Marriott Forecast - Poor Timeshare Sales

[AwayWeGo]

Motel 6 Or Super 8 ?

The TS business could be stripped out from Marriott Inc and sold to another corporation or set up as a stand-alone corp, with or w/out the Marriott name.

What a shock it would be if the former Marriott timeshares were shucked off & stood alone & rebranded as Motel 6 Timeshares -- or even Super 8 Timeshares.

If that happens, how the mighty will have fallen.

Note: There's already a Super 8 casino-hotel out in Las Vegas -- way off The Strip, naturally (not that there's anything wrong with that). I don't know of any Motel 6 casino in Las Vegas.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[JimC]

Marriott is a long term player. This is a short term problem. I would be surprised if Marriott would abandon the timeshare market. Unless it concluded that a fundamental shift had occurred.

More likely they will defer construction of future resorts and additional phases of existing resorts. They might also allow land options to expire, but I suspect that would only happen if there were a prolonged and deep recession.

Although I believe they could handle both the liquidity and risk issues; I am doubtful they would self finance the mortgages until the credit markets rebounded for that type of debt.

 

[dioxide45]

A Washington Post article cites Marriott as saying that when they sell a timeshare through financing Marriott does not keep the note but sells it. Apparently, there are no takers for these loans at the present moment. Marriott is not in the banking mortgage business. If they can't sell the mortgages, they are not in a position to hold these notes without great costs. In other words, the profit in selling the timeshare diminishes when you have to add in the administrative costs and risks associated with the mortgage business and people defaulting on payment. This is very bad news for their timeshare operations.

It isn't so much that there is cost to hold these notes. They do earn interest and Marriott still services these loans for the note holder and collects upon default and foreclosure, so they pay those costs. Marriott receives a servicing fee for their services. Marriott sells the notes to free up capital. If all there capital were in notes they wouldn't get all their money back for 10 years when the loan is paid in full. It is all about freeing up money to relend and put in to new projects.

 

[Icarus]

Marriot packages and sells there loans in the marketplace. Nobody is there to buy them now. They make a profit at each step of the way, and the sale makes more money available for more loans, etc.

The subprime thing affects the entire world economy. Nobody wants to spend money on things like timeshares now. (except for those TUG members and some others that are snapping up resale bargains and can afford to do that.) Nobody wants to spend money on anything discretionary right now.

-David

 

[billymach4]

Will everybody just hold your opinions. Marriott is not going away from the Timeshare business!!!

For Pete's sake! King George just signed the Bailout Bill. We now own all of that bad debt... Are you OK with that...

So now Marriott can sell those lousy notes, and we can get on with our lives.

Besides..... There are so many properties intermingled with Marriott Hotels, and Timeshare resorts side by side. Marriott would never let this house of cards fall.

 

[jerseyfinn]

If a company's business policy is to make sure that resale prices of their product remain high through the use of ROFR . . .

No, the business of MVCI is selling timeshare and MVCI is itself a subset of Marriott's hotel/accomodation business. This fact always seems to get overlooked here. Everything else ( the management agreements, the MRP options for owners, and yes, ROFR ) all flow from Marriott International doing the accomodation thing which also includes selling TS. So whatever Marriott is doing at the moment reflects this goal/objective. GM builds cars and they are into leasing. The former is the raison detre of the company & the later is an ancillary synergy from the primary business.

Just as this thread originally notes, the business side of things is down for Marriott ( and their other hotel and TS brethren will surely follow ). Marriott is making business decisions based wholly upon the present market conditions. The interesting thing for we timeshare people to ponder is where TS pricing is going to settle after this subprime effect finishes flushing through the real estate system -- in other words, were MVCI and others gaging the market reasonably accurately ( and the way I am using "reasonable" is very loose and slippery ).

Barry

 

[Icarus]

You still want to talk about ROFR in this thread?

-David

 

[dougp26364]

The easiest way to cut expenses is chop heads. I won't be surprised if the staff/unit ratio gets hit. If I were a shareholder I'd demand it, especially in properties that are sold-out.

Why? The owners pay for it not Marriott shareholders.

Not for the marketing, sales and developement side of the equation. Owners pay for the maintenance, upkeep and management of their resorts only. Owners may elect to remove Marriott as the managing company if they wish. They will, of course, lose the Marriott branded name and no longer have the rights afforded for "internal" exchaning with other Marriott resorts. Likewise, Marriott can remove it's management from resorts and remove it's brand or name from those resorts.

 

[winger]

Not for the marketing, sales and developement side of the equation. Owners pay for the maintenance, upkeep and management of their resorts only. Owners may elect to remove Marriott as the managing company if they wish. They will, of course, lose the Marriott branded name and no longer have the rights afforded for "internal" exchaning with other Marriott resorts. Likewise, Marriott can remove it's management from resorts and remove it's brand or name from those resorts.

if marriott is voted out of my MVCI resort, will I still have the option of exchanging my unit for MRP's ?

 

[Dave M]

You would have to check the terms of the legal documents that come with your ownership. For some resorts, the "Program Rules", which generally include that trading-for-points provision, can be changed by Marriott at any time without a vote of the homeowners.

 

[winger]

You would have to check the terms of the legal documents that come with your ownership. For some resorts, the "Program Rules", which generally include that trading-for-points provision, can be changed by Marriott at any time without a vote of the homeowners.

thanks I will search for this for my MMC ownership.

Hey you start use those zillion MRP's yet?

 

[Dave M]

I sure have.

Some Travel Packages and hotel stays. Extended trips to Australia-New Zealand and Europe are already booked for next year. Retirement is bliss....

 

[rfb813]

As was noted earlier Marriott packages the timeshare loans and resells the notes in order to provide more capital to invest int he business. The ability to resell these notes has been made difficult due to the current financial crisis (the same is occurring with Westgate Resorts). I don't believe that Marriott will exit the timeshare business but will slow the development of new resorts or the expansion of existing resorts. If this occurs the I expect that Marriott will ultimately need to exercise more ROFR's in order to get inventory to sell for their core sales staff.

 

[JimIg23]

I don't see Marriott ever leaving the timeshare business, maybe just hold off some new construction for a year or so. It is too profitable. Like every other time in our history, the economy will rebound and it get back to growth. However, it may be the time to buy a few more resales... I have been thinking about buying another, either MMC or Horizon Branson, their prices are pretty good now.

 

[jerseyfinn]

I don't see Marriott ever leaving the timeshare business, maybe just hold off some new construction for a year or so. It is too profitable . . .

I'm not one who "never says never", but I do agree that Marriott seems to be in the TS game to stay. Of course last year, they have a statement of the projected TS sales market which looks very upbeat. But I do agree with their instinct which says that folks want destination travel and that Marriott can lasso a nice chunk of that demand.

It's my own opinion that these difficult times afford Marriott and the TS sceptic crowd a chance to put up or shut up. I myself am betting on Marriott. That said, I have no idea where the bottom lies at the moment, but I'm satisfied with our portfolio and what it allows us to do in good times and during these difficult times. There is something to be said for aligning yourself with one of the big players, especially in tough market situations.

We just do our owner tuneup at Playa Andaluza where they are still selling TS, even in this downward-trending market. Naturally their numbers are down from a year ago, but they continue to do business and there does indeed exist a Euro-demand market at these Spanish resorts ( and Europeans do indeed continue to dabble in purchases at American resort destinations because of the favorable exchange rates ). Call it diversification. But TS still goes on despite current events.

Barry

 

[thinze3]

Marriott - are you listening??

Maybe Marriott could sell rewards points at a discount as a way to garner a little cash during these tough times.

I can se it now.

"Stuff your stockings this winter with Marriott Rewards Points, good for hotel stays, vacation getaways and much more! Buy between now and December 15th and get 25% "bonus" points free! Act fast as this is a limited time offer!"

Terry

 

[dmaxdmax]

I don't see Marriott ever leaving the timeshare business, maybe just hold off some new construction for a year or so. It is too profitable.

Good profit can actually be a reason to get out. If Marriott determines the TS business is worth $x but Newco thinks it's worth $3x, Marriott could be offered a deal too sweet to ignore. This is especially true if they need cash today.

If IBM can get out of the PC business then anything is possible.

Please understand that I've done no research and don't pretend to have any specific knowledge. My comments could apply generically to almost any corporation.

 

[winger]

Good profit can actually be a reason to get out. If Marriott determines the TS business is worth $x but Newco thinks it's worth $3x, Marriott could be offered a deal too sweet to ignore. This is especially true if they need cash today.

If IBM can get out of the PC business then anything is possible.

Please understand that I've done no research and don't pretend to have any specific knowledge. My comments could apply generically to almost any corporation.

Yes, like Westin or Hyatt can can come in and buy out Marriott's TS devision and rebrand all the MVCI TS's as their own. How nice of a thought.