A Few Tidbits from Marriott Vacations Worldwide 1Q22 Earnings Call

[JIMinNC]

There were a few interesting tidbits that TUGgers may find interesting from Marriott Vacations Worldwide CEO Steve Weisz, President John Geller, and CFO Tony Terry during their 1Q2022 Earnings Call today:

1) On the new combined product offering:
"At the end of March, we began pre-marketing our new combined product offering at our Marriott, Westin, and Sheraton sales centers, and we expect to complete the development of the related technology and officially launch the product later this summer. The combined product offering will bring Marriott, Westin, and Sheraton-branded vacation products together, allowing owners of each product more flexibility across our Marriott-branded portfolio. Early feedback from owners has been quite positive to the offer of more destinations and flexible usage options."

"We look forward to sharing a more in-depth overview of our new combined Marriott product offering, as well as our new Hyatt initiatives, at our Investor Day on Thursday, June 16 at the New York Stock Exchange."

This is really nothing new, so I elected to post this here rather than in the longer thread dedicated to the combined product.

2) On the availability of Interval International inventory:
"Inventory availability at Interval International continues to be challenging, primarily due to the lower member direct deposits. As you might imagine, lower owner travel during the pandemic has led to higher than average owner usage as travel restrictions eased. That higher owner usage directly impacts member inventory deposits, however, despite the lower deposits, Interval has done a fantastic job managing the inventory they do have with inventory utilization above pre-pandemic levels."

3) On new inventory/locations versus reacquired inventory:
"We continue to carry excess inventory on our balance sheet, ending the quarter with nearly $630 million of excess inventory. Given our recent purchase of 88 units in Bali, Indonesia, we have no further new inventory commitments besides our normal purchase of low-cost reacquired inventory."

Tony Terry later commented that reacquired inventory is significantly lower cost than even asset-light new development. The implication seemed to be that they would continue to favor inventory repurchases over new development, unless particularly attractive new development opportunities present themselves. He also said they were still actively working to dispose of their existing non-strategic real estate assets.

"We will seek to use our free cash flow to invest in growing the business organically or through strategic acquisitions. In the absence of compelling acquisitions, our best use of free cash flow remains returning capital to shareholders through dividends and share repurchases."

 

[jwalk03]

Disappointing they don’t seem interested in expanding to new locations much at all. What happened to the planned Waikiki Pulse location? Wouldn’t that be a further inventory commitment if it’s still coming?

 

[JIMinNC]

Disappointing they don’t seem interested in expanding to new locations much at all. What happened to the planned Waikiki Pulse location? Wouldn’t that be a further inventory commitment if it’s still coming?

Good question. I'm not 100% sure of what their definition of "commitment" is. I believe that in their asset light arrangements, that once their development partner builds the units, they have an agreed-upon schedule for taking those units from their partner, often in several batches, spread over an agreed upon time frame. So, it may not actually be a "commitment" until the development partner completes the units, triggering Marriott's committed purchase schedule. It may also be considered a commitment once construction has begun and the partner is moving forward. I do know construction on that project has not commenced, so it may not yet be considered a "commitment" - but that's just an educated guess on my part.

I'm hoping they may add more color to their plans for any new locations during the June 16 Investor Day.

 

[Big Matt]

Disappointing they don’t seem interested in expanding to new locations much at all. What happened to the planned Waikiki Pulse location? Wouldn’t that be a further inventory commitment if it’s still coming?

From my view as a Marriott only owner, there are a lot of new locations coming in from Sheraton/Westin/Hyatt

 

[JIMinNC]

From my view as a Marriott only owner, there are a lot of new locations coming in from Sheraton/Westin/Hyatt

Not Hyatt. That program must remain separate per the licensing agreements with Hyatt hotels. Only the Westin and Sheraton brands are part of the new product.

 

[dioxide45]

Thanks for the update. I hadn't had a chance to listen to the call yet. They seem to be sitting on a lot of inventory. I suspect this may be because they developed a few international locations. Costa Rica they can really only sell as weeks. I think Bali is in the Asia Pacific program? The may not be selling all that well given the past two years. Weren't they sitting on about $1.2 billion of inventory after the 2008 downturn? They are only at about half of that now. Domestic USA locations are probably much easier to sell, but not flashy to the current owner base. International locations being sold as weeks are so hard to book because point owners rely on owners actually electing points. I suspect they will have that issue with Westin/Sheraton at least through 2023 as 2023 will be the first year of occupancy that Vistana owners can elect, but many will have already made reservations and plans by the time they roll things out completely. Also, with some of the point allocations, they may have a hard time convincing some owners to elect points for certain resorts.

 

[Mowogo]

From my view as a Marriott only owner, there are a lot of new locations coming in from Sheraton/Westin

Everyone with a developer purchase appears to be getting a lot of new locations. They may not choose to utilize this ability due to unfavorable exchange rates, but it will be there. That makes it even easier to sell upgrades. Now with more home resorts you need more points to travel more.

 

[Mongoose]

This should put to bed those rumors about Marriott cutting off deposits to II. Also looking forward to what they say about Hyatt in June. So far, the Welk thing is a big yawner.

 

[dioxide45]

So far, the Welk thing is a big yawne.

Don't you now have Hyatt Vacation Club?

 

[Mongoose]

Don't you now have Hyatt Vacation Club?

Hyatt Residents Club. Not the (cough) “merger“ of Welk into Hyatt Vacation Club Platinum Program (no confusion there). I have to think they will try to introduce some type of HGV Max or Wyndham Travelshare type program. The former has a minimum $7k buy in. I have been spoiled with my Worldmark and HICV. Both have added resorts, HICV through acquistion without limiting access To existing owners.

 

[bazzap]

Thanks for the update. I hadn't had a chance to listen to the call yet. They seem to be sitting on a lot of inventory. I suspect this may be because they developed a few international locations. Costa Rica they can really only sell as weeks. I think Bali is in the Asia Pacific program? The may not be selling all that well given the past two years. Weren't they sitting on about $1.2 billion of inventory after the 2008 downturn? They are only at about half of that now. Domestic USA locations are probably much easier to sell, but not flashy to the current owner base. International locations being sold as weeks are so hard to book because point owners rely on owners actually electing points. I suspect they will have that issue with Westin/Sheraton at least through 2023 as 2023 will be the first year of occupancy that Vistana owners can elect, but many will have already made reservations and plans by the time they roll things out completely. Also, with some of the point allocations, they may have a hard time convincing some owners to elect points for certain resorts.

Yes, Bali is part of the Asia Pacific Programme.
Technically there are Bali Points, as there are Australia Points, but effectively they are all encompassed within Asia Pacific Points.

 

[Big Matt]

From my view as a Marriott only owner, there are a lot of new locations coming in from Sheraton/Westin/Hyatt

Thanks for the correction on that. I may be thinking more of II in relation to Hyatt......or maybe I'm just imagining things.