2024 MF's Discussion [MERGED / RETITLED]

[AlmostRetired]

With the 15 to 20% increase in the MF per point and the cost per point, think about how this impacts the value proposition of trust points. Cost aside, If you want to go to the Grande Ocean for a week in the summer, the cost is almost $3500 (4500 points x .77). You are now over the rental price (for a reasonable owner) for a deeded week and almost 90% over the MF of a deeded week. You are seeing a lot of rentals on Redweek for midweek where Trust point ownership is significant and access to is easy (see Macro Island for example). Listings are avoiding Friday and Saturday Nights. I do not know about you but when I vacation for less than a week, it almost always includes the weekend, limiting time off from work. The value proposition of using points for Bonvoy Points, cruises, tours and home rental that were never good to begin with just got worse. Now add the cost to own which is a sunken cost for current owners but a deterrent to new ones. The question remains how much is flexibility worth before it isn’t and will MVCI need to create additional or a different value proposition.

 

[StevenTing]

You will see those rentals on Redweek also increase. Give it time. Everything will go back to equilibrium.

 

[pacman777]

As long timeshare stays are at least 20% cheaper than booking via Marriott.com

 

[jabberwocky]

The value proposition of timeshares has always been the ability of some owners being able to arbitrage the system and get high value weeks at a lower cost, while owners of less valuable weeks overpay.

Most TUG veterans here are experts at making this work for them via exchanges or snapping up gems right when the booking window opens.

MVC was smart in setting up the trust system and selling it as “flexibility”. They take a skim and have set it up so that the benefits of any arbitrage mostly goes to MVC - not owners.

I never really understood the value proposition for MVC as a product relative to some other systems. With the introduction of Abound, incorporating Vistana and the high MF increases I think the scales are beginning to fall from owners eyes. MVC will need to step up and create a way to generate value.

 

[dioxide45]

They could raise maintenance fees significantly and people will still buy. The same is probably true for purchase price. In a 90 minute presentation there simply isn't enough time to do the math to figure out if it makes financial sense. At our presentation at Canyon Villas they tried to show us how we could pay $150 a night by owning deeded points vs paying $600 a night on Marriott.com. I think most of the prices on Marriott.com are more or less just there to try and sell points. How many people are paying $600 a night for a 2BR mid week in the middle of summer in the desert? If they can puff up Marriott.com prices to make the value in ownership look better, perhaps letting those nights just sit empty as they are making more by selling the points.

 

[dougp26364]

We’ve owned timeshare for 25 years next month. We joined this community perhaps a year later. Since that time the same question has been asked. When will the increasing cost of MF cause the collapse of timeshares as bad debt from uncollected fees increase? I always wonder that myself.

At 5% to 7%, I had estimated we could hang on another 10 to 15 years. At 20% that’s questionable.

I do not believe 20% per year will be sustainable for the majority of owners. I suspected this is a temporary situation created by a perfect storm of financial issues such as insurance, inflation and the cost of labor. However, I recall the mid to late ‘70’s, a time when gas was rationed and we saw double digit inflation inflation. In the early ‘80’s I had difficulty finding meaningful employment and inflation was still high. It could take several years before the economy, and soaring timeshare MF’s are brought under control.

As far as sales, it’s not the MF’s that will kill them, it’s the cost to borrow money. It was bad enough when they were charging 14% interest in a timeshare loan but you could take out a home equity loan for 3%. The cost to borrow could push that interest rate closer to 20% and push payments out of reach for all but the wealthiest amount us. Perhaps they’ll start selling very small packages of points, which will cause even greater claims that timeshare isn’t worth it because you can’t book much with only 1,500 points. Cries of scam could become even louder than they are today.

The next 5 to 10 years should be entertaining at the very least from a strictly observational standpoint.

 

[DeeCee]

Marriott Surfwatch 2 Bedroom

2023 Operating Fee $1,241.66
2023 Replacement reserve $384.08
2023 Property Tax $92.27

Total $1,718.01

Apologies - I do not have 2022 numbers and they were not posted last year.

Do we have an idea of what the increase will be for the 2024 MF on the weeks owners? We own at surfwatch and I'm wondering where the "let's sell point is".

TIA,
Dee

 

[CalGalTraveler]

@dougp26364 you bring up a great point about interest rates.

Higher interest rates also increases the opportunity cost where you can invest in your own "Timeshare CD." With $50k - $120k capital invested in a 5% CD you can simply take the $2500 -$5000+ annual interest and rent timeshares, rent hotels or go on cruises. You are guaranteed (and FDIC insured) to receive a return of principle without losing a penny. Easy exit too. Stop when you want.

 

[Big Matt]

I think the key is travel flexibility. For families with kids in school you are limited to christmas and spring break, Thanksgiving and summer. Most of those tend to be busy travel times and higher cost. I've transitioned to being an empty nester and now can travel whenever I want. I have weeks and points and can leverage my lock offs and II ACs and Getaways to get an awful lot for my annual MF and II commitment. I compare what I get to what it would cost for vacation rentals, hotel stays, Airbnb, etc. I'm way ahead no matter how you cut it. The big problem comes when I don't want to travel as much. At that point I'll sell my portfolio for whatever I can get for it and get out.

 

[VacationForever]

Do we have an idea of what the increase will be for the 2024 MF on the weeks owners? We own at surfwatch and I'm wondering where the "let's sell point is".

TIA,
Dee

Every property is going to be different.

 

[DeeCee]

Thanks. Interesting. I guess we will just have to wait and see. I cannot imagine 15-20% as they are talking about with the points system.
That would probably be when we consider selling.

Thanks,
Dee

 

[Dean]

With the 15 to 20% increase in the MF per point and the cost per point, think about how this impacts the value proposition of trust points. Cost aside, If you want to go to the Grande Ocean for a week in the summer, the cost is almost $3500 (4500 points x .77). You are now over the rental price (for a reasonable owner) for a deeded week and almost 90% over the MF of a deeded week. You are seeing a lot of rentals on Redweek for midweek where Trust point ownership is significant and access to is easy (see Macro Island for example). Listings are avoiding Friday and Saturday Nights. I do not know about you but when I vacation for less than a week, it almost always includes the weekend, limiting time off from work. The value proposition of using points for Bonvoy Points, cruises, tours and home rental that were never good to begin with just got worse. Now add the cost to own which is a sunken cost for current owners but a deterrent to new ones. The question remains how much is flexibility worth before it isn’t and will MVCI need to create additional or a different value proposition.

That is part of the reason that I push buying high value weeks instead of points even if one elects to do an enrollment though boy have those economics changed this year. I think the same has long been true about lower demand seasons or fixed weeks for MVC as well. Bronze and Silver weeks have always been this way and many, if not most, Gold weeks are questionable also. And for some resorts, Gold is likely not reasonable even if 100% free other than some very specific situations where one is using the owned week specifically usually even then only for specialty units like a 3BR or better views. Off season weeks probably should have lower fees to compensate somewhat which a pure points system will generally provide though the resorts still need upkeep so it's be difficult to adjust fees only based on demand. The reality is that for those that are well informed will make out well on the backs of those that make poor choices, don't plan sufficiently, and are not well informed. This is true from a purchase and usage standpoint.

 

[DanCali]

In a 90 minute presentation there simply isn't enough time to do the math to figure out if it makes financial sense.

This is why a lot of the commercials I get in my car (Sirius/XM) are for timeshare exit companies.

I always wondered if those ads are targeted at me because they actually know we own timeshares, or if so many people got burnt that it's worth it to just broadcast to all radio listeners...

 

[dioxide45]

Thanks. Interesting. I guess we will just have to wait and see. I cannot imagine 15-20% as they are talking about with the points system.
That would probably be when we consider selling.

Thanks,
Dee

Many of the weeks maintenance fee bills don't start rolling out until sometime in November. Some a little earlier and some are later. Since weeks make up the underlying deeds in the trust, I would expect weeks based maintenance fee increases to be somewhat in line with where the trust is. Some resorts will be higher and some will be lower but the trust point fee is more or less an average of weeks maintenance fees though points could be tilted toward lower quality/season weeks.

 

[DeeCee]

Many of the weeks maintenance fee bills don't start rolling out until sometime in November. Some a little earlier and some are later. Since weeks make up the underlying deeds in the trust, I would expect weeks based maintenance fee increases to be somewhat in line with where the trust is. Some resorts will be higher and some will be lower but the trust point fee is more or less an average of weeks maintenance fees though points could be tilted toward lower quality/season weeks.

Thank you for the information. We bought a gold season week about 6 years ago at Surfwatch. We are DVC points owners for 23 years, so I am very familiar with the workings of that point system, I am guessing there are some difference between DVC and Marriott Points, but really I am just trying to estimate how much we will be paying in Marriott dues. I have never seen a 15/20% increase in MF and I'm just wondering how that can even be....

I guess we'll find out



Have a wonderful day.
Dee

 

[bnoble]

As long timeshare stays are at least 20% cheaper than booking via Marriott.com

I think this is right. That's because this option...

the rental price (for a reasonable owner) for a deeded week

...is not a realistic alternative for the majority of (potential) owners.

To see why I think this, it is helpful to remember that TUGgers are probably not representative of the average timeshare owner/prospect. We are "enthusiasts," and most of us spend non-trivial time tracking timeshare rental markets, planning exchanges, thinking about how to maximize our vacation dollars, etc. In contrast, the "typical" timeshare owner just wants to go on vacation somewhere nice once or twice a year without making it a hobby or part-time job.

A typical owner is not about to scour RedWeek, TUG, Go Koala, and all of the other places one might have to go to to find a rental, becuase that takes time and they don't really want to spend a ton of time on all of this. That typical owner might also consider the risk profile of an individual rental (not refundable under any circumstances) to be more than they are willing to take on, even though the overall cost is lower.

I always wondered if those ads are targeted at me because they actually know we own timeshares, or if so many people gut burnt that it's worth it to just broadcast to all radio listeners...

Doubtful, except in the sense that people who listen to the channels you listen to are likely to be timeshare owners. It is also possibly because it's a relatively cheap advertising channel, and the business has such insanely good profit margins that this is an easy call in drumming up volume. I hear those ads a lot too. What are some of the other ads I hear a lot on SXM? Lately it's been gold or other "can't lose" investments and liver-health supplements. None of these inspire confidence.

Well, that and various CPAP replacements or cleaners, which tells me a lot about who else is listening along with me.

When will the increasing cost of MF cause the collapse of timeshares as bad debt from uncollected fees increase?

One of the advantages of trust points is that, once foreclosed/recovered, non-performing points can be rolled back into the inventory seamlessly. As long as Marriott is selling points at least as fast as they are recovering them, this doesn't have to be a problem.

 

[bizaro86]

I think this is right. That's because this option...

...is not a realistic alternative for the majority of (potential) owners.

To see why I think this, it is helpful to remember that TUGgers are probably not representative of the average timeshare owner/prospect. We are "enthusiasts," and most of us spend non-trivial time tracking timeshare rental markets, planning exchanges, thinking about how to maximize our vacation dollars, etc. In contrast, the "typical" timeshare owner just wants to go on vacation somewhere nice once or twice a year without making it a hobby or part-time job.

A typical owner is not about to scour RedWeek, TUG, Go Koala, and all of the other places one might have to go to to find a rental, becuase that takes time and they don't really want to spend a ton of time on all of this. That typical owner might also consider the risk profile of an individual rental (not refundable under any circumstances) to be more than they are willing to take on, even though the overall cost is lower.


Doubtful, except in the sense that people who listen to the channels you listen to are likely to be timeshare owners. It is also possibly because it's a relatively cheap advertising channel, and the business has such insanely good profit margins that this is an easy call in drumming up volume. I hear those ads a lot too. What are some of the other ads I hear a lot on SXM? Lately it's been gold or other "can't lose" investments and liver-health supplements. None of these inspire confidence.

Well, that and various CPAP replacements or cleaners, which tells me a lot about who else is listening along with me.


One of the advantages of trust points is that, once foreclosed/recovered, non-performing points can be rolled back into the inventory seamlessly. As long as Marriott is selling points at least as fast as they are recovering them, this doesn't have to be a problem.

You're right that an owner rental isn't realistic for many.

However, a 20% discount to Marriott.com seems very light to me. A timeshare is essentially a lifetime commitment to travel with the same company. You're trusting (with points especially) that they don't devalue them with high cost new resorts, and you're accepting in advance unknown future cost increases. That probably deserves more of a discount compared to a one time reservation that can be cancelled close to check in with no penalty. The difference in flexibility is huge.

 

[dougp26364]

One of the advantages of trust points is that, once foreclosed/recovered, non-performing points can be rolled back into the inventory seamlessly. As long as Marriott is selling points at least as fast as they are recovering them, this doesn't have to be a problem.

But there is the possibility that defaults accelerate faster than sales, creating a glut of unsold inventory.

The advantage for Marriott might not be folding points back in, but in selling assets off, eliminating excess points inventory from foreclosures but maintaining enough weeks for the remaining points owners. If MVC can buy back enough deeds in the deed for trust point swap sales practice, they’ll own the majority stake at some of the resorts, allowing them to vote to close a resort to decrease unsold inventory while profiting from the sale, assuming the property market remains strong and hasn’t collapsed.

If something like that were to happen (WILD speculation), which resorts do you think Marriott would dump? I would imagine it would be the under preforming, least popular resorts. What comes to my mind would be resorts like Willow Ridge Lodge in Branson, perhaps the once Horizons branded resort in Orlando, the Vail and Breckenridge Marriott resorts (seasonal with very high MF’s) Doral in Miami and maybe even Legends Edge in FL.

 

[bizaro86]

But there is the possibility that defaults accelerate faster than sales, creating a glut of unsold inventory.

The advantage for Marriott might not be folding points back in, but in selling assets off, eliminating excess points inventory from foreclosures but maintaining enough weeks for the remaining points owners. If MVC can buy back enough deeds in the deed for trust point swap sales practice, they’ll own the majority stake at some of the resorts, allowing them to vote to close a resort to decrease unsold inventory while profiting from the sale, assuming the property market remains strong and hasn’t collapsed.

If something like that were to happen (WILD speculation), which resorts do you think Marriott would dump? I would imagine it would be the under preforming, least popular resorts. What comes to my mind would be resorts like Willow Ridge Lodge in Branson, perhaps the once Horizons branded resort in Orlando, the Vail and Breckenridge Marriott resorts (seasonal with very high MF’s) Doral in Miami and maybe even Legends Edge in FL.

I think it's very unlikely they do that. It would annoy some owners, and they'd stop collecting fees.

If they did so, I think by far the most likely choice is Fairway Villas (Atlantic City).

 

[bnoble]

However, a 20% discount to Marriott.com seems very light to me.

That's fair. Maybe a better way to put it is "a noticeable discount off of Marriott's prevailing rates," whatever that happens to be. I have more thoughts on this, but they might deserve a separate thread in a general section of TUG.

But there is the possibility that defaults accelerate faster than sales, creating a glut of unsold inventory.

There is, but in the long run (and even in the near-ish term) I'd bet on Mariott's ability to sell timeshares.

 

[dougp26364]

That's fair. Maybe a better way to put it is "a noticeable discount off of Marriott's prevailing rates," whatever that happens to be. I have more thoughts on this, but they might deserve a separate thread in a general section of TUG.


There is, but in the long run (and even in the near-ish term) I'd bet on Mariott's ability to sell timeshares.

Granted that it would essential be a doomsday scenario, but it is a possibility as Marriott continues to try to push inventory from deeded weeks to trust points. Right now they have a strong sales angle with the Florida owners in that fees have skyrocketed thanks to changes in laws and issues finding affordable insurance.

 

[Dean]

You're right that an owner rental isn't realistic for many.

However, a 20% discount to Marriott.com seems very light to me. A timeshare is essentially a lifetime commitment to travel with the same company. You're trusting (with points especially) that they don't devalue them with high cost new resorts, and you're accepting in advance unknown future cost increases. That probably deserves more of a discount compared to a one time reservation that can be cancelled close to check in with no penalty. The difference in flexibility is huge.

I think 20% is reasonable but it's likely the minimum price I'd pay privately if I had direct options for the same or something similar. Remember that in many cases there are other hidden discounts like tax vs no tax, parking charges, etc. Still the decision involves the basic questions of how much savings make it reasonable for the risk and limitations of a private rental. Those answers will vary both with the individual and situation. Maybe it's a friend or relative making the risk dramatically low or maybe the need is very specific such as an additional unit for an existing stay. One other point is that one needs to look at the big picture, not just a given trip. How much flexibility do I need? What are the costs looked at over multiple trips as a group? There comes a point when a given trip is more expensive but you have the points and don't want to worry about the other options or they would not be in the budget. This happens with Bonvoy points as well.

 

[Dean]

Granted that it would essential be a doomsday scenario, but it is a possibility as Marriott continues to try to push inventory from deeded weeks to trust points. Right now they have a strong sales angle with the Florida owners in that fees have skyrocketed thanks to changes in laws and issues finding affordable insurance.

Same for Special Assessments. Just after I converted my La Cabana Weeks to points in the Trust, there was a SA that would have been around $10K in total as they were upgrading all the units. Instead I paid $76 IIRC, certainly in the $70's. the BG conversion has definitely been my best value in timesharing and this would have been the case even without the SA situation.

 

[DRH90277]

I think the implosion has been underway for some time and is growing. The economics of purchasing points makes no sense, many are buying resales, people are desperate to unload points at a fraction of the cost, good points reservations are getting tougher to get, we are being squeezed by the high maintenance fees, many are trying to get out of their timeshares, etc. One more point, I think Tug members are more knowledgeable participants than most and the consensus here seems to be to forego any points purchases and look very carefully at what is added to our portfolios.

If you were starting today, think about what you would buy with your knowledge base, and I suspect it would not be points. I, for one, would go for very select better resale properties that could be used, rented, or exchanged through Interval and stop there. I could do without points with the attendant difficulty in getting reservations. Our needs and those of our successful sons and daughters could be met easily with only this.

Look at the trending price on VAC stock with its PE of under 12 and tell me what the market thinks - now at $102 this morning and down from a high during the past year of $166.

 

[bizaro86]

I think 20% is reasonable but it's likely the minimum price I'd pay privately if I had direct options for the same or something similar. Remember that in many cases there are other hidden discounts like tax vs no tax, parking charges, etc. Still the decision involves the basic questions of how much savings make it reasonable for the risk and limitations of a private rental. Those answers will vary both with the individual and situation. Maybe it's a friend or relative making the risk dramatically low or maybe the need is very specific such as an additional unit for an existing stay. One other point is that one needs to look at the big picture, not just a given trip. How much flexibility do I need? What are the costs looked at over multiple trips as a group? There comes a point when a given trip is more expensive but you have the points and don't want to worry about the other options or they would not be in the budget. This happens with Bonvoy points as well.

We were discussing a discount compared to Marriott.com for a lifetime of TS ownership, not compared to an individual 1 week rental.

If the MF + capital cost was only a 20% discount to marriott.com I think that's a terrible deal, because the MVC version is a long term commitment where someone whose interests are at least partially opposed to yours gets to set the future fees. Marriott.com rentals are generally 100% refundable on short notice, and next year you can do it again if you want (or not!).