I believe Marriott will aggressively acquire weeks into Points Trust

[hotcoffee]

The point of my post is that even if Marriott has the perfect claw back agreement with II, they rely on 1) the owner depositing for points and 2) and owner depositing their week into II. Those timetables are not very predictable.

Exactly, but that is the same thing that non-points exchangers rely on. Even so, it certainly looks to me like Marriott will have an advantage acquiring Request-First search weeks because they have their own inventory to meet the Request-First search. In fact, those who think that Request-First searches will keep their week out of the hands of points exchangers (why they really care about that is a mystery) are probably doing the points exchangers a favor. A Deposit-First allows anyone to grab the deposited week. Marriott has no advantage there. But, a Request-First search can tap into the Marriott inventory resulting in a better chance of being satisfied. There are no strings being pulled. It's just that they have more to offer II than any one single non-points exchanger.

What a point system requires is lots of inventory available at the 13 month mark. They can only guarantee that if the trust owns it. That is basis for my assertion that Marriott will want to acquire such weeks.

Agreed. But, they probably have more inventory than we know about. I think they have this thing pretty well figured out.

 

[BocaBum99]

One reasonable question wrt this which remains IMO is will Marriott cook the back end of the reservation system to favor the trust? IOW, at any resort, in any peak period, their desired reservations for the trust will simply be executed first, before any 'external' owners reservations can be processed? Days on the 'calendar' can simply 'go away' without explanation and everyone will figure 'darn, I just didn't get in this year'. IMO, that's a real slippery slope and we need owners with historical data and experience to work this going forward. Marriott can promulgate 'separate buckets' all they want, but, unless I see those two shiny new buckets for myself in their reservation system, I'll discount that as factual. Trust with verification

*If* this cooking of the books does happen and weeks owners become disappointed and choose to sell into this down market with such weeks precluded from being eligible for enrollment into DCP, here comes the Hoover (that's Marriott) sweeping them up at low prices with ROFR and taking those deeds and adding to the pot cooking in the boiler room. Yummy.

I don't think Marriott will have the audacity of jumping all weeks owners in queue. I've worked for large companies with brands to protect. The internal brand police just won't let them cross that line. If it were Wyndham, Westgate or Diamond, I may be more concerned. Even Wyndham has showed some restraint in certain areas.

For now, this is all abstract to people who haven't seen a points system that has both fully committed resorts and partially committed resorts in terms of what happens to availability and the perception of availability.

Take Bluegreen, as an example of one I knew extremely well, they have two types of resorts. Club resorts and Club Associate resorts. The big difference between the two types is that most if not all of the inventory at a Club resort is committed to the Club. At the 11 month mark, availability is rich. Most people don't have trouble getting what they want even in prime season. Club Associate Resorts are hard to get into. Why? Because there isn't enough predictable inventory. The availability picture is like night and day.

The same will be true for Marriott. The Trust resorts will have great availability. It will look to owners like they can get in there anytime they want. The other resorts, they will have to put in a waitlist request. That is a very dissatifying experience.

Remember, Marriott's goal will be to sell 1000 points or more to owners each and every time they vacation. The first time they say they couldn't get what they wanted will be the first time the sales guy says. That used to be true, but Marriott now has an aggressive ROFR and buy back plan to get more inventory at resorts you want. So, buy another 1000 points from me today and I will get you Premier or Premier Plus status for a year while we get our inventory act together.

 

[josh1231]

The point of my post is that even if Marriott has the perfect claw back agreement with II, they rely on 1) the owner depositing for points and 2) and owner depositing their week into II. Those timetables are not very predictable.

What a point system requires is lots of inventory available at the 13 month mark. They can only guarantee that if the trust owns it. That is basis for my assertion that Marriott will want to acquire such weeks.

This is a valid point. That being said, the person trying to book 13-months out has deposited their week for points, adding one week to the total number of weeks available for points users. So has everyone else who is looking to book 13-months out. Because of this, there would be inventory at many resorts for people to reserve.

So although the timing of deposits is unknown as you said, the people booking at 13-months out would of had to deposit their weeks to book, thus adding to the available inventory. When you add in the number of weeks they still own at most of the resorts, I believe they will have plenty of inventory.

 

[camachinist]

I don't think Marriott will have the audacity of jumping all weeks owners in queue. I've worked for large companies with brands to protect. The internal brand police just won't let them cross that line.

I hope you're right. I'm watching, of all things, low/off-season bulk banks, as an indicator of any trends. Right now, they're looking pretty healthy, compared to similar targeted searches over the last six years. If they 'go away', those reservation dates are going somewhere

While perhaps misplaced here, my healthy skepticism of Marriott has been the result of a fifteen year relationship with them, first as a frequent hotel user, then later as a developer timeshare owner. IMO, the Marriott which 'sold' me our NCV weeks seven years ago doesn't exist anymore, as a corporate culture. Change is inevitable. Sometimes it's good and sometimes it's not. Time will tell here. I definitely won't be accused of any 180's.

 

[hotcoffee]

This is a valid point. That being said, the person trying to book 13-months out has deposited their week for points, adding one week to the total number of weeks available for points users. So has everyone else who is looking to book 13-months out. Because of this, there would be inventory at many resorts for people to reserve.

So although the timing of deposits is unknown as you said, the people booking at 13-months out would of had to deposit their weeks to book, thus adding to the available inventory. When you add in the number of weeks they still own at most of the resorts, I believe they will have plenty of inventory.

This brings up an interesting point. I wonder if it would be smarter for a premier or premier plus exchanger to wait a day or so after the beginning of the reservation opening to allow some exchange inventory to build up? But, on the other hand, they could just go on the wait list and pick up weeks deposited later.

 

[SueDonJ]

This brings up an interesting point. I wonder if it would be smarter for a premier or premier plus exchanger to wait a day or so after the beginning of the reservation opening to allow some exchange inventory to build up? But, on the other hand, they could just go on the wait list and pick up weeks deposited later.

Somewhere in a thread we figured out the other day that generally the 13- and 12-month reservation windows for Points open 1-3 days later than the 13- and 12-mo marks for Weeks anyway. In that thread we were trying to figure out if that's another indication that Marriott will hold to the "bucket theory" floating around for inventory allocations. But you bring up another possible reason for the deliberate delay, it gives time for exchange deposits to show up for Points owners.

 

[josh1231]

I agree, IMHO, unless Marriott gets a whole bunch of people to join their system, t (OR aggressively acquire weeks) the trust will not have a lot of inventory and be a failure.

Really, they only need as much inventory as people they have join the system. They have significant inventory at almost all properties, and if only 15 people join the points program, they only need enough inventory for those 15 people, and those 15 people by definition have deposited their weeks, so therefore they have enough inventory for those people. Their additional unsold inventory is going to be above and beyond what people are actually trading in to book.

When you also consider that the 15 people who deposited their week for points, only have enough points to reserve 13 of those weeks, you have even less need for additional inventory.

 

[BocaBoy]

Of course they have a lot of Ko Olina inventory. The third tower is not even fully opened yet.

As for a premier sold-out resort like Waiohai, they may well need to acquire more weeks from existing weeks owners. But that should not in any way hurt the remaining weeks owners.

We shall see.

 

[hotcoffee]

Of course they have a lot of Ko Olina inventory. The third tower is not even fully opened yet.

As for a premier sold-out resort like Waiohai, they may well need to acquire more weeks from existing weeks owners. But that should not in any way hurt the remaining weeks owners.

We shall see.

I have not kept up with which resorts are sold out and which are not. In the enrollment disclosure documents they send out, they have the list of 11 resorts that have unsold inventory going into the Trust (as of February 2010). I was surprised that there is was much MOC inventory there. Although I've been to that area multiple times, I've never been to the Marriott and don't even recall having seen it. There is also construction going on at Frenchman's Cove I've heard; so I guess they will eventually have a bunch of units there also.

At one point when I talked to my rep, he mention about Marriott adding inventory via foreclosures. So, they are probably picking up inventory little-by-little even as we speak. As time goes by, I suspect that they will have inventory everywhere. I get the feeling that those predicting failure of this program are in for some disappointment.

 

[josh1231]

Of course they have a lot of Ko Olina inventory. The third tower is not even fully opened yet.

As for a premier sold-out resort like Waiohai, they may well need to acquire more weeks from existing weeks owners. But that should not in any way hurt the remaining weeks owners.

We shall see.

What would you say are the premier sold-out properties?

 

[dioxide45]

I just don't see Marriott starting any kind of active buyback or ROFR program. Marriott already knows historically how many people redeem their weeks for MR points and exchange their weeks through II. They know how many people for week X at resort Y give up their week, they know they can in most cases get their hands on it for points inventory. So they don't need to gain additional access to units for the points trust.

There are a few select prime weeks that they may need to acquire and may try to pick up a few for the trust. Overall however, they have over 42MM points in the trust. That is going to take a long time for them to sell in this economy.

 

[josh1231]

I just don't see Marriott starting any kind of active buyback or ROFR program. Marriott already knows historically how many people redeem their weeks for MR points and exchange their weeks through II. They know how many people for week X at resort Y give up their week, they know they can in most cases get their hands on it for points inventory. So they don't need to gain additional access to units for the points trust.

There are a few select prime weeks that they may need to acquire and may try to pick up a few for the trust. Overall however, they have over 42MM points in the trust. That is going to take a long time for them to sell in this economy.

Where can I find the information like points in trust, etc...

 

[dioxide45]

Where can I find the information like points in trust, etc...

This thread includes links to the recorded documents where I found the information.

 

[ldanna]

So, given that, I will predict that Marriott will indeed NOT allow new exchange relationships to enroll, rather they will acquire units via ROFR and via equity trade ins into the program. In this way, they can acquire new inventory at the same time they are moving current points inventory.

The points program will only be as strong as the inventory in the Trust. This will occur only when the current inventory levels at Marriott are worked down sufficiently. But, when that happens, I expect Marriott to be buying. But, they will be buying weeks, not points.

No, not aquiring units via ROFR. This would mean extra expenses on MF. And the weeks Marriott wants are not for sale. Ski weeks usually don't go for sale. People use them or rent them ($3k to $4k in Park City for example). HHI platinum? High owner occupancy and you just don't see them around for sale. HI? Lots of Trust inventory.

What I do agree is that the points program will be as strong as the inventory on the trust. And Marriott can't count on inventory (ROFR or deposits) on the most wanted properties.

BTW, it has been reported an increase on the rental offers in RedWeek and a shortage on II inventory available for exchange this year.

 

[tlwmkw]

dioxide,

I agree with you. I don't think they'll be buying in much more to add to the trust. They would then have to pay MF's on those weeks and tie up capital which no one would want to do in the current economy. They can sell "the dream" even if the underlying inventory doesn't contain every resort. Every time someone redeems for MRP's that will be available for points and any legacy who enrolls and trades their week for points will make that week available. I think the points availability at some of the sold out resorts where owners usually occupy will be limited. Marriott is going to have some unhappy points owners when they find it is not so easy to book at certain locations- and they don't even have a home resort! It'll be interesting to see what happens as this system really gets going.

tlwmkw

 

[Fredm]

In a perverse way the current economic climate is a benefit to the timing of the D Club roll-out.

Several of our selling clients were delinquent on maintenance fees.
Marriott has begun to offer take-backs in lieu of fees.
While this does not make sense for many Platinum Season owners, it is a reasonable alternative for some Gold owners who want to get on with life. So, Marriott is picking up, for example, Desert Springs White weeks for the price of the 2010 fees. Some owners will not go for it, but some are.

Undoubtedly, these weeks are being placed in the points pool.
Given the hard times many owners find themselves in, this source of points can be meaningful to Marriott's program.

 

[camachinist]

Given the hard times many owners find themselves in, this source of points can be meaningful to Marriott's program.

Good point. When the house next to my mom's foreclosed, I was shocked that the owners hadn't paid their property taxes for SIX years. Who knows when they paid their last mortgage payment. This is in a nice modest neighborhood. I can only imagine how timeshares have been affected, since those are merely vacations. I would imagine there are a lot of deeds of trust in default as well as MF's past due. Plenty of gold for Marriott to selectively mine before they resort to using ROFR. My bet is they'll set a floor figure, relevant to the 'value' of the particular interval in points, inclusive of all costs of acquisition, and use that parameter as a broad brush to sweep in desired intervals, whether through default or through ROFR. Whatever meets the test is acquired.

The cool thing is we can watch deeding activity at our respective resorts and get a snapshot of what's going on. When Marriott acquires/transfers, it's recorded. Public record.

 

[Fredm]

Plenty of gold for Marriott to selectively mine before they resort to using ROFR. My bet is they'll set a floor figure, relevant to the 'value' of the particular interval in points, inclusive of all costs of acquisition, and use that parameter as a broad brush to sweep in desired intervals, whether through default or through ROFR. Whatever meets the test is acquired.

Exactly!...

 

[BocaBum99]

Just curious to those who believe Marriott will not exercise ROFR. What do you think Marriott will do when they work down their current inventory?

1) They will build new resorts? Talk about Capital intensity

2) They won't ever run out of inventory? They were so over built that it will be 10 years before they work it down? Or, Loan/maintenance fee defaults will be sufficient to replenish inventory?

3) They won't do anything. They will just sell points that aren't tied to inventory?

4) They will stop selling points?

5) They will just sell exchange memberships and reverse their original decision and become a fee for service company?

6) They will just broker resale points and weeks?

I believe the most logical conclusion will be that they will determine that exercising ROFR is the cheapest way to add inventory to the Trust. And, it will have the added benefit of reducing the average $MF/point by picking the right weeks.

They will also do equity trade ins to get new inventory. That may be the primary approach so that they sell something at the same time they acquire new inventory.

 

[BocaBum99]

I just don't see Marriott starting any kind of active buyback or ROFR program. Marriott already knows historically how many people redeem their weeks for MR points and exchange their weeks through II. They know how many people for week X at resort Y give up their week, they know they can in most cases get their hands on it for points inventory. So they don't need to gain additional access to units for the points trust.

There are a few select prime weeks that they may need to acquire and may try to pick up a few for the trust. Overall however, they have over 42MM points in the trust. That is going to take a long time for them to sell in this economy.

So, what will Marriott do when they run out of inventory? Do you believe they will never run out?

 

[RedDogSD]

Just curious to those who believe Marriott will not exercise ROFR. What do you think Marriott will do when they work down their current inventory?

1) They will build new resorts? Talk about Capital intensity

2) They won't ever run out of inventory? They were so over built that it will be 10 years before they work it down? Or, Loan/maintenance fee defaults will be sufficient to replenish inventory?

3) They won't do anything. They will just sell points that aren't tied to inventory?

4) They will stop selling points?

5) They will just sell exchange memberships and reverse their original decision and become a fee for service company?

6) They will just broker resale points and weeks?

I believe the most logical conclusion will be that they will determine that exercising ROFR is the cheapest way to add inventory to the Trust. And, it will have the added benefit of reducing the average $MF/point by picking the right weeks.

They will also do equity trade ins to get new inventory. That may be the primary approach so that they sell something at the same time they acquire new inventory.

I think this may happen, but not in the short term. Marriott has plenty of inventory to sell points for now. At some point, they will need to acquire some inventory, but they do not want to add the ongoing cost of Maintenance on properties until they have sold enough points to justify the cost. I think they are at least 1 year away from that, so I think we are ok. In a year....maybe. Lets look at the Economic dynamics again since now it seems that we may be heading into a double dip housing recession and it does not bode well that last months jobs numbers had the country losing jobs again after a couple of months of gaining jobs (although most of this was due to the Census).

 

[bw3]

unsold inventory

The most recent estimate I was given from a Marriott insider was that the unsold inventory in the newer resorts was roughly $2 billion (at full prices). I think it will be a while before they need ROFR.

 

[josh1231]

Just curious to those who believe Marriott will not exercise ROFR. What do you think Marriott will do when they work down their current inventory?

1) They will build new resorts? Talk about Capital intensity

2) They won't ever run out of inventory? They were so over built that it will be 10 years before they work it down? Or, Loan/maintenance fee defaults will be sufficient to replenish inventory?

3) They won't do anything. They will just sell points that aren't tied to inventory?

4) They will stop selling points?

5) They will just sell exchange memberships and reverse their original decision and become a fee for service company?

6) They will just broker resale points and weeks?

I believe the most logical conclusion will be that they will determine that exercising ROFR is the cheapest way to add inventory to the Trust. And, it will have the added benefit of reducing the average $MF/point by picking the right weeks.

They will also do equity trade ins to get new inventory. That may be the primary approach so that they sell something at the same time they acquire new inventory.

I don't think anyone ever said they would never exercise ROFR, they just aren't going to do it anytime in the near future. If they sell all 42 Million points they have in the trust at this time, yes, they might start then.

The title of the post was "I believe Marriott will aggressively acquire weeks into Points Trust", not "I believe Marriott will aggressively acquire weeks into Points Trust a year or two from now".

In the short term, which was how your title was written, I don't believe they will exercise ROFR, with the rare exception.

In the long-term, who knows what will happen. The one thing that is certain about most timeshare's is their steady depreciation. There's simply no need to purchase today, something that will be worth less a year from now.

 

[BocaBum99]

I don't think anyone ever said they would never exercise ROFR, they just aren't going to do it anytime in the near future. If they sell all 42 Million points they have in the trust at this time, yes, they might start then.

The title of the post was "I believe Marriott will aggressively acquire weeks into Points Trust", not "I believe Marriott will aggressively acquire weeks into Points Trust a year or two from now".

In the short term, which was how your title was written, I don't believe they will exercise ROFR, with the rare exception.

In the long-term, who knows what will happen. The one thing that is certain about most timeshare's is their steady depreciation. There's simply no need to purchase today, something that will be worth less a year from now.

This is a direct quote from my original post:

So, given that, I will predict that Marriott will indeed NOT allow new exchange relationships to enroll, rather they will acquire units via ROFR and via equity trade ins into the program. In this way, they can acquire new inventory at the same time they are moving current points inventory.

The points program will only be as strong as the inventory in the Trust. This will occur only when the current inventory levels at Marriott are worked down sufficiently. But, when that happens, I expect Marriott to be buying. But, they will be buying weeks, not points.

If Marriott does have $2B worth of inventory left to sell, that is 3 years of inventory when selling at the same rate as 1Q10 of $173M.

That acquisition program could start as soon as 2 years from now.

 

[windje2000]

Overall however, they have over 42MM points in the trust. That is going to take a long time for them to sell in this economy.

If Marriott does have $2B worth of inventory left to sell, that is 3 years of inventory when selling at the same rate as 1Q10 of $173M.

That acquisition program could start as soon as 2 years from now.

I can't reconcile 42 Million points in the Trust( = $420 Million @ $10/pt) and $2 Billion of unsold inventory.


What am I missing?