Marriott to Spin Off Timeshare Business [merged]

[mstoyanov]

I am not doom and gloom person but no matter how you slice it and dice it there is no way to see recent events surrounding Marriott Timeshare business as anything but having negative impact on timeshare owners. Even if economy improves significantly market for securitising mortgages is gone and will not come back and without such market there is no chance for the MCVI (or anyone else) to significantly increase timeshare sales. Very few people pay in full for timeshare purchases. So Spinco will have strongly to rely on increased management fees. I fully expect in the next 3 years to see average 6-7% increase in MFs per year on top of normal increases just from Spinco being forced to show better bottom line.
Add to the fact that Marriott was affected the worst of all major timeshare companies - when the crisis hit they had more unsold inventory than all others major TS companies combined. Economy is improving slightly and most other timeshare companies are starting to exercise ROFR regularly since they have tiny inventory - Hilton has never been as aggressive as recently (they buy even silver weeks), Starwood started regular ROFRs (something unheard before). DVC despite that they mostly concentrating on BCV are still not letting very cheap deals to go trough - I recently lost a great deal on VWL points. I even had Intrawest take a great deal that I had negotiated to buy. Wyndham does not have ROFR but is still acquiring inventory trough WAAM deals.

That said I still believe that top resorts at prime times will hold value - maybe not as much as some here wish but they would not be worthless as long as there is a good differential between MFs and rental price.

Now that value will be lower than what some believe but this is simply because people use unreasonable underlying assumptions to support their prices. I hear 10% ROI here mentioned quite a lot - in a true real estate 10% may be pretty good return but that is only because you can lock expenses pretty well (fixed mortgages, hedging against real estate slides, long term maintenance and utility contracts) and even downward slide in prices is quite limited compared to the timeshares (until recent crisis real estate prices dropping in half were unheard of). But I will never even consider trying to build a business renting timeshares with only 10% ROI - since underlying cost in timeshares can change drastically in very short time and can not be constrained. I will never buy any timeshare for mainly rent without at least 25-30% expected ROI.

Prime weeks in drive-to locations (Newport, Myrtle Beach, Hilton Head) will keep their prices much better than fly-only destinations since these are not that dependent on high volatile energy prices but sometime even a single event can change picture drastically (for example HI/SC proposed higher TAT, Hurricane destroying an area and sharply raising insurance rate for decades and so on)

Despite that I am still strong believer in timesharing - and I put my money where my mouth is. I just bought recently 2 EOY Marriott Platinum weeks for literally peanuts that I expect to use at least 50% of the time and currently can be rented when not used for at least 50% above MFs. These are my first Marriott purchases (I have all other major TS groups in my portfolio) and the prices that I bough my weeks would not have been possible without horrible DC program so I guess I have to be thankful to Marriott for depressing the prices.

Anyway I fully believe that now can really be a great time to get a excellent deals on timeshares that you plan to use for most of the time.

 

[davewasbaloo]

For those of us who also purchased resale a lucky few have reported actually making a profit on selling a TS. However, for most, if you bought thinking that you were making an "investment" you were also kidding yourself.

We bought ours not as an investment to make money, but certainly to mitigate cost. we had been to Disneyland Paris over 40 times by the time we bought, and we have yet to see everything the region in France offers. However, I am disappointed to see that my Easter week this year has availability via the Marriott Hotel booking system and the price for the same duration is not much more than just my maintenance fees. That never used to be the case, it used to be at least twice as much. It felt like a good deal in the early years, now, not so much. Add in the uncertainty of what Marriott is doing with it, I am concerned.

Of course every vacation I have had with MVCI has been fantastic, and if they remained with the same options as when we first bought, I would still be very happy. But now, hmmmmm, not so much.

 

[MALC9990]

No Rooms available

That's odd as I just looked on the Marriott Hotel Booking system and MVCI Paris I'lle de France has NO ROOMS AVAILABLE for Easter. Nothing to Rent after the 16th April and even that week there was no Owner Discount rate available.

After Easter there is avbailability again €149 per night with MOD, €169 per night advance payment no refund and €199 per night standard rate. These rates seem to be available until late June when they rise steeply to €239 per night and €319 per night.

These are all for a 2 bed unit - prices are in Euros.

 

[davewasbaloo]

There were some for 179 last I looked a few weeks ago, it made me feel sick. perhaps I found one rouge unit. Ok, I am relieved, thanks.

 

[equitax]

Clarifications...

Nope- Did not buy developer weeks.

My point on apples and oranges, Is that when you are buying your TS (or how the developer wants you to think) is in term of all the money you are going to save using your owned vacation - Most people aren't thinking about the resales - If thinking resale you wouldn't be at developer pitch anyways.

I don't own points and no of no marketability of these either.

Where my opinion will differ with most people, and where your Jetta comparison falls into the "wrong fruit" category, is as follows:

1- In the case of your jetta, your lack of maintaining,cleaning, driving properly, etc doesn't affect other Jetta owners. In the case of your deeded week, if you fail to pay MF (as many do), I end up footing the bill for it because my MF go up as a result.

2- When the developer does not make enough money, the next round of resorts don't get built, plain and simple. And if Marriott (Spinco) ended up being party to more resale transactions, be it by exercising ROFR, profiting from ROFR waiver, etc, that puts more money in their cofffers to further develop timeshares - Something that clearly is not done with realtors commissions etc.

Marriott "as developer" could and should be much more involved in the resale market, and I suspect that Spinco will be in the future.

As for why Marriott should (or should not) double dip - As an owner of Marriott Inc. (over 16000 shares worth) - I don't think I need to explain to anyone here why it is a good thing for them to make money.

As an owner or a TS interest - For the reasons that I want them to keep building more resorts to make my buck go further. I wonder how many people end up with the free TS from ebay then default costing TS owners money...

Wow, so much to respond to!
If you've sunk $30,000 (or $55,000) into a developer week and you're still pleased as punch, well great. That's because you're practicing the power of positive thinking. At the time, and apparently now too, the week had subjective (non-monetary) value to you. That's in your own brain. Extending that approach a bit, if you concentrate hard enough, your week will be worth millions!
There is an objective measure, though. That is what a buyer would pay. So, it isn't apples and oranges, it's just what those apples (or oranges) are worth, NOW. That a function of supply and demand, and, ultimately, what a rental could bring in excess of maintenance fees.
As to being permitted into the DP program, you seem to share the misconception that your points will be salable, and therefore subject to ROFR fees. That's incorrect. Legacy owners exchange their weeks for points on a yearly basis (if they wish to). Only "new" points you buy from Marriott would be subject to ROFR penalties (yes penalties).
And why is it "bad" that Marriott makes only a small profit on timeshare resales? They sold the damn things once (at an enormous profit, by the way); why a double dip? The same logic should apply to points: aren't they making a huge profit by selling them now? Why burden a points owner who wishes (needs) to get out with ROFR penalties that might make a resale impossible? If I want to sell my Jetta, I don't expect to hand Volkswagen another $3000 when I sell it to my neighbor!

 

[OutAndAbout]

Since Marriott spun off Host Hotels & Resorts, Inc.to unload debt and allow HST to be a REIT to capture tax advantages, why wouldn't HST be a good suitor for SpinCo?

Note: HST's real estate includes more than Marriott, it now has properties with most the majors (although MAR is probably still the largest).

If not HST, I would think Diamond Resorts (who purchased Sunterra and is privately owned) may be a better suitor than Wyndham.

 

[OldPantry]

Nope- Did not buy developer weeks.

My point on apples and oranges, Is that when you are buying your TS (or how the developer wants you to think) is in term of all the money you are going to save using your owned vacation - Most people aren't thinking about the resales - If thinking resale you wouldn't be at developer pitch anyways.

I don't own points and no of no marketability of these either.

Where my opinion will differ with most people, and where your Jetta comparison falls into the "wrong fruit" category, is as follows:

1- In the case of your jetta, your lack of maintaining,cleaning, driving properly, etc doesn't affect other Jetta owners. In the case of your deeded week, if you fail to pay MF (as many do), I end up footing the bill for it because my MF go up as a result.

2- When the developer does not make enough money, the next round of resorts don't get built, plain and simple. And if Marriott (Spinco) ended up being party to more resale transactions, be it by exercising ROFR, profiting from ROFR waiver, etc, that puts more money in their cofffers to further develop timeshares - Something that clearly is not done with realtors commissions etc.

Marriott "as developer" could and should be much more involved in the resale market, and I suspect that Spinco will be in the future.

As for why Marriott should (or should not) double dip - As an owner of Marriott Inc. (over 16000 shares worth) - I don't think I need to explain to anyone here why it is a good thing for them to make money.

As an owner or a TS interest - For the reasons that I want them to keep building more resorts to make my buck go further. I wonder how many people end up with the free TS from ebay then default costing TS owners money...

I think the illogic lies in your assumption that Marriott should have any particular stake in my resale. I know the HOA can suffer if I let my "Jetta" go to hell, but Marriott (i.e. Volkswagen) is mostly out of that particular equation (since most Marriott resorts are sold out). And the HOA's recourse is to collect maintenance fees from me until I do sell (and exercise various punitive measures if fail to pay or actually do abuse the poor unit). None of is this is relevant to the resale. It utterly escapes me why you would think anybody (HOA or Marriott) would need (or have a right) to take a slice of that action. And seriously, do you really think Marriott will build some nice new resorts if we let them loot our resales?
The problem of defaults is in no way a "Marriott" issue. It's a mud week issue, and a maintenance fee issue. Channeling more dough to Marriott won't fix it in any way whatsoever.
As a Marriott shareholder, the best thing you could do to ensure their profitibility is to send them a check for your dividends. Maybe they'd use that money to build the fourth tower at Ko Olina. Just think positively!

 

[MALC9990]

There were some for 179 last I looked a few weeks ago, it made me feel sick. perhaps I found one rouge unit. Ok, I am relieved, thanks.

Of course there is still unsold inventory at Paris so obviously Marriott would want to fill up the units especially at Easter.

There is some exchnage availability in March but nothing for Easter.

No Getaways at all.

So again a better picture for owners.

 

[timeos2]

I think the illogic lies in your assumption that Marriott should have any particular stake in my resale. I know the HOA can suffer if I let my "Jetta" go to hell, but Marriott (i.e. Volkswagen) is mostly out of that particular equation (since most Marriott resorts are sold out). And the HOA's recourse is to collect maintenance fees from me until I do sell (and exercise various punitive measures if fail to pay or actually do abuse the poor unit). None of is this is relevant to the resale. It utterly escapes me why you would think anybody (HOA or Marriott) would need (or have a right) to take a slice of that action. And seriously, do you really think Marriott will build some nice new resorts if we let them loot our resales?
The problem of defaults is in no way a "Marriott" issue. It's a mud week issue, and a maintenance fee issue. Channeling more dough to Marriott won't fix it in any way whatsoever.

Amen! Marriott, or anyone else in management/sales, has no business in what an owner does with their ownership rights. Once thje original sale is done & paid for it should be between the owner and the Association - no one else holds any reasonable stake. The HOA is NOT Marriott and why should Marriott hold any rights to what was legally sold? Development is in no way tied to existing or prior sales and new construction must assuredly doesn't depend on resales (maybe too bad - if it did then maybe developers would actually support resales and get prices up to more reasonable levels. The silly game of ROFR only depresses the already weak market - a firm buy back program would actually set a floor on price and assure it sticks.

Defaults are between the Association and owner - Marriott would only be involved if they are acting as the management for the Association and that would not entitle them to any "cut" - they are paid for services as management to cover this type of work.

 

[LAX90210]

Sales by Marriott will always be made to people who walk into a resort for some freebies and are told that they can own a lifetime of vacations for a small fee. Marriott will spin the numbers to show huge savings if they buy. The uinformed, uneducated (on timeshares) buyer will believe the lies and half truths they are told and own something they will more likely than not regret. Sales will never end totally until Marriott close the sales dept, but sales can slow to a crawl where the overhead is eating up the little profit they are making on fewer sales.

Even the most ardent marriott supporter here on TUG would not buy a retail points package with the current divesting of timeshares by Marriott. Is there anyone here on TUG considering buying retail points for any price? I will gladly read the reasons ANYBODY would give for buying RETAIL MARROITT POINTS now with full knowledge of the spinoff and timeshares in general. I am eagerly waiting to read this post and the reasons for buying. If none here will buy, then that shows that sales will fall even more because anyone who knows anything about the situation will not buy.

The internet is probably going to be the final death blow to retail timeshare sales because knowledge is power. no more trusting the salesman with no where to check on facts and promises. Google timeshares on the internet and the smoke and mirrors go away.

Now the change Marriott made to own the votes of any who buy points or convert to points becomes clearer. Once the spinoff starts assessing and raising fees owners might vote to remove Marriott as the mgt company. That is where the new division will make their profits, not on sales but on the backs of current powners. Even the number one cheerleader might finally have enough when their orlando annual MF's pass the $2000 mark. Marriott by owning the votes of all points owners and all weeks owners who convert(ed) will be able to vote against removing them as the mgt company. This will leave owners paying whatever marriott decides to charge them or they will have to walk away.

Marriott planned this thing out way in advance. The statement that they never planned on walking away but the last few years...... was not an off the cuff mistatement. That was a statement purposelly made in a speech written by PR dept, the legal dept, and CEO's. They said the stock will not be investment grade to cover their butts legally, not to be nice. They stripped current owners who convert of their votes and will give no future purchasers a vote on purpose, and that is to preserve their cash cow of being the managers of the resorts.

When we hear what Marriott has to say, we only hear the spin the PR and legal depts want us to hear, and usually not before they are ready for us to hear it. Walking away or selling might be the best option in the near future. Time will tell.

Boy, you nailed it spot on...ME, exactly...bought/suckered in to a Kauai TS in 2003, was -very- fortunate in being able to -finally- dump it in 2008 a few months prior to the big crash. Lucky I didn't lose even more on it. Thoroughly enjoyed the resort and would definitely stay there again, but only on my terms($cash$ only, CYA mode).

I just don't see any reason to own a TS, in view of all of the unknowns that can pop up, with your name on the deed.

This latest Marriott move may benefit me, indirectly, as it will likely make renting TS rooms easier going forward.

Learned a lot in this deal; unfortunately, most of it was bad.

There's a video biography out on Bill Marriott(CNBC? Don't remember for sure), where he talks about the 'early days'. Says something to the effect that if a party of one or two might drive up at night, he sometimes hit the No Vacancy light, figuring he would save the room for a family arrival; charge $more$, make $more$. Kinda told me all I needed to know about Marriott the man and Marriott the biz.

I still stay at Marriott Hotels & Resorts, but will never again have any dealings with them in any other fashion. I used to work for Big Corporate and have no interest in being screwed by BC just in the name of profits.

 

[wof45]

I guess we are back to generalizations again based on what we want to believe.

I would buy DC points, once they become available as resales. I am assuming they will be at a discount from the retail price. If another poster is correct that MVC would buy them back for 50% of retail, then there should be a market for at more than 50%. But then, I am from Philly, and we never pay retail.

 

[LAX90210]

If you can play golf at your club as a guest for close to as cheaply as you can as a member and save a $7000 outlay, why be a member? With Timeshares that is quickly becoming the case. The club is private and if you don't pay to join you can't play there except on rare occassions. You can rent any week at any resort from owners without buying, and often for less than the owners paid in annual MF's. Even resale why pay $5000 to $10000 to stay at a place you can rent for about the same money as an owner pays to stay there? The $7000 country club membership allows you to play a golf course that you otherwise couldn't play. The timeshare weeks are available for rent to anyone, not just owners.

If the annual MF's are $1200 you can in most cases rent from an owner for $1500(or less) costing you $300 more (or less) a year to rent than to own. For 20 years if you pay $300 a year more to rent than own and you have spent a total of $6000 more than being an owner. You saved $5000 to $10,000 by not purchasing and you have saved $1000's on the numerous assessments that owners inevitably paid.

Every year you can vacation where you want by perusing redweek and finding a really good rental price at any place you want to go. You can vacation on the exact dates you want, even last minute usually for discounted prices. You do not have to plan everything 10 months to a year in advance. No more waiting on the phone or computer hoping you can get the exchange you want.

If you don't own you simply rent where you want for close to the cost of MF's if not less than MF's every year. Browse the for rent ads and find a heck of a deal each year. I have seen 2 bed room ocean front Marriott's for rent on Redweek for less than MF's at most every resort at one time or another. Some resorts have 20 or 30 lisitngs for less than MF's perpetually listed.

The years you want to stay home, go on a cruise, go to an area where there are no Marriott resorts you don't have to worry about what you are going to do with your prepaid vacation. No more sweating renting it, no more last minute rental listings for $700 on TUG, no more banking the week because you can't rent it and you can't use it. You just pay to rent your annual vacation(s) at a price you feel is a good deal, not at the price Marriott feels you should pay each year.

Over the last few years owning has become more of a liability than a savings as rental prices keep dropping and MF's keep rising. I only purchased resale and even at those prices nowadays it is better to rent than own in most cases.

+1 Pretty much my plan going forward...lots of nice resorts out there in the Big World. I'm not locked in and can likely find somewhere nice & affordable to go whenever I want. For high times like XMAS, I'll just rent a hotel/resort room and get by fine.

 

[TJCNewYork]

Hopeful About A New Value Proposition

This a calculated business decision by Marriott, with their best interests in mind. It does not portend anything but that. There are many examples of successful spinoffs in business history.

Excellent point. Actually, Marriott joins Motorola and Sara Lee (among others) in announcing spinoffs. On 2/11, Motorola announced a split into Mobile Devices, and Enterprise Mobility Solutions. Earlier on 1/28, the Financial Times reported that Sara Lee plans to break up into a North American food business including Ballpark, Hillshire Farm and Jimmy Dean; and an international beverage and bakery business to include Douwe Egberts (expresso), Senseo (coffee systems), and Café do Ponto (ground coffees) plus top bakery brands, Ortiz, BonGateaux, and Sara Lee.


Unlike IBM/Lenovo, Motorola and Sara Lee, spinning off Marriott Vacation Club presents a broader challenge. In addition to the Securities Exchange Commission, the Federal Trade Commission and the Internal Revenue Service, the Marriott transaction touches federal, state and local statutes that govern real estate.


Under statute, Marriott legacy owners enjoy usage options (grandfathered) and the promise of protected deeded ownership to weeks-based home resort vacation ownership for years to come. FWIW, when it comes to trailblazing and pioneering a new frontier, Marriott can reference lessons-learned. The State and Legal Disclosure for Destination Club illustrates an uphill challenge; but it is most definitely one that is in-progress.


To close on a positive note, the appointment of Marriott's newly retired veteran, Bill Shaw as spinco's chairman of the board is very reassuring (to me) that someone with lifelong Marriott brand experience, will not only focus on advancing the best interests of Marriott, but will also seek to preserve if not enhance the value proposition of vacation ownership that compelled me to become a MVC owner in the first place.


I am hopeful for a successful outcome and a new value proposition.

 

[mstoyanov]

MOXJO7282,

If you truly believe the fair price of Grande Ocean gold OF is more than $13.8K
here is chance to make quick $3k by buying this auction and flipping it for $3k more:
http://cgi.ebay.com/MARRIOTT-GRANDE...70710546158?pt=Timeshares&hash=item3f079b1eee

For the record I have no connection whatsoever with the seller (and do not believe this unit is worth the asking price).

My Grand Ocean gold OF was purchased for $13.8K in 2004. I'm pretty sure I'd get that or a tad more. Also my Oceanwatch OS July 4th would sell for around $20k. Still good value in my book.

So things are not as dire as you predict from my and any Marriott prime week owner

 

[LAX90210]

^ Interesting ebay listing. I have no experience w/HH, but does look interesting. However, one item - in the pics, why would there be a bathtub next to a King bed? Seems a bit strange to me. No shower stall, just a tub...

 

[TJCNewYork]

New Model: Timeshare And Mixed-use Development?

Hopefully, a new model can be developed that has a brighter future for all of us.

About 2 weeks before Marriott unveiled Destination Club, an article, Timeshare's Role in Mixed Use Development appeared in the hospitality trade pubs. The image below illustrates how a developer might approach mixed use that includes fractional ownership (Ritz-Carlton), timeshare (MVCI) and a hotel (Marriott) into a single project. Will spinning off MVCI from Marriott International hinder or facilitate realization of such a project? What if it's a hotel to mixed-use conversion?


For example, as reported Feb 1st in the Orlando Sentinel, JW Marriott and Ritz Carlton Grande Lakes in Orlando are among 8 luxury hotel properties recently acquired in a foreclosure auction by Paulson & Co. Inc. If the new owner decides to maximize earning potential by converting some floors to fractional ownership or timeshare or both, would the transaction best be handled by Marriott International or spinco?


Such a scenario could playout anywhere a Marriott franchise property exists. In fact, it doesn't have to be a Marriott franchise, it could be an independent hotel in the Autograph Collection like the recently opened, Cosmopolitan Las Vegas. With 52 floors, 2,435 rooms and 560 suites with kitchenettes or fully-loaded kitchens there's amazing potential. Spinco combined with Guest-To-Owner marketing and the Destination Club, there would be marketing engine to drive pre-construction/conversion preview tours and sales.


What will happen to legacy resorts? Several have commented that COAs/HOAs will have a big stake in that. My hunch is that there will be a resurgence of demand when the economy recovers.


Thoughts?


[imgl]http://www.hospitalityworldnetwork.com/files/hotelworldnetwork/nodes/2010/8136/timesharegraphic.jpg[/imgl]

 

[BarbS]

^ Interesting ebay listing. I have no experience w/HH, but does look interesting. However, one item - in the pics, why would there be a bathtub next to a King bed? Seems a bit strange to me. No shower stall, just a tub...

That's the jacuzzi tub. The shower is on the other side of the tub in another little room.

 

[MikeM132]

Marriott announced their earnings this afternoon, and as part of the press release announced they will be spinning off the timeshare business into a separately traded company.

Here's the press release:

http://news.marriott.com/2011/02/ma...business-and-reports-fourth-quarter-2010.html

Oh boy. I already get about 2 calls a week from sharks looking to "buy" my Maui week. Now there's blood in the water.

 

[jerseygirl]

I am not doom and gloom person but no matter how you slice it and dice it there is no way to see recent events surrounding Marriott Timeshare business as anything but having negative impact on timeshare owners. Even if economy improves significantly market for securitising mortgages is gone and will not come back and without such market there is no chance for the MCVI (or anyone else) to significantly increase timeshare sales. Very few people pay in full for timeshare purchases. So Spinco will have strongly to rely on increased management fees. I fully expect in the next 3 years to see average 6-7% increase in MFs per year on top of normal increases just from Spinco being forced to show better bottom line.

I apologize in advance as this has assuredly already been discussed in connection with the advent of the DC ...

It's my understanding that with deeded timeshares, HOAs must be not-for-profit (I understand they can have an operating surplus from time-to-time -- I'm talking about over the long haul). I'm wondering whether or not DC owners have the same statutory protections as deeded owners? Can someone point me to where this may have been already discussed?

I know that there can be "shenanigans" regardless of the statutory protections ... but Mstoyanov's post left me wondering if DC points owners have fewer protections (e.g., are they given an accounting that allows them to tie their maintenance fees to actual expenses)? In other words, must the books eventually be balanced for DC points owners the way they are for deeded owners?

 

[dioxide45]

Anyone else get e-mail today?

Please read a special Letter To Owners and Frequently Asked Questions about the plan to establish Marriott Vacation Club International as a publicly traded company.

Bill Marriott talks about the exciting future of Marriott International and Marriott's timeshare business.

 

[camachinist]

Yes, I got that e-mail.

Here's to 'unforgettable experiences'

 

[mstoyanov]

Jerseygirl, I don't know if there is any protection in the trust documents (I would guess not) but Spinco can not be non-profit simply because it will be the new developer that will sell inventory. Despite that I think that there is one strong force that will keep MFs on the DC points lower for at least several years - the desire of the Spinco to sell points to new owners.
All timeshare developers subsidize new developments since that makes selling timeshares easier. I am actually surprised at the high cost of MFs for DC points as it is - at $0.40 per DC point at many resorts OV 2BR is already a hard sell compared to the renting from an owner. And HOA protections are not worth much if the HOA board is controlled by Marriott/Spinco - they will approve whatever Marriott/Spinco tells them to do. One simple way to hide the cost is by using non-bid contractors that are subsidiaries of Marriott (or Spinco). You can always come with whatever excuse you want - labor prices went higher, supplies became more expensive and so on.

Also Spinco will have the guaranteed yearly fees from the program and will have inventory to rent from the skim of enrolled legacy owners.

Another way Spinco can make MFs for the DC points lower is to raise even further the point for the resort that are biggest source of inventory in DC trust (Crystal Shores, Ko-olina, Lahaina/Napili tower). So at least in the next 5 years I suspect Marriott will be much better manager for the resorts that are biggest source of points in the trust while pushing for MFs increases in the resorts that does not have much inventory in the trust.

I apologize in advance as this has assuredly already been discussed in connection with the advent of the DC ...

It's my understanding that with deeded timeshares, HOAs must be not-for-profit (I understand they can have an operating surplus from time-to-time -- I'm talking about over the long haul). I'm wondering whether or not DC owners have the same statutory protections as deeded owners? Can someone point me to where this may have been already discussed?

I know that there can be "shenanigans" regardless of the statutory protections ... but Mstoyanov's post left me wondering if DC points owners have fewer protections (e.g., are they given an accounting that allows them to tie their maintenance fees to actual expenses)? In other words, must the books eventually be balanced for DC points owners the way they are for deeded owners?

 

[jerseygirl]

Thanks Mstoyanov. I get all that ... was hoping to determine the actual legal structure as it relates to maintenance fees. Do the legal documents outline how the fees are calculated and do they tie back to the actual deeded weeks? If yes, the total of all points X $0.40 should equal the maintenance fees for the underlying weeks that make up the trust, right?

 

[OldPantry]

Another way Spinco can make MFs for the DC points lower is to raise even further the point for the resort that are biggest source of inventory in DC trust (Crystal Shores, Ko-olina, Lahaina/Napili tower). So at least in the next 5 years I suspect Marriott will be much better manager for the resorts that are biggest source of points in the trust while pushing for MFs increases in the resorts that does not have much inventory in the trust.

That's an interesting thought, but I'm not sure why Spinco would want (need) to keep maintenance fees lower for those resorts where it still has substantial unsold inventory. Could you explain? The $.40 points fee is not resort-specific, and points owners don't pay the individual resort MFs. Why would Marriott exercise restraint at Ko Olina, Crystal Shores, and Lahaini/Napili? Believe me, I'd love it if they did treat Ko Olina better, as I own there.

 

[dioxide45]

That's an interesting thought, but I'm not sure why Spinco would want (need) to keep maintenance fees lower for those resorts where it still has substantial unsold inventory. Could you explain? The $.40 points fee is not resort-specific, and points owners don't pay the individual resort MFs. Why would Marriott exercise restraint at Ko Olina, Crystal Shores, and Lahaini/Napili? Believe me, I'd love it if they did treat Ko Olina better, as I own there.

The trust is a huge owner of those resorts. Who is paying the bulk of those MF given that only a small percentage of the points have been sold? MVCI is coming up with that money. The lower they can keep the MF/trust point ratio, the better for their bottom line.