties COULD change management companies. After all, we employ ILG. It would take a vote of the owners at each property, but if the new system is too awful and everyone is miserable there are alternatives. My biggest worry is the dilution of available high-season internal trades if we're merged with the other large companies. We personally really like the Hyatt properties because they are all unique. The Marriotts are cookie-cutter and are generally of lesser quality construction than Hyatt. The biggest advantage to Marriott and Westin is the number of properties worldwide and that counts for a lot, but the Hyatts are more personalized. We have a routine and generally trade within Hyatt to the same places each year. We'll miss being able to trade into our favorite places if the competition for available units becomes intense. We have really enjoyed the HRC as we know it and don't look forward to the likely inevitable changes.

 

[lizap]

I wonder if they will roll the HPP into their Trust Point program.

My guess is HPP is history.. it wasn't successful. Marriott will ditch it or re-invent it.

 

[ivywag]

My guess is HPP is history.. it wasn't successful. Marriott will ditch it or re-invent it.

Let's hope so!

 

[heathpack]

It would be interesting to measure the impact of Airbnb and VRBO on the timeshare concept.

Im sure the impact has been huge. It used to be that one of the big selling points of timeshares was that you got way more space, a kitchen, a washer/dryer, etc.

Now you can get those things from AirBnB without the upfront cost, the lack of exit strategy, the limited locations, the limited check in days. And for us, we can bring the dogs with us if we use AirBnB.

Timeshares are still cheaper for us but AirBnB has its appeal.

 

[Sapper]

It wouldn't be easy, but HRC properties COULD change management companies. After all, we employ ILG. It would take a vote of the owners at each property, but if the new system is too awful and everyone is miserable there are alternatives. My biggest worry is the dilution of available high-season internal trades if we're merged with the other large companies. We personally really like the Hyatt properties because they are all unique. The Marriotts are cookie-cutter and are generally of lesser quality construction than Hyatt. The biggest advantage to Marriott and Westin is the number of properties worldwide and that counts for a lot, but the Hyatts are more personalized. We have a routine and generally trade within Hyatt to the same places each year. We'll miss being able to trade into our favorite places if the competition for available units becomes intense. We have really enjoyed the HRC as we know it and don't look forward to the likely inevitable changes.

This. We have really enjoyed the Hyatt system, properties, etc. If we would have wanted Marriott, we would have bought Marriott. We wanted Hyatt, we bought Hyatt. Not looking forward to changes Marriott may impose. I know we cannot know what changes may come, but I feel like the changes which will come will only benefit Marriott share holders at our expense. I hope I'm wrong.

 

[Sapper]

My guess is HPP is history.. it wasn't successful. Marriott will ditch it or re-invent it.

That's why I figured they would roll it into their trust point program. They get rid of a horrid program and instantly add lots of units to their trust.

 

[Kal]

The most difficult issue to overcome is DEEDED UNITS. That really is the key. The goals of the HPP were two-fold - extract more money from the owners, and obtain their deeds. There is always a point where the benefits are so overwhelming (good and bad) an owner will give up deeded ownership. But keep in mind, the deed has value. What is the end game with points? Can you sell them? Can you walk (and no longer pay the annual MF)? At least with a deed, you can extract value on your way out the door.

 

[Sapper]

The most difficult issue to overcome is DEEDED UNITS. That really is the key. The goals of the HPP were two-fold - extract more money from the owners, and obtain their deeds. There is always a point where the benefits are so overwhelming (good and bad) an owner will give up deeded ownership. But keep in mind, the deed has value. What is the end game with points? Can you sell them? Can you walk (and no longer pay the annual MF)? At least with a deed, you can extract value on your way out the door.

My guess is Marriott will attempt to enroll HRC deed owners into some form of points program. They did this with their own program years ago, so have a history of implementing it. My guess is it will be a heck of a lot less expensive than what HPP was offering in order to lure more folks into giving up their deeds.

 

[lizap]

My guess is Marriott will attempt to enroll HRC deed owners into some form of points program. They did this with their own program years ago, so have a history of implementing it. My guess is it will be a heck of a lot less expensive than what HPP was offering in order to lure more folks into giving up their deeds.

That's a pretty safe bet. Those that bought into HPP are probably going to really get scre**d.

 

[suzannesimon]

Im sure the impact has been huge. It used to be that one of the big selling points of timeshares was that you got way more space, a kitchen, a washer/dryer, etc.

Now you can get those things from AirBnB without the upfront cost, the lack of exit strategy, the limited locations, the limited check in days. And for us, we can bring the dogs with us if we use AirBnB.

Timeshares are still cheaper for us but AirBnB has its appeal.

VRBO has been around forever. If people haven’t figured out yet that it is cheaper just to rent a week on Redweek, then I don’t think AirBnB will make any difference.

 

[suzannesimon]

I own all 3 brands. The 3 systems are run differently and I don’t know how much a system can be changed compared to what we were entitled to when we joined. They can’t take our fixed week, fixed units away. Can they change our CUP points? Seems to me it will be hard to merge Hyatt. Marriott owners have always had a 3 week priority to trade into other Marriott resorts in Interval. It would be nice if we had a 3-week lead time to get Hyatt, Marriott and Vistana properties in Interval.

 

[heathpack]

VRBO has been around forever. If people haven’t figured out yet that it is cheaper just to rent a week on Redweek, then I don’t think AirBnB will make any difference.

Yes home rentals have been around forever, but AirBnB has made it mainstream. A lot more people now look at AirBnB as an equal option to a hotel and check out private rentals first thing in the process. My vibe is that AirBnB brings more people into the mix by offering super low budget options (like a room in a house), non-vacation-condo options like city apartment, and traditional vacation condo type rentals.

At least that's my impression- for me, I might in the past have looked to VRBO to rent a beach house for a group but it wouldn't have occurred to me to look for a smaller place for just my husband and I to go to Paso Robles for wine tasting say. Now I'll look on AirBnB to see all the options for all the trips.

It would be interesting I think to see what the overall trend is- does the presence of AirBnB as something in the forefront of people's minds nowadays affect TS sales? I'd love to see some real data on that.

 

[vikingsholm]

I'm a little confused about the comments here regarding deeded week units being a problem.

When Marriott created the DC points system, we were legacy owners with Grand Residence Club, which are deeded weeks for specific units that we own outright.

All enrollment into the points system did was enable us to pay a one time fee that gave us access to enroll any (or none) of our weeks each year as points. Essentially, this deposited a week's 7 days into the points system, and gave us points to use in return for that year (with some ability to borrow from future years' points if necessary). That is an annual election, and is optional. We never have to do it if we don't want to, and can just use weeks as weeks, or trade them in exchange systems week for week, or rent them out. We still own those weeks as deeded. We did not have to give them or the deeds to Marriott permanently and only get points in return for use each year.

What am I missing in the concern expressed about deeded weeks being a problem here, if they end up treating Hyatt legacy weeks owners this same way?

 

[Kal]

I'm a little confused about the comments here regarding deeded week units being a problem.

When Marriott created the DC points system, we were legacy owners with Grand Residence Club, which are deeded weeks for specific units that we own outright.

All enrollment into the points system did was enable us to pay a one time fee that gave us access to enroll any (or none) of our weeks each year as points. Essentially, this deposited a week's 7 days into the points system, and gave us points to use in return for that year (with some ability to borrow from future years' points if necessary). That is an annual election, and is optional. We never have to do it if we don't want to, and can just use weeks as weeks, or trade them in exchange systems week for week, or rent them out. We still own those weeks as deeded. We did not have to give them or the deeds to Marriott permanently and only get points in return for use each year.

What am I missing in the concern expressed about deeded weeks being a problem here, if they end up treating Hyatt legacy weeks owners this same way?

The issue with the deeds is one of control by the developer. Yes, owners can opt in and opt out and have a seat at the table. There's only so much the developer can do to achieve full control. If an owner only has points, they have no marketable asset. The developer can manipulate points at will. If you own a deed, the owner has control of that asset.

 

[vikingsholm]

Kal, I'm saying in our case, we kept the deed and full control of the week of our legacy Marriott units. Of course, Marriott can alter the points offered for each week we own over time, but we can decide to convert or not convert the week to points in any given year accordingly, while keeping our deeded weeks.

If Hyatt legacy weeks owners were required to give up their deed permanently in exchange for points if they chose to join a new MVC/ILG points system, I can see the problem.

But if they're treated as we were as legacy week deed owners when the new DC point system came along, I just don't see the problem. Marriott did not obtain our existing deeds or control of our units.

Of course, it's unclear as of yet whether the legacy Hyatt deeded weeks owners would be given that similar option under the new system, but I'm thinking they would. Any brand new Hyatt purchasers after the completed merger (except for weeks resales) would probably only be able to buy points under the coming new system though from developer purchases, I presume. At least that's how Marriott runs it now.

 

[Kal]

For Hyatt HRC owners who buy into the HPP (~$13,000), they have the option on an annual basis to transfer their unit into the HPP. They still retain their deed. Of course they do have the option to permanently give their deed to the HPP, but Hyatt assumes few if any HRC owners will select that approach. Once that deed is gone, it's a points play from thereon.

 

[Sapper]

I'm a little confused about the comments here regarding deeded week units being a problem.

When Marriott created the DC points system, we were legacy owners with Grand Residence Club, which are deeded weeks for specific units that we own outright.

All enrollment into the points system did was enable us to pay a one time fee that gave us access to enroll any (or none) of our weeks each year as points. Essentially, this deposited a week's 7 days into the points system, and gave us points to use in return for that year (with some ability to borrow from future years' points if necessary). That is an annual election, and is optional. We never have to do it if we don't want to, and can just use weeks as weeks, or trade them in exchange systems week for week, or rent them out. We still own those weeks as deeded. We did not have to give them or the deeds to Marriott permanently and only get points in return for use each year.

What am I missing in the concern expressed about deeded weeks being a problem here, if they end up treating Hyatt legacy weeks owners this same way?

What Kal said is important. There is another aspect to this. When the units were initially sold, they were sold as part of a system. Each unit week had an assigned point value in this system. If Marriott makes some kind of system you have to enroll your deeded week into, then it necessarily removes that week from the current HRC system, which will negatively impact everyone in the HRC system. If they keep the unit week inside of the pool of HRC, but charge an enrollment fee, then they are adding a fee for something that was sold as part of the original ownership. Either way, not great for HRC owners who trade their weeks.

 

[AJCts411]

Speculating...within HRC there seems to be two groups of deeded owners, those who use their weeks and those who use their points. Marriott would want to bring as many week owners into the points system, which would IMO bring the most cash flow. Negative treatment of HRC owners, would affect their cash flow. I expect some sort of "one time" offer from Marriott, one unlike the HPP, that would entice not force, changing to points.

Another thought, if the deed owners at a specific resort, organized voted in a sense to reject the deal, via rejecting the Hyatt branding, (might also be in the developers best interest) then that would open the option of affiliating with another brand. This concept, would defiantly get the attention of the Hyatt Group, and I think prevent negative treatment of deed HRC owners, and a large sum of money was paid for the right to use the Hyatt brand. Another protection is all the lawyers probably salivating at the thought of a big payout if things went badly for HRC deeded owners.

Will the timeshare conglomerate Marriott is creating just steam roll over their newly acquired timeshare business to the determent of the owners? That remains to be seen.

 

[stover33]

I have little optimism that this will do anything but harm current Hyatt owners. This merger has been driven primarily by an "activist investor" (read: Greenwich CT hedge fund) of ILG.

Dear Fellow ILG Stockholders,


FrontFour Capital Group LLC (together with its affiliates, "FrontFour" or "we") is a significant stockholder of ILG, Inc. ("ILG" or the "Company"). On May 24, 2017 we issued a public letter to the Company's Board of Directors (the "Board") outlining the strong strategic and financial rationale for a combination between ILG and Marriott Vacations Worldwide Corporation ("Marriott Vacations"). At that time, we strongly believed that despite ILG's strong standalone prospects, such a combination would, in our view, maximize value for ILG's stockholders and result in (i) significant cost savings from the elimination of duplicative finance, IT, legal and sales & marketing functions, (ii) robust revenue synergies given the ability to market to a combined Marriott Rewards and Starwood Preferred Guest loyalty program and (iii) the removal of the risk that ILG's Interval International exchange business could be negatively impacted should Marriott Vacations threaten to or actually not renew its contract.

https://www.prnewswire.com/news-rel...ses-letter-to-ilg-stockholders-300601609.html

I'd pose the question of whether an activist hedge fund ever pushed for any merger, that was in the interest of the customers of the companies involved... their only interest is maximizing shareholder value. The Hyatt system was unique in that it had less resorts, but in the most desirable areas. The internal exchange system worked great, and their resorts were a step above (IMHO) in quality overall from Marriott (Marriott does have some beautiful newer resorts, but across the board Hyatt quality is better).

I fear that Hyatt will merge into Marriott, and the unique things that made us buy into the Hyatt system will be diluted or eliminated altogether. It feels somewhat like a great thing is coming to an end. I hope I am being overly pessimistic.

 

[suzannesimon]

I am not concerned that Marriott is going to harm our Hyatt ownership. That’s not the way they do business. If anything, they will give you the option to join the Destination Club points program which is just an additional option for your ownership. They can’t take your week away. Originally it cost $599 to opt-in. Lately it has been free. No one takes your week. I paid $699 to enroll 2 weeks and have only converted to points once. I still like the option though but my Marriott weeks are worth more as rentals than as points. They will want us to join so that they can get access to our weeks for other owners if we decide to trade for the points and use their weeks. I like Hyatt, but I like my Marriott and Westin weeks just as much. I certainly wouldn’t want Hyatt owners to quit the system and go with some no-name brand.

 

[Kal]

From the stockholders perspective it's all about dividends and increasing stock value. The combined company will earn more revenue thru 3 ways:
* Cost savings from the elimination of duplicative finance, IT, legal and sales & marketing functions
* Increased opportunities to sell time-share product
* Increased revenue thru time-share maintenance fees

I would add another:
* Acquiring deeded real estate (thru time-share permanent conversion to points)

There is never a mention of increasing value to existing time-share owners.