2024 Maintenance Fees DISCUSSION THREAD

[DanCali]

Given that some resorts are at 30% ownership by the trust, we are probably already at this tipping point given the number of owners that vote/don't vote their proxies. Owners also split their vote, MVC trust will always vote theirs in a block.

And rapidly increasing MFs works greatly in their favor.

exorbitant MF hike --> increase defaults --> increase foreclosures --> Get those weeks/points for pennies on the dollar --> Dump weeks trust --> Sell points for huge profit --> Use increasing voting power to further this strategy --> Repeat next year

It may turn out that Aruba St Kitts and Spain are the best places to own in the long run since they can't get dumped into the trust.

 

[Hindsite]

It may turn out that Aruba St Kitts and Spain are the best places to own in the long run since they can't get dumped into the trust.

MVC own large amounts of inventory at resorts outside of the Trust, so the same level of influence goes along with those. Certainly for Spain the block vote from MVC has the ability to dominate board voting.

 

[Red elephant]

And rapidly increasing MFs works greatly in their favor.

exorbitant MF hike --> increase defaults --> increase foreclosures --> Get those weeks/points for pennies on the dollar --> Dump weeks trust --> Sell points for huge profit --> Use increasing voting power to further this strategy --> Repeat next year

It may turn out that Aruba St Kitts and Spain are the best places to own in the long run since they can't get dumped into the trust.

I was beginning to wonder if this was the reason for the exaggerated MF hikes. Compared to other companies Marriott seems to be on a mission for something.

 

[AlmostRetired]

I was beginning to wonder if this was the reason for the exaggerated MF hikes. Compared to other companies Marriott seems to be on a mission for something.

Given that some resorts are at 30% ownership by the trust, we are probably already at this tipping point given the number of owners that vote/don't vote their proxies. Owners also split their vote, MVC trust will always vote theirs in a block.

And rapidly increasing MFs works greatly in their favor.

exorbitant MF hike --> increase defaults --> increase foreclosures --> Get those weeks/points for pennies on the dollar --> Dump weeks trust --> Sell points for huge profit --> Use increasing voting power to further this strategy --> Repeat next year

I think Dioxide45 hit the nail on the on the head with his comment.

I do not believe something nefarious will go on if it happens as others might. I on the other hand, read that Marriott was buying foreclosed weeks and said great. They just moved the burden of the uncollected MF into the trust and out from under a line item that I had to pay for in the operating budget. A made up example. A floating week offseason at the Heritage on HHI. MF 2500 that in default is costly. I am not sure how many offseason Heritage weeks Marriott has in the trust but I have a week during Christmas at the Heritage club for 1125 rented points. This is prime week in December, the best case scenario. @.60 a point it cost me $675 for a week in HHI and I got 10 rounds of golf plus cart. Heck, I will loose more than that in golf balls. The MF is about 2500. This is about $2 per point in the trust shared by all. If Marriott suspended buying foreclosed weeks for COVID and restarted it again in 2022, and they did this across the portfolio, it might help explain in part the 15% increase in the trust MF.

I do believe it can be a vicious cycle, higher MF's can cause more foreclosures that is a burden causing someone to absorb. As a non trust owner, I would rather it be to the trust. The MF of the trust will get high enough that it will impact sales. This will have Marriott rethink their foreclosure strategy. It will than burden deeded week owners. Not sure what the answer is but, I will continue to own my timeshares as long as it works for me and the way we vacation. The good news is when it no longer works, Marriott and the HOA created another potential exit strategy. If I know a foreclosure agreement is in place, I could walk away from my unit, let it foreclose and likely have no repercussions.

 

[Fasttr]

I think Dioxide45 hit the nail on the on the head with his comment.

I do not believe something nefarious will go on if it happens as others might. I on the other hand, read that Marriott was buying foreclosed weeks and said great. They just moved the burden of the uncollected MF into the trust and out from under a line item that I had to pay for in the operating budget. A made up example. A floating week offseason at the Heritage on HHI. MF 2500 that in default is costly. I am not sure how many offseason Heritage weeks Marriott has in the trust but I have a week during Christmas at the Heritage club for 1125 rented points. This is prime week in December, the best case scenario. @.60 a point it cost me $675 for a week in HHI and I got 10 rounds of golf plus cart. Heck, I will loose more than that in golf balls. The MF is about 2500. This is about $2 per point in the trust shared by all. If Marriott suspended buying foreclosed weeks for COVID and restarted it again in 2022, and they did this across the portfolio, it might help explain in part the 15% increase in the trust MF.

I do believe it can be a vicious cycle, higher MF's can cause more foreclosures that is a burden causing someone to absorb. As a non trust owner, I would rather it be to the trust. The MF of the trust will get high enough that it will impact sales. This will have Marriott rethink their foreclosure strategy. It will than burden deeded week owners. Not sure what the answer is but, I will continue to own my timeshares as long as it works for me and the way we vacation. The good news is when it no longer works, Marriott and the HOA created another potential exit strategy. If I know a foreclosure agreement is in place, I could walk away from my unit, let it foreclose and likely have no repercussions.

To clarify, the Trust is not paying the unpaid back MF’s on the foreclosed weeks, MORI is paying them, and likely treats them as an acquisition cost of the week.

 

[Hindsite]

To clarify, the Trust is not paying the unpaid back MF’s on the foreclosed weeks, MORI is paying them, and likely treats them as an acquisition cost of the week.

When weeks are acquired by whatever means, and not put into the land trust, are they owned at the timeshare brand level? e.g MVC, Sheraton, Westin or at the MVW level?

 

[DanCali]

I do believe it can be a vicious cycle, higher MF's can cause more foreclosures that is a burden causing someone to absorb. As a non trust owner, I would rather it be to the trust.

Unless the alternative was that MFs would not spiral out of control to begin with...

Maybe it was discussed but I haven't seen a good explanation how Disney is able to keep Orlando MFs at ~4% increase this year (some resorts sub 2%) and Marriott Orlando resorts MFs are up ~15% on average, (some resorts even higher). And looking at Orange County, California the Disneyland properties went up 5%-6% year-over-year (~10% in 2 years), while Newport Coast is up 18% (33% in 2 years). Those differences are dumbfounding.

 

[DanCali]

The MF of the trust will get high enough that it will impact sales. This will have Marriott rethink their foreclosure strategy.

Maybe... But the writing has been on the wall for years even when points MFs were in the $0.50s and $0.60s. There will always be plenty of people who start with buy 1000 points because the salesperson showed them it gets them 2 weeks in a 2BR at a nice resort. And then they will buy more when they realize not all resorts are as cheap as HHI in December/January.

Not sure what the answer is but, I will continue to own my timeshares as long as it works for me and the way we vacation. The good news is when it no longer works, Marriott and the HOA created another potential exit strategy. If I know a foreclosure agreement is in place, I could walk away from my unit, let it foreclose and likely have no repercussions.

There probably will be repercussions to your credit history before they foreclose. And you can't count on that option being there forever, especially in times like a recession. If they can't sell points fast enough, they don't need to add more.

 

[AlmostRetired]

To clarify, the Trust is not paying the unpaid back MF’s on the foreclosed weeks, MORI is paying them, and likely treats them as an acquisition cost of the week.

You are correct. It is just the burden of the ongoing MF.

 

[dioxide45]

When weeks are acquired by whatever means, and not put into the land trust, are they owned at the timeshare brand level? e.g MVC, Sheraton, Westin or at the MVW level?

While a certain person here believes Marriott holds on to prime weeks for rent, I doubt this actually happens that much. For a publicly traded company, $30K+ now is better than a few thousand each year over 20 years in the form of rental income. As I understand it, the HOAs acquire the deeded weeks through foreclosure then they get sold to MVCI (MORI). I suspect to save on administrative costs the HOA probably deeds these directly to the trust, but they could perhaps go to MORI first and then MORI deeds them to the trust.

 

[Hindsite]

While a certain person here believes Marriott holds on to prime weeks for rent, I doubt this actually happens that much. For a publicly traded company, $30K+ now is better than a few thousand each year over 20 years in the form of rental income. As I understand it, the HOAs acquire the deeded weeks through foreclosure then they get sold to MVCI (MORI). I suspect to save on administrative costs the HOA probably deeds these directly to the trust, but they could perhaps go to MORI first and then MORI deeds them to the trust.

Thanks, I'm not bothered about what they hold and if there is some devious ends. From the investor calls last Feb, they said they were releasing rental keys for owners to book, so I assumed that an amount of inventory was permanently or semi-permanently held by the company(s), so I had assumed that they did have holdings of some sort over and above what goes into the Trust (where possible). I also see large deposits into II of low season weeks that appear to me to be bulk that they own, whether that be US or non-US resorts.
Is the assumption that the block voting for the US resorts relates to Trust holding and not outside of the Trust?
Thanks

 

[SueDonJ]

This is the scariest part.

I never realized that if you buy Trust points it's "taxation without representation" - you own a sliver of all the resorts but one other entity, which doesn't pay MFs and may have completely different priorities, gets all the voting power. This can't end well for owners.

Are you saying that the MF's on the Weeks conveyed to the Trust aren't the responsibility of the Trust?

 

[bnoble]

I think he means that trust owners do not have voting rights, unlike, say, owners of enrolled weeks.

 

[Ralph Sir Edward]

Are you saying that the MF's on the Weeks conveyed to the Trust aren't the responsibility of the Trust?

Sue, who votes the individual proxies for the weeks underlying the trust weeks ownership? The Trust does. As point owners, what do you get to vote on?

 

[dioxide45]

Thanks, I'm not bothered about what they hold and if there is some devious ends. From the investor calls last Feb, they said they were releasing rental keys for owners to book, so I assumed that an amount of inventory was permanently or semi-permanently held by the company(s), so I had assumed that they did have holdings of some sort over and above what goes into the Trust (where possible). I also see large deposits into II of low season weeks that appear to me to be bulk that they own, whether that be US or non-US resorts.
Is the assumption that the block voting for the US resorts relates to Trust holding and not outside of the Trust?
Thanks

Many of these rentals are of unsold trust inventory. If the trust has 50,000,000 in unsold points. Marriott can attempt to rent out underlying reservations up to that amount on Marriott.com and other outlets. We also see developer deposits into II that come from the MVC Exchange Company. Inventory doens't need to be owned outside the trust for Marriott to rent it.

 

[dioxide45]

Marriott's Maui Ocean Club (MM0) - 1BR EOY OV

2024 Replacement Reserve - $170.13 (2023: $170.13)
2024 Property Tax Fee - $202.70 (2023: $159.85)
2024 AOAO Replacement Reserve - $379.58 (2023: $110.46)
2024 Operating Fee - $480.12 (2023: $507.01)
2024 AOAO Operating Fee - $480.70 (2023: $372.27)

Total: $1713.23 (2023: $1314.87, +30.3%)

Marriott's Maui Ocean Club (MM0) - 2BR EOY OV

2024 Replacement Reserve - $187.14 (2023: $187.14)
2024 Property Tax Fee - $222.97 (2023: $175.84)
2024 AOAO Replacement Reserve - $417.54 (2023: $121.50)
2024 Operating Fee - $528.13 (2023: $557.71)
2024 AOAO Operating Fee - $528.78 (2023: $404.17)

Total: $1884.56 (2023: $1446.36, +30.3%)

It's actually a 9.8% increase (per the President's letter) with an additional $500-800 fee for the plumbing replacement, depending on the size of your unit.

@NTP66 Which line item in your breakdown includes the $500-$800?

 

[DanCali]

Are you saying that the MF's on the Weeks conveyed to the Trust aren't the responsibility of the Trust?

As others mentioned, I was referring to the situation that, unlike a deeded week owner, the "owners" who pay the MFs on the Trust points don't get a say when it comes to voting on the agenda items concerning the underlying weeks. We own multiple enrolled weeks but no trust points, so I never really realized this in the 13+ years since this started.

 

[bnoble]

Marriott is not alone in this. Wyndham's trust product also retains voting rights with Wyndham.

 

[DanCali]

Marriott is not alone in this. Wyndham's trust product also retains voting rights with Wyndham.

Oh, I'm sure they are not alone. It's a great proposition for them. No risk of building new resorts, rofr on all resale inventory (with the exception of a handful of vistana resorts like Kierland and Harborside), 80+% gross margins, and gain full control of the the boards of directors over time while point owners pay the annual dues.

 

[Ralph Sir Edward]

Oh, I'm sure they are not alone. It's a great proposition for them. No risk of building new resorts, rofr on all resale inventory (with the exception of a handful of vistana resorts like Kierland and Harborside), 80+% gross margins, and gain full control of the the boards of directors over time while other owners pay annual dues.

Welcome to the world of Points. . .

 

[sparty]

And rapidly increasing MFs works greatly in their favor.

exorbitant MF hike --> increase defaults --> increase foreclosures --> Get those weeks/points for pennies on the dollar --> Dump weeks trust --> Sell points for huge profit --> Use increasing voting power to further this strategy --> Repeat next year

It may turn out that Aruba St Kitts and Spain are the best places to own in the long run since they can't get dumped into the trust.

Isn't there another piece to this, the COA collects the bad debt by spreading it to the paying members in the next years MF? For my Cypress Harbour MF statement I don't see bad debt listed as a line item on the statement. For Sheraton Desert Oasis there is a line item charge and the way I read it is the bad debt is being collected as a charge to all the owners who do pay.

 

[dioxide45]

Isn't there another piece to this, the COA collects the bad debt by spreading it to the paying members in the next years MF? For my Cypress Harbour MF statement I don't see bad debt listed as a line item on the statement. For Sheraton Desert Oasis there is a line item charge and the way I read it is the bad debt is being collected as a charge to all the owners who do pay.

That is how it works. I don't know if they are forecasting expected bad debt for 2024 or trying to collect from 2023 shortfall. In either case the bad debt is being spread across all owners. There is also an "Acquisition Revenue" line item in the income area that we think is the revenue from Marriott when they buy these weeks back from the HOA trough their agreements.

 

[WahooWah]

That is how it works. I don't know if they are forecasting expected bad debt for 2024 or trying to collect from 2023 shortfall. In either case the bad debt is being spread across all owners. There is also an "Acquisition Revenue" line item in the income area that we think is the revenue from Marriott when they buy these weeks back from the HOA trough their agreements.

During a foreclosure, each foreclosed interval starts with a credit bid that covers the cumulative unpaid MF plus late fees, interest, etc. IF MORI buys the foreclosed week, my assumption is that MORI covers the "bad debt expense" for the HOA/VOA and any amount collected in excess of the credit bid must be reflected in the "Acquisition Revenue" line. When intervals in the auction are not bid on (which is mostly the case, I assume), those intervals are retained by the HOA/VOA and that credit bid amount must go to some kind of "bad debt expense" line item. My hope would be that the acquisition revenue is used to offset the bad debt expense and costs of the auction.

Form what I have seen in researching the public records, almost all of these intervals acquired by MORI are put into the trust. I have not seen MORI retain these intervals as deeded weeks to either resell them or rent them out, whether they are premium intervals or not. Westin is a different story. They definitely resell/rent premium deeded weeks acquired through foreclosure auction (although I'm sure some are put into the Westin Flex trust as well).

 

[Hindsite]

Form what I have seen in researching the public records, almost all of these intervals acquired by MORI are put into the trust. I have not seen MORI retain these intervals as deeded weeks to either resell them or rent them out, whether they are premium intervals or not. Westin is a different story. They definitely resell/rent premium deeded weeks acquired through foreclosure auction (although I'm sure some are put into the Westin Flex trust as well).

Do you know what they do with weeks they acquire that are outside the US?
Thanks

 

[WBP]

My theory: The MVC resale market will begin to be flooded with near "give-away" prices, this month, except for the tried and true MVC resorts, that have maintained strong values (e.g. Grande Ocean (platinum season)). Further, MVC will be so flooded with "Right of First Refusal" inventory, that they will waive their Right of First Refusal, at resorts/seasons where/when they have reacquired the inventory in the past (as, I would expect that MVC/MVW's Board of Directors would not want to see MVC/MVW take on a lot of new debt).

I expect that there will be a peak in resale listings, until the end of First Quarter 2024, when MVC Maintenance Fees must be (1) paid, or (2) go to collections.

Even Grande Ocean, I believe, will see a spike in resale listings over the next few months, as the wave of "Original Owners" are "aging-out," and the adage that MVC Ownership was sold on, the "pass your MVC ownership along to your children" premise, washed out to sea, as, in our experience, the adult children that we know, including our own, want nothing to do with owning a timeshare (with a few exceptions: the adult children who want to relive their childhood memories). And, forget about, the once (long time ago) value in exchanging a MVC Week for Marriott Bonvoy points.

And, despite this insanity, MVC will continue to sell new ownerships to naive customers, predicated on "the dream."