Marriott points and internal exchange program - the latest info

[Dave M]

This comes from a Marriott insider who has never given me inaccurate info:

The internal points and internal exchange program that I announced on this forum about two years ago as being "in development" is currently scheduled to become operative in about May/June 2010. (Obviously, delays are possible.)

Those who bought directly from Marriott will pay a relatively low fee if they choose to join the points program. Marriott intends to make the fee low enough so that many, many owners will join. Those who bought resale will pay a higher fee, possibly much higher, if they wish to join. I don't know yet whether there will be any partial or full grandfathering for those who purchased resale before a particular unknown date.

Marriott's intent is to make it easy enough for most owners to join so that the points program will work effectively. Note that the overwhelming majority of Marriott owners bought directly from Marriott, so if resale owners don't pay the higher fee to join, Marriott's program will likely still be a big success.

Also, Marriott expects to make it easy enough for most owners to join that the huge majority of available exchange weeks will be exchanged through the internal points system. If successful, there wouldn't be many prime weeks in II inventory because those prime weeks would command a higher exchange value in the internal points program.

This will be a money-maker for Marriott, as anticipated all along. Instead of II getting the exchange fee for those Marriott to Marriott exchanges, Marriott will get it. There are around 700,000 Marriott weeks. If one fourth of those (no idea what the real number is) exchange in the points system to other Marriotts each year, an exchange fee of $100 would mean $17,500,000 in annual revenue that goes to Marriott instead of II. That doesn't count the upfront fees to join the points program.

II would still be used by those who don’t join the points program and by those who want to exchange to non-Marriotts.

We can speculate all we want, but I currently have no additional info (how the points program would work, what the fees would be, how points would be assigned to various individual weeks or seasons, etc.). Thus, don’t ask for more details because I don’t have them!

If you attend a Marriott sales presentation, you'll likely hear more about this coming program. However, remember that those sales people don't neceesarily have the most accurate info.

There are still a myriad of details to work out before the program goes live, but it’s for real.

If I get any updates, I will edit this post and post a message in this thread regarding the update.

 

[jimf41]

Let me be the first to say WOW. About a year and a half ago you dropped the bombshell 6 month reservation window for resale owners. I assume that this source is not the same one. IF Marriott is definitely doing this why let it out a year ahead of time. One reason, just like with the 6 month resale res window deal they want to see what the owners reaction is before they do it.

I bought all my weeks direct and even if they give me free entrance into this system I don't see the benefit to me over the current system. To "buy" into something there would have to be a big advantage over II. From the rumors going around about how it would work, none of them appeal to me.

Can't wait to see the posts on this one.

 

[Michigan Czar]

Dave, thanks for always keeping us informed. Wow, this will be interesting to follow. Let the discussions begin.

 

[normab]

We are so happy with the system that exists, trading our weeks for what we consider to be a reasonable fee. And we bought a silver week specifically for flexchanging that works well for us in the current system.

I am not sure we would welcome the points system unless it keeps the benefits we now have and would offer us some additional benefit. It will be interesting to see the specifics--I would imagine the average person would not choose to make a change unless there were some benefit for them, not just Marriott.

 

[aka Julie]

Wonder if II will mount some kind of counter attack/strategy to try to keep a good number of Marriott owners depositing and exchanging thru II, i.e. more ACs, lower exchange fees, etc. We can only hope.

 

[thinze3]

Let me be the first to say WOW. About a year and a half ago you dropped the bombshell 6 month reservation window for resale owners. I assume that this source is not the same one. IF Marriott is definitely doing this why let it out a year ahead of time. One reason, just like with the 6 month resale res window deal they want to see what the owners reaction is before they do it.

I bought all my weeks direct and even if they give me free entrance into this system I don't see the benefit to me over the current system. To "buy" into something there would have to be a big advantage over II. From the rumors going around about how it would work, none of them appeal to me.

Can't wait to see the posts on this one.

The points sytem makes more sense, as that survey we all took last year was all about points.

 

[KathyPet]

Darn I just renewed my II membership for 3 years. i wonder if i can cancel and get a pro rated refund.

 

[SueDonJ]

Thanks for the update, Dave. Even without all the details, this looks a whole lot better than the Asian-resorts points program that's been mentioned here recently (or at least, it doesn't appear that the costs will be as prohibitive.)

It sure is nice to "know" someone in the know.

 

[gmarine]

Darn I just renewed my II membership for 3 years. i wonder if i can cancel and get a pro rated refund.

Yes, you can.

 

[KathyPet]

Thanks GMarine good to know I can get my money back!

 

[Ireland'sCall]

Guess we will have to just wait until the full scheme is revealed in mid 2010 .
Meantime the uncertainty will drive down even further the resale values .
In addition would you buy direct knowing that your chances of resale are very much diminished ?

G

 

[RandR]

Perfect timing...I just got my letter today from Marriott that my resale is complete and the unit is in my name. Let's hope they don't end up doing this after all. As a resale owner I would be pretty miffed if they put a big punitive fee in for resale owners. My wife travels a lot for business and it would certainly mean the end of her use of Marriotts. She is only one person but if many other resale owners do the same thing maybe it will get noticed. Probably not though.

 

[KathyPet]

Well Welcome to the world of being "miffed". You can join those of us who bough direct who get "miffed" every time Marriott devalues our points. And, yes you are correct about Marriott not caring in the least if you take your hotel business elsewhere. When they did the last point devaluation under the guise of "System enhancements" there was a huge outcry by Marriott owners and it did absolutely no good whatsoever.
Marriott made nothing on the units when they are sold on the resale market. it does not surprise me at all they they will attempt to "stick it to" resale purchasers now.

 

[gmarine]

IMO, Marriott isnt going to do anything to piss off existing owners who bought resale.
I could see Marriott having a higher fee for resale owners and/or grandfathering in resale buyers but I doubt the fee will be much higher. Marriott wouldnt want to discourage resale buyers from joining the program because they would still want the revenue from the exchanges.

So we wait and see what happens.

 

[GregT]

Fascinating post --- I would think a Marriott point system (pure speculation) has to lean more towards the Wyndham model than the Worldmark model (apologies that I don't know the other point systems well enough -- can anyone contrast?).

Wyndham has a "home resort" where your points originated, and which determines your MFs -- and you have a booking preference (you can book at your home resort 12 (or 13?) months in advance, whereas a non-owner must wait until 10 months. In Worldmark, there is no home resort and you pay the same MFs as all other owners (and there are no booking preferences).

In Wyndham, we say "points are points" and buy where the MFs are lowest. The availability is generally strong enough that you can almost always get where you want, assuming you plan ahead. I bought at the cheapest MF property I could find (Smoky Mountains in Tennessee) and bought the exact point size I needed to be able to book the property I really wanted to visit(Elysian Beach Resort), which commanded double the MFs in the Caribbean.

Wyndham's resale values have been utterly obliterated due to their on-going battle with their owners to take away owner privileges (not rights). I bought my Smoky Mountain Wyndham TS for about $100. I don't see Marriott going to war with its owners like Wyndham.

However, this may open up an opportunity to "load up" on Marriott points at the lower MF properties and trade into the higher MF properties (such as MOC). It will be interesting to see how Marriott handles this.

I agree with the Poster who indicated this will put further pressure on resale pricing -- uncertainty always causes concern, and people won't want to be holding an even more illiquid asset that is now having the rules change, especially in this economy.

I think it will also hurt the retail pricing at the higher-end properties -- why pay $60K at MOC for XXX points when you can buy one or two $20K properties for XX points and get into MOC? Unless there is a compelling home resort booking advantage...

Dave, thanks for posting!

 

[PerryM]

Don't buy Marriott now!!!

The logical reaction should be to not buy Marriott until they introduce their system.

Questions that are up in the air:

1) What is the cost to convert an existing week? Will existing weeks have to pay much more than new weeks on the day of the release?

2) New units sold after the release might have the conversion fee built in as a sweetener, just like cash discounts and MRPs now. Wait for the sweetener.

3) Yearly maintenance fee - how much?

4) Transaction fee - how much?

5) When the unit is sold resale the Internal Exchange Points do NOT carry forward to the new owner - the existing Points disappear into Marriott's pocket

6) How will a $35k Platinum week at X exchange for a $35k Platinum week at Y?

7) Which Marriott unit/week will generate more Points? Why take a guess and buy now - just wait for the new system

8) Buy Marriott now or buy a resale now and be grandfathered in - that's my guess

9) 13 month reservation window stays/goes?

10) Can Points be rented from one Marriott owner to another - cheaper to rent Points than buy the week

11) Can Points be "rolled forward' to next year or do they just disappear if you can't go on vacation this year?

12) Can Points be borrowed from next year's usage? If so cheaper to borrow than buy usage

13) Is it still the 8 am mad dash to reserve a week to deposit and get more points or does Marriott just give you a generic week?

14) If few Marriotts make it into II those that do might be able to get 3BRs or Holiday weeks or Ocean Front (new benefit) - II will make it worth your while to deposit your week

15) Must you pledge usage for years in the future? Will you have to pay a penalty to Marriott if you sell your week? Can you even sell your week?

For the life of me I can't figure out why a smart company, like Marriott, will keep this rumor going for 3+ years by next year. What good does 3 years of rumors do for Marriott?

The unknowns are many and the benefits of buying now are what? Better to wait until Marriott releases this wonderful system - hell, resales might drop so low that you can buy 2 or 3 resale weeks for 1 Marriott week.

P.S.

Make no mistake about it this is a sales gimmick with Marriott getting more than the owners. You will see for yourself if this system ever sees the light of day.

 

[NJDave]

IMO, Marriott isnt going to do anything to piss off existing owners who bought resale.
I could see Marriott having a higher fee for resale owners and/or grandfathering in resale buyers but I doubt the fee will be much higher. Marriott wouldnt want to discourage resale buyers from joining the program because they would still want the revenue from the exchanges.

In addition, Marriott should not look soley at how much timeshare revenue they may receive when deciding how to treat resale (or any) owners. If owners are "totally dissatisifed" with Marriott, they may take their personal and /or business hotel travel over to Starwood, Hilton or other competitors.

 

[bobcat]

In addition, Marriott should not look soley at how much timeshare revenue they may receive when deciding how to treat resale (or any) owners. If owners are "totally dissatisifed" with Marriott, they may take their personal and /or business hotel travel over to Starwood, Hilton or other competitors.

I do not like points. We were in a system where they raised M/F's, changed points value and other things. People may cxl. their Marriott cards ?. How will they deal with the view you own?. They could have a points scale from Garden to Ocean front. Too many questions. In the meantime it could kill sales from Marriott and resale. Perry made good points and well as other people. In the meantime, I ask that all owners keep the peace between direct sales and resale. We all made a choice when we purchased. Thanks.

 

[Quimby4]

I do not like points. We were in a system where they raised M/F's, changed points value and other things. People may cxl. their Marriott cards ?. How will they deal with the view you own?. They could have a points scale from Garden to Ocean front. Too many questions. In the meantime it could kill sales from Marriott and resale. Perry made good points and well as other people. In the meantime, I ask that all owners keep the peace between direct sales and resale. We all made a choice when we purchased. Thanks.

Marriott and Direct Buyers should all be thankful for the resale owners. We continue to pour our money into the resorts through maintenance fees. Many other resorts are struggling due to foreclosed units and unpaid maintenance fees.

The Marriott Resale purchasers should be treated the same as Direct Buyers. I am willing to spend about $85 to join the Marriott system and $99 to trade, no more than what I am paying for II, which gives me access to 1000's of resorts.

Just had to put my 2 cents in for the people from Marriott reading the board Looking forward to hearing more details.

 

[BocaBum99]

Dave,

Marriott had contract sales of $212M in the second quarter in its timeshare segment. If you are correct and Marriott converts 1/4 of its members into points, your annualized revenue of $17.5M is very small. On a quarterly basis, that is $4.375M or about 2% of sales. In addition, there will be costs to operate the system that they didn't have before they offered it. So, the net income contribution is much smaller. That assumes that Marriott will be able to charge $100 to book an internal exchange. That is very high for an internal exchange. $49 is much more reasonable. At that rate, the revenue contribution is less than 1% of revenues. Marriott is clearly not doing this for the exchange revenue.

I believe Marriott is doing it to remain competitive and gain control of inventory. They need a better story. I agree that the idea of making it very inexpensive for people who make developer purchases is the right idea to get more folks to convert. That is the error most other timeshare groups made. However, even if free, there is no guarantee that owners will convert depending on the program.

Making it so that resale owners need to pay something like a $5000 fee to join is probably something they would do. I would probably dump my Marriott's when the conversion rate is really high if it ever gets really high.
It's certainly a different approach. It'll be fun to watch.

Unfortunately for owners, their best option is to do nothing. If they opt in, they will be immediately devaluing their ownerships by giving Marriott control of what they own.

 

[dougp26364]

This comes from a Marriott insider who has never given me inaccurate info:

The internal points and internal exchange program that I announced on this forum about two years ago as being "in development" is currently scheduled to become operative in about May/June 2010. (Obviously, delays are possible.)

Those who bought directly from Marriott will pay a relatively low fee if they choose to join the points program. Marriott intends to make the fee low enough so that many, many owners will join. Those who bought resale will pay a higher fee, possibly much higher, if they wish to join. I don't know yet whether there will be any partial or full grandfathering for those who purchased resale before a particular unknown date.

Marriott's intent is to make it easy enough for most owners to join so that the points program will work effectively. Note that the overwhelming majority of Marriott owners bought directly from Marriott, so if resale owners don't pay the higher fee to join, Marriott's program will likely still be a big success.

Also, Marriott expects to make it easy enough for most owners to join that the huge majority of available exchange weeks will be exchanged through the internal points system. If successful, there wouldn't be many prime weeks in II inventory because those prime weeks would command a higher exchange value in the internal points program.

This will be a money-maker for Marriott, as anticipated all along. Instead of II getting the exchange fee for those Marriott to Marriott exchanges, Marriott will get it. There are around 700,000 Marriott weeks. If one fourth of those (no idea what the real number is) exchange in the points system to other Marriotts each year, an exchange fee of $100 would mean $17,500,000 in annual revenue that goes to Marriott instead of II. That doesn't count the upfront fees to join the points program.

II would still be used by those who don’t join the points program and by those who want to exchange to non-Marriotts.

We can speculate all we want, but I currently have no additional info (how the points program would work, what the fees would be, how points would be assigned to various individual weeks or seasons, etc.). Thus, don’t ask for more details because I don’t have them!

If you attend a Marriott sales presentation, you'll likely hear more about this coming program. However, remember that those sales people don't neceesarily have the most accurate info.

There are still a myriad of details to work out before the program goes live, but it’s for real.

If I get any updates, I will edit this post and post a message in this thread regarding the update.

I wonder what Marriott considers "low" for a joiner fee? We have two weeks, I consider $100 to be low. My bet is Marriott will consider $500 to be low but, it could be higher.

Still, it's ANOTHER year out before anything happens according to your source. Anything can happen between now and then so, everything remains purely speculation. Since there's little I can do about what Marriott may or may not do, there's little sense in taking this into consideration with our current ownership interest and, should we think we might want to add another Marriott week, there's little reason to do so until AFTER Marriott decides what it wants to do.

 

[BocaBum99]

Here's a problem. How does Marriott solve it?

There is a well known summer week stock out situation at the Maui Marriott since Marriott over assigned the platinum week at this resort. if you want a summer week, you've got to fight hard to get one.

Let's say that Marriott creates this new points program and 40% of owners at the Maui Marriott platinum season signs up. What weeks do they get? Doesn't there have to be a rule that they get in line with everyone else? To give points owners preference over summer weeks would result in revolt at that resort.

If Marriott becomes the trustee, would that be like one superowner of those weeks? There has to be a fair distribution method of the weeks into the program. It will be interesting to see what they do to solve it.

 

[BocaBum99]

This comes from a Marriott insider who has never given me inaccurate info:

Dave,

Didn't your source say that this points program would be rolled out in 2009? If so, then that is one instance where he gave you inaccurate info.

 

[PerryM]

Analog or digital?

Here's a problem. How does Marriott solve it?

There is a well known summer week stock out situation at the Maui Marriott since Marriott over assigned the platinum week at this resort. if you want a summer week, you've got to fight hard to get one.

Let's say that Marriott creates this new points program and 40% of owners at the Maui Marriott platinum season signs up. What weeks do they get? Doesn't there have to be a rule that they get in line with everyone else? To give points owners preference over summer weeks would result in revolt at that resort.

If Marriott becomes the trustee, would that be like one superowner of those weeks? There has to be a fair distribution method of the weeks into the program. It will be interesting to see what they do to solve it.

At the Maui Ocean Club weeks 1 - 51 are all Platinum - this was a major blunder by Marriott but that's water over the levee.

A Points exchange system MUST take into account supply and demand - why have such a system if its no better than weeks? So now 4th of July week, President's week, and Christmas week are worth more points.

The guy who gets up at 8 am and snags a hot holiday week suddenly has more Points in his account than the guy who got up at 8:01 am! How can this be - it can't be.

Marriott will be forced to issue generic weeks. At the Maui Ocean Club your deposit will be the same and another owner's there. So who gets 4th of July week - why the guy who gets up at 7:59:45 AM since the computer seems to run 15 seconds faster than the phone system.

Same ol' same ol' except owners had to pay to get into this new ol' system. This new system will simply be the digital version of the current analog system - nothing better.

So Marriott, why not instruct II to lengthen the "Marriott only" window from 24 days to 10 months? Takes one eMail to do it and 1 minute on II's part.

P.S.
The 13 month/12 month reservations will still have to be honored for those Marriott owners who don't convert - but now the concept of "Home resort advantage" must be added.

What a mess...

 

[GregT]

Perhaps Marriott is rattling the saber about a points sytem to force a concession from II? Better revenue sharing? Who knows? It is a distinct possibility that they are threatening to depart to sweeten the arrangement.