Marriott to Spin Off Timeshare Business [merged]

[littlestar]

I'm wondering if Wyndham is next to go stand alone on timeshare business:
http://www.benzinga.com/analyst-rat...mments-on-wyndham-worldwide-wyn#ixzz1E85Q2OZM

Interesting stuff.

 

[timeos2]

I'm wondering if Wyndham is next to go stand alone on timeshare business:

http://www.benzinga.com/analyst-rat.../02/861932/deutsche-bank-comments-on-wyndham-

Interesting stuff.

Of course it's possible but less likely as they already seem to jave a model of relative independent operation that works largely based on management rather than new sales. Sales at Wyndham may face big changes and what they really need is to turn operations over to independent owners at the resorts. Hopefully that will occur and that system will remain one of the truly great values, at resale purchase, in all of timeshare. If sales wins control it may implode spectacularly. It appears operations (the growth is from new management contracts NOT new buildings) has the edge in that situation so far at Wyndham....
Interesting times in all of timeshare.

 

[SueDonJ]

It's interesting how TUGgers cherry-pick select quotes to bolster their position, isn't it? If anyone is interested in viewing ALL of Marriott's quotes the transcript from the conference call can be found here at seekingalpha.com. The Q&A session following is worth a read, too.

There's no doubt that we have good reason to be concerned about the future of Marriott timeshares. But I don't agree that it's time to sound the death knoll. Marriott's made a logical, rational business decision here similar to others in their history that have strengthened their offerings. This bears watching, of course, but the economy has been and will continue to be the primary driver of all timeshare business.

These are the conference call quotes that I find most interesting:

Arne Sorenson: "Our Timeshare business had a great 2010, rolling out the Marriott Vacation Club Destinations Points Program to great success, providing owners with greater flexibility and choice. And the business continued to right-size its overhead as well as its sales and marketing costs. And for Timeshare, bigger changes are in the offing. Last night, as you know, we announced a plan to divide the company's Lodging and Timeshare businesses into two separate publicly traded companies through a special tax-free dividend to our shareholders. While many of you might first think this is Marriott International exiting the Timeshare business, we do not view it that way. We see it as setting up a platform for the Timeshare business still linked to the Marriott and Ritz-Carlton brands to grow faster with independent capitalization but still adding loyal Marriott customers as they grow."

...

"For more about the business, I've asked Steve Weisz, the future CEO of the new Timeshare company, to talk to you a bit about MVCI's prospects. A 37-year Marriott veteran, Steve is a tremendous leader, understands this business very well and has done an outstanding job in his almost 14 years at the MVCI helm."

Stephen Weisz: "While we aren't naming the new company today, we know that when we do, it will include the name Marriott because of the tremendous competitive advantage the name conveys. In fact, we will have the exclusive rights to both the Ritz-Carlton and Marriott names as they apply to the Timeshare business under a long-term agreement, for which we will pay a franchise fee to Marriott. At the same time, we will also be able to develop and operate Timeshare resorts under other brand names."

...

"Bill Shaw, who is retiring as Vice Chairman of Marriott at the end of March, will become Chairman of the Board of our new public Timeshare company. Bill's strong leadership, business and finance acumen and core belief in Marriott culture will serve our public shareholders well. Debbie Marriott Harrison, Mr. Marriott's daughter, will also serve on our Board of Directors. The Timeshare business is highly regulated, and Debbie's experience in corporate affairs at Marriott International makes her a great addition to the board."

...

"Looking further ahead, while we don't expect the new company to be investment-grade in the near term, we do expect that it will continue to securitize its consumer notes receivable and should require little additional incremental capital. We believe we will have the economic strength and flexibility to weather further economic cycles as well as grow over time."

And from this reuters.com article, "... After a special dividend, the Marriott family is expected to hold around 21 percent of the outstanding common stock of each company."

So Marriott is saying that they're spinning off the timeshare business in an effort to focus better solely on what it needs to prosper; they're putting strong, effective Marriott, Int'l leaders including a Marriott family member into position in the new company, and they intend to hold an equal percentage of ownership in the new company as they hold in Marriott, Int'l. Those are positive indicators, IMO.

 

[littlestar]

I enjoy my Wyndham points membership/resorts, but the Marriott quality at Marriott timeshare resorts is extra special. I hope Marriott makes a success out of the spin off because I'd sure miss staying in and at Marriott Vacation Club resorts with the quality i've grown to love.

 

[jlf58]

Thats makes no sense. It's a process and this is the first step in a process. They will now be in a position to florish, fail or sell, none of which will hurt Marriott.



If they wanted to walk, they would have sold it lock stock and barrel.[/QUOTE]

 

[SueDonJ]

Of course it's possible but less likely as they already seem to jave a model of relative independent operation that works largely based on management rather than new sales. Sales at Wyndham may face big changes and what they really need is to turn operations over to independent owners at the resorts. Hopefully that will occur and that system will remain one of the truly great values, at resale purchase, in all of timeshare. If sales wins control it may implode spectacularly. It appears operations (the growth is from new management contracts NOT new buildings) has the edge in that situation so far at Wyndham....
Interesting times in all of timeshare.

John, what it comes down to is that some of us don't WANT a 100% owner-controlled timeshare! We bought Marriott specifically for the brand standard and hotel relationship, knowing full well that it will cost us more in maintenance and management fees (as opposed to the timeshare model you prefer, with less developer/manager oversight and fewer amenities, appointments and fees.) We've had this discussion before and it's worth saying again - there is no one ideal model of timeshare to fit every owner's preferences or budgets.

I enjoy my Wyndham points membership/resorts, but the Marriott quality at Marriott timeshare resorts is extra special. I hope Marriott makes a success out of the spin off because I'd sure miss staying in and at Marriott Vacation Club resorts with the quality i've grown to love.

Yep, I agree completely about what Marriott offers, and that's why I'm encouraged by their efforts to branch out into the more-flexible DC system, and to stem their timeshare business' drag-down effect in this economy on Marriott, Int'l.

 

[timeos2]

John, what it comes down to is that some of us don't WANT a 100% owner-controlled timeshare! We bought Marriott specifically for the brand standard and hotel relationship, knowing full well that it will cost us more in maintenance and management fees (as opposed to the timeshare model you prefer, with less developer/manager oversight and fewer amenities, appointments and fees.) We've had this discussion before and it's worth saying again - there is no one ideal model of timeshare to fit every owner's preferences or budgets.



Yep, I agree completely about what Marriott offers, and that's why I'm encouraged by their efforts to branch out into the more-flexible DC system, and to stem their timeshare business' drag-down effect in this economy on Marriott, Int'l.

Owner controlled certainly does not mean it can't also be a Marriott. It does mean they would be challenged to offer real value to owners vs simply setting the corporate desire for return and billing owners to reach it. It would mean competitive bids for services - to the required standards - to get best value for the dollar spent vs imposed no bid contracts with often obscene profits & 15% overhead - all charged to owners because the Board doesn't question it - they benefit from it!

Not having Owner vs Corporate control leads to out-of-control fees and ultimately can destroy the value of your purchase. I don't agree with your view at all but I fully agree that it is your right to have it. I hope we can agree to be in disagreement on that point.

 

[camachinist]

As Mr. Weisz apparently currently sits on the BOD of a consumer feedback firm, Mindshare Technologies, since 2004, one might ponder the significance of that in light of Marriott's/MVCI's traditional (lack of) responsiveness to customer feedback as experienced at all levels of timeshare ownership.

Is the 'advocate' here on TUG a sign of change from the traditional stance of Marriott not directly communicating with customer groups like TUG? Is that presence part of the transition to the spun-off timeshare company?

I always wondered why Marriott didn't integrate the clunky timeshare reservation system into the smooth and seemless MARSHA they use for hotel reservations. Now it makes more sense.

I have no opinion about the change but am watching rental prices closely. So far, prime weeks at NCV are still going for 2X MF's so I'm not complaining. Gold weeks are down from traditional highs but I'm blaming the economy for that. Also, there are a lot more rental weeks on the market than in the past, perhaps partly due to the resort being built out as well as the sluggish economy in some sectors. For me, irrespective of sunk costs, it's still a viable vehicle for vacations and income. Time will tell if the changes will affect that opinion or not.

Thanks to TUG for bringing this change to light. As a MAR shareholder, I'm sure I would have learned about it eventually, but my focus has been elsewhere.

 

[SueDonJ]

Owner controlled certainly does not mean it can't also be a Marriott. It does mean they would be challenged to offer real value to owners vs simply setting the corporate desire for return and billing owners to reach it. It would mean competitive bids for services - to the required standards - to get best value for the dollar spent vs imposed no bid contracts with often obscene profits & 15% overhead - all charged to owners because the Board doesn't question it - they benefit from it!

Not having Owner vs Corporate control leads to out-of-control fees and ultimately can destroy the value of your purchase. I don't agree with your view at all but I fully agree that it is your right to have it. I hope we can agree to be in disagreement on that point.

Oh sure, I don't think we're arguing about this, just don't see things the same way! No harm, no foul. That's what's great about timeshare variety, we both can have what we want.

If it was possible to have the best of Marriott's offerings without the level of control that Marriott holds and exerts, then like you I'd be all for more owner input and control. But that's not a choice we're given. So if my choice is either a Marriott resort with all the inherent good and bad, or a non-Marriott resort with more owner input and control, I'll take the Marriott.

 

[Werner Weiss]

Wall Street likes "pure play" companies. The main goal is to increase overall shareholder equity. This is a case where the sum of the parts is expected to be more than if Marriott had been left whole.

Here's a summary posted at CityBiz Real Estate: Analyst: Marriott's Timeshare Spin-Off Perk for Shareholders

The good thing for us, as owners of Marriott weeks (or DC points), is that nobody wants the Marriott Vacation Club of 2012 and beyond to look any different to current and prospective owners than it does today — and certainly nobody wants the spinoff to fail.

MVCI has been run as separate division within Marriott International. Now it will be "more separate," with its own shareholders, directors, and executive management that does not answer to Marriott International.

The spinoff, if properly managed, has the opportunity to thrive when consumer confidence improves. Except in recent years, Marriott's timeshare business was a profitable part of Marriott International.

Ideally, cut lose from the parent company, the spinoff will be more nimble and better positioned to work with non-Marriott entities if there are business opportunities. I think we will see new locations developed in partnership with developers who have access to capital.

I'm not worried about the beautiful resorts where I own weeks or the viability of the spinoff to continue the high level of quality to which we've become accustomed.

I realize that some people are worried that this is bad news. I'm not one of them.

 

[windje2000]

I'm wondering if Wyndham is next to go stand alone on timeshare business:
http://www.benzinga.com/analyst-rat...mments-on-wyndham-worldwide-wyn#ixzz1E85Q2OZM

Interesting stuff.

Equally interesting is that IIRC, Deutsche Bank is advising Marriott on this spin off.

 

[timeos2]

If it was possible to have the best of Marriott's offerings without the level of control that Marriott holds and exerts, then like you I'd be all for more owner input and control. But that's not a choice we're given. So if my choice is either a Marriott resort with all the inherent good and bad, or a non-Marriott resort with more owner input and control, I'll take the Marriott.

Ah but you are! Press to get real owners as Board candidates & work to get them elected. Once they have the majority things can be done for the owners vs the Marriott licensing agency. That would be a much better outcome for owners.

 

[timeos2]

I'm not worried about the beautiful resorts where I own weeks or the viability of the spinoff to continue the high level of quality to which we've become accustomed.

I realize that some people are worried that this is bad news. I'm not one of them.

I wouldn't worry about resort quality as if they are to keep the M name on the doors they must meet whatever those are. The worry is how do you get there. What cost to license the M? What contractors are you forced to pay far higher then prevailing rates for maintenance & upgrades on a no bid contract vs a competitive bid process for the exact same result at a (usually) better rate? What are the fees going to be when they know you want that name and they can charge whatever they want and with fees the only income for what will now be your mother company? How long before they exceed even the highest going rental values in the top times - forget the slightly off season or worse that get hit even harder (and may well start to default in droves)? That is the worry not the look & feel of the resorts. The costs are what will kill value.

 

[SueDonJ]

Ah but you are! Press to get real owners as Board candidates & work to get them elected. Once they have the majority things can be done for the owners vs the Marriott licensing agency. That would be a much better outcome for owners.

Hmmmm. For the last few elections at both my resorts, the Board candidates have all been owners and there wasn't anything in their bios that pointed to them as obvious Marriott plants. It's possible, sure, but I think it's more possible that if an Owner loves the resort/their ownership enough to run for the position, then chances are the Owner loves Marriott, too. Heck, I'd consider a run but I'd hate to have to give up the "free" voice I have here on TUG. (Plus it's for sure that there others whose professional expertise would serve the Board and Owners much better than I could. And it's much more certain that if the majority ownership thinks like most of TUG does that cost-saving is Priority One, I wouldn't have a chance!)

In a lot of these discussions you mention the price differential of goods if we weren't hostage to Marriott's choice of vendors/contractors. Sure, Marriott demands a certain standard and in some cases will not allow the Board to determine choices. (I think this happened with at least one aspect of Aruba Ocean Club's recent refurb, where Marriott contracted with a local artist for very specific, expensive chandeliers for the lobby. The product was chosen by Marriott for its uniqueness which satisfies the brand standard set by Marriott; it doesn't appear the Board was asked or allowed to research less-expensive alternatives.) But there are instances where the Board can exert influence and does - SurfWatch is undergoing a refurb now and the Board located a Hilton Head resident who is renovating the existing TV cabinets for $100 each. That's a substantial savings from the $800 new cabinets that were recommended.

It's a balancing act between owners and Marriott, with Marriott holding most of the cards. If you want their name on the door and all the related benefits of the brand, you can push only so far - which is not nearly as far as what's allowed with the type of ownership/oversight you prefer.

 

[MALC9990]

Clunky timeshare reservation system ?

As Mr. Weisz apparently currently sits on the BOD of a consumer feedback firm, Mindshare Technologies, since 2004, one might ponder the significance of that in light of Marriott's/MVCI's traditional (lack of) responsiveness to customer feedback as experienced at all levels of timeshare ownership.

Is the 'advocate' here on TUG a sign of change from the traditional stance of Marriott not directly communicating with customer groups like TUG? Is that presence part of the transition to the spun-off timeshare company?

I always wondered why Marriott didn't integrate the clunky timeshare reservation system into the smooth and seemless MARSHA they use for hotel reservations. Now it makes more sense.

I have no opinion about the change but am watching rental prices closely. So far, prime weeks at NCV are still going for 2X MF's so I'm not complaining. Gold weeks are down from traditional highs but I'm blaming the economy for that. Also, there are a lot more rental weeks on the market than in the past, perhaps partly due to the resort being built out as well as the sluggish economy in some sectors. For me, irrespective of sunk costs, it's still a viable vehicle for vacations and income. Time will tell if the changes will affect that opinion or not.

Thanks to TUG for bringing this change to light. As a MAR shareholder, I'm sure I would have learned about it eventually, but my focus has been elsewhere.

Do we own with the same MVCI or is there another with the clunky reservation system? Seems to me that the MVCI that I own with has a reservation system that allows me to log on to my account at Myvacationclub, click on Check Availability, select the resort I want to reserve at, choose the week and check-in date and about 2 mins later my confirmation is printed and the reservation appears in my MR account list of upcoming reservations.

That is not Clunky !

Also, can someone enlighten me on the importance of TS rental rates - didn't we buy our timeshares for vacations? I know I bought my timeshares with Marriott to enjoy vacations not to go into the vacation rental business. Rental rates have no relevance to me since I bought TS to vacation not to rent.

I can understand the focus on rental rates if I had a condo that I used for only part of the year and wanted to rent out the remaining weeks to offset my costs but buying TS weeks to use as a rental business just does not make sound business sense to me. I say this as someone who owns a Condo that is rented 52 weeks of the year and is profitable. It will not make me fabulously wealthy but the return on investment is way better than the bank is paying on deposits and is as good as most corpporate bonds are paying.

 

[wof45]

I wouldn't worry about resort quality as if they are to keep the M name on the doors they must meet whatever those are. The worry is how do you get there. What cost to license the M? What contractors are you forced to pay far higher then prevailing rates for maintenance & upgrades on a no bid contract vs a competitive bid process for the exact same result at a (usually) better rate? What are the fees going to be when they know you want that name and they can charge whatever they want and with fees the only income for what will now be your mother company? How long before they exceed even the highest going rental values in the top times - forget the slightly off season or worse that get hit even harder (and may well start to default in droves)? That is the worry not the look & feel of the resorts. The costs are what will kill value.

we currently own 4 condos and one of the biggest problems with them are the owners who are elected because they want to save money and lower MF. The result is the that quality suffers -- landscaping, maintenance, painting, parking areas, roofs, etc.

We used to laugh about the longtime owners who are now living on SS and cannot afford to pay their MF, so all the rest of us suffer as they hold down their costs.

Do you really want resorts where people want to pay the same MF as they did ten years ago? You should look at all of the small, older places in Orlando, Treasury Island, Cocoa Beach, etc, and decide if that is the way you would like to see the MVC resorts go.

 

[timeos2]

Do you really want resorts where people want to pay the same MF as they did ten years ago? You should look at all of the small, older places in Orlando, Treasury Island, Cocoa Beach, etc, and decide if that is the way you would like to see the MVC resorts go.

No. And if that type permeate the Board then THEY need to be booted off! I do know what you mean. I see a classic example at two resorts that had to replace roofs. They both had cement based tile look roofs - very upscale but installed wrong by the developer and the expected life of 30 years was cut to 15 to 20 requiring near term replacement. Both looked at options. real tile slightly fragile - 30years+/- but VERY costly. Metal - less than glazed tile but still architecturally pleasing & 30-50 year minimum life. The same cement tile they had - cheaper still but limited life & very fragile and finally asphalt shingles. Cheap but poor look & limited 20-25 year life at best.

They parted ways on the correct answer. One decided maintaining the original high tech look of the tile was a key part of the resort charm/architecture and decided to use the expensive glazed tile on all the buildings that were 1 or 2 stories with highly visible roofs. For the taller buildings they opted for the metal. Long life, still high end pleasing look that fit the resorts but less visible - saving $3 MILLION dollars with that choice over 100% glazed tile for all buildings. They also opted to do the work immediately as they knew there were serious problems and a future hurricane could cause serious damage to the recently renovated units. Since this was unexpected and nearly 15 years early by the reserve funding plan they had to go for a hated Special Assessment OR get a tough to obtain loan to cover the costs & thus spread the fee over 10 years for owners - avoiding the SA. They were able to do so thanks to excellent collections history & thus the work was done within a year. The annual Insurance savings thanks to the new design & materials ended up being over $100K PER YEAR helping pay for the work.

The other resort did $500K in temporary repairs and then, five years later, decided to reroof with asphalt shingles for $1.5 million more that required a SA. And they won't get any insurance savings as the new design doesn't improve the buildings storm/water resistance. Plus it looks awful - cheap like most shingles will.

Which group do I think did the right thing even though it cost far more? The first by a landslide. So it isn't just the bottom line it is getting the best for the dollar. If we had to pay 40-50% premium because we HAD to use a captive contractor and their markup a well as a 15% overhead to the management company as Marriott and many others charge then the better option would not have been as attractive in cost/benefit and may not even been affordable for our owners. Getting the best for the best prices let us get top of the line and kept it affordable. That is what a Marriott type contract prevents and why fees rise unnecessarily higher when your Board uses such a management agreement. We've had one once and learned it is NOT the way to go.

I don't mind spending money for what is needed and for desirable upgrades - in fact I often push for it. But not one dollar goes to overhead if it doesn't absolutely have to. Best bang for the buck is what we get and quality doesn't have to suffer - and in fact may be improved for it. I hate resorts that "cheap out" on things but I want responsible use of every dollar when they are spent. 15-50% to useless corporate overhead is not good use of my funds. A top quality and ever improving resort is. It's that simple.

 

[chalee94]

Also, can someone enlighten me on the importance of TS rental rates - didn't we buy our timeshares for vacations?

if you are paying $1000 in annual dues for a timeshare and i - as a nonowner - can rent the same week in the same unit for $400, how much value does your timeshare have?

if marriott were to raise annual dues such that they were virtually always higher than a typical rental rate, what would that suggest to you about the viability of the timeshare business model?

 

[pedro47]

No. And if that type permeate the Board then THEY need to be booted off! I do know what you mean. I see a classic example at two resorts that had to replace roofs. They both had cement based tile look roofs - very upscale but installed wrong by the developer and the expected life of 30 years was cut to 15 to 20 requiring near term replacement. Both looked at options. real tile slightly fragile - 30years+/- but VERY costly. Metal - less than glazed tile but still architecturally pleasing & 30-50 year minimum life. The same cement tile they had - cheaper still but limited life & very fragile and finally asphalt shingles. Cheap but poor look & limited 20-25 year life at best.

They parted ways on the correct answer. One decided maintaining the original high tech look of the tile was a key part of the resort charm/architecture and decided to use the expensive glazed tile on all the buildings that were 1 or 2 stories with highly visible roofs. For the taller buildings they opted for the metal. Long life, still high end pleasing look that fit the resorts but less visible - saving $3 MILLION dollars with that choice over 100% glazed tile for all buildings. They also opted to do the work immediately as they knew there were serious problems and a future hurricane could cause serious damage to the recently renovated units. Since this was unexpected and nearly 15 years early by the reserve funding plan they had to go for a hated Special Assessment OR get a tough to obtain loan to cover the costs & thus spread the fee over 10 years for owners - avoiding the SA. They were able to do so thanks to excellent collections history & thus the work was done within a year. The annual Insurance savings thanks to the new design & materials ended up being over $100K PER YEAR helping pay for the work.

The other resort did $500K in temporary repairs and then, five years later, decided to reroof with asphalt shingles for $1.5 million more that required a SA. And they won't get any insurance savings as the new design doesn't improve the buildings storm/water resistance. Plus it looks awful - cheap like most shingles will.

Which group do I think did the right thing even though it cost far more? The first by a landslide. So it isn't just the bottom line it is getting the best for the dollar. If we had to pay 40-50% premium because we HAD to use a captive contractor and their markup a well as a 15% overhead to the management company as Marriott and many others charge then the better option would not have been as attractive in cost/benefit and may not even been affordable for our owners. Getting the best for the best prices let us get top of the line and kept it affordable. That is what a Marriott type contract prevents and why fees rise unnecessarily higher when your Board uses such a management agreement. We've had one once and learned it is NOT the way to go.

I don't mind spending money for what is needed and for desirable upgrades - in fact I often push for it. But not one dollar goes to overhead if it doesn't absolutely have to. Best bang for the buck is what we get and quality doesn't have to suffer - and in fact may be improved for it. I hate resorts that "cheap out" on things but I want responsible use of every dollar when they are spent. 15-50% to useless corporate overhead is not good use of my funds. A top quality and ever improving resort is. It's that simple.

I agree with above statement 100 %.

 

[wuv pooh]

Stephen Weisz: "While we aren't naming the new company today, we know that when we do, it will include the name Marriott because of the tremendous competitive advantage the name conveys. In fact, we will have the exclusive rights to both the Ritz-Carlton and Marriott names as they apply to the Timeshare business under a long-term agreement, for which we will pay a franchise fee to Marriott. At the same time, we will also be able to develop and operate Timeshare resorts under other brand names."

They will also have the ability to run the exchange system for other brand names through the new exchange company that they formed. As the largest and most respected independent timeshare company it will be interesting to see what happens. I am sure that other companies have similar issues that led to the Marriott decision. Maybe 4 Seasons, Starwood, Hilton, Disney, etc. When Marriott spun off the real estate business they funded many luxury hotels that were not Marriott branded. I would not be suprised to see future changes as most believe that the timeshare industry has to consolidate to cut costs and propsper going forward.

 

[Big Matt]

For all of you out there spinning the doom and gloom, read this post. I don't know who this is coming out of the woodwork with post #1, but it is the one post in this entire thread that is on point and based in fact.

Marriott is just separating the assets/debt from their hotel management company just like they did with Host Marriott (a reit).

I predict that this new spin off will buy and sell properties just like Host has done. Host owns many properties that are managed by other big name brands including Hilton, Hyatt, Le Meriden, most Starwood properties, and yes Marriott and Ritz Carlton.

Marriott will still manage timeshares, just like it manages hotels. This also opens up the door for Marriott to managed timeshares that they didn't develop. Wait and see.

Hey Folks --- This operations vs capital dilemma is not new for Marriott. So, before jumping to conclusions as to eventualities, let's try some historical perspective:

Those of us who are Marriott hotel junkies remember it was 20 years ago and three economic cycles ago that the old Marriott itself was split into two new companies for --- guess what --- the purpose of isolating capital debt (caused at that time mainly by hotel overbuilding).

That plan had two parts and successfully solved the company's capital problems of the era:

Part 1. The "old" Marriott was split into two new entities:

A. The new Marriott International became the hotel operating and franchising company (and developer/manager of the MVCI/MORI resorts).

B. The new Host-Marriott became - among other things - the debtor of the company's capital debt.

Part 2. The company moved into the hotel franchising business big time -- which brought many new players into the fold to manage AND INCUR DEBT to build, open and/or manage Marriott-branded hotels (and allowed multi-branding of hotels with varying amenities).

This two-step initiative was designed - and was successful - in doing one of the things that Marriott is now attempting to do with MVCI/MORI resorts --- to isolate and service resort development debt.

If that part was successful with the hotels 20 years ago - Marriott is probably thinking - why not try it with the timeshare system?

What goes around comes around!

 

[hotcoffee]

. . . I would not be suprised to see future changes as most believe that the timeshare industry has to consolidate to cut costs and propsper going forward.

I do not think that consolidation would necessarily be a bad thing overall. Suppose that one of more of Starwood's timeshare business, Disney's, Marriott's, and others got together like the airlines have done? More choses. More options. Maybe not so bad.

If the economy were to really heat up again maybe timesharing will once again become viable, but I am not holding my breath. There are a lot of issues that are dissimilar to the situation 10, 20, or 30 years ago. I do not think our economy will ever be what it was in past years. Things are different now.

 

[pgnewarkboy]

It's interesting how TUGgers cherry-pick select quotes to bolster their position, isn't it? If anyone is interested in viewing ALL of Marriott's quotes the transcript from the conference call can be found here at seekingalpha.com. The Q&A session following is worth a read, too.

There's no doubt that we have good reason to be concerned about the future of Marriott timeshares. But I don't agree that it's time to sound the death knoll. Marriott's made a logical, rational business decision here similar to others in their history that have strengthened their offerings. This bears watching, of course, but the economy has been and will continue to be the primary driver of all timeshare business.

These are the conference call quotes that I find most interesting:

Arne Sorenson: "Our Timeshare business had a great 2010, rolling out the Marriott Vacation Club Destinations Points Program to great success, providing owners with greater flexibility and choice. And the business continued to right-size its overhead as well as its sales and marketing costs. And for Timeshare, bigger changes are in the offing. Last night, as you know, we announced a plan to divide the company's Lodging and Timeshare businesses into two separate publicly traded companies through a special tax-free dividend to our shareholders. While many of you might first think this is Marriott International exiting the Timeshare business, we do not view it that way. We see it as setting up a platform for the Timeshare business still linked to the Marriott and Ritz-Carlton brands to grow faster with independent capitalization but still adding loyal Marriott customers as they grow."

...

"For more about the business, I've asked Steve Weisz, the future CEO of the new Timeshare company, to talk to you a bit about MVCI's prospects. A 37-year Marriott veteran, Steve is a tremendous leader, understands this business very well and has done an outstanding job in his almost 14 years at the MVCI helm."

Stephen Weisz: "While we aren't naming the new company today, we know that when we do, it will include the name Marriott because of the tremendous competitive advantage the name conveys. In fact, we will have the exclusive rights to both the Ritz-Carlton and Marriott names as they apply to the Timeshare business under a long-term agreement, for which we will pay a franchise fee to Marriott. At the same time, we will also be able to develop and operate Timeshare resorts under other brand names."

...

"Bill Shaw, who is retiring as Vice Chairman of Marriott at the end of March, will become Chairman of the Board of our new public Timeshare company. Bill's strong leadership, business and finance acumen and core belief in Marriott culture will serve our public shareholders well. Debbie Marriott Harrison, Mr. Marriott's daughter, will also serve on our Board of Directors. The Timeshare business is highly regulated, and Debbie's experience in corporate affairs at Marriott International makes her a great addition to the board."

...

"Looking further ahead, while we don't expect the new company to be investment-grade in the near term, we do expect that it will continue to securitize its consumer notes receivable and should require little additional incremental capital. We believe we will have the economic strength and flexibility to weather further economic cycles as well as grow over time."

And from this reuters.com article, "... After a special dividend, the Marriott family is expected to hold around 21 percent of the outstanding common stock of each company."

So Marriott is saying that they're spinning off the timeshare business in an effort to focus better solely on what it needs to prosper; they're putting strong, effective Marriott, Int'l leaders including a Marriott family member into position in the new company, and they intend to hold an equal percentage of ownership in the new company as they hold in Marriott, Int'l. Those are positive indicators, IMO.

Glad to hear that everything is wonderful in Marriott La La land where only good things happen for the corporation, shareholders, and those who bought Marriott timeshares to see them disappear as part of Marriott - the reason they bought in the first place. Sorry but the above is nothing but corporate BS. What are they going to say, the truth? Never. The stock market has evaluated the deal. Marriott stock went up after the announcement because they got rid of a drag on their earnings. It is not, and never will be, a good deal for those who bought from Marriott. The new company does not and will not ever have the financial clout and marketing power of Marriott. For Marriott timeshare owners the future just got alot dimmer.

 

[SueDonJ]

Glad to hear that everything is wonderful in Marriott La La land where only good things happen for the corporation, shareholders, and those who bought Marriott timeshares to see them disappear as part of Marriott - the reason they bought in the first place. Sorry but the above is nothing but corporate BS. What are they going to say, the truth? Never. The stock market has evaluated the deal. Marriott stock went up after the announcement because they got rid of a drag on their earnings. It is not, and never will be, a good deal for those who bought from Marriott. The new company does not and will not ever have the financial clout and marketing power of Marriott. For Marriott timeshare owners the future just got alot dimmer.

Actually, if everything was wonderful in my Marriott La La land then I'd be able to split my m/f in half and double my Weeks. And turn them into fixed units/Weeks, too, yeah that's the ticket. But too bad so sad, everything is NOT wonderful and I'm not sure how you get that I think it is from what I wrote, which was, "There's no doubt that we have good reason to be concerned about the future of Marriott timeshares" and "These are good indicators."

So tell me, knowing that the timeshare segments are, have been, and will continue to be a drain on Marriott, Int'l throughout the economy's slow and uncertain improvement, which means the hesitancy on the part of investors and shareholders will sooner rather than later become a total lack of patience, what would YOU do if you were in charge of MVCI's business? Would you sit tight and simply hope that the stockholders who don't own the timeshares would be willing to ride out the storm with you? Make no effort at all to protect a business segment which is a money-making operation for you? Because that would be an even more risky business venture than this spin-off appears to be, IMO.

 

[disnefile]

Glad to hear that everything is wonderful in Marriott La La land where only good things happen for the corporation, shareholders, and those who bought Marriott timeshares to see them disappear as part of Marriott - the reason they bought in the first place. Sorry but the above is nothing but corporate BS. What are they going to say, the truth? Never. The stock market has evaluated the deal. Marriott stock went up after the announcement because they got rid of a drag on their earnings. It is not, and never will be, a good deal for those who bought from Marriott. The new company does not and will not ever have the financial clout and marketing power of Marriott. For Marriott timeshare owners the future just got alot dimmer.

You got it right. I can't believe there are still some people who think this may not be a very bad deal. Things will not change at first but wait a year or two. Todays resale prices will look good. But Marriott International will get fees from the Timeshare. They have nothing to lose but alot to gain.