3% Charge paused

[jp10558]

I agree, they had to know it would be very unpopular. I also wonder whether either Marriott International or Chase/Amex got involved. As profitable as the relationship between the big banks and hotels and airlines is, I would not be surprised if there were a clause in those agreements prohibiting a surcharge on the co-branded card. Pure speculation on my part.

Not only that, but for smaller businesses anyway - if you use Square for instance, just got a notice on a commercial agreement you had to make with JP Morgan and Paymenttech (I think) to keep using Square - and part of it is you can't charge a surcharge for using a card. IDK if most people are just ignoring that, but a lot of bigger companies aren't charging the fee and I wonder if it's because the card agreements are scrutinized closer?

Now, perhaps the bigger companies are also negotiating different processing terms given that settlement a while ago. IDK. I'm not sure if they went back to court over the contracts (if there still was such a clause in people not using Square) how it'd go.

I also wonder how many people are starting to walk away from stores / companies that charge the fee if it's a competitive market. I know I've started doing so when and as I can. Carrying cash is a hassle for instance.

 

[claraj]

I don't think so. The main reason for the decrease was lower component expenses (individual weeks maintenance fees).

Bummer!!!

 

[DRH90277]

Interesting, let's flip this. What if they had offered a 3% discount on MF's to those who pay in cash. Seems like a cleaner and safer bet from a public relations perspective. Might be a dumb idea but is it more dumb that what they tried to do?

 

[billymach4]

Interesting, let's flip this. What if they had offered a 3% discount on MF's to those who pay in cash. Seems like a cleaner and safer bet from a public relations perspective. Might be a dumb idea but is it more dumb that what they tried to do?

Cash always talks. However this method is also not legal in all jurisdictions. Sorry.

Exactly what some gas stations do. Charge a higher price for using your cc. 10 cent/gallon discount if paying cash.

 

[TUGBrian]

lets be real, at the end of the day the added costs are going to be passed down to owners/consumers and not simply eaten by the powers that be.

itll just be in a different format.

 

[Fasttr]

I don't think so. The main reason for the decrease was lower component expenses (individual weeks maintenance fees).

But, were the anticipated lower Component Expenses a result of anticipated CC fee savings at the resort level???

 

[daviator]

But, were the anticipated lower Component Expenses a result of anticipated CC fee savings at the resort level???

I don't think so. This year's Flex and Abound MFs are based on last year's Component Expenses, if I'm not mistaken. And I'm not aware that any of the resorts (components) were implementing credit card surcharges last year.

In the case of the points products (Flex and Abound) – the credit card expenses are incurred by the Flex and Abound trusts, which collect the MFs for the weeks that they own. But those owners are also paying their share of the credit card fees incurred by each individual component VOA, even though presumably the trusts pay their individual maintenance fee by something other than credit card. So if I'm not just confusing myself, it seems like to some extent, points owners are getting charged for their own (collective) credit card use, and in addition they are paying some of the credit card fees for each of the component associations. I kind of get why MVC would like to unbundle credit card fees, but paying by card is the norm and it's popular for many valid reasons, so they may be stuck with the status quo.

 

[TolmiePeak]

Isn't this just part of a plan where you can avoid the 3% fee if you have a Mariott Branded credit card? All other cards will be charged the 3% fee. I mean if airlines can make the vast majority of their profits from credit cards why wouldn't you expect timeshare companies to do the same?

 

[tahoe]

Isn't this just part of a plan where you can avoid the 3% fee if you have a Mariott Branded credit card? All other cards will be charged the 3% fee. I mean if airlines can make the vast majority of their profits from credit cards why wouldn't you expect timeshare companies to do the same?

Marriott branded credit card "belongs" to Marriot International, not Marriott Vacation Club?

 

[dioxide45]

Isn't this just part of a plan where you can avoid the 3% fee if you have a Mariott Branded credit card? All other cards will be charged the 3% fee. I mean if airlines can make the vast majority of their profits from credit cards why wouldn't you expect timeshare companies to do the same?

Well, it seems that based on what was posted earlier about co-branded card arrangements, Bonvoy card acceptance shouldn't be costing the HOA all that much money. I suspect any revenue sharing from interest and fees goes back to Marriott International but I would expect the rebates from merchant processing fees goes back to the merchants. If the goal of the fee was to pass actual credit card costs on to those costing the the HOA Credit Card Fees, Bonvoy Card usage costs should be nearly zero.

Perhaps The Marriott Vacation Clubs need to come out with their own co-branded card.

 

[Hindsite]

The (small minority, I assume) of owners who do not pay by credit card are definitely helping to subsidize the cost for the rest of us who pay by card. You can say that's not fair – I say that you choose to subsidize when you don't avail yourself of the benefits of paying by card, of which there are many.

The issue is that its not a choice in jurisdictions where expensive branded cards aren't available. Its a bias that favours a specific group, whose size we don't actually know as we don't have the data on the breakdown of premium card usage vs standard card usage. The quoted surcharge was stated as "upto 3%" so we never got to find out whether it was actually going to be a flat charge or not.

The change has been undone by the inability to apply the principle of putting the charge back to the user due to regional variations in regulations.

MVW will be the biggest financial looser in this as (we presume) that they don't pay by CC for the maint fees on the weeks and points they own, so the business case for making some form of change will still be sitting there waiting for a way to make it deliverable. Meanwhile, individual owners who never knew that they were subsidising premium card usage by others now know that and won't be happy either.

Perhaps MVW met their target of achieving a nice cash windfall for the end of Q3 from all the advanced payments made and that cut them the slack for putting the idea on hold.

 

[dioxide45]

Its a bias that favours a specific group, whose size we don't actually know as we don't have the data on the breakdown of premium card usage vs standard card usage. The quoted surcharge was stated as "upto 3%" so we never got to find out whether it was actually going to be a flat charge or not.

This is something they could have communicated better. If the HOAs are really being rebated on merchant fees for Bonvoy credit card usage, then the cost of using those is close to zero. If a Bonvoy card has little to no cost for the association, those owners are in the same bucket as those paying with ACH or one of the other no fee methods of payment. If that is really the case and they said Bonvoy card users would only incur a 0% to 0.5% then they might not have had so much outrage.

I think this simply comes from the fact that none of the MVW executive really have Marriott experience, neither from the hotel company nor from within Marriott Vacations. They are outsiders who are coming in making uninformed decisions. Perhaps a pause to reevaluate isn't such a bad idea.

so the business case for making some form of change will still be sitting there waiting for a way to make it deliverable.

I wonder though, does earning the 10% management fee on 100% of the Credit Card Fee outweigh their savings on not paying the credit card fees on the maintenance fee payments for weeks and points they own?

 

[Hindsite]

I wonder though, does earning the 10% management fee on 100% of the Credit Card Fee outweigh their savings on not paying the credit card fees on the maintenance fee payments for weeks and points they own?

My MVC Sales math says that the loss in management fee is 10/15% of the CC fee, so as long as they can drive more than 15% of the CC fees off their books they should be ahead.

Hopefully they have better modelling than I can muster at this time of day!!! I may find a white board and marker pen later on and see if I can scribble something illegible to prove that the earth really is flat.

 

[Fasttr]

I don't think so. This year's Flex and Abound MFs are based on last year's Component Expenses, if I'm not mistaken.

Looking back the past several years at average weeks vs points MF increases, I don’t think that is correct. I think they estimate Component Expenses for the same year, and true up the following year, as needed. In years where weeks have had large transitions in MFs, the Trust MF change has been similar, without a lag.

 

[timtax]

I would assume that other "Non Branded" credit cards are used to pay MF in some cases so they would not be rebated?

 

[jp10558]

Interesting, let's flip this. What if they had offered a 3% discount on MF's to those who pay in cash. Seems like a cleaner and safer bet from a public relations perspective. Might be a dumb idea but is it more dumb that what they tried to do?

I'm pretty sure in NY for instance, you can offer a discount for paying cash, but you have to advertise the most expensive payment method rate more prominently than any discounted rate.

Just to be consistent WRT following the law, I really don't know how it's legal like at MVC resorts to refuse to take cash. "Legal tender for all debts public and private" makes my lay person think that taking cash is non-negotiable... but clearly I'm either wrong or no one has had a court rule.

Personally I wish we had better consumer protection laws and enforcement so that we don't either have to effectively now "pay a fee" to safely pay bills. 2010s era Credit Card rules worked well for me personally, but I also would accept some fee free by law electronic payment system that provided fraud and dispute resolution tools similar to credit cards for online transactions.

In person like cash is fine with me because in person it's a lot harder to just not give you an item as you're handing over cash, and a lot harder to fool you on the size or actual quality or the like of something you're buying. You know if what you're looking at in person is 3" or 3' size, but online it's not always obvious. But even though I'm OK with different rules in person, I still want protections against muggings and convenience of not dealing with change of digital.

What's crazy is if the government did this, they could probably cut out all coins and maybe even $1 bills from making new ones to pay for the digital infrastructure. It's not like any of the coins are useful by themselves in general life anymore, and dollar bills are marginal at best given current prices.

 

[1Kflyerguy]

I would assume that other "Non Branded" credit cards are used to pay MF in some cases so they would not be rebated?

That's correct, in this case the Bonvoy cards have lower effective fees, than other cards. I think thr question becomes who gets rebate. Does it all flow back to Marriott International or does MVC get a portion or all of the rebate for fees associated with their card transactions.

 

[chris5]

Interesting, let's flip this. What if they had offered a 3% discount on MF's to those who pay in cash. Seems like a cleaner and safer bet from a public relations perspective. Might be a dumb idea but is it more dumb that what they tried to do?

I'm pretty sure there are vendors who do this and it might be perfectly legal in most cases. I booked a Viking Cruise and received a 3% discount for paying by ACH (or e-check) which Viking has now reduced to a 2% discount for ACH payments for current bookings -- saved me around $950 for choosing this payment method. Since Viking reduced the discount to 2%, not sure this would be better than a cash back reward of 3% on a Viking cruise paid on another credit card, like Costco Citi.

I got good mileage from Marriott Rewards/Bonvoy points over the years, when the program had Travel Reward Certs for combining mileage and hotel stays, when you could get better value from points than today's valuation (though there are still bargains out there for European hotel stays), and when credit card payments added to point totals -- most of this is now gone. But it's still nice to book a a nice Marriott branded hotel stay, get upgraded in your room and have access to concierge lounge services. I've drained over 2.5 million points since we've retired in 2013 and only have a modest 140K of points currently in my account with Lifetime Titanium status. If MVC charges 3% for maintenance fee payments, it might not be worth it to continue paying by credit card, though my last big spend on a Marriott luxury hotel came out at 1.4 cents per point! But that was an unusual situation.

 

[cubigbird]

Awesome. I paid a bunch of $$ ahead of time to avoid paying the 3% fee only for them to pause and not do it. So now they have more money up front. I assume the influx of cash from many owners attempting to avoid the fee will help quarterly earnings. Well played corporate,….well played.

I did pay with a Marriott card so I at least earn 6x points consolation prize.

 

[dioxide45]

Awesome. I paid a bunch of $$ ahead of time to avoid paying the 3% fee only for them to pause and not do it. So now they have more money up front. I assume the influx of cash from many owners attempting to avoid the fee will help quarterly earnings. Well played corporate,….well played.

I did pay with a Marriott card so I at least earn 6x points consolation prize.

We were all duped. Fell for it hook, line and sinker.

 

[billymach4]

Just think y'all could have been earning > 3% in SGOV between now and Jan 27.

 

[dioxide45]

Just think y'all could have been earning > 3% in SGOV between now and Jan 27.

View attachment 129284

But isn't that an annual yield? Four months is only about 1%.

 

[billymach4]

But isn't that an annual yield? Four months is only about 1%.

Let me ask AI before it kills all of us.

 

[daviator]

I'm glad I only prepaid a couple of my VOIs, I held off on all the weeks-based ownerships.

 

[DRH90277]

Take a step back and think. Doesn't this just show us how compliant the BOD's of the various properties are with the wishes of the MVC management. Where is the independence? Did the individual BOD's approve this change and if not, why not? It may be time to push back with some independent directors for the individual properties.

Was this action to charge the 3% approved by the individual BOD's of the properties in advance of the announcement?