Marriott to Spin Off Timeshare Business [merged]

[SueDonJ]

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.

Have you disclosed all this to your buyer? The spin-off, and that you believe it's being done because Marriott doesn't want to do business in timeshares anymore and has positioned itself to sell them off? What about your true belief that it's a bad time to be a Marriott owner? That you believe your buyer could rent what you're selling to him for less than the increased m/f you think he'll be paying? That if he buys from you, you think what you're selling will become less and less valuable?

Just wondering if it's only Marriott that has an obligation to protect the buyer's investment, or if it extends to anyone selling Marriott timeshares ...

 

[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).

I'm including every area if you do your homework & make enough offers. Not every one will be under annual fees but has always been less than annual fees and a reasonable amount allotted for capitalized purchase cost (spread cost over 15 years) and rental rates are steadily declining everywhere as annual costs are nearly universally on the rise. One to five years and every resort is likely to be renting for less than fees especially if the "name fee" rises significantly due to recent changes. My bet is the fees will rise and rents will continue to fall.

 

[BocaBoy]

I am almost positive that MF's will rise quickly once the Spinco takes over......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.

This makes no sense. The timeshare division always had its own P&L within Marriott before the spinoff and its profitability was measured by its own activities. That will not change with the spinoff. This type of separate P&L accounting is always the case with a line of business within a larger corporation. The sale should not have the effect of increasing maintenance fees.

Companies sell or spin off divisions and subsidiaries all the time for many reasons. Often the result is a win-win. Often it is not. But the reason for the success or failure is usually either the management or the nature of the industry itself. Sometimes success results from the ability to focus better at both the resulting entities. In this case, if the industry is the problem it would be the same problem without the spinoff. I am optimistic about the management issue because the executive team at the new company seems to be the best of Marriott as it relates to timesharing. And the focus should be sharper.

Time will tell whether this spinoff works, but I don't see why everybody sees it as the death of Marriott timesharing.

 

[AwayWeGo]

Bail Out Or Ride It Out ?

One to five years and every resort is likely to be renting for less than fees especially if the "name fee" rises significantly due to recent changes. My bet is the fees will rise and rents will continue to fall.

Whoa -- that's scary.

I mean, under those circumstances (renting for less than maintenance fees), why own a timeshare -- any timeshare ?

And if too many timeshare owners become ex-owners, with orphan units increasing & units in the hands of fee-paying owners diminishing, then what happens to the resorts whose financial foundations crumble ?

It sounds like we're headed toward a tipping point.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[tombo]

This makes no sense. The timeshare division always had its own P&L within Marriott before the spinoff and its profitability was measured by its own activities. That will not change with the spinoff. This type of separate P&L accounting is always the case with a line of business within a larger corporation. The sale should not have the effect of increasing maintenance fees.

When it was a part of Marriott it's stock and viability was part of the same large corporation. They were a piece of the puzzle. For years they were a sizeable portion of Marriott's profit. Now as a stand alone spin off they will have stock and investors who's returns on investment and stock values and dividends will depend entirelly upon what the timeshare division does. Sales are off 30% over the last 3 years and I personally doubt they will do anything but drop more. Dropping sales, decreasing profits, those trends will lead to drop in stock prices and possibly selling or filing bankruptcy down the road.

Marriott Spinco has 1.5 billion in inventory. Not all inventory is an assett, some inventory like timeshares in this market are a liability. Marriott has to pay MF's on the inventory they own. If owning lots of inventory was good a good thing Marriott would be ROFR'ing lots of it at the current historically low resale prices. They want none at any price. That should speak volumes. If I felt sure that I could buy gold, silver, used cars, or anything else right now including timeshares for a cheap price to resell for a profit, I would be buying. Marriott doesn'twant any more inventory so they feel like it isn't cheap enough yet or they feel like they will have a hard time unloading the 1.5 billion they are already stuck with and they sure don't want anymore liabilities added to the books.

Marriott did not want the timeshare divisions profit/loss as part of their overall company any more so they spun it off. If it was really profitable or forecast to be so in the near future they would have kept it. The spokesperson for Marriott said we never planned on dumping the timeshare divisioon but the last few years... What more do you need to hear? They want to be separate in case things go terribly wrong, and they must see that as a distinct possibility or they wouldn't have done something they in their own words never planned to do. This doesn't even take reading between the lines, this was a flat out statement that things over the last few years got bad enough that they had to dump timeshares.


If the Spinco is not showing good profits, or even worse showing losses the stock will drop and the shareholders will be on the warpath wanting people fired. When they were a part of Marriott it wouldn't be as crucial to have a good bottom line becuase their performance would be intermingled with all of Marriott. Now the Spinco bottom line is what will determine if they survive or not. Their bottom line over the last few years was bad enough that Marriott no longer wanted them to be a part of Marriott corp. What will happen when stock holders and investers no longer want Marriott Spinco?


Sales will be flat or dropping for the foreseeable future(if not forever) for ALL timeshares, not just Marriott. How does Spinco make a good bottom line with 1.5 billion of inventory liabilities and falling sales? By raising mgt fees and by assessing to renovate. The current CAPTIVE owners are the cash cow for Spinco. A 10% increase in mgt fees is 10% straight to the bottom line. Owners will have to pay or sell. They are captive customers. Owners can vote Marriott out, but other than that they will have to pay whatever amount is on the bill. New points members and owners who converted to points can't even vote to get rid of Marriott as the mgt company no matter how expensive they get.

The experts at Marriott wanted the timeshare division off of their books. If they don't want it anymore neither do I. Time will tell but if I sell now I am sure I can easily buy another week or multiple Marriott weeks cheaply resale a few years down the road if things recover and the future looks better for Spinco Marriott timeshares and timeshares in general.

Marriott in their infinite corporate wisdom dumped their timeshares so I will bow to their expertise and follow suit. My week will be sold ASAP.

 

[pgnewarkboy]

Although I agree this is a bad deal for owners, it is possible that Spinco can make money besides raising MFs. They can basically add value through providing tours, special excursions and events, teaming with others in the resort industry etc. They can charge for these extras.

 

[kjd]

A couple of points. If you purchased a timeshare thinking they were going to hold their value you were kidding yourself. Almost everyone knew that about 50+% of the purchase price of a typical TS is a recoup of marketing costs. How can anyone think those giveaways to prospective buyers were free? Personally, I purchased from Marriott because of the MRP bonus which provided several overseas vacations. I'm sure many others did the same thing.

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

Timeshares are and always have been losers from day one of ownership. They are like cars, golf memberships, RV's, second homes, boats, etc. The value is in the usage over a long term. Rental prices vs maintenance fees have nothing to do with the consideration. You either use a TS and enjoy it or you realize that you made a mistake and try to sell for whatever you can get for it. Sales people may have told you otherwise for the purpose of making a sale.

An annual golf membership around here costs about $7,000. After ten years of golf you have nothing except the experience. Why would timesharing be any different? Can I ever recoup the $70,000 I have spent on timeshare purchases? No, and I never expected to. I did however take many great vacations and also expect to take more of them in the future. If you think of it that way you won't needlessly obsess over the Spinco outcome or anything else that may come our way.

 

[tombo]

An annual golf membership around here costs about $7,000. After ten years of golf you have nothing except the experience. Why would timesharing be any different? Can I ever recoup the $70,000 I have spent on timeshare purchases? No, and I never expected to. I did however take many great vacations and also expect to take more of them in the future. If you think of it that way you won't needlessly obsess over the Spinco outcome or anything else that may come our way.

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

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

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

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

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

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

 

[timeos2]

Why Marriott is getting out is clear. Same for owners

An annual golf membership around here costs about $7,000. After ten years of golf you have nothing except the experience. Why would timesharing be any different? Can I ever recoup the $70,000 I have spent on timeshare purchases? No, and I never expected to. I did however take many great vacations and also expect to take more of them in the future. If you think of it that way you won't needlessly obsess over the Spinco outcome or anything else that may come our way.

Quite true and it is easy to ignore rent value vs fees until the spread becomes so large as to be impossible to to do. It may not apply immediately to the most prime weeks but if allowed to continue eventually it becomes impossible to ignore.

Once fees start to equal or exceed the rental value plenty of owners notice and many, especially the mid-range "value" seekers - will bail one they realize they are paying $1300/year for something they could easily rent from any number of sources for $700-$900. It is too much of a difference to justify. Once they bail the fees for those that remain go higher & the process gains a repeat momentum. Not good. Suddenly (in a few years) even the most in demand prime times cost more in those fees - made worse when the resort pays a stiff premium for a name branding - and even the top owners start to take the cheaper option. A small premium to own is acceptable as it may get a view, reservation priority, etc that is worth a few extra $$. But if the spread becomes too large those small perks fade away. That appears to be the case at most Marriotts, Stawoods, etc and getting worse.

It has never been a strong market and current conditions have weakened it even more. While holding on to what you already paid for may make sense for now it is unlikely that any resale buyers are going to offer much to take over litlle more than the obligation to fees that dont represent a good value today. The whole picture changes when the often big purchase cost is a nearly certain write off rather than a potential income asset. It's a big part of why Marriott sees inventory as an albatross rather than an valuable asset. Why would it be any different for an owner of similar inventory just far less of it?

Hold & use to squeeze value out. Assume little to no resale value and make your best moves based on that unfortunate assumption. Any $$ you can get out with is a bonus and it falls everyday that you hold these rapidly depreciating and costly to hold "assets".

 

[dan_hoog]

John - I appreciate the response.

The maintenance fee plus amortized ownership cost is a different hurdle than maintenance fees alone. Of course, for many resale timeshares, these are effectively the same.

I can believe there is a tax, in effect, on the Marriott branded timeshares due to the change. I personally think this is a sub-10% premium that could gradually leak into maintenance fees. There are two mouths to feed now. Of course, other factors drive maintenance fees as well and over 3 to 5 years would have much more effect, IMO.

I agree maintenance fees will rise, but don't agree rental rates would necessarily fall. Many of the same factors that drive costs up for maintenance fees are the same types of inflation factors that will drive up rentals. I just don't believe you'd see maintenance double while rentals drop 50% (not that you put that specific scenario forward).

You can potentially buy an ipad for $41 on Quibids.com. However, most people can't. I'm sure a dedicated savvy shopper and tough negotiator will be able to find incredible rental deals now and forever. However, many people will pay the premium (meaning higher rental fees) for early deal certainty.

When I rent out at reasonable rates on redweek, I've always gotten takers at or very near the asking price within 30 to 45 days. I've rented several units in the last few months and I'd say it is actually easier than in past years - and no one has asked me for discounts recently.

I agree the timeshare economics continue to be challenged and may get worse. However, sometimes a seemingly insurmountable challenge or obstacle is the catalyst for a shift or change that could be beneficial. Maybe this will be one of those cases (though I'd rather that outcome in larger off-topic issues of importance to civilization).

I'm including every area if you do your homework & make enough offers. Not every one will be under annual fees but has always been less than annual fees and a reasonable amount allotted for capitalized purchase cost (spread cost over 15 years) and rental rates are steadily declining everywhere as annual costs are nearly universally on the rise. One to five years and every resort is likely to be renting for less than fees especially if the "name fee" rises significantly due to recent changes. My bet is the fees will rise and rents will continue to fall.

 

[wof45]

of course, Marriott has a very different view of the timeshare market, and of what they are doing with timeshares.

remember that they do not plan to create a new company until the end of 2011.

here is an abbreviated version of their 10K filing --
http://biz.yahoo.com/e/110218/mar10-k.html

2010 Compared to 2009

Operating income increased by $847 million to operating income of $695 million in 2010 from an operating loss of $152 million in 2009. The increase in operating income reflected a favorable variance of $614 million related to Timeshare strategy-impairment charges recorded in 2009, $116 million of higher Timeshare sales and services revenue net of direct expenses, a $73 million increase in base management and franchise fees, a $51 million decrease in restructuring costs, $28 million of higher incentive management fees, and $23 million of higher owned, leased, corporate housing, and other revenue net of direct expenses, partially offset by a $58 million increase in general, administrative, and other expenses. We note the reasons for the increase of $73 million in base management and franchise fees as well as the increase of $28 million in incentive management fees as compared to 2009 in the preceding "Revenues" section.

 

[BocaBoy]

When it was a part of Marriott it's stock and viability was part of the same large corporation. They were a piece of the puzzle. For years they were a sizeable portion of Marriott's profit. Now as a stand alone spin off they will have stock and investors who's returns on investment and stock values and dividends will depend entirelly upon what the timeshare division does.

Marriott did not want the timeshare divisions profit/loss as part of their overall company any more so they spun it off. If it was really profitable or forecast to be so in the near future they would have kept it.


If the Spinco is not showing good profits, or even worse showing losses the stock will drop and the shareholders will be on the warpath wanting people fired. When they were a part of Marriott it wouldn't be as crucial to have a good bottom line becuase their performance would be intermingled with all of Marriott.

Do you have any conception at all of the factors that cause a large corporation to spin off or sell a subsidiary or division? A losing business is only one of many reasons. Often the best time to divest is when the spinoff's future looks good.

When it is part of a large corporation the viability and continued existence of a division or subsidiary is based on its own profitability. Intermingling results does not make the large corporation want to keep it any more than if it were separate. Also, there are a lot of reasons to spin off or sell a division other than a bleak future. Shareholder value is a key one. Often divesting a profitable division will result in more shareholder value than keeping them together. Often the sum of the parts is worth more than the whole. Witness GE's sale of NBC Universal to Comcast.

I spent my entire working career in the executive suites of Fortune 50 companies and the business analysis on TUG is amazingly naive and shallow. As we used to say about consultants: "Often wrong but never in doubt."

 

[BocaBoy]

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

This is obviously true in most cases, but nothing is absolute. I bought all of my timeshares directly from Marriott. I have sold two of them, both at a profit. One in Orlando after 20 years of ownership and one in Hawaii after only four years of ownership. Both were sold in the last two years. However, that will be a lot harder going forward for a lot of reasons, one being the fact that MVCI's Resale Operations division is not an "Approved Broker" and purchasers even through them at developer prices are not being allowed to join the DC program.

 

[tombo]

Do you have any conception at all of the factors that cause a large corporation to spin off or sell a subsidiary or division? A losing business is only one of many reasons. Often the best time to divest is when the spinoff's future looks good.

When it is part of a large corporation the viability and continued existence of a division or subsidiary is based on its own profitability. Intermingling results does not make the large corporation want to keep it any more than if it were separate. Also, there are a lot of reasons to spin off or sell a division other than a bleak future. Shareholder value is a key one. Often divesting a profitable division will result in more shareholder value than keeping them together. Witness the GE sale of NBC Universal to Comcast.

I spent my entire working career in the executive suites of Fortune 50 companies and the business analysis on TUG is amazingly shallow. as we used to say about consultants: "Often wrong but never in doubt."

When the official statement is:
""We've never really been interested in walking away from this business," Marriott Chief Operating Officer Arne Sorenson told the Journal on Monday. "But the last few years have been extraordinarily difficult. This recession was harder on the timeshare business than last recessions."



Yes there are many reasons to spin off a division. Sometimes the reason is obvious as in this case where you have such a definitve reason given by the CEO in a written statement. With your vast corporate experience please interpret Marriott's statement that they never planned on divesting the timeshare division but the last few years performance of the timeshare division forced them to do so. Why did they not say that they had planned this for years? Why not say that this was going to be a world class financially strong company rather than to state that this company will not have investment grade stock?

Does anyone really believe that the official corporate statement translates to this a great time to sell timeshare points? Does it mean that there is a lot of interest in stock puchases for this venture, so we struck while the iron is hot? Nope. It means that things reached a tipping point and they wanted out.

Yes there are many reasons wy companies divest themselves of part of their company, but rarely is it spelled out any more clearly than in Marriott's official statement. It does not mean that the stand alone company won't survive. It doesn't mean that it will or won't sell to another party in the future. It does mean that Marriott didn't want to gamble on it anymore after the last few years dismal performance of MVCI and their forecast for future perfomance. of course consultants and prognosticators can always be wrong. If you feel that this spinoff will be a great company buy stock. If I was considering this stock in any way it would be to short sell. JMHO.

 

[wof45]

Does anyone really believe that the official corporate statement translates to this a great time to sell timeshare points?

I suggest looking at the 10K filing rather than posts here.

 

[sandytoes]

e-mail from Marriott to Vacation Owners

I haven't read all the posts regarding this issue so this may have already been posted. If not here is a recent e-mail received for Marriott.

Dear Marriott Vacation Club® Owner,
I have some important news about Marriott® Vacation Club International that I would like to share with you. On
February 14​

​

​

​

​

​

​

​

​

th, Marriott International announced plans to divide into two separate publicly traded companies — a
lodging company and a timeshare company. Marriott Vacation Club International (MVCI) and its affiliates will remain
the exclusive developer of timeshare and fractional products for Marriott® and The Ritz-Carlton®, focused on
maximizing growth and development within this exciting industry. Marriott International will concentrate on its
global hotel management and franchise business. We believe this transaction will position MVCI to create new and
expanded offerings for you as Owners.
Most importantly, you should experience no changes in your ownership from this transaction. We will still operate
under the Marriott brand and continue to develop and manage to the same exacting standards that have made us the
recognized industry leader worldwide. You should see no impact in your service, resort experiences or usage options,
including access to benefits and lodging properties through the Marriott Rewards® program as a result of this transaction.
For more than 26 years, you have helped us create the finest and most extensive timeshare resort system in the
world. With the dramatic success of the new Marriott Vacation Club Destinations™ program, we have meaningfully
expanded your vacation options. As we enter this exciting new chapter, each and every MVCI associate looks forward to
continuing to create new and exciting vacation experiences for you, your family and friends for generations to come.
We thank you for being a loyal Marriott customer and we promise to continue to work hard to deliver the
“Unforgettable Experiences” that you have come to expect from us. We will continue to provide you with updates
of this transaction as the year progresses. Thank you for your continued support.
Best regards,
Steve Weisz
President​

Marriott Vacation Club International

 

[timeos2]

Yes read the paper - then remember this is the best it can be

I suggest looking at the 10K filing rather than posts here.

Great advice especially if you want the absolute best face on the facts that a well tuned spin machine can roll out. Even the most optimistic reading of that document can only come to the conclusion that at best they see the future as flat vs the desired strong growth of five years ago and that they have waited as long as they are comfortable with for it to once again shine. It isn't likely to happen thus the seemingly sudden "interest to walk away" vs hanging on to a soon to be profitable, former star division.

When you read it there really isn't any other way to interpret as they have put the absolute best light possible on the situation and it is little more than a fading flashlight rather than a powerful search light beacon of hope. What they say is the very best it could be and it isn't good. That speaks volumes.

Again that all has to do with stockholders. As owners the question is will use value be maintained? Recent history says no and that isn't good for owners OR stockholders. The industry is in a big hurt - far deeper than most others and as we know most aren't feeling real positive now. Being below that already low bar leaves very little positive to say.

 

[tombo]

I suggest looking at the 10K filing rather than posts here.

From the 10k report:

"Costs in excess of enrollment revenue for the new points-based program totaled $13 million and is reflected in our Income Statement in Timeshare sales and service, net of direct expenses.

Given the amount of inventory we have, we do not expect to develop new timeshare resorts in the near term.".

So costs exceeded revenue on points sales meaning that it is a money loser so far. Marriott will not develop new timeshare resorts because they are loaded up with inventory. These are bad things and good reasons to dump the timeshare division.

from 10 k report"In response to lower demand for our Timeshare products, we have correspondingly reduced our projected investment in new Timeshare development. While our Timeshare segment historically generates positive operating cash flow, year-to-year cash flow varies based on the timing of both cash outlays for the acquisition and development of new resorts and cash received from purchaser financing. We include timeshare reportable sales we finance in cash from operations when we collect cash payments. The following table shows the net operating activity from our Timeshare segment (which does not include the portion of income from continuing operations from our Timeshare segment). In 2010, 2009, and 2008, new Timeshare segment mortgages were $256 million, $302 million, and $747 million, respectively, and collections totaled $347 million (which included collections on securitized notes of $230 million), $155 million, and $222 million, respectively. ".

New timeshare mortgages down from $747 million in 2008 to $256 million in 2010 and collections are up to $347 million on less total securitized notes. A lot less future income in reduced mortgages from reduced sales. It is why they want out.

Have you seen positive things I am missing in the 10K? Yes they have some positive glowing statements about how the divesture of timeshares position them to be more profitable, but the fact is they are becoming less and less profitable. They put a positive spin on the things they could, but bottom line is it is a business with negative growth.

 

[wof45]

Great advice especially if you want the absolute best face on the facts that a well tuned spin machine can roll out.

Perhaps you don't realize that this is Marriott's official corporate filing. This is the document that they can be sued for false information. All of the newspaper articles, quotes, etc are just comments that they do not have to answer to.

 

[wof45]

New timeshare mortgages down from $747 million in 2008 to $256 million in 2010 and collections are up to $347 million. A lot less future income in reduced mortgages from reduced sales. It is why they want out.

my question to you is, how is this any different or worse than any other real estate developer before the recession and recovering from the recession?

 

[SueDonJ]

When the official statement is:
""We've never really been interested in walking away from this business," Marriott Chief Operating Officer Arne Sorenson told the Journal on Monday. "But the last few years have been extraordinarily difficult. This recession was harder on the timeshare business than last recessions."...

Perhaps you don't realize that this is Marriott's official corporate filing. This is the document that they can be sued for false information. All of the newspaper articles, quotes, etc are just comments that they do not have to answer to.

That's something to consider for sure, although it's not necessarily true that the Marriott spokespersons don't have to answer to the quotes attributed to them. What is true, though, is that their quotes can be taken out of context and/or spun by newspaper reporters to perhaps assign them a different meaning than the one which was intended.

The above quotes that Tombo and several others are focusing on, for example - what is their context? What questions did the WSJ reporter ask in order to elicit those responses? The way Arne Sorenson's words are used in the newspaper article seem to give the appearance that he says Marriott IS "walking away from this business." And perhaps not coincidentally, that's the meaning which several naysayers have attributed to Marriott. But that's in direct contrast to MANY other quotes from Marriott execs as well as the official statement issued by Marriott. So which do you place more stock in (no pun intended ) - the quotes which may be out of context, or the complete official statement?

 

[melroseman]

So I’m just a lurker, but having lurked for a long time let me summarize my take on the posts here (or at least the vast majority of them). Marriott should ignore the economic realities of 2011, the timeshare market today, the real estate market in general, and its own shareholders and operate solely for the benefit of and to the advantage of its timeshare owners. I guess no one here can imagine why they wouldn’t do that.
If you really want to turn this "timeshare market" around and give Marriott a reason to operate as we would like, let’s all buy multiple resale weeks so there are no defaults and the equivalent of oh, say 8 or 9 weeks worth of DC points. Let's get all of our friends to do the same. Let’s all finance 90% of those purchases with Marriott at 12%. Then Marriott can eliminate inventory, finish unfinished projects profitably, exercise its ROFR because demand is so strong, and start new projects; coincidentally resale values will rise. Watch how quickly they get back into the “timeshare business.”
Or, based on what I read here, we could all kill ourselves. I think I’ll just sit tight and do nothing but enjoy my weeks or rent them. Never intended to sell anyway. The investment has been no worse than Bank of America.

 

[chalee94]

Why not say that this was going to be a world class financially strong company rather than to state that this company will not have investment grade stock?

again, some of you seem to be hung up on this point.

for one, it's the debt rating...not the stock rating.

you do realize that starwood debt, for one example, is not "investment grade?" you know, the crummy corporation that manages the crappy westin brand? stock currently in the $60s...up over 30% this year? not. investment. grade.

marriott corp debt is above "investment grade" but not by that much...well below a really financially strong "A"-rated corporation.

the reason to spin off the timeshare side is as simple as MAR + MVCI currently = $41, but management thinks that after the spinoff MAR's $38 (or whatever) portion will move more easily to $50 while MVCI will probably spin its wheels in the $3-4 range. separate, the entities will be worth more. that's appealing to shareholders and that's why they are splitting the entities. debt for MVCI will likely cost a little more if they need to issue new debt - a nonissue if they don't. not ideal for the timeshare side but not necessarily the harbinger of doom, either.

i don't have any skin in this game as i don't own MVCI. i don't think this spinoff is great news for MVCI or timesharing in general. but some of these posts look like an overreaction, IMO...

 

[pgnewarkboy]

Over reacting? I think it is exactly the opposite. I am sure it makes perfect sense for Marriott - so what. If I am a marriott stockholder that makes me happy. Is that supposed to make owners happy? In life, you win some and you lose some. For owners this goes into the loss column. As some have posted, it doesn't mean you still can't have some great vacations but it also doesn't mean you have to be happy about the situation. The owners "were sh....on" by Marriott. Plain and Simple.

 

[funtime]

"New timeshare mortgages down from $747 million in 2008 to $256 million in 2010 and collections are up to $347 million on less total securitized notes.""

I believe that it is a fallacy to think that the only reason Marriott created "Spinco" was because it believes that timeshare company is a money loser. More to the point is the fact that the income from timeshare company is unpredictable and publically owned companies enjoy predictable income, steady as she goes, quarter after quarter as they file their 10(k) reports.

The second thing is probably less visible. Did Marriott in the heydey bundle up its timeshare mortgages and "securitize" them to great profit? I do not know but if it did, those days are over. I imagine a lack of viable secondary markets to sell timeshare mortgages has much to do with the spinoff.

So too, the hotel industry suffered greatly in the recession. So, the fact that the hotel industry is now on the rebound means that without the timeshare division, Marriott can show a steady uptick with its hotels. When you slide down so low on the hotel side, it does not take too much to improve on performance.

Lastly, for those that think that timeshares have "no value" because they believe that they can rent them for cheaper than the maintenance fees, I do not think that that situation is accurate or will continue - at least not with Marriotts. All it takes is seeing one or two last minute deals to become convinced that rentals will always be cheaper than maintenance fees.

Sure you can get great deals in Orlando in September, that I get, and sure we have our last minute board with great deals, but for the most part, the tugger thread on rentals expresses optimism - people are having success at rentals. Renting timeshares is a learning experience and I believe that the more sophisticated the owners get, the more they can utilize their own timeshares including renting them on the open market for more than maintenance fees. Just like hotel rates, timeshare rentals will tick back up. So I for one will watch with interest - cherish my two Marriotts, enjoy them as weeks - and not buy points - and continue to trade them, use them or rent them. Funtime