Marriott to Spin Off Timeshare Business [merged]

[wof45]

$1.5 BILLION in basically what can be called "distressed inventory" for them to sell in an industry where sitting on $10-12 million is considered high. This is a huge anchor that Marriott understandably wants off their books. Moving it to a quasi independent operation doesn't magically give it better value. It just moves it to a new owner to deal with. Not a positive no matter how you try to spin it and the related costs have to be covered. It sure won't be sold any time soon so guess who will be paying? Lets see, where does the income other than sales come from? I think I can see some fees going up before long.

let's do some math on this --

if the average week sale is $25,000, then $10 million is 400 weeks which at 50 weeks per unit is 8 units. So, $1.5 billion is 150 times 8 units or 1200 units.

that is no a lot more units than Marriott Grande Vista, or Shadow Ridge.

Obviously selling 100,000 1,500-DC point blocks is not going to happen in a year, but as long as MVCD is selling existing inventory, it is all profit since the costs are already sunk and they do not have to pay to replace inventory.

Why do think MVCD will be short on cash when they have inventory to sell and not replace?

 

[dioxide45]

let's do some math on this --

if the average week sale is $25,000, then $10 million is 400 weeks which at 50 weeks per unit is 8 units. So, $1.5 billion is 150 times 8 units or 1200 units.

that is no a lot more units than Marriott Grande Vista, or Shadow Ridge.

Obviously selling 100,000 1,500-DC point blocks is not going to happen in a year, but as long as MVCD is selling existing inventory, it is all profit since the costs are already sunk and they do not have to pay to replace inventory.

Why do think MVCD will be short on cash when they have inventory to sell and not replace?

While 1200 units may not sound like a lot. It is almost 50% larger than Grande Vista (which you referred to). Remember though that Grande Vista is Marriott's largest resort. Consider it also a brand new one and a half Grande Vistas without a single week sold preconstruction. Those 1200 units account for almost 10% of Marriott's total unit weeks. That is a heavy burden.

 

[wof45]

While 1200 units may not sound like a lot. It is almost 50% larger than Grande Vista (which you referred to). Remember though that Grande Vista is Marriott's largest resort. Consider it also a brand new one and a half Grande Vistas without a single week sold preconstruction. Those 1200 units account for almost 10% of Marriott's total unit weeks. That is a heavy burden.

a benefit for MVCD is that it only has the one trust and doesn't have to sell 10 different resorts in different places. It can sell them all from the same pool.

 

[windje2000]

let's do some math on this --

if the average week sale is $25,000, then $10 million is 400 weeks which at 50 weeks per unit is 8 units. So, $1.5 billion is 150 times 8 units or 1200 units.

that is no a lot more units than Marriott Grande Vista, or Shadow Ridge.

Obviously selling 100,000 1,500-DC point blocks is not going to happen in a year, but as long as MVCD is selling existing inventory, it is all profit since the costs are already sunk and they do not have to pay to replace inventory.

Why do think MVCD will be short on cash when they have inventory to sell and not replace?

You are comparing apples and oranges.

The $1.5 B is inventory at cost. The $25K per week is retail.

Cost of sales is 40%.

To convert, reduce the $25K at retail to cost (0.4 x $25K)

Or, recognize that $1.5 B in inventory represents $3.75B at retail, assuming the $1.5 B is all finished goods inventory which it most certainly is not.

 

[dioxide45]

You are comparing apples and oranges.

The $1.5 B is inventory at cost. The $25K per week is retail.

Cost of sales is 40%.

To convert, reduce the $25K at retail to cost (0.4 x $25K)

Or, recognize that $1.5 B in inventory represents $3.75B at retail, assuming the $1.5 B is all finished goods inventory which it most certainly is not.

I was just out searching to quote this post you made in another thread. The 1.5BB inventory number kicked around isn't based on retail pricing.

 

[Lardan]

I read this entire thread. I'll admit at times I skimmed some. After reading all this I was very reluctant to post anything with me just joiningg today. But, I thought why not, I'm a Marriott owner myself.

I posted today in my introduction thread that I bought at Cypress Harbour 11 or 12 years ago site unseen over the telephone. Why did I do this, because of the name Marriott. So out of all this to me the most important aspect of Spinco, as we call it, retains the Marriott name.

Homes are for living, having families grow in them, and hopefully an investment along the way. Timeshares are for discretionary income pure and simple whether to enjoy by utilization, renting, or flipping. As much as the real estate market has sufferred, to me it is only natural the timeshare market would suffer much worse.

I think as the economy picks up, which it will, there will be a lot mergers, buyouts, and acquistions take place in business. I would not be surprised at all if several of the big names do in fact merge, and probably with Spinco down the road.

I follow the stock market fairly close and spinoffs are not that uncommon. Results do vary and spinoffs occur for many reasons. I think this spinoff occurred to please the stockholders, but at the same time I don't think Marriott would allow anything to fail with its name on it. I come back to the name again don't I.

I wouldn't like it and I would be very upset if the value of my timeshare at Cypress crashed. But, I think that I would be more upset about the loss of the wonderful vacations more than the money. I bought it so long ago at a very good price on the secondary it wouldn't really affect the family bottom line at this point. I've never considered it a monetary asset anyway, just something to enjoy.

This period of the timeshare market to me certainly somewhat reflects the stock market. No doubt the time share market is down quite substantial right now and many want to bail due to fear of losing money, while others see it as an excellent buying opportunity. In the stock market at least the sellers are normally those that lose.

I am currently in the midst of closing on a timeshare I just bought. Again with the price I paid for it if it crashed I would survive just fine. Not that it wouldn't upset me a great deal. But I looked at it as a risk vs. reward. The risk to me was worth it for I feel this industry will bounce up in the future with changes, not cease to exist. I never thought I would get this time share for the weeks I went into looking for the price I paid. Please don't take this as bragging just stating my faith in the fact this industry will survive.

I can really do nothing about any of the things happening with Marriott or the timeshare industry. So, I feel the I made an extremely good purchase and now I'll ride this out while we continue to enjoy our vacations.

As for MF they are going to go up, what isn't? But, with the amount of inventory setting out there I don't think they can raise the MF costs too much because it would inhibit new sales. I certainly don't see a tier system coming where new buyers pay one rate while existing owners pay another.

I am curious about is Marriott time share debt to assest ratio. But, I think a lot of the debt they are carrying is actually not entirely a real debt owed, but just unsold inventory. I would also be curious if the resorts appraised higher than expected and it became public, is it possible our taxes would increase? Local governments would love to find some big juicy time share complexes to raise the property taxes since virtually all those seeing an increase in their taxes are non-residents of the area.

I guess where I was trying to head with all this is don't do something like unloading the resorts you have enjoyed for years because of some current unknowns and a shaky market. I bet it is very rare here anyone would be facing bankrupcy because their time shares folded. If that is the case, well frankly maybe that person should not have bought the timeshare(s) in the first place.

 

[OldPantry]

You are comparing apples and oranges.

The $1.5 B is inventory at cost. The $25K per week is retail.

Cost of sales is 40%.

To convert, reduce the $25K at retail to cost (0.4 x $25K)

Or, recognize that $1.5 B in inventory represents $3.75B at retail, assuming the $1.5 B is all finished goods inventory which it most certainly is not.

So, doing the 40% wholesale/retail adjustment, that inventory is really more like a 3000 unit overhang. Isn't that fairly close to 25% of all vacation clubs? Any way you look at it, it's beginning to sound like a pretty heavy anchor. That inventory has carrying costs. And some of it can't be sold without further significant investment (think of the half-empty third tower at Ko Olina).

I would see some major problems ahead. The buy-in by existing weeks owners will unquestionably tail off rapidly, and their exchange points won't actually generate revenue for Spinco. So, the company is left with new points sales to generate the income investors will be expecting.

Every time I've looked at it, new points seem to be a terrible deal. People end up paying more to access the vacation clubs via points than it would cost them to simply pay direct Marriott retail. (This presumes that money spent on points has a real cost: lost investment income). While there will undoubtedly be a limited number of folks who will succumb to the hard sell, I think the bloom is off that particular rose. If the sales of new points also tail off drastically, then Spinco will need to rethink its business model. The obvious answer would be a sale: half off, or something like that. So, a price that actually represents a good deal. The early buyers would be livid, but that inventory would move!

 

[windje2000]

I was just out searching to quote this post you made in another thread. The 1.5BB inventory number kicked around isn't based on retail pricing.

Exactly my point.

Two items other than retail/wholesale enter into the analysis.

First, the $1.5B is after the impairment hit of $0.7 B.

Second, the inventory is not 100% finished goods. Much is in various states of development. I recall reading somewhere that about 1/2 was finished goods, but have no link for that data point.

 

[TJCNewYork]

We have to take into consideration that neither of these rankings is specific to the timeshare product

One common denominator is that both rankings apply to publicly-traded companies, which is what spinco will be. In general, these companies comply with the norms set by the trading exchange. (Knowing your passion for documents) Section 303A.01 of the New York Stock Exchange Manual, for example, outlines requirements for a Spin-off Transaction that is likely to apply to spinco.

Per the NYSE manual, one norm is a minimum of 3 board-level committees including Audit, Nominating and Compensation. Exceeding this norm, Marriott currently has 6 board-level committees. Although Wyndham Worldwide outperformed Marriott by Ethisphere metrics, Wyndham runs on 4 board-level committees. How many should spinco have?

Overall, how do the Fortune Top 50 compare? About 23 companies or 46% appear to have expanded the scope of board-level oversight beyond the norm. Among the Top 25 companies, the percentage rises to nearly 60%.

What's so striking in this group is the expanded focus on public and social issues impacting business lines. The thinking drives the selection of independent board members who have, as one IBM charter notes, 'a proprietary stake' that is 'closely aligned with company interests'.

To illustrate, here are selected examples from the Fortune Top 50:

Proctor & Gamble, Governance & Public Responsibility Committee
Coca-Cola, Public Issues & Diversity Review Committee
IBM, Directors & Corporate Governance Committee
GE, Public Responsibilities Committee
Johnson & Johnson, Public Policy Advisory Committee
AMEX, Public Responsibility Committee
Target, Corporate Responsibility Committee
JPMorganChase, Public Responsibility Committee
Nike, Corporate Responsibility Committee
General Mills, Public Responsibility Committee

Borrowing from General Mills, should spinco have board-level oversight for:

• Reviewing public policy and social trends affecting spinco;
• Monitoring spinco's corporate citizenship activities;
• Evaluating spinco's policies to ensure they meet ethical obligations to employees, consumers, society and owners?

For P&G, Coke, IBM, GE, J&J, Amex, Chase, Target and Nike, did expansion of board-level oversight offer them an edge over their competitors? Is there a parallel that merits spinco's consideration?

Back to your point, neither the World's Most Ethical (WME) Companies or the Fortune 500 rankings are specific to timeshare. As a new company blazing a trail for an industry in recovery and evolving, increasing value for both shareholders and owners presents a challenge.

FWIW, considering the inclusion of 'deceptive Timeshares sales practices' among ConsumerAffairs.com's Top 10 Scams of 2010, and a business model that for the foreseeable future relies upon the 'power of the referral from highly satisfied owners', the examples above merit serious consideration.

 

[SueDonJ]

TJC, I appreciate how much thought you're putting into this "campaign" (for lack of a better word, not meant to be derisive in the slightest) to get Marriott to consider a forward-thinking BOD seat with increased customer influence. I agree with the others here that it is not going to happen. It's simply not in their best business interest to allow it.

It appears that you think Marriott has an obligation to the customers (especially the timeshare owners) to make up for recent perceived value losses. But if I only measure my timeshares' value in terms of usage, because that's the only value guaranteed by my contracts, and I'm getting the value as promised, how can I agree with your perception that there's been a devaluation which needs correcting? The product itself was developed with leeway for changes related to business and usage patterns - it's a bit unrealistic to expect that Marriott won't make changes to it when their bottom line suffers. I happen to be encouraged by Marriott making moves to combat the terrible economy's effects on timeshares, and am willing to give them some time to let their moves work. They have a history of being an industry leader; the spin-off has a pretty good chance at success if MI's same business practices are continued there.

The reason I contrasted that Ethisphere ranking with the one from Fortune 500, is because that one from Ethisphere has been brought up on TUG before as "evidence" of Marriott changing from an ethical company to an unethical one. It's not apparent if you're trying to make the same charge. Are you? My thinking is that the Fortune 500's ranking is probably the more coveted of the two, and thus if there was actual evidence of Marriott being an unethical company then leaders in the industry would not be consistently voting for Marriott in the F500 ranking. The Ethisphere site says that one of the data points considered is whether or not a company is "involved" in litigation - it doesn't say whether the company must be at fault in such litigation to be discounted. Well, we know Marriott's involved in litigation, once case in particular has been prominently displayed all over TUG and the timing of it fits perfectly to affect the Ethisphere poll. Was that alone enough to bump Marriott in favor of Wyndham? I don't know, but I'm not about to charge Marriott with being unethical if I don't have proof.

It's a great discussion and I have no problem with it happening here on TUG. Whether we're MVCI/DC timeshare owners or MAR stockholders or both, it's important to know the product we're dealing with. The abstract discussions are, IMO, as important as the concrete (for example, "how do I reserve?") discussions.

 

[TJCNewYork]

I only measure my timeshares' value in terms of usage

I think 'Usage' can be a variable yardstick because some owners measure value w/MF$, MR points, ACs, ShortStays, rentals and so on.

Speaking of MF as a value yardstick, there's nothing 'abstract' when 200+ owners default in your COA. There is nothing 'abstract' about Marriott reporting impairment charges of $1.5 billion. And, there is nothing 'abstract' to the general public when ConsumerAffairs.com lists timeshares among the Top 10 Scams of 2010.

Combine that with loss of owner confidence along with betrayal and the uphill climb to value becomes quite the challenge. That said, my over-riding concern is the impact the sum total has on the value of spinco and its assets. What happens to the value of our legacy weeks or DC points, when the value of spinco hits bottom? In the bigger picture, any positives all of us combined can think of are trumped - especially when investors start slicing the cheddar.

Are you?

Nonsense. Let's put that to rest, N.O.W. The Ethisphere ranking is based upon self-reported info by the applicant. According to Ethisphere, Wyndham outperformed their competitors. The WME recognition could be easily dismissed as Wyndham having sharper pencils filling out forms. Who knows what it means and who really cares?


That said, the F500 ranking is a more reliable yardstick, in my opinion. Having looked under the F50 hood, I am even more convinced! It stands to logic that in order to exceed shareholder expectations and create more value, a publicly-traded company will have to figure out just how to engage not only their shareholders, investors and stakeholders, but the public at large.

I am very hard-pressed to think of a company whose products and services the public does not want that investors would be willing to invest in?


Given all of the factors mentioned, Spinco needs every competitive advantage to succeed. This is not about 'one seat'. The 10 examples illustrate many different solutions. If what you call a 'campaign' contributes in a meaningful way to extract that advantage for spinco, it is a win for all us.

 

[OutAndAbout]

So, $1.5 billion is 150 times 8 units or 1200 units.
that is no a lot more units than Marriott Grande Vista, or Shadow Ridge.

While 1200 units may not sound like a lot. It is almost 50% larger than Grande Vista (which you referred to). Remember though that Grande Vista is Marriott's largest resort.

The Maintenance Fees list (weeks):
1 BEDROOM 515
2 BEDROOM 38,728
3 BEDROOM 7,107
TOTAL: 46,350/50=927 villas
(dividing by 51 & 52 ends up with a fraction, so maybe 2 weeks are "dead" for service?)

The resort description:
..200 acres & 1,790 rooms & villas, 5 pools, 2 golf courses, lake, boat and fishing equipment rental..
(maybe the 1,790 includes lock-off villas?)

 

[dioxide45]

The resort description:
..200 acres & 1,790 rooms & villas, 5 pools, 2 golf courses, lake, boat and fishing equipment rental..
(maybe the 1,790 includes locking off all villas?)

The Maintenance Fees list (weeks):
1 BEDROOM 515
2 BEDROOM 38,728
3 BEDROOM 7,107
TOTAL: 46,350/50=927 villas
(dividing by 51 & 52 ends up with a fraction, so maybe 2 weeks are "dead" for service?)

I would think the 1790 is definitly considering 2 and 3BR lock offs as two rooms. The 927 better reflects the deeded units.

 

[wof45]

Speaking of MF as a value yardstick, there's nothing 'abstract' when 200+ owners default in your COA. There is nothing 'abstract' about Marriott reporting impairment charges of $1.5 billion. And, there is nothing 'abstract' to the general public when ConsumerAffairs.com lists timeshares among the Top 10 Scams of 2010.

Let's get a little real in your arguments.
What is listed as a scam is Time Share Post Card Companies -- not timeshares.

When you start quoting proof that does not say what you claim, the rest of your claims also sound a little phony.

 

[TJCNewYork]

Let's Get Real

Let's get a little real in your arguments. What is listed as a scam is Time Share Post Card Companies -- not timeshares

OK - Your point is understood. "Timeshares" is used as an all-inclusive term. But, unlike the lovable characters, Donkey and Shrek in 'Shrek Forever After', there's nothing fictional about scams involving timeshare investment, timeshare sales, timeshare rental and timeshare resales. In common usage, the general travelling public, vacationers and consumers have been exposed to this term, "timeshares" repeatedly in a negative context.

Given government involvement combined with media coverage about timeshares in general, does the general public even want timeshare products and services??? Other than defaulting on your MFs, what exit strategies will spinco offer to reassure consumers that timeshare even merits consideration?

Resales is a major issue that has yet to be solved:
August 2010: FTC Warns Consumers
October 2010: Psst... Hey Buddy, Wanna Sell a Timeshare?

While Donkey spun timeshares into a joke in the final film of the Shrek series, reselling timeshare is no joke to the hundreds of thousands of owners who thought buying one was a good deal.

Spinco faces a formidable business challenge recovering from a train wreck. With all the negatives embedded in the term, "timeshares" the only aspect that's "phony" is the denial.

 

[Fredm]

Folks, why so serious?
Timeshares are supposed to be fun.

The analysis/opinions of Spinco's future prospects are interesting.
We have no shortage of them, mine included.
We do indeed enjoy hearing ourselves talk.

But, "let's get real".
Time will tell how this all shakes out. In the meantime we are passive observers, opinions notwithstanding.

As mentioned in another post, it's just us chickens clucking at one another.

In closing, cluck, cluck, cluck.

 

[SueDonJ]

OK - Your point is understood. "Timeshares" is used as an all-inclusive term. But, unlike the lovable characters, Donkey and Shrek in 'Shrek Forever After', there's nothing fictional about scams involving timeshare investment, timeshare sales, timeshare rental and timeshare resales. In common usage, the general travelling public, vacationers and consumers have been exposed to this term, "timeshares" repeatedly in a negative context.

Given government involvement combined with media coverage about timeshares in general, does the general public even want timeshare products and services??? Other than defaulting on your MFs, what exit strategies will spinco offer to reassure consumers that timeshare even merits consideration?

Resales is a major issue that has yet to be solved:
August 2010: FTC Warns Consumers
October 2010: Psst... Hey Buddy, Wanna Sell a Timeshare?

While Donkey spun timeshares into a joke in the final film of the Shrek series, reselling timeshare is no joke to the hundreds of thousands of owners who thought buying one was a good deal.

Spinco faces a formidable business challenge recovering from a train wreck. With all the negatives embedded in the term, "timeshares" the only aspect that's "phony" is the denial.

To answer what's bolded - no. The general public does not want timeshares. If it did, then everybody and their mother would have bought one back in the good old days when the economic picture was rosy and bright.

Timeshares are a niche item, always have been and always will be. They're attractive to folks who want to vacation in a certain style despite knowing that purchasing the product carries an inherent financial risk, because no timeshare seller is charged with or takes steps to protect the resale value. Timeshares have always had a negative connotation in financial circles. There is nothing the spin-off can do to combat that because the product is simply not a sound financial investment vehicle.

What the spin-off can do to ensure future success is continue whatever business practices Marriott has used to keep the product of consistently high quality and attractive to those who think the vacation lifestyle is appealing. And along with the rest of us, it can hope and pray that the overall economic picture improves to the point where enough folks have the discretionary income to buy the lifestyle.

As far as considering what the spin-off can do to ensure the financial value of the product that existing owners have previously purchased? I think it's a pipe dream to expect them to do anything, again because they're not charged with protecting a financial investment. I think it's more on the shoulders of the HOA to protect owners from defaults, foreclosures, etc... They're the ones who can get creative with things like deed-back offers. But as long as owners believe that they're entitled to a cash return when they no longer see usage value in what they've purchased, then even the programs which allow them to walk away won't be of any help.

Cluck cluck BWAAAACK.

 

[Fredm]

Cluck cluck BWAAAACK.

AH Ha!

A duck in chicken feathers.
You can't fool me! :hysterical:

 

[TJCNewYork]

Strident amidst fowl banter... Let's not forget that the spinco transaction is subject to regulatory approval, and the Securities Exchange Commission is hardly a 'bystander'. Quoting the SEC,

[FONT=Verdana,Arial,Helvetica]"The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. [/FONT][FONT=Verdana,Arial,Helvetica]As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever.[/FONT]

[FONT=Verdana,Arial,Helvetica]As our nation's securities exchanges mature into global for-profit competitors, there is even greater need for sound market regulation. [/FONT][FONT=Verdana,Arial,Helvetica]And the common interest of all Americans in a growing economy that produces jobs, improves our standard of living, and protects the value of our savings means that all of the SEC's actions must be taken with an eye toward promoting the capital formation that is necessary to sustain economic growth."[/FONT]

Investors do their homework. With articles like this making direct reference to and attracting attention to TUG, will this discussion contribute to a successful spinco?

__________
Just for fun: If you leave the fox alone with a clucking chicken, isn't the chicken in big trouble?

 

[TJCNewYork]

Timeshares are a niche item, always have been and always will be.

At $10+/point and rising, a single mid-week stay for a golf getaway at spinco's NJ resort will top $1,750/night. Given so many other affordable options, is there really a market for this? It seems like spinco's 'niche' is shrinking very fast. Rephrasing WSJ, "little wonder" spinco's parent "wants out".

 

[OldPantry]

At $10+/point and rising, a single mid-week stay for a golf getaway at spinco's NJ resort will top $1,750/night. Given so many other affordable options, is there really a market for this? It seems like spinco's 'niche' is shrinking very fast. Rephrasing WSJ, "little wonder" spinco's parent "wants out".

Look, I'm no fan of points either, but this figure, $1,750 a night, seems wildly out of whack. Do you mean all five week nights? If not, would you mind breaking it down?

 

[wof45]

At $10+/point and rising, a single mid-week stay for a golf getaway at spinco's NJ resort will top $1,750/night. Given so many other affordable options, is there really a market for this? It seems like spinco's 'niche' is shrinking very fast. Rephrasing WSJ, "little wonder" spinco's parent "wants out".

Marriott Fairway Villas, May - Aug, Sun - Thurs, ==> 275 points.
If you rent them for 50 cents per point that's $137.50/night

 

[TJCNewYork]

Look, I'm no fan of points either, but this figure, $1,750 a night, seems wildly out of whack. Do you mean all five week nights? If not, would you mind breaking it down?

OP - Based upon a sales scenario at MGV last September, we looked at a one night golf getaway midweek at spinco's NJ resort, Seaview w/2 br villas. This is a 2 hr drive from NY. According to sales, the midweek night requires 175 DC points.

As of today 03/11/2011, DC points cost $10.22/point. So, 175 x $10.22 = $1,788.50. This does not account for the added cost of MFs or annual membership or usage over the lifetime of DC ownership. It's more of first year cost for inception or entry into the program (my words). Considering that DC requires a minimum of 1500 points, the cost of entry is actually considerably higher = $15,330.00

Assuming upfront costs are paid, and MF remains the same (hah), when one calculates the cost of one night midweek based upon MF: $.40 x 175 = $70. That's very attractive for a one night stay, and better than MOD, I think.

For enrolled legacy owners who have not purchased DC points, the cost of 175 points will vary widely depending upon how many DC points your home resort, season and view is worth and your current MF. So let's say my home resort is worth 3,000 points and my current MF is $1400. Each point is worth $2.74 so the cost of one mid-week night at Seaview is 175 x $2.74 = $479.50

In the worst case scenario, excluding the cost of the exchange fee, calculating the cost of one night using a home resort to Seaview exchange based upon 7 night stay would be $1400/7 = $200/night.

In the best case scenario, excluding the cost of the exchange fees, calculating the cost of one night using a home resort to 2 Shortstay exchanges based upon a total of 12 nights would be $1400/12 = $116.60

In the super best case scenario, excluding the cost of the exchange fees, calculating the cost of one night using a home resort to 2 Shortstay exchanges plus a Bonus AC based upon a total of 19 nights would be $1400/19 = $73.68

Aside from the 'breakdown', I'm compelled to add that my wife and I have agreed to decline DC enrollment for now. The economics of legacy ownership is familiar and works for us. But, we are very hopeful that the value in legacy ownership is retained and increased. Based upon comments here and here, we continue to think that spinco is long overdue. Spinco is not a panacea, but a positive step on the road to a solution.

Inspite of many concerns about declining value and the lack of competitive advantage in an industry marred in the media; we also remain very confident that the appointment of the new chairman of spinco's BoD is on-target, because of the knowledge, experience, capabilities, respect, integrity and extensive executive relationships he brings to the table.

 

[TJCNewYork]

Marriott Fairway Villas, May - Aug, Sun - Thurs, ==> 275 points. If you rent them for 50 cents per point that's $137.50/night

Thanks WOF. I was not aware of the increase to 275 points. My calcs will be off, but easy for TUGers to figure out. As far as renting points for 50 cents, I wasn't really following that, could you point me to the specific posts/thread?

 

[Fredm]

Given so many other affordable options, is there really a market for this? It seems like spinco's 'niche' is shrinking very fast. Rephrasing WSJ, "little wonder" spinco's parent "wants out".

No. At least not a growth market.
Marriott figured that out several years ago.
Hence, Marriott (via Spinco) is migrating from an asset-based to a fee-for-service business model.
Existing assets remain to be sold. And they will be over time.

I have suggested that one only need look to Wyndham for how this might evolve.
Marriott has taken the first steps with creating a standardized currency (with attendant infrastructure), and is bundling for-fee services.

With all due respect to the WSJ article you reference, its author demonstrated no insight to the working dynamics of the industry. Understandably, they had to put something in print. Nonetheless, it was superficial, knee-jerk reporting, IMO. Certainly not forward looking analysis.

None of this negates the structural issues which created the problem.
At the end of the day, timeshare developers fell victim to their own success.
The market is awash in cheap inventory readily available in an internet-based marketplace.
Developers can no longer effectively compete with their owners for a sale.

The world does not need more timeshares developed anytime in the foreseeable future. Marriott was the most aggressive. Hence, was left holding the largest bag.
The economic/credit market contraction of 2008 hastened the fall (and exacerbated the structural problems inherent in fractional ownership of real estate).

Marriott's response to this reality is to recast the business.
Its success remains to be seen. Nonetheless, attempting to prognosticate Spinco's future prospects based on an asset based model is missing the mark, IMO. Service consolidation is the name of the game. The opportunities are huge.

Does this preclude future development? Of course not. But, it will be in response to heretofore untapped markets in the world, likely integrate hotel assets, and take on a substantial rental component. The pieces are in place. But, that is the subject for another discussion.

The SEC is indeed chartered "to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.......". They are not passive bystanders. But, we certainly are.

No doubt, informed investors do their homework. Research should begin with an understanding of the business model.
Given the value of the Marriott brand, its large and well-heeled owner base, its operations management expertise, and Spinco's newly found freedom to pursue service consolidation ventures, it may work out well for shareholders.
Time will tell.