Marriott Grand Vista 2br lockout will $5500 get though the ROFR

[brigechols]

Is this a gold or plat MGV that you are using.

A 3BR platinum MGV.

 

[samara64]

A 3BR platinum MGV.

May be there are none avail. You can do an ongoing search. Works very well.

 

[dioxide45]

A 3BR platinum MGV.

I would think you would need to book the highest TDI MGV week and put in a wide open request. Definitely don't limit it to a single week or checkin day. I wouldn't expect a peak Crystal Shores week to be deposited, be willing to take low season as that is what we see show up fairly often, but require high weeks to pull off the exchange.

 

[Saintsfanfl]

Do you know of anyone who used a 3BR MGV to exchange into a 3 BR at Crystal Shores? For an instant exchange, I need to use the entire 3BR MGV just to see a 2 BR at Crystal Shores.

I have never heard of anyone trading into a 3BR at Crystal Shores. I haven't been monitoring lately since I sold my higher powered Marriotts but I found the same as you in that you needed a decent 3BR or a very high demand high location 2BR just to see a 2BR at CS. That said, I think they may have possibly lowered it down a bit. I saw a 2BR at CS 4 days out last Sep/Oct using a non-Marriott trader. It was the first time I could use a non-Marriott and I have seen short notice deposits before. I used to check daily. It may have just been that it was a cancellation that already passed pref and the lowered trading power was the factor but it is still an indicator that CS is probably going to be more available for offseason as time passes.

The 3BR may just not exist in II but it running an OGS using another 3BR would be fun. September may get a match at some point.

 

[Seaport104]

Didn't pass this time around

Mine passed at 6,000 last year.

Bought a 2nd MGV platinum and was informed today that Marriott exercised at 6,000

 

[puckmanfl]

good morning...

With regards to the 3 bedroom at Crystal Shores... There are 2 units onthe property, therefore only 104 units that can be had over a year!!! There is no way an owner will ever deposit this because with the exception of 6206 at MOC everything is a clear downtrade. An owner might redeem for DC points because they probably fetch over 10,000 (2 weeks summer in HHI).

I believe you will NEVER see a 3bedroom in II at Crystal...

 

[samara64]

Bought a 2nd MGV platinum and was informed today that Marriott exercised at 6,000

Is this a 2BR or 3BR MGV for $6K.

Thanks.

 

[samara64]

MGV

Marriott has the same 2BR Plat for $8900 on their resale website. After the 40% sales commission, it is down to $5400. That is how much they pay the seller.

Makes no sense at all.

 

[Saintsfanfl]

Marriott has the same 2BR Plat for $8900 on their resale website. After the 40% sales commission, it is down to $5400. That is how much they pay the seller.

Makes no sense at all.

While the $6K ROFR is very surprising I am not surprised at the lack of sense in the lower brokered net amount. They have not always updated their info in a timely manner. It could be that there isn't any inventory left on the list and it's just not updated. It could also be that they were not proactive and did not call the listers to offer the higher buyback amount.

Usually when this happens they would increase the list amount or remove it entirely. Either way, $6K is alot for a direct buyback. I wonder if it included free usage which would make more sense.

 

[GregT]

Marriott has the same 2BR Plat for $8900 on their resale website. After the 40% sales commission, it is down to $5400. That is how much they pay the seller.

Makes no sense at all.

I believe the difference is how they account for these two transactions.

If it is correct that the resale website is weeks they are listing on behalf of a third party, and all they earn is the 40% commission on sale, then when they sell it, they have $3,500 of revenue (for the commission earned on the week shown) and the cost of the revenue is $0 (because it's someone else's week), so their margin is 100% on that week. That's tremendously profitable.

However, if they ROFR that same identical week for $6,000 and now own it, then it is their "inventory" and they have to make sure they care re-sell it profitably (Note, I don't think they care where the week is, only that they have now acquired inventory that is worth 2,775 points when converted to Trust Points and resold). Once they've cycled that week into points, they will be able to sell those points for $27,750, at the ROFR cost of $6,000. Their margin on this sale is 78%. If their current margins (on their entire business) are below 78% then this transaction increases their overall margin and makes them a more profitable organization.

It is likely that they have a rigid formula they follow when ROFRing something, and are very disciplined in only ROFRing weeks when they meet their target profitability.

So...the resale week and the ROFR week are different transactions for Marriott.

In my opinion, Marriott is currently targeting a ROFR cost of no more than 23% for the points equivalent value and that they will indiscriminately ROFR stuff that is less than 23% (which translates into a >77% gross margin) irrespective of where the week is located. They may pass on Silver/Bronze, but I think it would be the exception when we see Platinum/Gold passing at less than 23%.

This is my speculation of course, but in my own business, we are heavily focused on gross margin and increasing the margin by even 1% is a big deal.

Best,

Greg

 

[Saintsfanfl]

I believe the difference is how they account for these two transactions.

If it is correct that the resale website is weeks they are listing on behalf of a third party, and all they earn is the 40% commission on sale, then when they sell it, they have $3,500 of revenue (for the commission earned on the week shown) and the cost of the revenue is $0 (because it's someone else's week), so their margin is 100% on that week. That's tremendously profitable.

However, if they ROFR that same identical week for $6,000 and now own it, then it is their "inventory" and they have to make sure they care re-sell it profitably (Note, I don't think they care where the week is, only that they have now acquired inventory that is worth 2,775 points when converted to Trust Points and resold). Once they've cycled that week into points, they will be able to sell those points for $27,750, at the ROFR cost of $6,000. Their margin on this sale is 78%. If their current margins (on their entire business) are below 78% then this transaction increases their overall margin and makes them a more profitable organization.

It is likely that they have a rigid formula they follow when ROFRing something, and are very disciplined in only ROFRing weeks when they meet their target profitability.

So...the resale week and the ROFR week are different transactions for Marriott.

In my opinion, Marriott is currently targeting a ROFR cost of no more than 23% for the points equivalent value and that they will indiscriminately ROFR stuff that is less than 23% (which translates into a >77% gross margin) irrespective of where the week is located. They may pass on Silver/Bronze, but I think it would be the exception when we see Platinum/Gold passing at less than 23%.

This is my speculation of course, but in my own business, we are heavily focused on gross margin and increasing the margin by even 1% is a big deal.

Best,

Greg

This is very true, but once their ROFR threshold exceeds 60% of list then the resell website sellers have no reason to continue to list and instead should opt for the buyback since the proceeds are higher. Why should MVCI pay $6K when they already have a list of people willing to take $5,400? I think this is what samara64 was getting at.

It could also be that the ROFR threshold actually exceeds the buyback offer. Why lower the open buyback offer amount when those will come along willingly? ROFR'ing for a higher amount makes sense because it's still a hefty margin.

 

[sb2313]

The 3BR may just not exist in II but it running an OGS using another 3BR would be fun. September may get a match at some point.

I saw one for mid-September last year at about a month a half out. We got the chance to stay in 3 bedroom via Marriott reward points a couple of years ago and would love to stay in one again someday!

 

[disneymom1]

I believe the difference is how they account for these two transactions.

If it is correct that the resale website is weeks they are listing on behalf of a third party, and all they earn is the 40% commission on sale, then when they sell it, they have $3,500 of revenue (for the commission earned on the week shown) and the cost of the revenue is $0 (because it's someone else's week), so their margin is 100% on that week. That's tremendously profitable.

However, if they ROFR that same identical week for $6,000 and now own it, then it is their "inventory" and they have to make sure they care re-sell it profitably (Note, I don't think they care where the week is, only that they have now acquired inventory that is worth 2,775 points when converted to Trust Points and resold). Once they've cycled that week into points, they will be able to sell those points for $27,750, at the ROFR cost of $6,000. Their margin on this sale is 78%. If their current margins (on their entire business) are below 78% then this transaction increases their overall margin and makes them a more profitable organization.

It is likely that they have a rigid formula they follow when ROFRing something, and are very disciplined in only ROFRing weeks when they meet their target profitability.

So...the resale week and the ROFR week are different transactions for Marriott.

In my opinion, Marriott is currently targeting a ROFR cost of no more than 23% for the points equivalent value and that they will indiscriminately ROFR stuff that is less than 23% (which translates into a >77% gross margin) irrespective of where the week is located. They may pass on Silver/Bronze, but I think it would be the exception when we see Platinum/Gold passing at less than 23%.

This is my speculation of course, but in my own business, we are heavily focused on gross margin and increasing the margin by even 1% is a big deal.

Best,

Greg

I am betting the unit Marriott exercised ROFR was a 3 bedroom platinum Grande Vista, not a 2 bedroom. The 3 bedroom Marriott resales has the 3 bedroom listed for $12,600.

We just purchased Surfwatch platinum 2 bedroom (garden view) and passed ROFR in February for $8000 plus 2015 maintenance fees. Marriott resales lists it for $19,400.

 

[taterhed]

We've come up with an unofficial metric of what passes ROFR. Most that pass are above 23% of the Trust Points value.

2BR Grand Vista is worth 2,775 points or $27,750 roughly in points value if sold at retail.

An offer of $6,400 or more (I speculate) would have a high probability of passing. Below that, it's much more difficult to predict.

$5,500 is approx 20% ROFR metric, so I think you have risk of not passing. It still may pass if the Trust is deep in 2BR GVs but I do not know.

Please let us know if it passes and I hope that it does.

Best,

Greg

Yeah, what Greg said :rofl:

Seriously, I'd go with Greg's more scientific approach. I more or less took the Marriott Resales price and multiplied by 60% (since I think Marriott typically likes to have a margin of 40% before expenses). Since your offer is slightly above that ($5500 vs $5340), I said a good chance of passing given that it is Orlando, where general inventory is not as scarce as in other locations.

Good luck!

Well, here's one you can use to test your rubicon:
For the second time in a month, Marriott Waiohai 2br, annual, plat.: failed ROFR at $9500

Wife says hit 'em again!

 

[samara64]

Thanks Greg for the analysis.

This is very true, but once their ROFR threshold exceeds 60% of list then the resell website sellers have no reason to continue to list and instead should opt for the buyback since the proceeds are higher. Why should MVCI pay $6K when they already have a list of people willing to take $5,400? I think this is what samara64 was getting at.

It could also be that the ROFR threshold actually exceeds the buyback offer. Why lower the open buyback offer amount when those will come along willingly? ROFR'ing for a higher amount makes sense because it's still a hefty margin.

Saintsfanfl, That is what I meant. Why resell a desired week if they need it for DC inventory but I see Greg's logic as well.

The unit with the $6K ROFR was a 2BR. I verified that with poster.

 

[taterhed]

I am betting the unit Marriott exercised ROFR was a 3 bedroom platinum Grande Vista, not a 2 bedroom. The 3 bedroom Marriott resales has the 3 bedroom listed for $12,600.

We just purchased Surfwatch platinum 2 bedroom (garden view) and passed ROFR in February for $8000 plus 2015 maintenance fees. Marriott resales lists it for $19,400.

Again for your formula: Marriott Grande Vista 3br annual plat: just passed ROFR @ $8500

 

[GregT]

Why should MVCI pay $6K when they already have a list of people willing to take $5,400? I think this is what samara64 was getting at.

Yes indeed, it is very odd.

The only thing I can think (and I am speculating) is that Marriott is reluctant to be the Buyer where they set the price for an individual week.

It is different if they are ROFRing a transaction where the price was set by a third party.

I think it is also different if they initiate a broad buy-back program where they make the same offer to the owners of every week, offering to buy back anybody's 2BR GV for $X,XXX and the offer goes to hundreds of owners.

Perhaps Marriott feels there is a conflict for them to price the purchase of an individual week, it definitely is odd.

Best,

Greg

 

[GregT]

Again for your formula: Marriott Grande Vista 3br annual plat: just passed ROFR @ $8500

That is worth 3,725 points or $37,250 in recycled Trust Points. So $8,500 is 22.8%.

That's right on the edge and was a well-priced offer.

I really don't mean to suggest that this method is perfect, but do believe that it is a useful rule of thumb.

Best,

Greg

 

[taterhed]

No, just curious. Thanks. Might be useful in future or to others.

from my cell...

 

[samara64]

2br mgv

Just FYI A 2BR MGV Gold EOY ODD got exercised this morning for $1500.

 

[Seaport104]

While the $6K ROFR is very surprising I am not surprised at the lack of sense in the lower brokered net amount. They have not always updated their info in a timely manner. It could be that there isn't any inventory left on the list and it's just not updated. It could also be that they were not proactive and did not call the listers to offer the higher buyback amount.

Usually when this happens they would increase the list amount or remove it entirely. Either way, $6K is alot for a direct buyback. I wonder if it included free usage which would make more sense.

The $6k was for a 2BR Grande Vista Platinum beginning with 2016 use. It did not include free usage for 2015. I was surprised that they ROFR'ed it as well. I bought the same unit last year for the same price and another one for $5,500.

 

[sb2313]

Just FYI A 2BR MGV Gold EOY ODD got exercised this morning for $1500.

Well they grabbed the other half from me as an eoy even gold 2 bed was taken at $1500 today.

 

[n777lt]

2 weeks ago, MVCI offered to buy back ours (GV plat 2Bdrm lockoff) for $4400 (not a ROFR exercise, just offered during sales pitch). Looked as if they were selling Gold for twice that, and I did not see any GV platinum on their resale list, so they may be looking for that inventory...but at $4400, not very hard!

Don't know how that fits with Greg's metrics, but just more data for the mill.

 

[Pens_Fan]

Aruba Surf Club gold Garden View just passed ROFR at $4000.

 

[samara64]

I have a pending Contract for a 2BR Platinum at the Grand Vista for $5500 any feedback on my chances to be able to get by the FROR?

Any updates on this ROFR. Would be good to know.