In The Long Run - Maintenance Fees on Points vs. Deeded Weeks

[alhanna]

We recently went to a presentation on MVC. We heard an approach that was different than the previous presentations.

The basic premise was that it would be cheaper in the long run to be owning points vs. deeded weeks due to the maintenance fees. The maintenance fees on points generally increases at a lower percent than deeded weeks, especially if your deeded weeks are in areas impacted by hurricanes. Added up over time, the difference can be sizable.

We did not make a purchase but in looking at my own properties and points over the last few years, there seems to be some truth to that premise. Does that seem accurate? What other factors should be considered?

 

[Steve Fatula]

Either can be less. On points, it's sort of the average of all the resorts (yes, not precisely). So, if you have a resort with higher increases due to geography, laws, etc., then, points will go up less. Or the opposite, some resorts seem to see lower than average mf increases, so, they would likely always be cheaper.

What he told you was from a sales mindset, but is not reality. Steven Ting has a historical mf spreadsheet, part of his signature line. There, you will find properties with lower MF increases than points. And weeks are generally cheaper to purchase too, esp resale weeks (by far). My dsv2 and Plaua Andaluza weeks are both cheaper (per point) than pure points. Another way to look at it is purchase cost + mf over some period, say 10 years. Even with a higher mf increase of a week, I doubt it would exceed points total cost.

At the rates points mf are increases, it could be $1 ea in 10 years, hope not!

 

[bazzap]

Weeks are cheaper to buy (generally much cheaper) than the points equivalent for those weeks.
Weeks MFs are cheaper (with the exception of just a small number of resorts) than the points MFs equivalents for those weeks.
Hurricane damage or other need for Special Assessments can skew this at some resorts in some years, but these cases can be viewed as exceptions to the norm.
Overall, this sales approach is very misleading.

 

[Quilter]

We recently went to a presentation on MVC. We heard an approach that was different than the previous presentations.

The basic premise was that it would be cheaper in the long run to be owning points vs. deeded weeks due to the maintenance fees. The maintenance fees on points generally increases at a lower percent than deeded weeks, especially if your deeded weeks are in areas impacted by hurricanes. Added up over time, the difference can be sizable.

We did not make a purchase but in looking at my own properties and points over the last few years, there seems to be some truth to that premise. Does that seem accurate? What other factors should be considered?

Where was the presentation?

It sounds like the salesperson is trying to spin a tale by using a recent increase in m/f's some (only one that I know of) resorts. At Ocean Pointe we had a significant increase.

While staying at Manor Club I attended an owner forum and asked about possible major increase in the m/f's at that resort. The GM responded that the costs of staffing will eventually need to be addressed as the salaries weren't highly competitive with others in the area.

 

[Dean]

We recently went to a presentation on MVC. We heard an approach that was different than the previous presentations.

The basic premise was that it would be cheaper in the long run to be owning points vs. deeded weeks due to the maintenance fees. The maintenance fees on points generally increases at a lower percent than deeded weeks, especially if your deeded weeks are in areas impacted by hurricanes. Added up over time, the difference can be sizable.

We did not make a purchase but in looking at my own properties and points over the last few years, there seems to be some truth to that premise. Does that seem accurate? What other factors should be considered?

I'm probably being redundant but here's how I see it. Owners pay for their respective resorts. If you own a week, you pay those fees and if there's a special assessment, you pay that. If you own in the trust, you pay for the fees as averaged over the resorts/weeks in the trust. And if there's a SA, you pay that too but it's averaged over all the trust owners. I think in general it seems the resorts that are heavy in the trust tend to be more expensive resorts thus I would expect them to have higher fees even if one owned comparable week there. So looking at it black and white weeks vs trust, I suspect the opposite is true, that for many resorts compared to the trust, the spread will increase not decrease. If you own a high fee resort or low points resort, what you were told might be true in some cases particularly depending how you look at the points portion.

There are other factors and variations though. The real issue is how you use the points. One way to look at points vs weeks is if you'll use the week. Take Waiohai where current fees are $2130 & an IV gives you 4225 DC points but my last stay there would have been 4850 points thus the skim for that stay ws 625 pts. At 60¢ pp that would have been $2910 on the points for that stay. If one took the points off the week it's more in the 50¢ pp range looking at the fees pp. I own this exact week EOY and I did this exact stay. Looking across my portfolio I'm convinced their statements are false in our situation. Looking at our costs from a points perspective our fees pp are under 40¢ overall and a little over 40¢ if I only look at the weeks I actually take points on. Those with quarter shares are quite a bit lower than mine.

On a side note, I own a different timeshare system in a trust format and that has been VERY favorable for me. I owned weeks and converted to points with a retail purchase not unlike MVC though it resquired a relatively small purchase and thus my costs for qualified points was extremely low. On top of that, the weeks I converted were all at one resort and within a year or so after my conversion, they announced a SA to upgrade the units. It was roughly $1000 for each studio and each 1BR. I owned a mix of studios, 1 BR, 2 BR L/O and a 3 BR double L/O and all counted as the smaller portions for the SA. My SA would have been like $10K but in the trust I only paid under $100 even though those points in the trust were still based at that resort. That system's fees are also much cheaper for me than owning weeks due, in part, to their setup of a base fee and pp amount above that so I get an economy of scale.

 

[Superchief]

In theory, the average increase in MF's for DC trust points should be the same as the overall avg % increase for the resorts. The trust is supposed to pay their fair share of the MF's for the resorts so the increases at the resorts should apply to the trust ownership. However, my experience has been that my 6 resort MF's are increasing faster than my point increases. The 3 Florida resorts all incurred increases over 6% . This leads me to believe that the trust isn't paying their fair share of the costs at many resorts, especially since the point program is a key driver of front desk, HR, housekeeping, and owner services increases. I've also noticed impact on the activity expenses, likely due to the GM's trying to improve their resort satisfaction ratings at the expense of owners.

 

[GregT]

We recently went to a presentation on MVC. We heard an approach that was different than the previous presentations.

The basic premise was that it would be cheaper in the long run to be owning points vs. deeded weeks due to the maintenance fees. The maintenance fees on points generally increases at a lower percent than deeded weeks, especially if your deeded weeks are in areas impacted by hurricanes. Added up over time, the difference can be sizable.

We did not make a purchase but in looking at my own properties and points over the last few years, there seems to be some truth to that premise. Does that seem accurate? What other factors should be considered?

I do not believe this will be the case. The MFs on points are based on the MFs of the underlying weeks in the Trust, and then there is an additional percentage added for the administrative costs of the Trust. So the MFs on the points will always have as its foundation, the MFs of the weeks in the Trust.

I suppose it is possible to construct isolated situations where the MF on a week is higher than the MF on the points to reserve that week. An easy example would be a Silver rated week in Palm Desert, which requires only 1,775 points to reserve a 2BR, which is $1,150 in Trust Point MFs. That's less than the full MF for the Silver rated week -- but a function of the MFs being so high for a low demand week.

I have difficulty constructing a scenario where Platinum weeks are better served by Trust Points than owning the week. Marriott Frenchman's Cove comes to mind, as it is only 4,125 points, which is $2,600 in Trust Point MFs -- not too different from owning the week. But that week is an oddity because Marriott ascribed really low points to a high-value week.

Interesting sales approach. It will be worth continuing to monitor however.

Best,

Greg

 

[davidvel]

This is an age old fraudulent sales practice used by Marriott: hide all the pertinent facts. The salesperson of course doesn't mention the acquisition cost, focusing only on a small part of the cost equation (and even mostly misrepresenting even that. )

 

[bbodb1]

Who is gonna make it?
We'll find out....

 

[JIMinNC]

The only thing the sales guy said that I think is basically true sometimes is that the Trust fees are less impacted by special assessments and higher insurance costs in hurricane-prone areas like Florida, the Caribbean (not Aruba), and South Carolina. Those increases are averaged over the entire Trust whereas if you own one of those resorts, you get hit directly. I think that may be a contributor to the increases that @Superchief mentioned above for the FL resorts.

 

[bazzap]

The only thing the sales guy said that I think is basically true sometimes is that the Trust fees are less impacted by special assessments and higher insurance costs in hurricane-prone areas like Florida, the Caribbean (not Aruba), and South Carolina. Those increases are averaged over the entire Trust whereas if you own one of those resorts, you get hit directly. I think that may be a contributor to the increases that @Superchief mentioned above for the FL resorts.

If there have been no special assessments in Aruba, there have also been none in St Kitts, so for the Caribbean that only leaves St Thomas.

 

[sjsharkie]

Agree with GregT above. This premise by the salesperson is absolutely impossible unless...

... you are scouring the point values and only going to resorts that are "bargain" weeks vs. the underlying mf for that particular resort. And that just means that the trust probably wants to incentivize people taking those weeks since they base the point chart on supply/demand.

In addition, the trust has to manage point system bad debt, unused nights, profit margin, admin overhead, etc. This is on top of the bad debt they are paying for in the maintenance fees themselves.

So, if you are only going during mud/off season for all of your vacations, I find it hard to believe that you would be able to come out ahead on a dollar to dollar basis owning trust points.

-ryan

 

[ocdb8r]

I do not believe this will be the case. The MFs on points are based on the MFs of the underlying weeks in the Trust, and then there is an additional percentage added for the administrative costs of the Trust. So the MFs on the points will always have as its foundation, the MFs of the weeks in the Trust.

I suppose it is possible to construct isolated situations where the MF on a week is higher than the MF on the points to reserve that week.

This is the correct response - like-for-like ownership, the trust will always be higher in maintenance fees due to the additional administrative costs lumped on for administration of the trust (which, by the way, MVC controls completely...so you can imagine how those administrative fees will progress over time).

As Greg points out, it is of course possible to construct certain situations where the MF cost for the trust points is/was lower than the MF cost for owning the actual week, these include:

1) specific unbudgeted for assessments, which will prop up the costs of an individual week for a single year;
2) where you plan to only vacation in silver/bronze season - long-term your maintenance fees may in fact be lower in the trust. However, the inverse is also true here - long-term your maintenance fees are almost certain to be higher if you vacation primarily in Gold/Platinum seasons.

 

[capjak]

Greg T has it basically correct (not sure how the point only resorts were determined by MVC). It really comes down to how you intend to use "your points vs deed". If you are planning trips to go to Maui every year in a 2 bedroom, I think you may be better off with a deeded week vs Points in regards to MFs due to the high points required to stay there.

 

[drlee]

Yes. In Hawaii, if you compare a deeded week to what it would cost in points, you'll find the weeks' maintenance fee much less than the points. For example, a 2 bedroom ocean front can be had for 5850 points (in the cheapest season) or 7000+ points for valentines's week. The points fee for 5850=$3510, for 7000=$4200. The fee for the week (whenever you use it is $2590.

 

[Steve Fatula]

Keeping in mind of course that weeks owners love to compare weeks to weeks of points. That's not necessarily how they are used though. We have not stayed a week in quite a long time. This trip, where are here 12 nights. That would take 2 weeks to accomplish, and be more expensive than points + weeks. The cost per night for the 1br portion of this resort (using 2/3 of the mf) is $142. The cost per night for those 5 add on nights with pure points is $85. And of course, depending on ownership level and 30 or 60 day discounts, the math changes. When we go to Branson, a 2br there on weeks in platinum season is $1237 (2019) mf, but we have always paid $974 mf (2019) with pure points due to this discount. Of course, that's for a week which we never stay anyway, but the math can be better. We find that adding 5 cheap weekdays to a week vacation giving 12 days to be an excellent value. Or, using points at high airfare cities can give you a cheaper flight than week checkin days.

Weeks and points have different uses. Equating a week to a week of points is simply not a good comparison as points can be used many other ways. But still, that flexibility is going to cost you upfront, so, points will still be more expensive considering all costs. Just saying that mf wise, points can be cheaper. This is pure points of course. When using a week as points, some resorts have very low mf costs per point. Mine isn't the lowest by any means, but, it's 47 cents/point (2020). The resort is 2br only, and we rarely do 2br, can't lock off, so, much better value using it as points. This far, in 4 years of using points, we have never paid the full point cost, we've always been able to get in everywhere we've gone at the 30% discount. So, that 47 cents per point becomes cheaper. So, it all depends.

You can exchange weeks too of course, and on exchanges, you can get awesome value mf wise. So, that changes things too. For these reasons and more, we like using both.

 

[Dean]

Keeping in mind of course that weeks owners love to compare weeks to weeks of points. That's not necessarily how they are used though. We have not stayed a week in quite a long time. This trip, where are here 12 nights. That would take 2 weeks to accomplish, and be more expensive than points + weeks. The cost per night for the 1br portion of this resort (using 2/3 of the mf) is $142. The cost per night for those 5 add on nights with pure points is $85. And of course, depending on ownership level and 30 or 60 day discounts, the math changes. When we go to Branson, a 2br there on weeks in platinum season is $1237 (2019) mf, but we have always paid $974 mf (2019) with pure points due to this discount. Of course, that's for a week which we never stay anyway, but the math can be better. We find that adding 5 cheap weekdays to a week vacation giving 12 days to be an excellent value. Or, using points at high airfare cities can give you a cheaper flight than week checkin days.

Weeks and points have different uses. Equating a week to a week of points is simply not a good comparison as points can be used many other ways. But still, that flexibility is going to cost you upfront, so, points will still be more expensive considering all costs. Just saying that mf wise, points can be cheaper. This is pure points of course. When using a week as points, some resorts have very low mf costs per point. Mine isn't the lowest by any means, but, it's 47 cents/point (2020). The resort is 2br only, and we rarely do 2br, can't lock off, so, much better value using it as points. This far, in 4 years of using points, we have never paid the full point cost, we've always been able to get in everywhere we've gone at the 30% discount. So, that 47 cents per point becomes cheaper. So, it all depends.

You can exchange weeks too of course, and on exchanges, you can get awesome value mf wise. So, that changes things too. For these reasons and more, we like using both.

I don't think it's necessarily weeks vs points but weeks vs enrolled vs points. In some cases one might come out ahead using points used for lower times like weekdays or worse off like mostly weekends. They do have different uses and having a variety of options allows one to maximize the best options. I think the basic issue in this thread was owning weeks vs points but how you use them is also a slightly different but valid consideration. We've had plenty of threads about how to get DC points as cheap or cheaper than trust points usually with lower yearly dues which is actually the larger long term cost and the larger long term risk/commitment. The flexibility of having multiple options does come with a cost in that even in the best of times it often means additional volume. That's good for me and likely for you but not for someone just getting started or working on a small scale. In a way it's no different than the single week vs multiple weeks reserving at 13 months out discussion. But I do agree that owning trust points will tend to be more expensive in most situations vs the DC points. Lots of nuances here, fun to discuss and important to learn about if new or thinking about MVC.

 

[Steve Fatula]

Well, it was about weeks mf vs pure points mf per the title and my answer is it depends. Weeks mf is not always cheaper than points mf. You have to compare based on some proposed usage. And the math Is not always as simple as some make it sound. I provided an example (current trip @ dsv2) where mf is cheaper even via pure points. But they are two totally different products. I own and use both, but in totally different ways. I personally don't think it reasonable to compare mf. What matters more is the use case(es). After all, if you wanted cheap only, stay at cheapest $30 motel. (They still exist).

 

[JIMinNC]

If there have been no special assessments in Aruba, there have also been none in St Kitts, so for the Caribbean that only leaves St Thomas.

But, St Kitts is much more in the prime hurricane zone than is Aruba, so while maybe there haven’t been assessments, it only takes one big storm. The good news is the worst damaging winds in most storms are confined to a small area around the eye, so any small island like St Kitts has a low probability of a direct hit.

 

[bazzap]

But, St Kitts is much more in the prime hurricane zone than is Aruba, so while maybe there haven’t been assessments, it only takes one big storm. The good news is the worst damaging winds in most storms are confined to a small area around the eye, so any small island like St Kitts has a low probability of a direct hit.

Yes St Kitts is in the hurricane zone so there is always a risk which should not be ignored
Compared to some other MVC locations though, for me anyway, I would consider this a very low risk.
“In the post-Columbian history of St Kitts and Nevis there have been 80 recorded hurricane events which have affected these islands. Not all of these were direct hits by hurricane-force winds. In many cases the effects were by way of heavy seas and torrential rain. The most recent of these events were hurricanes Hugo (1989), Luis (1995) and Marilyn (1995). None of these three events produced more than minimum hurricane winds.”