Marriott DC Points (Resale Restrictions?)

[Bodie]

As I return to consideration of buying DC points on the secondary market to add to my Marriott portfolio and go from Executive to Presidential, I just can't wrap my head around why Marriott would agree to the terms and why they would treat these points like those I already own. IOW, if I buy 1500 points for far, far less than what MVC is selling them for, why would all "privileges" I currently have accrue to the additional purchase. I understand MVC makes about $3 per point, but that's far less than the $24K they could get assuming a purchase of 1500 points. What don't I understand? Or is the axiom "something is better than nothing" the answer. Thanks all you smart people.

 

[jmhpsu93]

They make $4500 for simply doing some paperwork, vs. them having to pay for marketing and sales, which is a substantial amount in the $24K transaction.

 

[DanCali]

As I return to consideration of buying DC points on the secondary market to add to my Marriott portfolio and go from Executive to Presidential, I just can't wrap my head around why Marriott would agree to the terms and why they would treat these points like those I already own. IOW, if I buy 1500 points for far, far less than what MVC is selling them for, why would all "privileges" I currently have accrue to the additional purchase. I understand MVC makes about $3 per point, but that's far less than the $24K they could get assuming a purchase of 1500 points. What don't I understand? Or is the axiom "something is better than nothing" the answer. Thanks all you smart people.

I assume they have strict cuttoffs for inventory they hold and margins they expect to earn from the inventory.

I had a week that they exercised ROFR for $XX,XXX. The next time around, it was for ($XX,XXX + $1000) and they didn't exercise ROFR. They do the same thig with points - sometimes an extra 5% or 10% to the purchase price is what makes the difference. And if sales slow down and they have enough inventory, they may not exercise ROFR at all for some time (like in early 2021).

But every DC point that changes hands, they still ring the cash register...

 

[ljmiii]

I understand MVC makes about $3 per point, but that's far less than the $24K they could get assuming a purchase of 1500 points. What don't I understand? Or is the axiom "something is better than nothing" the answer.

Because you are giving them $4,500 for which they have to give you absolutely nothing in return - those 1500 points were someone else's, not theirs.

And all those 'owner updates' aren't free - they have to pay the sales staff and the prospects. The general rule of thumb is that sales and marketing costs are 50% of a product's cost (though timeshares are probably higher)...so when MVC sells direct the 'product production' side is 'getting' $12K ($8/pt). Creating points inventory costs a significant amount of money even if it is 'just' a hotel conversion and not a new project - at a $5/pt cost they make exactly the same amount of money on a resale as a direct one.

That said, ROFR'ing is usually cheaper than building new. Part of the reason MVC is making plenty of money is that they unbundled points from underlying weeks. Sell, ROFR, rinse, repeat is quite the money making machine.

 

[Fasttr]

Exactly what others have said....

Normal Point Transaction Sales Price
Less Sales and Marketing costs
Less Acquisition Cost (Cost to build/acquire weeks supporting the points or cost to acquire points via ROFR)
Equals probably something close to the $3/point they get on the junk fees on resale points transactions....all for just doing some paperwork.

 

[Bodie]

They make $4500 for simply doing some paperwork, vs. them having to pay for marketing and sales, which is a substantial amount in the $24K transaction.

Thank you

 

[Bodie]

Exactly what others have said....

Normal Point Transaction Sales Price
Less Sales and Marketing costs
Less Acquisition Cost (Cost to build/acquire weeks supporting the points or cost to acquire points via ROFR)
Equals probably something close to the $3/point they get on the junk fees on resale points transactions....all for just doing some paperwork.

Thank you

 

[Bodie]

Because you are giving them $4,500 for which they have to give you absolutely nothing in return - those 1500 points were someone else's, not theirs.

And all those 'owner updates' aren't free - they have to pay the sales staff and the prospects. The general rule of thumb is that sales and marketing costs are 50% of a product's cost (though timeshares are probably higher)...so when MVC sells direct the 'product production' side is 'getting' $12K ($8/pt). Creating points inventory costs a significant amount of money even if it is 'just' a hotel conversion and not a new project - at a $5/pt cost they make exactly the same amount of money on a resale as a direct one.

That said, ROFR'ing is usually cheaper than building new. Part of the reason MVC is making plenty of money is that they unbundled points from underlying weeks. Sell, ROFR, rinse, repeat is quite the money making machine.

Thank you.

 

[Bodie]

To everyone who answered, thank you. I understand now.

 

[davidvel]

Because you are giving them $4,500 for which they have to give you absolutely nothing in return - those 1500 points were someone else's, not theirs.

Exactly. It like if a builder sold condos for 300,000. Then if someone who bought a condo from the builder wants to sell their condo ("resale"), the new buyer has to pay the builder $150,000 to use the driveways, entrance gate, and unlock their door. The builder gets a free $150K. Complete scam.

 

[Eric B]

Don't own any DC points as I'm in from the Vistana side, but if it were me I'd follow the money. In other systems (e.g., Wyndham) the VIP benefits are funded by the sales budget and you only get them if you buy direct because the yearly fees predominantly go to the resort HOAs. I would guess, but don't have direct knowledge of the truth, that in Abound the benefits are budgeted separately from sales in the annual operations budget, so you would be paying in the annual Flu Dues and as a percentage of the annual cost per point for what you own whether retail or resale.

 

[dioxide45]

What are DC points??

 

[Venter]

What are DC points??

That is the old term for "Abound" points or "Marriott Vacation Club" (MVC) points or "Destination Cub" (DC) pionts.

 

[VacationForever]

Don't own any DC points as I'm in from the Vistana side, but if it were me I'd follow the money. In other systems (e.g., Wyndham) the VIP benefits are funded by the sales budget and you only get them if you buy direct because the yearly fees predominantly go to the resort HOAs. I would guess, but don't have direct knowledge of the truth, that in Abound the benefits are budgeted separately from sales in the annual operations budget, so you would be paying in the annual Flu Dues and as a percentage of the annual cost per point for what you own whether retail or resale.

Resale DC points get full benefits as long as the $3 per point junk fees is paid up.

 

[Eric B]

Resale DC points get full benefits as long as the $3 per point junk fees is paid up.

I understand the junk fees, having read about them. IMHO, they wouldn’t necessarily fund benefits in excess of the maintenance fee cost for an indeterminate period of time.

 

[igopogo]

Another possible reason, going back to my microeconomics class, which is price differentiation. It’s very difficult to charge two different customers different prices based on what they are willing to pay. In this case, though, they know that well-informed customers are unlikely to pay full price even if the secondary market weren’t there…they would just walk away. So the junk fees give MVCI a way to make some money on those customers without creating a two tiered pricing system.

Also, the secondary market gives them some cover when they tell a potential full price customer “don’t worry, if you don’t like the product you can just sell it to someone else.” But of course MVCI gets their pound of flesh.

 

[vacationtime1]

"Price differentiation" for Marriott is the difference between charging an unsophisticated buyer $16/point but charging only $11/point for a "bundle" or "hybrid" package when a customer gags over the $16/point starting price.

Marriott's $3/point "education fee" is different. What has happened is that Marriott has lowered itself to the level of Westgate in making resale point purchases worthless -- unless one pays the $3/point fee to Marriott. The parallels between Marriott's treatment of resale points purchases and Westgate's treatment of resale weeks purchases are shocking (no reservations more than 60 days out, etc.). The only difference is that Marriott has learned to monetize the resale buyers' pain by extracting $3/point for essentially nothing other than treating a resale owner of its product fairly.

 

[winger]

"Price differentiation" for Marriott is the difference between charging an unsophisticated buyer $16/point but charging only $11/point for a "bundle" or "hybrid" package when a customer gags over the $16/point starting price.

Marriott's $3/point "education fee" is different. What has happened is that Marriott has lowered itself to the level of Westgate in making resale point purchases worthless -- unless one pays the $3/point fee to Marriott. The parallels between Marriott's treatment of resale points purchases and Westgate's treatment of resale weeks purchases are shocking (no reservations more than 60 days out, etc.). The only difference is that Marriott has learned to monetize the resale buyers' pain by extracting $3/point for essentially nothing other than treating a resale owner of its product fairly.

What? You cannot use Resale Marriott Club Points to make reservations more than 60 days from check-in date?

 

[Fasttr]

What? You cannot use Resale Marriott Club Points to make reservations more than 60 days from check-in date?

That is the documented penalty if you don’t pay the $3/point junk fee to MVC. If you pay MVC the junk fees, the points would have full access. That said, not sure if anybody tested this and not paid the fees.

 

[winger]

That is the documented penalty if you don’t pay the $3/point junk fee to MVC. If you pay MVC the junk fees, the points would have full access. That said, not sure if anybody tested this and not paid the fees.

Oh I understand. I didn't know your can even transfer the DC points without paying that $3 fee

 

[Dean]

That is the documented penalty if you don’t pay the $3/point junk fee to MVC. If you pay MVC the junk fees, the points would have full access. That said, not sure if anybody tested this and not paid the fees.

It'd be interesting to test it. I wonder if you could pay the fees later to gain access if so.

 

[bazzap]

It'd be interesting to test it. I wonder if you could pay the fees later to gain access if so.

I would be amazed if MVC were to turn down $3 / point pure profit whenever anyone wanted to pay it?

 

[Dean]

I would be amazed if MVC were to turn down $3 / point pure profit whenever anyone wanted to pay it?

Maybe but I could see them foregoing the money to make a statement or requiring an additional purchase plus ether $3. I suppose they could have just made that the transfer fee though I'm pretty sure some states regulate a maximum transfer fee and that FL did at one time, if not now.

 

[dioxide45]

Maybe but I could see them foregoing the money to make a statement or requiring an additional purchase plus ether $3. I suppose they could have just made that the transfer fee though I'm pretty sure some states regulate a maximum transfer fee and that FL did at one time, if not now.

Technically the transfer fee is only $25. The $3pp fee is an initiation fee to join the Exchange Company. I am not sure if that is regulated. It would be akin to paying $3000 to join II. Who would do that?

 

[Dean]

Technically the transfer fee is only $25. The $3pp fee is an initiation fee to join the Exchange Company. I am not sure if that is regulated. It would be akin to paying $3000 to join II. Who would do that?

Understood and agree. I am thinking that FL sets a maximum transfer fee or at least they did at one point which may be why they did not simply make it a transfer fee and this is a way around that limitation as it's a defect transfer fee labeled as something else.