Marriott DC Points

[Jayco29D]

I am just curious what folks think of buying and using Marriott Destination Club Points.
- Are you able to book and get the resorts and views you want?
- How long in advance do you need to book using DC points to get what you want?
- If you want to use DC points to stay at the Ritz residence clubs, is there actual availability if you are trying to book at the Ritz with DC points? Are there any tips on how to use DC points to book at the Ritz?
- What are the pros and cons compared to a deeded week (assuming the deeded week does not qualify to be converted to DC points)?
- How hard is it to resell Marriott DC Points?
- Can you combine two or more DC points packages to achieve higher membership levels i.e. Select, Executive, Presidential or Chairman’s Club membership levels?
- If you buy DC points resale, are there any restrictions or limitations on using your points or on the benefits resale owners receive?
- Can Marriott change the DC points redemption value i.e. do they change the number of points it takes to stay at their various resorts - or is it fixed like Disney?
- What is the difference between Basic Ownership, Premier Status and Premier Plus Status vs Select, Executive, Presidential or Chairman’s Club membership levels? Why does Marriott have the two different groupings?
- What are the MFs per DC point? Does it vary by the total number of points owned or is it a flat rate?
- Does Marriott change the benefits and/or number of points to quality for its Basic Ownership, Premier Status and Premier Plus Status and the Select, Executive, Presidential or Chairman’s Club membership levels from year to year?

 

[JIMinNC]

See my answers in RED

I am just curious what folks think of buying and using Marriott Destination Club Points.
- Are you able to book and get the resorts and views you want?
So far I'm batting 1000. Have gotten every reservation I've tried to get in the five use years we've had Points. Just booked Waiohai on Kauai for last week of February 2019 at 12:01am tonight when the clock ticked over to the 12 months to check-in day and the 20% premium Owner level owners have to "pay" went away. We were also successful booking mid-June OF at Maui Ocean Club back in 2016, but had to cancel that reservation about 9 months out. We used those freed-up points to book Labor Day weekend in Hilton Head at Barony, the week of the Heritage golf tournament in HHI at Barony in an OF unit, two long weekends at Grand Chateau, and several days at Pulse at Mayflower in Washington, DC. That's one other thing I like about the DC, it's easy to cancel and reconfigure reservations.
- How long in advance do you need to book using DC points to get what you want?
The high demand things like whale season in Hawaii, summer in Hawaii, winter in the Caribbean, are like anything else in timeshare - if it's high demand you better be online at 12 months (or 13 months if you are Select or above). Just shopping around the points system for Hawaii the last week or so, I found the availability in Maui to be considerably greater using DC points than searching with our newly-acquired Maui Ocean Club OV 2BR. I'll be online next week at 9am sharp trying to book our MOC week to align after the just-booked Kauai week, but if I had enough points (and was at least Select level), I could have already booked the week I want at MOC tonight with points. But owning that Maui week only costs me about $2200 for every use year in maintenance fee, while booking with points would cost 6700 points with a maintenance fee of almost $3700. Plus my EOY week cost only $8000 up front, while enough points to book Maui EOY would cost over $35K from Marriott or $22K resale. So for somewhere you want to go regularly, Marriott weeks are still much more cost effective than DC points. But you can't beat the flexibility and ease of booking with points to travel to a lot of different places. Just shopping around the points system the last few days, in addition to being able to book Maui and Kauai, had I wanted to, I could have booked 2BR OV/OS units next February in Aruba, St Kitts, Marco Island, and several other attractive warm weather winter destinations, as well as a ski location like Park City.
- If you want to use DC points to stay at the Ritz residence clubs, is there actual availability if you are trying to book at the Ritz with DC points? Are there any tips on how to use DC points to book at the Ritz?
I've never tried to book a Ritz. But unless you are Executive or above, I think you have to wait until 6 months out. Since we are only lowly Owner level, I haven't tried.
- What are the pros and cons compared to a deeded week (assuming the deeded week does not qualify to be converted to DC points)?
As I mentioned above, weeks are still more cost effective in almost every instance. The exception might be offseason bookings, where if you own a higher point value enrolled week or an equivalent amount of Trust Points, you can book multiple (sometimes up to three or more) offseason weeks for the amount of points it would take to book one prime season week. Points also offer the flexibility of not being tied to a 7-day calendar, cancellation and re-booking flexibility, the ability to select a different unit size and view for each trip, and a more hotel-like booking process. I've always hated traditional timeshare trading and the search and wait game, so avoiding that is a big plus for DC Points. But for going to a location you like every year (or every other year with an EOY ownership) you can't beat the cost effectiveness of a resale week. That's why even though we love the DC Points system, we still just bought a deeded EOY week at Maui Ocean Club. If Marriott ever offers us a cost effective way to enroll that week in the Points system we will, but until then, we'll be content to go online at 12 months every other year and book our cheap week in Maui!
- How hard is it to resell Marriott DC Points?
I've never tried to sell or buy resale points, but almost every broker who sells resale weeks also sells resale points, so there is an active and vibrant market. Marriott has ROFR rights on points, so that does support the price a bit, but they still sell for only a fraction of the $11-$13 per point that Marriott charges retail. There have been some people that have had points pass ROFR at $3-$3.50/point (one even less at $2.75), but most seem to take $4.00 to $4.50 or more to pass ROFR. Marriott then charges an extra $2/point to activate the points for the new buyer. So, the buyer will usually pay $5.50 to $6.50/point resale, with Marriott getting $2 of that and the seller getting $3.50 to $4.50 (less any commission paid to the broker).
- Can you combine two or more DC points packages to achieve higher membership levels i.e. Select, Executive, Presidential or Chairman’s Club membership levels?
Yes. Membership levels are based on the TOTAL points you own, regardless of whether those were purchased in one package or multiple packages.
- If you buy DC points resale, are there any restrictions or limitations on using your points or on the benefits resale owners receive?
The program governing documents give Marriott Vacation Club the right to restrict resale points from being used for things like exchanging for Rewards Points or the Explorer Collection options (Tours, Vacation Homes, and Cruises) - they call those "Special Benefits". But, if you pay the $2/point activation fee to Marriott, the documents guarantee that you will have access to the core benefits of booking points reservations at Marriott Vacation Club locations. In practice, however, I believe people who own resale points have posted that they were able to use resale points for Explorer offerings, so MVC does not appear to be enforcing the ban on Special Benefits for resale points at this time. Based on that, at present, it appears if you pay the $2/point activation fee at purchase, your resale points would function just like developer points.
- Can Marriott change the DC points redemption value i.e. do they change the number of points it takes to stay at their various resorts - or is it fixed like Disney?
As I understand it, since the basis for the points is an underlying land trust, the points charts are fixed and cannot change IN TOTAL. But Marriott does have the right to change point requirements for individual units/weeks within the Trust. But the key is, if they increase the point requirement for a given unit type or week, that increase has to be offset by an equal decrease somewhere else.

 

[Fasttr]

As usual, Jim did an excellent job at answering your questions. That said, I didn't see that he replied to your last 3 questions....so here goes....

What is the difference between Basic Ownership, Premier Status and Premier Plus Status vs Select, Executive, Presidential or Chairman’s Club membership levels? Why does Marriott have the two different groupings?
When the DC first rolled out, the benefits were based on a 3 tier ownership status (Owner, Premier and Premier Plus). Approx 5 years into the program (2015 or so), they flipped to a 5 tier system, which is the one currently in place. Here is a link to the benefits of each tier. https://m.marriottvacationclub.com/...rshipLevelsResources/benefits_at_a_glance.pdf

- What are the MFs per DC point? Does it vary by the total number of points owned or is it a flat rate?
MF/point is $0.553, so a smidge over 55 cents a point....so it does vary by how many points you own.

- Does Marriott change the benefits and/or number of points to quality for its Basic Ownership, Premier Status and Premier Plus Status and the Select, Executive, Presidential or Chairman’s Club membership levels from year to year?
As mentioned above, only the 5 tier system is currently active. No major changes from year to year. Only 1 major change so far in the 8 years the program has been in existence. as mentioned above. They may add a benefit here or there and assign it to a specific tier(s) when they do....like the home rentals, etc.

And just for another data point on availability to book resorts/views desired, I would have to agree with Jim...I have been very happy with availability in the system when booking with points. As long as you book when the windows open up, you will be very pleased. That said, on a few occasions where the planning was done late, like about a week ago when my son was wondering if there was any availability in Orlando for a 3 day weekend in early March (yes, about a month out) I was actually able to give him several options for him to choose from and was able to book it for him.

 

[GregT]

Jayco,

You've gotten excellent responses so far. The only one I can add to is my experience with one of the Ritz Carlton resorts, Ritz Carlton St. Thomas. I've been able to make multiple reservations, but it is a tough one to reserve. Availability is limited and I've had several experiences where I had to use Trust Points to make part of the reservation. Not always, but enough times to make me suspicious that it is not accidental.

I would suspect this applies to other Ritz properties too, but definitely STT. In my examples, about 40% of the reservation's point requirements had to be Trust points.

Best,

Greg

 

[VacationForever]

@JIMinNC , I have only booked weeks which opens up at 9am Eastern Time. With points do you book on Tuesday night 12:01am Eastern Time?

 

[JIMinNC]

As usual, Jim did an excellent job at answering your questions. That said, I didn't see that he replied to your last 3 questions....so here goes....

Good catch. I think the OP edited his post and added those last three questions after I had already quoted it and started replying. Didn't catch that. Thanks for watching my six!

 

[Steve Fatula]

I have had no trouble thus far. The closest I came to having "trouble" was booking Spain this May. At the time I wanted to book, last year well in advance, there was no inventory. So, I simply had Marriott add me to the waiting list, and, around Jan 1, I got it. I like to book within 30 days for the most part since that yields me a 25% point discount. But not for major trips such as overseas.

I was able to get past ROFR buying points at $2.50/pt.

I mostly like my owned week better as overall it's cheaper, but it is enrolled which allows me to trade the lockoff for "free".

 

[JIMinNC]

@JIMinNC , I have only booked weeks which opens up at 9am Eastern Time. With points do you book on Tuesday night 12:01am Eastern Time?

I was using Destination Points to book Waiohai on Kauai. The 13-month points inventory for Feb 23, 2019 check-in has been sitting out there for a month for the 2BR Island View that we were looking for, but since we are only Owner level, from 13 to 12 months we have to pay a 20% point penalty to book in that window. So the 4850 point booking would have cost us 5820 points if booked before the 12-month release date. I theorized that when the clock rolled to Friday EST on Thursday evening (12-month points inventory is released on Fridays), the 20% penalty would disappear at midnight, so I went online to check, and sure enough, the 2BR IV was now showing 4850. So I booked it. I'm not sure if they also load the 12-month points inventory release at midnight or if that waits until 9am on Friday. But I just had a feeling that 20% penalty would disappear on the inventory that was already out there, and it did.

Now I gotta be online next Thursday at 9am sharp to book our EOY deeded week on Maui for March 2 check-in to match up with the Kauai week. I did a dry run Thursday morning and the Feb 23 Maui weeks inventory showed up on schedule right at 9am. The Friday Feb 22 check-ins were oddly the first to go about 9:05 and the Saturday Feb 23 check-in dates lasted until 9:09. When I went offline at about 9:20, the Sunday Feb 24 date was still available. I checked back in mid afternoon, and all three were gone. But then something odd happened. After I booked the points last night after midnight, I just went back into the weeks system and looked at our MOC week again, and voila, all three MOC check-in days - Feb 22, 23, 24 - were once again showing as available. So, I don't know if they loaded additional MOC weeks inventory last night either before or after midnight, or why those appeared as available again. I also checked again just now (12:50pm EST on Friday) and the 22,23,24 are still showing as available - even though they initially seemed to be gone shortly after 9am.

 

[VacationForever]

I was using Destination Points to book Waiohai on Kauai. The 13-month points inventory for Feb 23, 2019 check-in has been sitting out there for a month for the 2BR Island View that we were looking for, but since we are only Owner level, from 13 to 12 months we have to pay a 20% point penalty to book in that window. So the 4850 point booking would have cost us 5820 points if booked before the 12-month release date. I theorized that when the clock rolled to Friday EST, the 20% penalty would disappear at midnight, so I went online to check, and sure enough, the 2BR IV was now showing 4850. So I booked it. I'm not sure if they also load the 12-month points inventory release at midnight or if that waits until 9am. But I just had a feeling that 20% penalty would disappear on the inventory that was already out there, and it did.

Now I gotta be online next Thursday at 9am sharp to book our EOY deeded week on Maui for March 2 check-in to match up with the Kauai week. I did a dry run Thursday morning and the Feb 23 Maui weeks inventory showed up on schedule right at 9am. The Friday Feb 22 check-ins were oddly the first to go about 9:05 and the Saturday Feb 23 check-in dates lasted until 9:09. When I went offline at about 9:20, the Sunday Feb 24 date was still available. I checked back in mid afternoon, and all three were gone. But then something odd happened. After I booked the points last night after midnight, I just went back into the weeks system and looked at our MOC week again, and voila, all three MOC check-in days - Feb 22, 23, 24 - were once again showing as available. So, I don't know if they loaded additional MOC weeks inventory last night either before of after midnight, or why those appeared as available again. I also checked again just now (12:50pm EST on Friday) and the 22,23,24 are still showing as available - even though they initially seemed to be gone shortly after 9am.

Ok... you booked at midnight to avoid the 20% penalty. Thanks for elaborating.

 

[Jayco29D]

See my answers in RED

Thanks Jim. This was an excellent reply to my questions. I appreciate the time you took to thoroughly answer each question in detail. I like the flexibility of using DC points to book wherever and which ever view as well as being able to book for less than a week. I am not sure right now if we will purchase DC points. I am just starting research process. We have deeded weeks at MKO-OV 2 br EOY and WKORVN-OF 2 br EOY and so far, so good with those. Deeded weeks are certainly cost effective.

 

[Jayco29D]

Jayco,

You've gotten excellent responses so far. The only one I can add to is my experience with one of the Ritz Carlton resorts, Ritz Carlton St. Thomas. I've been able to make multiple reservations, but it is a tough one to reserve. Availability is limited and I've had several experiences where I had to use Trust Points to make part of the reservation. Not always, but enough times to make me suspicious that it is not accidental.

I would suspect this applies to other Ritz properties too, but definitely STT. In my examples, about 40% of the reservation's point requirements had to be Trust points.

Best,

Greg

Have you tried booking the Ritz at Northstar with DC points. We like skiing so that would be the primary Ritz resort we would be interested in during ski season. We are interested in the Ritz bc it is pet friendly.

 

[Jayco29D]

Good catch. I think the OP edited his post and added those last three questions after I had already quoted it and started replying. Didn't catch that. Thanks for watching my six!

Yes, I added the last 3 questions a little while after posting.

 

[Jayco29D]

I have had no trouble thus far. The closest I came to having "trouble" was booking Spain this May. At the time I wanted to book, last year well in advance, there was no inventory. So, I simply had Marriott add me to the waiting list, and, around Jan 1, I got it. I like to book within 30 days for the most part since that yields me a 25% point discount. But not for major trips such as overseas.

I was able to get past ROFR buying points at $2.50/pt.

I mostly like my owned week better as overall it's cheaper, but it is enrolled which allows me to trade the lockoff for "free".

Where can you find DC points for $2.50/pt. I have not seen anything under $3+.

 

[Steve Fatula]

Where can you find DC points for $2.50/pt. I have not seen anything under $3+.

From a timeshare realtor with dozens of sellers. Most likely was just lucky to get past ROFR.

 

[Jayco29D]

Jayco,

You've gotten excellent responses so far. The only one I can add to is my experience with one of the Ritz Carlton resorts, Ritz Carlton St. Thomas. I've been able to make multiple reservations, but it is a tough one to reserve. Availability is limited and I've had several experiences where I had to use Trust Points to make part of the reservation. Not always, but enough times to make me suspicious that it is not accidental.

I would suspect this applies to other Ritz properties too, but definitely STT. In my examples, about 40% of the reservation's point requirements had to be Trust points.

Best,

Greg

What are Trust points? Are they different than regular DC points?

 

[Fasttr]

What are Trust points? Are they different than regular DC points?

Trust points are the points that MVC sells, and the same points that you can find for sale on the resale market. Legacy (or Exchange) points are points that folks with enrolled weeks can convert to by exchanging their week for points. For the most part, inside the DC, they are treated the same....but there can be some subtle differences at times (one being the Ritz ressies GregT mentioned that required at least some Trust points to book)

 

[JIMinNC]

From a timeshare realtor with dozens of sellers. Most likely was just lucky to get past ROFR.

What was the size of the points package that you bought for $2.50? Was it a small package? What time of year? Do you know if the broker might have bundled other fees into the price that they submitted to Marriott for ROFR (i.e. - was it a seller that charges and upfront fee and that fee was submitted as part of the price; or did they bundle all closing/transfer costs in the price to be paid by the seller, as was the case with StevenTing's recent purchase)?

 

[dgf15215]

I'll agree with most of the comments you've received so far, the process is fairly simple and effective. My wife and I have never had an issue getting the location we wanted but we're fairly limited in our requests: Ko Olina, Surf Club, Beach Place Towers, Ocean Point & Newport are our regulars. You do need to plan ahead, the earlier the better. My wife tracks the exact day/week she needs to book and I think we book 13 months out. If I'm wrong on that it's out of the ignorance of laziness, letting her do all the work.

No experience with Ritz. Never tried to sell points. The membership level is based on total points available adding DC & Trust points together - that combination gives us our status. Marriott can change how many DC points are needed for a specific style unit in a specific week but the total number of points in the building has got to remain the same. What happened to us that one week we own was reduced in value by 100 so we lost the 100 points to use every year; some other owner got a bonus of 100 points. It did not affect our status level even though we were on the cusp of the category; we were grandfathered into the status we were at. The benefits at each level are slightly different and yes, they raise the bar for each level on occasion. However, once you achieve a specific level you stay there even after the bar is raised for new entrants. I know that from experience.

 

[Steve Fatula]

What was the size of the points package that you bought for $2.50? Was it a small package? What time of year? Do you know if the broker might have bundled other fees into the price that they submitted to Marriott for ROFR (i.e. - was it a seller that charges and upfront fee and that fee was submitted as part of the price; or did they bundle all closing/transfer costs in the price to be paid by the seller, as was the case with StevenTing's recent purchase)?

3,500 points. Steven Ting used the same realtor, and yes, seller paid everything, including the enrollment fee which was added to the $2.50/pt. So, the $2.50 was my cost without the enrollment fee. It's on rofr.net, looking there, it appears to be it was July 6 2017.

 

[VacationForever]

3,500 points. Steven Ting used the same realtor, and yes, seller paid everything, including the enrollment fee which was added to the $2.50/pt. So, the $2.50 was my cost without the enrollment fee. It's on rofr.net, looking there, it appears to be it was July 6 2017.

But what was sent to Marriott was about $5, as it includes the junk fees, correct? If so, the true ROFR is really $5, as MVC would have to pony up $5 to the seller if they decide to exercise.

 

[JIMinNC]

3,500 points. Steven Ting used the same realtor, and yes, seller paid everything, including the enrollment fee which was added to the $2.50/pt. So, the $2.50 was my cost without the enrollment fee. It's on rofr.net, looking there, it appears to be it was July 6 2017.

That makes sense then. While YOUR cost was net $2.50 (not including the enrollment fee), Marriott's cost would have been $2.50 + $2 ($4.50/point) since the way I understand that Realtor writes the paperwork, your submittal would have been $4.50/pt from Buyer to Seller with the Seller paying the transfer fee and all closing costs. So in that scenario, MVC would have been obligated to pay the Seller $4.50, not $2.50. So while the effect to you was a ROFR pass at $2.50, Marriott was actually passing on a $4.50 sale.

 

[Steve Fatula]

Agreed, but, the seller gets $2.50 per point if ROFR is not exercised, not $4.50 or $5 or whatever the total number is. My cost is the same as in a regular non "seller pays all fees" scenario. In a regular scenario, you would submit a purchase price of $2.50 and you would pay (if it passed ROFR) $2.50/pt to the seller + all the other costs. So, to make it more realistic, I put $2.50 on rofr.net since that's what I paid per point, same as a regular structured deal. However, you might consider it $4.50 for ROFR, I see that of course. OTOH - who's to say that Marriott didn't read the document submitted in full, where it did say seller pays all fees (yes, the document submitted to Marriott did show that, nothing was done under the table). So, if they read it, they knew it was essentially a $2.50/pt offer. So, hard to say what actually happened. But Steven did the same thing just a slightly higher price. I guess I was more seeing it as price paid per point, not ROFR. Though the site is named ROFR. But people use it to see point cost as well (I sure did). Perhaps 2 prices are needed on that site to make it clearer, if I had put $5 or whatever total was per point on that site, people would likely assume that's what they need to pay to get past ROFR.

The advantage of writing this scenario is the seller actually hopes they do exercise ROFR, and in that case, good for them (happy for them), and I'll just try again. So, there is incentive for the seller. Seems like a win win.

 

[Jayco29D]

Agreed, but, the seller gets $2.50 per point if ROFR is not exercised, not $4.50 or $5 or whatever the total number is. My cost is the same as in a regular non "seller pays all fees" scenario. In a regular scenario, you would submit a purchase price of $2.50 and you would pay (if it passed ROFR) $2.50/pt to the seller + all the other costs. So, to make it more realistic, I put $2.50 on rofr.net since that's what I paid per point, same as a regular structured deal. However, you might consider it $4.50 for ROFR, I see that of course. OTOH - who's to say that Marriott didn't read the document submitted in full, where it did say seller pays all fees (yes, the document submitted to Marriott did show that, nothing was done under the table). So, if they read it, they knew it was essentially a $2.50/pt offer. So, hard to say what actually happened. But Steven did the same thing just a slightly higher price. I guess I was more seeing it as price paid per point, not ROFR. Though the site is named ROFR. But people use it to see point cost as well (I sure did). Perhaps 2 prices are needed on that site to make it clearer, if I had put $5 or whatever total was per point on that site, people would likely assume that's what they need to pay to get past ROFR.

The advantage of writing this scenario is the seller actually hopes they do exercise ROFR, and in that case, good for them (happy for them), and I'll just try again. So, there is incentive for the seller. Seems like a win win.

So in the end, did you pay the seller $2.50 per point and then pay $2 extra per point to Marriott to activate the points?

I am confused by this discussion because doesn't everyone pay an extra $2 per point to Marriott to activate points?

 

[JIMinNC]

Agreed, but, the seller gets $2.50 per point if ROFR is not exercised, not $4.50 or $5 or whatever the total number is. My cost is the same as in a regular non "seller pays all fees" scenario. In a regular scenario, you would submit a purchase price of $2.50 and you would pay (if it passed ROFR) $2.50/pt to the seller + all the other costs. So, to make it more realistic, I put $2.50 on rofr.net since that's what I paid per point, same as a regular structured deal. However, you might consider it $4.50 for ROFR, I see that of course. OTOH - who's to say that Marriott didn't read the document submitted in full, where it did say seller pays all fees (yes, the document submitted to Marriott did show that, nothing was done under the table). So, if they read it, they knew it was essentially a $2.50/pt offer. So, hard to say what actually happened. But Steven did the same thing just a slightly higher price. I guess I was more seeing it as price paid per point, not ROFR. Though the site is named ROFR. But people use it to see point cost as well (I sure did). Perhaps 2 prices are needed on that site to make it clearer, if I had put $5 or whatever total was per point on that site, people would likely assume that's what they need to pay to get past ROFR.

The advantage of writing this scenario is the seller actually hopes they do exercise ROFR, and in that case, good for them (happy for them), and I'll just try again. So, there is incentive for the seller. Seems like a win win.

I agree that from your standpoint, it's essentially a $2.50/point deal when compared to the way most deals are structured with the buyer paying the $2/pt activation fee. The points cost you a total of $4.50 or $5, but $2.00 to $2.50 of that was the activation fee and the closing costs. For the guy who submits a traditional $4.50/point deal to Marriott, his total cost would be $6.50 plus closing. So I agree, from the buyer's standpoint your deal was $2.50/point plus fees, while his was $4.50 plus fees. But if Marriott exercised either deal, they would have been obligated to pay the $4.50 or $5, so that is why they likely waived ROFR at such a low price for both you and Steven. They were looking at a $4.50 or $5 cost to exercise which is right in line with the price they usually waive at when the buyer pays the activation fee

I don't disagree with structuring the deal this way - if I ever decide to buy resale points I would probably try the same structure - my only point is that to just say you passed at $2.50/point is sorta misleading unless it's also disclosed that Marriott was basing their decision on having to pay $4.50 to $5. If someone else tried to buy points at $2.50 with a more traditional buyer-pays-the-activation-fee structure, they would almost certainly lose the deal to Marriott at that price. So all I'm saying is that the information that is entered into ROFR.net should probably be consistent, or at least footnoted to show which deals were based on the Buyer paying the $2 activation fee and which were based on the Seller paying. Otherwise, the entires on ROFR.net are not truly apples-to-apples. The same could be said for the resale weeks sales where the buyer gets it cheaply but the ROFR is based on a higher price that includes an upfront fee paid by the Seller. If that's not disclosed on ROFR.net, it could be equally misleading.

 

[JIMinNC]

So in the end, did you pay the seller $2.50 per point and then pay $2 extra per point to Marriott to activate the points?

I think this is the key question/clarification that needs to be answered. They way I understand the two ways these deals can be structured is as follows:

1) Most deals, the Buyer pays closing costs and the $2/point activation fee. So, for a 3,500 point purchase like we're discussing, the contract would be worded that the Buyer will pay the Seller the agreed-upon price, plus pay Marriott their activation fee, and the closings cost to the Escrow/Title company. Let's say it takes $4.50/point to pass ROFR in a deal like that. So, for 3,500 points the price would be $15,750, which is what is submitted to Marriott since that is what the Buyer is obligated to pay the Seller. If Marriott were to exercise ROFR, they would be obligated to pay the Seller $15,750 - the same as what the Buyer had agreed to. Marriott would then have to cover their closing costs, since under that deal, the Buyer pays for closing. But assuming Marriott waives ROFR, the closing statement would have the Buyer paying the Seller $15,750, the Buyer paying Marriott $7,000 ($2/point), plus the Buyer paying the closing costs going to the Escrow/Title company. If closing costs were $500, the the total paid by the Buyer into Escrow would be $23,250 ($15,750 + $7,000 + $500). The Escrow/Title company would then disburse $15,750 to the Seller, $2,000 to Marriott and keep $500 for themselves.

2) As I understand the deals where the Seller-Pays-All, the deal for 3,500 points would be worded that the Buyer will pay the Seller $16,250, so that is what is submitted to Marriott for ROFR decision. If Marriott waives ROFR, the Buyer would then pay $16,250 into Escrow. The Escrow company would then deduct $500 from those proceeds for closing, and also deduct another $7,000 from the Seller's proceeds for the activation fee that gets sent to Marriott. So in this case the Seller nets $8,750 ($2.50 per point). But the way the contract is worded, if Marriott were to exercise ROFR on this transaction, they would still be obligated to pay the Seller $16,250. I assume since the Seller pays for closing under the contract terms, Marriott could charge them for their costs to close and deduct that from their proceeds (for argument's sake, let's say thats the same $500 it would cost to close the external sale, but arguably, Marriott's costs should be less). But since there is no transfer to a new Buyer in that case, Marriott would not be able to deduct the $2/point from the Seller's proceeds. So in this case, the Seller would actually net more - $15,750 - if Marriott exercised ROFR.

If my understanding and math is correct, under both scenarios above, if Marriott were to exercise ROFR, it would cost Marriott $15,750 ($4.50/point). So, both of these transactions should be essentially equal for Marriott, so they should be equally likely or unlikely to exercise ROFR on both of these deals. So, looked at from Marriott's perspective, they are exercising or waiving ROFR at $4.50/point on both transactions.

But these two scenarios are very different for the Buyer and Seller. Under scenario #1, if Marriott waives ROFR and allows the deal to go through, the Buyer's total cost would be $23,250 [$15,750 ($4.50/point) to the Seller, plus closing costs, plus $2/pt activation fee to Marriott for a total of $6.64/point]. But under scenario #2, the Buyer's total cost is only $16,250 [$8,750 retained by the Seller ($2.50/point), plus $7,000 the Escrow company remits to Marriott on behalf of the Seller ($2.00/point), plus closing costs, for a total cost of $4.64/point]. So, even though Marriott's ROFR cost under both scenarios is $4.50/point, for the original Buyer and Seller, scenario #1 is a $4.50/point cost for the base points, but scenario #2 is only a $2.50/point base cost for the points.

Hopefully Steve Fatula can confirm that this is the way these deals are structured. My assumption is the key is the legal language in the sales contract that makes Marriott's cost equal under both scenarios even though the cost to the Buyer is much less in #2.