Marriott to Spin Off Timeshare Business [merged]

[pgnewarkboy]

Let me summarize all I have read here. There is no valid argument that owners are better off as a result of this spinoff. The most optimistic hope that spinco will be a great company and the Marriott name will still have weight. The main point is that "hope" is now the operative word for the most optimistic. This is a bad deal for Marriott Timeshare owners. It is a good deal for Marriott Corporation. Owners can now hope for the best when before they had no need for hope.

Furthermore, any new buyers into the system will have to be told as a matter of law that they are not buying from Marriott or into Marriott. They are buying from or in to Spinco.

 

[SueDonJ]

Let me summarize all I have read here. There is no valid argument that owners are better off as a result of this spinoff. The most optimistic hope that spinco will be a great company and the Marriott name will still have weight. The main point is that "hope" is now the operative word for the most optimistic. This is a bad deal for Marriott Timeshare owners. It is a good deal for Marriott Corporation. Owners can now hope for the best when before they had no need for hope.

Furthermore, any new buyers into the system will have to be told as a matter of law that they are not buying from Marriott or into Marriott. They are buying from or in to Spinco.

Any Owner (TUGgers especially, because we've been discussing all this for ages now) who wasn't hoping last week, or last month, or anytime during the last few years that Marriott would be able to figure out a way to combat the poor economy's effect on timeshare sales would have had to have their heads stuck firmly in the sand, IMO. The writing's been on the wall for quite a while now.

Consumers buy products all the time from subsidiaries and spin-offs knowing full well that the parent company can unilaterally separate itself from the product. Marriott has said that they know the brand name sells and that they need to keep it on the product if they want to continue to profit from it when it's spun off. Like others have said, Marriott isn't stupid and they're not going to leave the product completely unprotected.

 

[dan_hoog]

Notice the smily face -- It is a remark on how corps sometimes try to alter the playing field through odd means, not a recommendation.

Really? Are you really touting the benefits of price-fixing? Just think it through a smidgen: you want to rent your unit, but nobody is biting at your 2x maintenance fee rate. So, ...? You can't cut your price, so you can't rent at all. Maybe this great idea isn't so great. Maybe.

 

[wof45]

Spinco will have a lot more flexibility with the unused inventory than Marriott Inc does right now. If spinco can focus on getting the unused inventory disposed of - even at a discount, so that mf revenues are in and foreclosures down, this whole thing can turn around.

The land trust does have value, and while the timeshare interests may be worthless as resales, I am quite certain that the underlying real property owned by my 3bdr at grande vista is more than the 7000$ I paid for it. Do The math the land and building is worth more that 192 per sq ft.

Mf may be high, and I see many people moaning about all of this. Tough times don't last forever and the resale values reflect market conditions and the fact that developer overcharged.

If you can't afford to hold, walk. If you bought retail don't ever expect to get your initial outlay back.

I believe that many people here are drinking the koolaid without actually analyzing the financials.

Marriott MVC is not losing money, it is just not earning as quickly as it was several years ago. That has an effect on the future stock value, but the value is not negative.

I believe the analysis is also fairly straightforward that MVC does not need to have a firesale on points. We know that they sell weeks and now points for 5-10 times the development cost, and we also know that the maintenance costs are less than 5% of the sale price, so MVC can easily afford to sit on inventory as long as they turn it all over in less than 5 years, which it appears they are doing even in this recession. (even if tuggers don't buy even a single point).

You should worry a little about your investment at GV since 50 weeks times $7,000 is $350,000 and I'm not sure that a condo in Orlando is worth that these days.

But you do get good trades based on MF paid, so you will do well if you enjoy the vacations for 10-20 years or so. In the worse case, you can convert your weeks to DC points and rent the points for 50 cents per point.

We've already had our weeks 10-2 years, so we can't complain except that it would be nice to be able to sell and get some real cash.

 

[bogey21]

Furthermore, any new buyers into the system will have to be told as a matter of law that they are not buying from Marriott or into Marriott. They are buying from or in to Spinco.

You better believe that when Marriott creates an official name for Spinco it will be Marriott something!

George

 

[tombo]

Let me summarize all I have read here. There is no valid argument that owners are better off as a result of this spinoff. The most optimistic hope that spinco will be a great company and the Marriott name will still have weight. The main point is that "hope" is now the operative word for the most optimistic. This is a bad deal for Marriott Timeshare owners. It is a good deal for Marriott Corporation. Owners can now hope for the best when before they had no need for hope.

Furthermore, any new buyers into the system will have to be told as a matter of law that they are not buying from Marriott or into Marriott. They are buying from or in to Spinco.

I agree. Hope springs eternal but the dumping of MVCI by Marriott is forever. If MVCI was a good thing Marriott would have kept it. If they had forecast a rebound in future sales Marriott would have kept it. If there was a viable business plan to right the sinking ship they would have implemented it (points was an attempt). Marriott has thrown in the towel and all that is left is to hope that the Spinco division will not file bankruptcy, hope that Spinco will not sell to a company that will not retain or be allowed to retain the Marriott name, and to hope that the assessments and MF increases will be gradual and not 10% to 20% every year. Hope and $5 will buy a cup of latte' at Starbucks.

In an earlier post I asked if any were considering buying points retail from Spinco/Marriott after researching the current situation and why. No responses. If this is a great thing, a good thing, or no change at all it would seem that some would be jumping on the deals Marriott will be offering soon to sell points. Several Tuggers purchased additional retail points. Some were considering it. Where are all of the HOPEFUL buyers? I wouldn't buy now for 75% off the price they were charging last month. In fact I have already called an interested buyer HOPING I can sell my Marriot week before it is too late.

I think now would be a great time for all the Marriott lovers and eternal optimists to put their money where their mouth is. Since the future is bright, now is the time to buy. Points will keep increasing in price as the company gets stronger and stronger. Buy now at the bottom. If you are that confident buy a bunch of points while they are cheap.

Will any of the people who think the spin off is great, beneficial, a wonderful thing with a great future go ahead and buy a bunch of retail Spinco/marriott points? I doubt it. Optomistic is one thing, placing money on a bet this risky is another.

 

[wof45]

I think now would be a great time for all the Marriott lovers and eternal optimists to put their money where their mouth is. Will any of the people who think the spin off is great, beneficial, a wonderful thing with a great future go ahead and buy a bunch of retail Spinco/marriott points?

I believe that those who predict the huge ROFR fees for points resales are wrong, and that in the future there will be the opportunity for tuggers to buy resale points as they buy resale weeks today.

 

[tombo]

I believe that those who predict the huge ROFR fees for points resales are wrong, and that in the future there will be the opportunity for tuggers to buy resale points as they buy resale weeks today.

If you are right you can resell any points you buy cheaply now for big money. If I was almost positive gold was going up in the next 5 years I would buy gold. Do you believe it strongly enough to buy points, or are you just hopeful?

 

[equitax]

Mathematics

This is not a regular condo though - The unit itself is maintained, and my point was that the underlying value of the land and building was probably worth the $7000.00 paid.

1800 sq ft / 52 = 34.61 sq ft owned 7000/34.61 = 200 $ / ft.

Though Based on revenue potential its not worth very much.

Math is great - One can prove anything!

Ever sit through the Marriott Sales Presentation?:whoopie:

You should worry a little about your investment at GV since 50 weeks times $7,000 is $350,000 and I'm not sure that a condo in Orlando is worth that these days.

 

[equitax]

I think you may be missing the point here

Read bullet I in the Land Trust documents filed with Orange County which govern anyone that "owns" points.

http://or.occompt.com/recorder/eagleweb/downloads/20100149464.pdf?id=DOC576S654.A0&parent=DOC576S654

"Developer may impose an administrative charge, not to exceed One Dollar ($1.00 U.S.) per point, in connection with the waiver of this first right of refusal".

It's not a prediction, its a fact. So if you are to "convey" 3000 points, MVCI can charge you up to USD 3000 for waiving their right of first refusal, and why would they give you a discount? They now stand to make more money that the websites out there that gouge people wanting out with listing fees.

Don't pay and they're mortgaged? Even better - Developer still gets them back and burns the Condo Association out of MF due and gets the points back.

The folks at Marriott are not that stupid - Best way for them to reduce demand for resale is to make resale units less attractive. The attempts to do so thus far (such as you can't trade your week in for MR points or use MVCI for resale help) have done little to combat that. And for all those people calling the DP program a "failure", Marriott seems to be cranking out new point owners, as can be seen in the Orange County Florida Official Records.

The ROFR waiver fees basically mean the developer profits every time points change hands in the secondary market - if and when that market ever comes to exist. This is a lot better than the $95 they collect right now on a resale week (which they can't raise because its deeded) the other 25 on MGV/MGR transfers goes to the condo association.

Part of the reason why the high pressure sales tactics is so that buyers don't read the legal documents behind what they are buying. You think anyone was given the opportunity to read through the 157 page document which is the Declaration of Grande Vista Condominium after sitting through a MVCI presentation and before the forked out the AMEX for the down payment?

I believe that those who predict the huge ROFR fees for points resales are wrong, and that in the future there will be the opportunity for tuggers to buy resale points as they buy resale weeks today.

 

[timeos2]

This is not a regular condo though - The unit itself is maintained, and my point was that the underlying value of the land and building was probably worth the $7000.00 paid.

1800 sq ft / 52 = 34.61 sq ft owned 7000/34.61 = 200 $ / ft.

Though Based on revenue potential its not worth very much.

Math is great - One can prove anything!

Ever sit through the Marriott Sales Presentation?:whoopie:

Except you have no rights to that possible (but unlikely) $7000 in true underlying value. That's one big reason timeshare prices don't track like real estate / whole ownership usually does. That lack of any ability to cash in on the intrinsic value is one big reason why. Even when it's a great deal for owners (like the not-so-long-ago sale & transfer to Harrah's was for the Las Vegas Summerbay resort - some owners actually tried to derail what was/is a great deal - one they could not get now - and almost did it! Had they "won" that resort and it's owners would be in dire straights rather than enjoying a rebuilt, Silver Crown resort they can be proud of) there is zero guarantee the other thousands of owners will in fact go along. It's a nightmare. A total sale is so remote as an option that it is really meaningless.

 

[MOXJO7282]

Will any of the people who think the spin off is great, beneficial, a wonderful thing with a great future go ahead and buy a bunch of retail Spinco/marriott points? I doubt it. Optomistic is one thing, placing money on a bet this risky is another.

What about the naysayers? Are you willing to bet that it's the beginning of the end? Its easy to espouse the sky is falling, that human nature, but its pure speculation at the time for all of us.

Personally I don't have a crystal ball, so I don't know exactly how it will play out but if you put a gun to my head, I'm betting the Marriott timeshare business continues to holds it own and ownership will continue to be a value for years to come. With all that has happen in the TS industry during the downturn, Marriott wasn't going to come out of it smelling like a rose, but I think it will come out of this when the market gets stronger and right the ship.

 

[windje2000]

I agree. Hope springs eternal but the dumping of MVCI by Marriott is forever. If MVCI was a good thing Marriott would have kept it. If they had forecast a rebound in future sales Marriott would have kept it. If there was a viable business plan to right the sinking ship they would have implemented it (points was an attempt). Marriott has thrown in the towel and all that is left is to hope that the Spinco division will not file bankruptcy, hope that Spinco will not sell to a company that will not retain or be allowed to retain the Marriott name, and to hope that the assessments and MF increases will be gradual and not 10% to 20% every year. Hope and $5 will buy a cup of latte' at Starbucks.

In an earlier post I asked if any were considering buying points retail from Spinco/Marriott after researching the current situation and why. No responses. If this is a great thing, a good thing, or no change at all it would seem that some would be jumping on the deals Marriott will be offering soon to sell points. Several Tuggers purchased additional retail points. Some were considering it. Where are all of the HOPEFUL buyers? I wouldn't buy now for 75% off the price they were charging last month. In fact I have already called an interested buyer HOPING I can sell my Marriot week before it is too late.

I think now would be a great time for all the Marriott lovers and eternal optimists to put their money where their mouth is. Since the future is bright, now is the time to buy. Points will keep increasing in price as the company gets stronger and stronger. Buy now at the bottom. If you are that confident buy a bunch of points while they are cheap.

Will any of the people who think the spin off is great, beneficial, a wonderful thing with a great future go ahead and buy a bunch of retail Spinco/marriott points? I doubt it. Optomistic is one thing, placing money on a bet this risky is another.

As a potential buyer, I don't think the prospect of Spinco changes the merits of buying developer points, weeks, or any timeshare product representing a hybrid of the two. They all suck. Spinco does not change or affect that.

As an owner, IMHO, Spinco's existence will have no effect on the MVCI level of quality and service. The Hampton Inn, Motel 6, McDonalds, Morton's, The Palm, etc. all are brands which represent levels of quality and service. I see no Spinco change coming. The condo agreements are long term. Spinco's franchise agreement will be long term.

Will Marriott will charge Spinco for use of the brand? Sure. Branding sells product. But will Marriott 'brand' housekeeping charges? Can't see it happening. IMHO, MF are unlikely to be affected materially if at all.

Will I be buying points? Nope. But that didn't change as a result of Spinco. And as an owner, I see basically no change.

Are you shorting Spinco stock?

 

[SueDonJ]

... I think now would be a great time for all the Marriott lovers and eternal optimists to put their money where their mouth is. Since the future is bright, now is the time to buy. Points will keep increasing in price as the company gets stronger and stronger. Buy now at the bottom. If you are that confident buy a bunch of points while they are cheap.

Will any of the people who think the spin off is great, beneficial, a wonderful thing with a great future go ahead and buy a bunch of retail Spinco/marriott points? I doubt it. Optomistic is one thing, placing money on a bet this risky is another.

Does the equivalent work for the TUGgers who think this is the absolute worst move Marriott could have ever made, that their timeshare ownership has just sunk as low as it will ever go? Should they now prove their position by walking away from their Marriott timeshares in whatever way it's possible to do so? Just take whatever the loss is today because it's only going to get worse from here on? Oh, but of course they should, because if they don't then they're not proving themselves worthy of the discussion. They're not exhibiting the courage of their convictions.

See how ridiculous that sounds?

I'm not overly optimistic with the timeshare market these days, haven't been for quite some time, and have said so repeatedly. It's been fairly obvious that Marriott and the other industry leaders have had to at least explore options to protect their companies. I'll say again that I am much more in favor of Marriott making moves as opposed to them standing still. None of us can predict the future, but I think that branching out into the more-flexible DC product was a good move. If I needed more timeshares then I'd buy - that system works for me. And now I think that spinning off the timeshares may turn out to be a good move because it's one that Marriott has successfully navigated before with its hotel business.

I sort of agree with bogey here - this might be the time to increase stock holdings in MAR in advance of the spin-off.

 

[wof45]

It's not a prediction, its a fact. So if you are to "convey" 3000 points, MVCI can charge you up to USD 3000 for waiving their right of first refusal, and why would they give you a discount? They now stand to make more money that the websites out there that gouge people wanting out with listing fees.

Giving themselves a right to charge up to $1 per point does not mean that they will charge that.

In the long run, there will be the ability to resell points, because they are set up for a class action suit. If retail is now almost $10 per point, and points behave like good weeks, then it is logical that in a market environment like today's they will sell for at least 20% of retail or $2 per point.

If Marriott takes $1, it still leaves $1 for the former owner, which is not much, but still better than the brand X timeshare resales.

 

[equitax]

Maybe...

Time will tell. Either way i'll be happy as my unit will have paid for itself after its next two uses. I also own a nice chunk of Marriott inc stock which will mean i get a piece of spinco too.

Spinco will change the timeshare product again, Marriott will get more fees and spinco will be profitable. And once issues, I'll hold my spinco shares to the bitter end which I don't believe will ever come. R

Except you have no rights to that possible (but unlikely) $7000 in true underlying value. That's one big reason timeshare prices don't track like real estate / whole ownership usually does. That lack of any ability to cash in on the intrinsic value is one big reason why. Even when it's a great deal for owners (like the not-so-long-ago sale & transfer to Harrah's was for the Las Vegas Summerbay resort - some owners actually tried to derail what was/is a great deal - one they could not get now - and almost did it! Had they "won" that resort and it's owners would be in dire straights rather than enjoying a rebuilt, Silver Crown resort they can be proud of) there is zero guarantee the other thousands of owners will in fact go along. It's a nightmare. A total sale is so remote as an option that it is really meaningless.

 

[hotcoffee]

. . . . Personally I don't have a crystal ball, so I don't know exactly how it will play out but if you put a gun to my head, I'm betting the Marriott timeshare business continues to holds it own and ownership will continue to be a value for years to come. With all that has happen in the TS industry during the downturn, Marriott wasn't going to come out of it smelling like a rose, but I think it will come out of this when the market gets stronger and right the ship.

I don't know about the "market gets stronger" part, but I agree that things won't change much in terms of whether the timeshare business holds it own or not. Had Marriott not spun off the new company, timesharing would still never again be what it was in its best days. I no longer think owning a timeshare is a good idea (if it ever was).

I believe the best hope for timesharing is consolidation.

 

[gblotter]

I no longer think owning a timeshare is a good idea (if it ever was). I believe the best hope for timesharing is consolidation.

Yep yep. Setting aside the recent convulsions and revulsions of Spinco and DC points program, purchasing a timeshare just doesn't make financial sense. If I was aware of the available timeshare rental options, I'm not sure I ever would have purchased. I knew enough to be wary of timeshares, but trusted that a Marriott version would be different. You know what they say about hindsight. Not bitter - just wiser.

 

[timeos2]

So we acted - and it means mostly getting OUT

What about the naysayers? Are you willing to bet that it's the beginning of the end? Its easy to espouse the sky is falling, that human nature, but its pure speculation at the time for all of us.

Personally I don't have a crystal ball, so I don't know exactly how it will play out but if you put a gun to my head, I'm betting the Marriott timeshare business continues to holds it own and ownership will continue to be a value for years to come. With all that has happen in the TS industry during the downturn, Marriott wasn't going to come out of it smelling like a rose, but I think it will come out of this when the market gets stronger and right the ship.

I consider myself an aysayer on this - and yes, I acted. I had long been a tempted by and twice nearly did buy into Marriott mostly based on our great (and many) stays at various resorts. What kept me out was the requirement to buy at only one site - a serious limitation if there isn't one you want to visit almost every use period - so I actually thought the points might be what finally got me to buy in. Of course the overall economy changed, renting went from a premium to a less than annual fee situation (yes, even in the prime times if you find the right, desperate to rent owner! and that offers much better choice of unit / view than exchange or points ownership ever could) and the ponys system they rolled out was a bad joke as far as value for the dollar so we (thankfully) never bought.

Since then and despite the falling aand therefor attractive prices for even the very best times/resorts/units we, in big part due to my health taking a bad turn, actually have reduced our holdings in timeshare to two owner controlled weeks resorts. One extremely seasonal so we have a fixed summer week - the other a year round demand so its a top value float week there for us. Our beloved Wyndham - a great system and value IMO - has been sold. Our RCI Points were allowed to expire on a RTU. We are close to being done with Wastegate through sale or ROFR - whatever it takes to get roid of that (our one real mistake in timeshare choices) so we have acted to the current state of timeshare by largely divesting.

Interestingly everything we sold we find we can easily rent now foe less then we had been paying in fees and of course without the purchase cost overhead. A sad state for owners but great for those of us that recognize the opportunity & value it represents. We are taking as many or more vacations - vast majority in timeshares - but paying far less than we would have for the same things as owners! That alone speaks volumes to the state of timeshares in general and top ones specifically. It is not good.

 

[dan_hoog]

Timeos2

Are You are including rentals like Marriott ocean watch - ocean front platinum weeks? Mine rent for 2500 to 3000 on red week or more from Marriott. Maintenance is just under 1k.

I don't think you'd have a reliable way to rent under 2k, and even at that week and view selection is poor. Maybe last minute if your travel flexible, but many are not.

I find the range to be around 20 percent premium for top views in most resorts (rental). Of course, new/resale premiums were paid also (resale in my case).

 

[MOXJO7282]

Interestingly everything we sold we find we can easily rent now foe less then we had been paying in fees and of course without the purchase cost overhead. A sad state for owners but great for those of us that recognize the opportunity & value it represents. We are taking as many or more vacations - vast majority in timeshares - but paying far less than we would have for the same things as owners! That alone speaks volumes to the state of timeshares in general and top ones specifically. It is not good.

We must visit different Marriott resorts at different times because this is the exact reason I still love Marriott, because I can't rent a prime season 2bdrm in Maui, Aruba, Newport Coast, Grand Ocean, Mrytle Beach for anything close to MFs. And neither can alot of people, hence the continued strong demand in my rentals.

So until either of these changes for me, I'll be a happy Marriott owner.

 

[bastroum]

With 2 hours to go on Ebay a Shadow Ridge White Season 2BR EOY has no takers for $1.00. Do you think this has anything to do with this weeks annoucement?

 

[dioxide45]

The land trust does have value, and while the timeshare interests may be worthless as resales, I am quite certain that the underlying real property owned by my 3bdr at grande vista is more than the 7000$ I paid for it. Do The math the land and building is worth more that 192 per sq ft.

You should worry a little about your investment at GV since 50 weeks times $7,000 is $350,000 and I'm not sure that a condo in Orlando is worth that these days.

I don't think the owners at GV has that much to worry about. According to our fall 2009 newsletter Grande Vista has an estimated value of $900MM. With 900 units, you can do the math.

 

[tombo]

Does the equivalent work for the TUGgers who think this is the absolute worst move Marriott could have ever made, that their timeshare ownership has just sunk as low as it will ever go? Should they now prove their position by walking away from their Marriott timeshares in whatever way it's possible to do so? Just take whatever the loss is today because it's only going to get worse from here on? Oh, but of course they should, because if they don't then they're not proving themselves worthy of the discussion. They're not exhibiting the courage of their convictions.

See how ridiculous that sounds?

.

Not ridiculous at all. I have contacted a buyer that I was going to sell my week to when the points were introduced. I backed out of that sale thinking that if exchange inventory became hard to get for weeks owners it would be way down the road. I decided that the risk was worth keeping my week back then even though I did not like the change to points by Marriott.

Now I feel that Marriott has spoken loud and clear that they think Mariott timeshares are a product who's time has passed. If you don't believe it look at Marriott. Marriott has divested themselves of their timeshare division and they will not buy any more inventory at any price. Weeks are selling for all time lows yet Marriott refuses to ROFR a week. If Marriott doesn't feel like a $1000 platinum week is worth ROFR'ing, why should I buy it? They after all are the experts on what their product is worth. If Marriott feels like now is a good time to get out, who am I to disagree?

I am almost positive that MF's will rise quickly once the Spinco takes over. Marriott already has some of the highest MF's in the industry and that is only going to get worse. I will be able to rent at most Marriott locations for cheaper than MF's in the next few years IMO. I feel like Marriott timeshares are going to become less and less valuable in the future thanks to the dumping by Marriott and the increased MF's to make profit for the stand alone division who can't make a profit on sales alone. So I truly feel this is a bad time for Marriott owners and I truly expect things to get worse in the next 5 years.

My buyer thinks they still want my week and if they do I can assure you that they will be the proud owner as soon as I can get the paperwork done. Yes I feel that it is time to walk away and yes I am selling.

 

[wof45]

I don't think the owners at GV has that much to worry about. According to our fall 2009 newsletter Grande Vista has an estimated value of $900MM. With 900 units, you can do the math.

do you actually believe that the units are worth 1 million each?
or is that the assessed value for the property taxes you are paying?