How bad can it get?

[oldkey]

We own several weeks at MOC along with my 500+ points at DVC. Our goal has been to use these weeks/points as our "second home" in retirement. We really only want to be gone from our home Jan - Easter. We have been very successful in renting our weeks/points now to pay for both the maintenance fee as well as the loan payments on the weeks. We actually make money in both cases and put that money into "owning" the weeks and points. This has worked for 17 years with Disney and 7 years now for MOC. When we retire the rent will have paid for the weeks (we have paid off Disney already). When we vacation, we intend to rent the studio side to pay the maintenance fee so we can stay in the one bedroom side.

It all seems so simple...but...all these changes. I want to buy another week or two...but...not sure how bad it could get...

- we will never trade
- we could care less about the Marriott points program
- we just want to stay at MOC
- unless we somehow get sick of Maui, I never intend to sell (just there two weeks ago - never liked it more - so cool to walk all the way up to Hona Kai)
- we relish in the thought that we can leave all this to our kids in a trust

What's the worst that can really happen with the Spin Off? I understand the expense of flying to Maui and the possible stress on rents. What about the building? Can they sell it? To who? Will our beloved MOC always be there? I want to keep buying weeks but all this negativity here.....

I am the only one left that still feels good about Marriott?

 

[wof45]

everything is still the same as it has always been for weeke owners.

if you want additional weeks, you can buy them resale and they will continue to work as they always have.

Destination Club is a new feature that you have to buy into if you want to use it, but if you don't enroll, then your existing weeks and any that you buy resale work just the same way.

 

[ronparise]

what marriott is doing with their timeshare unit is no different that what marriott has done since 1927 when J. Willard and his new bride Alice moved to Washington DC opened up a A&W Root Beer Stand. They build companies, buy companies, operate companies, sell companies and spinoff companies.

In this case they they are spinning off the timeshare division. management remains the same. I wouldnt worry about the future of your resort

 

[BobG7734]

I totally agree with the above posts...the hysteria about DC and Spinco has gotten out of hand in this forum...if you own the TS just continue to own it...the management and budgets of TS are set by the owners, not by anyone else.

 

[timeos2]

I totally agree with the above posts...the hysteria about DC and Spinco has gotten out of hand in this forum...if you own the TS just continue to own it...the management and budgets of TS are set by the owners, not by anyone else.

Agreed 100%. If all you desire is to use the resort for the week(s) you own then all the recent hoopla, except the chance for significantly higher fees, aren't likely to affect you or the resort. The fees can go up anywhere for any reason so that just comes along for the ride regardless of what resort/brand. The recent changes at Marriott may mean a bigger jump than most but that is strictly speculation now. If you like the resort and the fees are within your budget go for it. If you use you almost can't lose.

 

[oldkey]

Awesome!

Time to buy anotherweek ....and not read any more negative posts....

 

[gblotter]

If all you desire is to use the resort for the week(s) you own then all the recent hoopla, except the chance for significantly higher fees, aren't likely to affect you or the resort. The fees can go up anywhere for any reason so that just comes along for the ride regardless of what resort/brand. The recent changes at Marriott may mean a bigger jump than most but that is strictly speculation now. If you like the resort and the fees are within your budget go for it. If you use you almost can't lose.

The likelihood of significantly higher maintenance fees is not something I can dismiss so easily. I also own at MOC, and I almost always use my home resort. I fear the prospect of dramatic fee increases is real. Given the Marriott spinoff and the existing abusive Maui County timeshare taxation, I can easily see MOC fees rising to $2500 within a couple of years - I don't think anyone can reasonably deny that possibility. At what price-point do owners cry uncle ($3K per year)? When you find yourself paying $400+ per night in maintenance fees, will timeshare ownership still make sense? Higher maintenance fees will of course depress resale values, impacting any exit strategy. I have accepted the fact that at some point I may have to just walk away because of the exorbitant maintenance fees. Some will call that a gloom-and-doom, sky-is-falling attitude. However, Marriott has ripped off my rose-colored glasses twice in the past year. Marriott is clearly acknowledging the reality of the situation. They saw a bleak future for the timeshare business and decided to get out. I'm not following Marriott to the exit just yet, but I am also trying to acknowledge reality here. For this reason, I can't imagine purchasing another week in this uncertain environment.

 

[ronparise]

The fear of rising maintenance fees is real. The fact the maintenance fees are approaching what a 5 star hotel charges is also very real. If it becomes common for maintenance fees to exceed the cost to rent, there will be more and more folks just walking away.

These fears however are not unique to Marriott. This is a problem for the whole industry and all of us not just Marriott owners. It has nothing to do with this spinoff, except that it will become very clear just what a large timeshare company is really worth. Dont be surprised if the share price drops to the same value of our timeshare weeks on the secondary market

 

[Cmore]

.... Some will call that a gloom-and-doom, sky-is-falling attitude. However, Marriott has ripped off my rose-colored glasses twice in the past year. Marriott is clearly acknowledging the reality of the situation. They saw a bleak future for the timeshare business and decided to get out. I'm not following Marriott to the exit just yet, but I am also trying to acknowledge reality here....

Forgive me as I am new here, I am trying to understand how they "ripped off the rose-colored glasses twice in the last year"? We have been MVCI owners for over 10 yrs. I understand the introduction of points, and spin off are changes, but really how does those two things really impact a weeks owner?

Our resorts are still Marriott branded and managed, still have the internal priority they had with weeks based resorts. True, likely will have less access to new resorts unless you enroll, but the 'weeks mvci network' is still very large if you choose not to enroll. I really don't see a reason for fees to climb at a rate different than their consistent irritating climb above the rate of inflation, but that problem has long existed.

Everyone, is entitled to their opinion, but like others I simply see this as Marriott unlocking shareholder value and separating a capital intensive part of the business from the franchise and mgmt side.

Looks a lot like the hotel model to me.

 

[TJCNewYork]

Looks a lot like the hotel model to me, too.

Cmore - Looks a lot like the hotel model to me, too.

Everyone, is entitled to their opinion, but like others I simply see this as Marriott unlocking shareholder value and separating a capital intensive part of the business from the franchise and mgmt side.

Looks a lot like the hotel model to me.

 

[vacationtime1]

Everyone, is entitled to their opinion, but like others I simply see this as Marriott unlocking shareholder value and separating a capital intensive part of the business from the franchise and mgmt side.

Looks a lot like the hotel model to me.

Looks a lot like the hotel model to me, too.

I am not persuaded. If Marriott wanted to separate the capital intensive part of the business (real estate ownership and development) from the franchise and hotel management side, Marriott would have spun off the construction and sales portions of the timeshare business but retained the ongoing management of timeshares after they are sold.

NewCorp would be like many other real estate developers -- cyclical, boom or bust, and high risk/high reward. The management side would be steadier, ongoing, less variable -- like Marriott's existing hotel business. It would have been analogous to the model where Marriott manages properties owned by others (REIT's for the hotels, HOA's for the timeshares).

The fact that Marriott did not want to stay involved in the ongoing management of existing timeshares is more disturbing to me than its desire to get out of real estate development. There may be good and sufficient reason for Marriott to dump the balance sheet issue of unsold inventory, but for it to choose to also dump ongoing vacation property management suggests that Marriott sees large issues downstream.

 

[ral]

The fact that Marriott did not want to stay involved in the ongoing management of existing timeshares is more disturbing to me than its desire to get out of real estate development. There may be good and sufficient reason for Marriott to dump the balance sheet issue of unsold inventory, but for it to choose to also dump ongoing vacation property management suggests that Marriott sees large issues downstream.

Based on the following from the Marriott News Center, "Under the plan, the new company will focus on the timeshare business as the exclusive developer and operator of timeshare, fractional and related products under the Marriott brand and the exclusive developer of fractional and related products under the Ritz-Carlton brand", it seems that the new company will manage the Marriott brand, but will only develop the Ritz-Carlton brand. Unless the wording is incorrect, Ritz-Carlton management will be operating the Ritz-Carlton brand. This leads me to believe that Marriott is staying involved in the ongoing management of the Ritz-Carlton brand.

 

[wof45]

all this speculation is pretty pointless.

the spinoff is all about the stock price. Marriott Intl stock gets a much higher multiple if it does not have a lot of invested funds, meaning that its roi is much higher.

 

[bogey21]

Looks a lot like the hotel model to me.

Looks more like the RCI model to me. Conversion into an exchange company who will rent unsused Weeks to the general public.

George

 

[MOXJO7282]

If you can afford the price tag and these loans you mention aren't high interest I say invest in another but I strongly recommend it be a 2BDRM OV/OF.

A 2BDRM OF/OV at the MOC is a unit IMHO that will always have some value and rent well because the demand is so incredibly high.

And if you can take advantage of the lockoff and split into a 2week vacation then your really driving value. I'm going in 2012 in my OF unit. I've already found a renter for the studio section for $1600. So my renter is almost paying for the whole MFs and I get the use of the 1BDRM side. Can't beat that value.

I also just rented one of my 2012 weeks already. So even if MFs continue to go up, there will always be a renter willing he pay up for a vacation at the fabulous Maui Marriott.

 

[Cmore]

Looks more like the RCI model to me. Conversion into an exchange company who will rent unsused Weeks to the general public.

George

I understand what you are saying, but Marriott has long held ownership interests in most if not all the resorts. The resorts have been available for use by MR points members and the general public thru the Marriott reservation system for a very long time.

Why are they not entitled to do what they want with their weeks just as TS owners can rent, occupy, trade, give away, etc with their weeks ? As long as traded weeks are allowed to go thru the trading process as required by our doc's I really don't see the problem.

I expect them to live up to the terms that they sold us, and nothing more.

 

[vacationtime1]

I expect them to live up to the terms that they sold us, and nothing more.

Many purchasers thought one of those terms was that Big Marriott would always be around to manage the properties in a way that "protects" its owners' "investments". Marriott has always played on its reputation in the industry as an inducement to buy into its timeshare system. Marriott also played on its reputation as a branding entity when it forced recalcitrant HOA's to upgrade facilities against the threat of disaffiliation. It turns out that Marriott can fulfill its "obligation" (and collect licensing fees) by renting its name to a company that will soon be unrelated to it.

Whether or not this will make a difference to the owners remains to be seen. Although I think that OP, and others who operated under the "buy to use" assumption, will be the least affected.

 

[tombo]

I also just rented one of my 2012 weeks already. So even if MFs continue to go up, there will always be a renter willing he pay up for a vacation at the fabulous Maui Marriott.

If the fuel prices keep rising and air fare skyrockets that is not the case. If R/T air fares are $2000 or more a person and MF's are $2500 to $3000 for a week, there will be a lot of units for rent and few renters. Increased supply and reduced demand will lower prices.

The cost of renting and/or MF's in hawaii is only one of the factors that determines the value of owning and the rental prices one can command. Fuel costs fluctuations and the resulting air fare fees are an expense that can either increase travel to the Islands or almost kill it. Just read the Hawaii thread here on TUG and read the response from owners in the thread about high air fares are killing me where owners are discussing whether they can afford to go to their home resorts or not.

The high fuel/air fares of 2 years ago could pale in comaprison to projected fuel increases in the next 2 years. The high was about $4 a gallon a couple of years ago and travel to hawaii plummetted. Motels and condos had fire sale prices for rental properties stting empty. The TUG last minute boards and redweek were filled with bargain basement prices on Hawaii weeks.

In the last year fuel costs went down and travel to Hawaii increased. Now fuel and oil is jumping rapidly (my gas jumped 20 cents a gallon in one day this week). Projections are $4 to $5 a gallon within 2 years. If you can't afford to go,if renters aren't willing or able to pay the air fares, if MF's and taxes continue to rise, and if there are a lot of owners discounting their rental prices hoping to entice a renter to rent their unit rather than let it sit empty, then owning anywhere in Hawaii could become an expensive proposition.

Many here on TUG live for vacations and feel that other people will also vaction no matter what. Most people do not feel the same way. Most people vacation when they have secure jobs and when the cost to do so is not a strain on the family budget. The term "staycations" where people vacation at home was coined because so many people could not afford to travel on vacation in the poor economy and chose to stay home instead of going anywhere. Flying to Hawaii for most is a luxury item, not something they must do every year or so.

If air fares increase by 50%, double, or triple then you might not ba able to rent your weeks no matter how cheaply you price them. if you can't rent them, can't afford to pay the air fares, and can't sell the timeshares you might become the owner of a white elephant.

I sold my Hawaii timeshare 3 years ago (thank goodness) and will gladly rent if I decide to go back. For me if air fares are expensive I might never go back. Loved Hawaii but I have been there and done that numerous times. If I never go back to Hawaii again it will not affect my life in a negative way.

To me rising Hawaii timeshare taxes, Hawaii's faster than average increases in MF's, an unfriendly timeshare environment exhibited by the Gov't of several islands, and future predictions of ever escalating fuel costs and unending air fare increases means that it is time to sell if you have not done so already. I could be wrong, but if I am wrong I can always buy another week resale in the future, or simply rent when/if I want to return. In a few years if fuel costs, taxes, MF's, and air fares keep rising, the option to sell might no longer be an option.

 

[OldPantry]

How bad can it get? Pretty bad. That is (as mentioned above) dependent on what happens to maintenance fees. If MOC goes to $2500 or $3000, which is not outside the realm of possibility, things could start collapsing there. The tipping point for any resort will be when rentals are consistently cheaper than MFs. Somewhere around there, folks will rebel. There are two ways to do this: walk away, or fight to lower MFs. Walking away can lead to a pernicious cycle, burdening the rest of the owners with ever-rising MFs. It also damages the walkees, whose credit ratings are hurt, and who might be subject to the harassment of collections procedures.

Somebody mentioned that MFs are threatening to equal the cost of 5 star resorts booked from the hotel companies (Marriott, Hilton, Westin) directly. That should never happen. These companies are for-profit. They look to make money renting inventory, above and beyond all their fixed and variable costs. Think of all the things that go into these costs (advertising, marketing, interest expenses, depreciation, etc.). HOAs, on the other hand, are non-profit. They just need to collect enough in MFs to be self-sustaining, with a cushion for "just in case". The difference should be substantial. In fact, the difference should be large enough that the hierarchy would be, from bottom to top: MFs, private rentals, hotel rentals

If it isn't the case, then there's something rotten in the state of Denmark, and homeowners have to step up and demand changes. Unchecked, the rise in MFs could eventually lead to bankruptcy for vacation clubs, leaving everybody (except the new resort owners) out in the cold.

By the way, this scenario is not a prediction. I actually think things are looking up for timeshares, and don't anticipate that things will spiral out of control.

 

[dioxide45]

Somebody mentioned that MFs are threatening to equal the cost of 5 star resorts booked from the hotel companies (Marriott, Hilton, Westin) directly. That should never happen. These companies are for-profit. They look to make money renting inventory, above and beyond all their fixed and variable costs. Think of all the things that go into these costs (advertising, marketing, interest expenses, depreciation, etc.). HOAs, on the other hand, are non-profit. They just need to collect enough in MFs to be self-sustaining, with a cushion for "just in case". The difference should be substantial. In fact, the difference should be large enough that the hierarchy would be, from bottom to top: MFs, private rentals, hotel rentals

I think it is hard to compare the MF with rental rates of 5-star hotels. While a hotel is for profit and a TS is not. A hotel also has three rooms for every one 2BR at a TS. So to rent equivalent accommodations at a 5 star hotel would cost much more for equivalent accommodations.

 

[Cmore]

Many purchasers thought one of those terms was that Big Marriott would always be around to manage the properties in a way that "protects" its owners' "investments". Marriott has always played on its reputation in the industry as an inducement to buy into its timeshare system. Marriott also played on its reputation as a branding entity when it forced recalcitrant HOA's to upgrade facilities against the threat of disaffiliation. It turns out that Marriott can fulfill its "obligation" (and collect licensing fees) by renting its name to a company that will soon be unrelated to it.

Whether or not this will make a difference to the owners remains to be seen. Although I think that OP, and others who operated under the "buy to use" assumption, will be the least affected.

Again, I understand the various points made, by everyone. I am just trying to grasp how things have "really" changed for weeks owners and I don't see much.

JMO, but when I travel on business and choose to stay at a Marriott, or Starwood property, etc. I don't call in and confirm I am at a "parent" company owned property. I am staying at a property that represents the "brand" regardless of the ownership group of that particular property. Certainly, some properties do a better job of upholding those stds. than others. This is true at MVCI as well, some of our resorts are maintained better than others and this was/is true under Marriott corp. They are good, but not perfect.

In this case, MVCI branded resorts will need to maintain the standards that is expected by MVCI, or individual resorts will not be able to maintain their affiliation, which has happened to a few properties over the years, most if not all were Marriott acquisitions not developed resorts.

People can continue to fret over DC points or the spin off if they want to, I don't beleive either of those things damages in any significant way what MVCI owners already own. The damage we've had in regards to the "cash value" of our various owned weeks was largely done by what's happened in the economy, something that is far beyond the the control of "Big Ol' Marriott Corp."

I wish you well, and I am going to enjoy my upcoming Spring Break trips with my son's and their friends. 1 week in Colorado skiing, and the next week in Orlando hitting the parks again.

 

[BobG7734]

Again, I am saying that there is a lot of hysteria in this forum. If you own the TS it is up to you to relate to the BOD to let your thoughts known abbot MF amounts and get involved in the management of the facility. Marriott has nothing to do with it. It is liking to own a condominium where tHe owners control the ownership.

 

[MOXJO7282]

If the fuel prices keep rising and air fare skyrockets that is not the case. If R/T air fares are $2000 or more a person and MF's are $2500 to $3000 for a week, there will be a lot of units for rent and few renters. Increased supply and reduced demand will lower prices.

The cost of renting and/or MF's in hawaii is only one of the factors that determines the value of owning and the rental prices one can command. Fuel costs fluctuations and the resulting air fare fees are an expense that can either increase travel to the Islands or almost kill it. Just read the Hawaii thread here on TUG and read the response from owners in the thread about high air fares are killing me where owners are discussing whether they can afford to go to their home resorts or not.

The high fuel/air fares of 2 years ago could pale in comaprison to projected fuel increases in the next 2 years. The high was about $4 a gallon a couple of years ago and travel to hawaii plummetted. Motels and condos had fire sale prices for rental properties stting empty. The TUG last minute boards and redweek were filled with bargain basement prices on Hawaii weeks.

In the last year fuel costs went down and travel to Hawaii increased. Now fuel and oil is jumping rapidly (my gas jumped 20 cents a gallon in one day this week). Projections are $4 to $5 a gallon within 2 years. If you can't afford to go,if renters aren't willing or able to pay the air fares, if MF's and taxes continue to rise, and if there are a lot of owners discounting their rental prices hoping to entice a renter to rent their unit rather than let it sit empty, then owning anywhere in Hawaii could become an expensive proposition.

Many here on TUG live for vacations and feel that other people will also vaction no matter what. Most people do not feel the same way. Most people vacation when they have secure jobs and when the cost to do so is not a strain on the family budget. The term "staycations" where people vacation at home was coined because so many people could not afford to travel on vacation in the poor economy and chose to stay home instead of going anywhere. Flying to Hawaii for most is a luxury item, not something they must do every year or so.

If air fares increase by 50%, double, or triple then you might not ba able to rent your weeks no matter how cheaply you price them. if you can't rent them, can't afford to pay the air fares, and can't sell the timeshares you might become the owner of a white elephant.

I sold my Hawaii timeshare 3 years ago (thank goodness) and will gladly rent if I decide to go back. For me if air fares are expensive I might never go back. Loved Hawaii but I have been there and done that numerous times. If I never go back to Hawaii again it will not affect my life in a negative way.

To me rising Hawaii timeshare taxes, Hawaii's faster than average increases in MF's, an unfriendly timeshare environment exhibited by the Gov't of several islands, and future predictions of ever escalating fuel costs and unending air fare increases means that it is time to sell if you have not done so already. I could be wrong, but if I am wrong I can always buy another week resale in the future, or simply rent when/if I want to return. In a few years if fuel costs, taxes, MF's, and air fares keep rising, the option to sell might no longer be an option.

So now its going to get worse than it was in 2009 & 2010? No way.

I wish everyone listed their ownership because it does help in understanding their perspective. Like mine for instance. Obviously I'm pro Marriott. Mainly because I've experienced nothing but good things through my ownerhship, especially my Maui units. Marriott has well exceeded my expectation.

Others are making comments about Marriott when they just don't have any or limited experience with them.

I rent most of my Maui weeks to West Coast folks. Airfare is not going to go to $2000 for them ever. If it does this world is going to have much more to worry about than going on vacation. If you choose to live your life in that much fear so be it. I refuse to.

I remember so much negative talk when I first bought into the Marriott program and if I would have listened then my family would have missed out on so much priceless memories.

I fully expect that Marriott will weathe this storm and ownership will continue to bring value, at these with the resorts I own.

 

[SueDonJ]

Again, I am saying that there is a lot of hysteria in this forum. If you own the TS it is up to you to relate to the BOD to let your thoughts known abbot MF amounts and get involved in the management of the facility. Marriott has nothing to do with it. It is liking to own a condominium where tHe owners control the ownership.

RC, I do admire you for not giving in to the hysteria. Like you I think there is less to worry about with the advent of the DC and upcoming spin-off than many on TUG are anticipating.

But I have to respectfully disagree with you that Marriott plays no role at all, has no influence, related to m/f. The fact that they hold seats on the resort Boards, and require a brand standard to be met at the resorts (both rights by virtue of the governing docs,) means that their influence is exerted upon the remaining Board members. Because most of the Operating Budgets are set according to need and are audited on a routine basis, you're correct that Marriott does not have unlimited free reign to increase m/f willy-nilly, but their influence is apparent in the resort furnishings and the budgets' reserve fees. There's no denying that Marriott can and does exert control over certain line items in the budgets related to the brand standard, and that it benefits them greatly to do so liberally because their contracted Management fee is 10% of the total budget.

I hope you understand I'm not trying to add to the hysteria. I don't have a problem with how Marriott manages the resorts, in fact I hope they continue the same management style after the spin-off. We bought Marriott because of the brand standard and don't want to see it sacrificed.

 

[SueDonJ]

So now its going to get worse than it was in 2009 & 2010? No way.

I wish everyone listed their ownership because it does help in understanding their perspective. Like mine for instance. Obviously I'm pro Marriott. Mainly because I've experienced nothing but good things through my ownerhship, especially my Maui units. Marriott has well exceeded my expectation.

Others are making comments about Marriott when they just don't have any or limited experience with them.

I rent most of my Maui weeks to West Coast folks. Airfare is not going to go to $2000 for them ever. If it does this world is going to have much more to worry about than going on vacation. If you choose to live your life in that much fear so be it. I refuse to.

I remember so much negative talk when I first bought into the Marriott program and if I would have listened then my family would have missed out on so much priceless memories.

I fully expect that Marriott will weathe this storm and ownership will continue to bring value, at these with the resorts I own.

We feel much the same way, Joe.