It's Maintenance Fee Month. Good old January. How is everyone coping? Are timeshare maintenance fees still worth the value vs hotel or other forms of

[pedro47]

Current requirement is $100,000 income

ELIGIBILITY​

Annual income of $100,000 or more is required. Guest must meet eligibility requirements and be a resident of the District of Columbia or one of the 50 states within the United States. Residents of Delaware, Hawai'i, Maine and Missouri are not eligible for this offer. Guest may not have attended a sales presentation at any Marriott Vacation Club® property in the last 12 months. Employees of Sponsor and its affiliated companies, and their immediate families, are not eligible for this offer.

Last earning call had the net worth number (self reported):

"If the consumer -- because you are talking about generally a larger dollar purchase, whether you finance it or not, right, $25,000, $30,000. So how the consumer is feeling about their lot and where things are going, it's going to weigh on people over the longer term. So that's where the macro comes into play, consumer confidence. But yes, given our owners typically have, as you said, $1.5 million self-reported net worth [they] are probably invested in the stock market. Any given week, depending on what the market is doing and things like that, that could impact somebody's at the table decision. Stock market is down or stock market’s up, right? “I feel good about where I'm at.""

My only point being that the target customer is not the average middle class family. It is more like telling people in my neighborhood who spent $150-$200k on a Range Rover to slum it for 5 years in a Lexus GX for $75k and buy 6,000 points for $75k. If that person is also a Marriott person who has Bonvoy status and gets a few hundred thousand in Bonvoy points and status for their spouse with it that helps sweeten the deal.

So retirement income & social security income does not qualify?LOL

 

[wuv pooh]

So retirement income & social security income does not qualify?LOL

I don't get your point. Why would income not count as income? If you mean that not everyone chooses to report a $100k AGI even though they have the assets to do so, then I am sure they do not care. They don't want to give a sales incentive to someone who cannot purchase, which is why they have the requirement and also why spouses need to attend together in most instances. For ex. my Aunt visited us on vacation and I was going to have her take a tour, but her income was only $30k SS with no assets, so we did not book the tour. They assume people will self police if they know the requirement. I would consider it stealing to take $300 if I was not qualified, but I am sure there are people who have no problem with it.

 

[JIMinNC]

So retirement income & social security income does not qualify?LOL

Why would it not? It’s income just the same as W-2 wages. It would count toward the $100k qualification. When they say income they mean all sources.

My wife and I don’t earn W-2 income any more, but the IRS certainly considers our dividends, capital gains, and any IRA distributions as income on April 15. Medicare also considers it when they are deciding how much extra we’re going to have to fork out above the standard rate for our premiums. I’m confident MVC considers it income as well.

 

[bazzap]

Correct. No enforcement and any acknowledgments to the terms (initial here, sign there) is all on the honor system. They don't verify income income to attend a presentation. I am sure they do when you buy, but at that point they don't care.

Perhaps for new owners and / or those resident in the US they may be more rigorous?
Having retired now though, I wouldn’t qualify on either the age or income criteria but it didn’t seem to cause them any problem last year with us attending another sales presentation and buying an additional week.
I am not sure how they would even confirm my income, not without running a credit reference check on me anyway and they didn’t do that as I get a monthly report of any checks made.

 

[Dean]

So retirement income & social security income does not qualify?LOL

I took this as sarcasm related to the statement that those of a certain age were not technically allowed to do a sales presentation.

 

[timsi]

The $1.5 Million net worth refers to Marriott Vacations Club owners specifically, per the 2019 Investor Day.

View attachment 86872

It may be hard to read the fine print, but here is an enlargement:

View attachment 86874

Marriott mentioned the $1.5 million net worth as "self-reported," suggesting a lack of confidence in the accuracy of this figure. Moreover, the elevated delinquency rates on their loans, ranging from 8-10%, create a disconnect with a clientele presumed to be affluent and possessing a high net worth.

 

[JIMinNC]

Marriott mentioned the $1.5 million net worth as "self-reported," suggesting a lack of confidence in the accuracy of this figure. Moreover, the elevated delinquency rates on their loans, ranging from 8-10%, create a disconnect with a clientele presumed to be affluent and possessing a high net worth.

How else would Marriott get that info other than self reported through surveys? Not everyone finances, so just looking at net worth info provided for credit approval by those who finance would not be representative of the total owner base.

Remember the $1.5 million net worth is the MEDIAN. Half of their owners have net worth’s above that figure and half have net worth’s below. Perhaps the loan losses are concentrated toward the lower end of the range.

More importantly, $100k in annual income and $1.5 million in net worth isn’t all THAT affluent nowadays. A two income household with two $50k earners, but a big mortgage, would top that income level. Even both of our kids already make over $100k each, and they are both single and still in their 20s. Someone who is a homeowner and who was diligent in contributing to their employer sponsored 401k plans over the last decade or two could have easily accumulated over $1 million in net worth given market performance and real estate appreciation.

Being “a millionaire” ain’t what it used to be.

 

[timsi]

How else would Marriott get that info other than self reported through surveys? Not everyone finances, so just looking at net worth info provided for credit approval by those who finance would not be representative of the total owner base.

Remember the $1.5 million net worth is the MEDIAN. Half of their owners have net worth’s above that figure and half have net worth’s below. Perhaps the loan losses are concentrated toward the lower end of the range.

More importantly, $100k in annual income and $1.5 million in net worth isn’t all THAT affluent nowadays. A two income household with two $50k earners, but a big mortgage, would top that income level. Even both of our kids already make over $100k each, and they are both single and still in their 20s. Someone who is a homeowner and who was diligent in contributing to their employer sponsored 401k plans over the last decade or two could have easily accumulated over $1 million in net worth given market performance and real estate appreciation.

Being “a millionaire” ain’t what it used to be.

You're absolutely correct; the dynamics of $1.5 million and a six-figure income have shifted. But for the same reasons, servicing a loan of 25-30k shouldn't be what it used to be and overly burdensome. 8-10% default rate seems high, especially considering the concentration within the first four years, as highlighted by Marriott. Who knows, maybe 1/3 of new owners with a loan could be in default (a bit of a speculation, but not entirely). This would not be very consistent on surface with a financial profile of individuals with a $100k income and a net worth of $1.5 million.

Moreover, it's worth noting that these numbers likely pertain specifically to new owners with loans, as I don’t think they have a way of knowing about those who bought resale or just gave them a cheque.

 

[okwiater]

Maybe the $1.5MM in net worth includes the retail prices of the MVC ownerships they bought?

 

[timsi]

Maybe the $1.5MM in net worth includes the retail prices of the MVC ownerships they bought?

LOL

Probably also taking into account the market appreciation of those VOIs.

 

[billymach4]

LOL

Probably also taking into account the market appreciation of those VOIs.

Yeah. The artificial inflation of those points by way of price increases! WooHoo! We are all millionaires and we didn't know it! We just have to dig for the gold!

 

[DanCali]

The $1.5 Million net worth refers to Marriott Vacations Club owners specifically, per the 2019 Investor Day.

View attachment 86872

It may be hard to read the fine print, but here is an enlargement:

View attachment 86874

But note that in the 2021 investor presentation that footnote was taken out. Recycling a slide and intentionally taking that footnote out makes me think their compliance department really didn't like it. They may have asked the marketing people for the underlying data and it may not have been what it was represented to be two years prior. So I still think that this is somehow just a vague "addressable market" slide which includes estimates or wishful thinking of a much more affluent pool of people, such as second/vacation home owners. The 2021 slide has no footnote and no sources at all.

https://ir.marriottvacationsworldwide.com/static-files/68885cc1-a518-4da9-b799-84a5e3c4784b

"If the consumer -- because you are talking about generally a larger dollar purchase, whether you finance it or not, right, $25,000, $30,000. So how the consumer is feeling about their lot and where things are going, it's going to weigh on people over the longer term. So that's where the macro comes into play, consumer confidence. But yes, given our owners typically have, as you said, $1.5 million self-reported net worth [they] are probably invested in the stock market. Any given week, depending on what the market is doing and things like that, that could impact somebody's at the table decision. Stock market is down or stock market’s up, right? “I feel good about where I'm at.""

If that number is incorrect (maybe average rather than median, or maybe it's a "market opportunity") the question was answered vaguely enough so as to leave plausible deniability. He's literally quoting the person asking the question as the source and doesn't confirm or deny.

Also "net worth" can be highly illiquid. For example, a mortgage free house, or a 401K account. We don't know anything about these alleged self reported numbers.

 

[JIMinNC]

But note that in the 2021 investor presentation that footnote was taken out. Recycling a slide and intentionally taking that footnote out makes me think their compliance department really didn't like it. So this still makes me think that this is somehow just a vague "addressable market" slide which includes a much more affluent pool of people, such as second home owners. The 2021 slide has no footnote and no sources at all.

https://ir.marriottvacationsworldwide.com/static-files/68885cc1-a518-4da9-b799-84a5e3c4784b

View attachment 86883

No idea why they took out the note two years later, but it's obviously the same data, even the same slide, just no note. Maybe by 2021, since they were farther into merging MVC, Westin Vacation Club, Sheraton Vacation Club, and Hyatt they wanted to deemphasize that the data was specific to MVC - especially if they felt the Westin, Sheraton, and Hyatt averages were similar but they just didn't have the same comparable data. Just theorizing.

But as I was commenting on with @timsi above, $1.5 million in net worth sounds like a lot, but today, it's not what it used to be. It's almost certainly above average, but someone with $1.5 million of net worth probably lives a lifestyle closer to an average middle class person than the lifestyle of the truly affluent. So while the MVC base may be more affluent than average, it's all relative.

 

[VacationForever]

Maybe the $1.5MM in net worth includes the retail prices of the MVC ownerships they bought?

I was thinking the net worth drops after a MVC purchase.

 

[bnoble]

Someone in their 50s with a net worth of 1.5M is in the top 20% but not the top 15%. It’s not a small number of people.

Net Worth Percentile Calculator by Age - Personal Finance Data

Rank your total net worth to specific age ranges to see your net worth percentile rank calculated. Find out where you stand or where you project yourself to be in the future. Use the percentiles to compare your net-worth to US households using data from 2022. To use this calculator, enter the...

personalfinancedata.com

 

[daviator]

Correct. No enforcement and any acknowledgments to the terms (initial here, sign there) is all on the honor system. They don't verify income income to attend a presentation. I am sure they do when you buy, but at that point they don't care.

They don’t verify income or anything else when you buy, unless you are taking out a loan, in which case I imagine there is a standard credit application. Their loan terms are lousy and nobody should ever buy a timeshare on credit, especially at those terms.

 

[daviator]

But as I was commenting on with @timsi above, $1.5 million in net worth sounds like a lot, but today, it's not what it used to be. It's almost certainly above average, but someone with $1.5 million of net worth probably lives a lifestyle closer to an average middle class person than the lifestyle of the truly affluent. So while the MVC base may be more affluent than average, it's all relative.

Agreed. As a Californian, for a number of years now I’ve been able to joke, “I always wanted to live in a million dollar home. I just never thought it would be THIS one.”

A million bucks definitely ain’t what it used to be.

 

[pedro47]

I took this as sarcasm related to the statement that those of a certain age were not technically allowed to do a sales presentation.

It was totally sarcasm on my part. Some times we needs to poke holes into our conversation. LOL

 

[pedro47]

I believe so, but I also believe that they have a maximum age for attending a sales presentation of 60 (or was it 65?)
Anyway, they don’t enforce the age requirement so probably not the income one either?

LOL, the maximum age for attending a sales presentation of 60 (or was it 65?)

 

[timsi]

No idea why they took out the note two years later, but it's obviously the same data, even the same slide, just no note. Maybe by 2021, since they were farther into merging MVC, Westin Vacation Club, Sheraton Vacation Club, and Hyatt they wanted to deemphasize that the data was specific to MVC - especially if they felt the Westin, Sheraton, and Hyatt averages were similar but they just didn't have the same comparable data. Just theorizing.

But as I was commenting on with @timsi above, $1.5 million in net worth sounds like a lot, but today, it's not what it used to be. It's almost certainly above average, but someone with $1.5 million of net worth probably lives a lifestyle closer to an average middle class person than the lifestyle of the truly affluent. So while the MVC base may be more affluent than average, it's all relative.

As some numbers appear to remain unchanged over the years, I view the reported $1.5 million net worth and the 85% owner satisfaction rate with a degree of skepticism. As far as I know, there are no public details on how they gathered this data. There seems to be no correlation between these numbers and factors such as inflation, the fluctuation of the value of different asset classes, inventory or IT issues.

 

[Retired2025 aka AlmostRetired]

When I went through the Investors PDF, a phrase from Columbo comes to mind ( I was not a big fan of the Columbo series) "Just one more thing." "There's something that bothers me."
I understand the product, the target market and the market opportunity. Can you explain the value preposition of the product, to the target market that allows you to capture the market opportunity? After a long silence, we break for commercial.

 

[Superchief]

They don’t verify income or anything else when you buy, unless you are taking out a loan, in which case I imagine there is a standard credit application. Their loan terms are lousy and nobody should ever buy a timeshare on credit, especially at those terms.

Their loan default rate is likely high because fiscally responsible people would never finance the purchase at MVC's absurd rates (unless they initially finance to get the incentive and then pay it off). High inflation is definitely a factor. Most of us didn't expect food, energy, insurance, taxes, and interest rates to go up over 25% in the past two years. Discretionary income has definitely declined and the timeshare is likely one of the first things to go.

I don't really care about the cost of a timeshare vs. hotels or rentals. My concern is whether I can continue to afford to keep it and also pay the increasing food and travel costs to use it. There is no excuse for MF's to increase more than inflation and resort management (including BOD's) need to show more fiscal responsibility.

 

[jp10558]

But as I was commenting on with @timsi above, $1.5 million in net worth sounds like a lot, but today, it's not what it used to be. It's almost certainly above average, but someone with $1.5 million of net worth probably lives a lifestyle closer to an average middle class person than the lifestyle of the truly affluent. So while the MVC base may be more affluent than average, it's all relative.

I sort of seriously doubt timeshares would be that interesting to the truly affluent. The sales pitch was always around saving money, or at certain incomes hassle with maintaining a vacation home. If you're 100M+ you probably aren't that bound by hassles as you can just hire someone at the $100k a year level to deal with whatever hassles you might have, plus service companies probably exist to maintain vacation homes for less than paying someone to be a permanent live in manager.

Plus I find at different income levels, there's different things that are worth trying to be frugal with. If you're really low on the income scale, you'll pay attention to your patreon subs at $5/month, but at IDK $75k it's likely not worth worrying about things until they hit IDK, $200 a month? Now, I'm saying cumulatively, so if you're paying patreon for like 50 podcasts at $5/month, yea that's probably worth looking at, but if you've got 5 and one you don't listen to so much, I wouldn't be running to my app to unsubscribe or making plans to review pateron monthly or anything. I'm not thinking it's worth effort to gasbuddy for the absolute cheapest gas to save 10 cents a gallon. etc. If you're at the truly affluent level, $70K a year in vacations just paying cash probably is "in the noise" in the same way.

So the pitch for timeshares is kind of the middle class to upper middle class IMHO, depending on the timeshare. People who would like a nice vacation each year or more often, but don't really have the desire or funds to drop $5k per week just for a place to stay. Playing the game with timeshares (many, probably not Marriott) can drop that by 50% easily on MFs, though you do need to consider the purchase price. Like they said above, $30k is a car purchase though, not really hard to finance for many middle class people and up.

 

[timsi]

When I went through the Investors PDF, a phrase from Columbo comes to mind ( I was not a big fan of the Columbo series) "Just one more thing." "There's something that bothers me."
I understand the product, the target market and the market opportunity. Can you explain the value preposition of the product, to the target market that allows you to capture the market opportunity? After a long silence, we break for commercial.


View attachment 86896

It's easy: referrals! If every owner refers two of their friends to buy from Marriott, and those two friends each refer two more friends, and so on, we can easily reach 35 million people.

On a more serious note, Marriott does not even have a product for 35 million people, not even close, as they are only adding new resorts at a snail's pace. They are content with acquiring inventory virtually for free and recycling it in an endless loop. The delinquency rate is 2-4% for each of the 125 or so resorts, allowing them to sell without building anything new, as they always have inventory worth the equivalent of 3-4 new resorts each year. Of course, this does not actually increase the number of owners; new owners simply replace those who have left the program.

 

[SueDonJ]

Oh yes. I agree. We need them. More importantly, the TS companies need them. I am not disparaging them. I am simply stating reality. Yes, we need them. That is why I cringe every time the crowd here tells basically anyone who bought retail to "Rescind! Rescind!" Every time someone rescinds and the developer has any inkling that is due to "Well, I'll just buy resale.", there is at least one employee at that developer saying "We really have to do something to de-value this resale market. It is hurting us."

So, people who own resale shouldn't be so happy when others rescind. Which is an extension of your initial point.

Poor choice and impulse? The only way that is not true is when someone values convenience / simplicity over cost. I bought mine resale, but still, #1 reason I bought them is convenience / simplicity. Data? It is in the #s, in the $s. People's situations differ but the #s don't change. Priorities do.

"As with all financial analysis you can choose your basis." ... Here is the democratization on the internet. Everyone's opinion and approach is right. There are CORRECT ways to do this stuff and sloppy ways. Once again, it is not "opportunity cost". And, the risks in the assumptions are a distant secondary consideration to thinking about it correctly in the first place.

For an attitude that you claim is not meant to disparage direct purchasers, I have to say I feel as though you've used a whole lot of words that lead me to feel disparaged. But it's certainly not anything that those of us who had LEGITIMATE reasons to purchase direct haven't seen before.

It may not be true that there is as much legitimacy to be found in the current timeshare market, what with the proliferation of a widespread and easily-accessible external resale market online, but there was a time that it could and did make sense to buy direct. At the time Don and I purchased it was me that did all the legwork. I learned about the reputation surrounding timeshares, the beginning of the online resale market, the albatross of annual MF's increases, the game of exchanging via II and even the start of the online rentals-by-owners market - and I took the time to learn that the Marriott brand was my preference.

I knew enough about all of it to do my due diligence without being "sloppy." I knew that I wanted annual stays at SurfWatch in a 3BR non-lockoff unit (a very rare animal in the Marriott portfolio) during either the Memorial Day or Labor Day high-demand/holiday periods in units with specific view types. At the time the resort was still under construction with external resales virtually non-existent. I'd learned enough to know that no exchange company would/could guarantee my specific wants, plus I wanted no part of the risks - minimal as they may be - with renting from owners/strangers.

So buying direct made sense for me, and we followed up our original purchase of SurfWatch with Barony Beach. To this day I haven't and wouldn't EVER claim that anyone who reached a different purchase decision than mine has made a "poor choice" or one that's somehow not "CORRECT." That would be rude, and uncouth.

Times have changed, the timeshare market has changed with them. The single piece of advice I would give to people considering buying timeshares is the same today as it was back then: do your homework and learn what you need to know in order to get the vacations that you want. I also only have one piece of advice for the people who buy spur-of-the-moment and ask questions that lead me to think that they didn't do their homework: rescind while you can so you can give yourself time to learn what you need to know and then buy what you want, and ignore the people who make themselves feel superior to you by disparaging you.

*Like Jim we eventually bought a home on Hilton Head so our stays at SurfWatch and Barony are behind us. But we take full advantage of the owners' Day Pass usage that's available at both, and thankfully Marriott introduced the Destination Club/Abound at exactly the right moment for us to learn it and use it to its full advantage so that II can be in the rearview mirror. We are STILL very happy with our purchase decisions all those years ago.