Marriott Trust Inventory Management

[dougp26364]

No one will get any arguments from me over whether or not Marriott's system is a flawed system. I can see its flaws. However, I have gotten pretty much what I wanted both years so far. That did not always happen with II. So, right now, the system seems to be working for me.

Overall, I'm not very optimistic about the future of DC. In fact, I am not very optimistic about the future of timesharing in general. I think the best days for timesharing are behind us now. I think it is going to be a struggle for the spinoff company to survive. That is not only because DC is a flawed program (which it is), but also because I don't think there is going to be many people willing to shell out $50,000 to buy points in this economy. So, what would be the incentive to buy points at all? Their Explorer program seemed good at first until I noticed how many points it takes to do the best vacations. In the Trust, the best inventory requires too many points to reserve. I assume that they are trying to sell shorter vacations. So, I guess they think they can get people to fly all the way to Hawaii for three nights at Ko Olina. Well, I do not see that happening from anywhere except maybe the west coast. If the DC program really were to fail, the spinoff company would go down in flames; and Marriott timesharing would be history.

I agree that there should be just one points pot. I don't know if they can do that legally or not, though. The Trust is real estate. But if they can, one points pot would give everyone, Trust owners as well as weeks owners, access to everyone else's inventory to the benefit of all.

Diamond Resorts successfully blends trust points and non-trust points into one exhange pool. DRI does it not only for domestic resorts but for ALL resorts. If DRI (formerly Sunterra) can do it, so can Marriott. My opinion is Marriott does not want to do this because they want to much control.

 

[dougp26364]

We were told by two different Sales Managers at two different resorts very recently that BIG changes are coming at the end of the year but they wouldn't say what these changes are.

We enrolled with the idea of taking one of the explorer packages (Safari) but then noticed too that they take anywhere from 16,000 to 20,000 points so how many years of saving up would this mean for a lot of people who do not even get 3,000 or 4,000 points? It would take forever. It would even take three years for us so that took care of that. No way are we giving up our fixed/week unit on Maui for three years on a row.

Marriott will have to do something to make the program more user friendly for everyone or it will not succeed in this economy. Traveling is a luxury and will get even more so if the economy doesn't change for the better which I doubt will happen.

Maybe the best thing is to bail out now before everyone wants to sell their Marriott timeshare.

I hope there are changes and that those changes are more owner friendly. However, I'm not very optimistic. Marriott had many, many examples of successful points overlay systems and even trust based systems that were overlayed with deed week/pionts based reservation system. Marriott choose to ignore the 4 lane super highway and elected to cut their own path with a dull hatchet through the jungle. IMHO, poor choice for such a large company with so much experience in the hospitality field.

As it is now, we'll take advantage of the one fee for all services and continue to trade in weeks rather than points. That system still works. If there ever comes a time when it doesn't work, we'll cancel our DC membership and put our Marriott weeks back in our personal I.I. account. Fortunately, I have a non-Marriott week with I.I. I've decided I'd be best served by keeping that account open for a few more years until I know how all of this will shake out with Marriott. If things go from bad to worse, I'll move my Marriott weeks back to our personal account and take my chances with the old system, which doesn't seem to be broken.

IMHO, Marriott needs to address a few critical areas:

1. Put the original seasons back in place. By this I mean stop jacking the points around so that what was once a gold season is now worth less than a silver season. Keep the points the same throughout the orignal seasons at established resorts. If Marriott thought they made a mistake when they originally sold a resort (check the differences in seasons between Oceana Palms and Ocean Pointe), then they should live with it and not punish legacy week owners by re-seasoning established resorts with fluctuating point requirements.

2. STOP SKIMMING POINTS! If a week is worth 5,000 points to reserve, then give the owner of that week 5,000 points. Other systems respect owners enough to give them what it takes to reserve their week. Why doesn't Marriott do the same.

3. Online access to reservation!

4. Home resort advantage for trust owners and a set date when all other owners can reserve any units not already spoken for. It would probably be worthwhile to set up a bulk banking date with I.I. at a specified date so they can meet exchange obligations out of the inventory not already reserved by owners.

5. A discount for last minute reservations. Many other systems offer bonus time or up to 50% discounts for last minute reservations.

My bet is the changes we'll see favor Marriott and not the owners but, time will tell.

 

[jazzeah]

no that was almost 200k in dollars of Marriott inventory. we own MGV - 25K, MGO, 40K, MOW, 25K, MLS, 35K and now spent 35K for more points
so that is 157K of dollars paid to Marriott for purchasing timeshares and now points.

so you are right not 200K.

eitherway it is what it is, I was on the phone with the Marriott rep yesterday - on hold for 45 mins since they are very busy getting people to convert to points and I found out that you also have to tell them by June 30 to carry over your new DC points or you will lose them by the end of the year. Way too many dates to remember. I need a calendar just for Marriott rules. Luckily I moved them over

 

[hotcoffee]

I . . . .The only advantage for Premier Plus owners is booking less than 7 nights at the 13 month mark.

I forgot about that one. I guess that is worth something. The only trouble is that with the way the DC program is currently structured, there is relatively little inventory available 13 months. If a Premier-plus member has to wait until 10 months, he loses most of his 13 month advantage.

Trust owners however can reserve at more home resorts where there is lots of trust inventory. Once I deposit a week for points, I can only see exchange inventory. A trust owner can request first for exchange inventory, a legacy owner can not. . . .

One of my main points is that most Trust owners will not have enough points to reserve good weeks at the best resorts. How many people are going to buy points so they can stay for a week (or less) at a seasonal resort in its off-season? So, in reality, legacy DC members are only competing again a fraction of the Trust owners for, for example, most of the Hawaiian weeks. The critical question is how long will Marriott wait until they concede the inventory is excess and give others a shot at it?

 

[hotcoffee]

We were told by two different Sales Managers at two different resorts very recently that BIG changes are coming at the end of the year but they wouldn't say what these changes are. . . .

I sure hope you are right about big changes coming. I just don't believe DC is going to fly the way it is now. I don't think anyone is particularly happy with it. Worse, the thing the spinoff company needs the most is to sell points. But, the DC program has not been crafted with enough incentives for people to buy points. I would never have bought my points had I not had a pretty decent amount of enrollment points to start with. And, the only reason I had a decent amount of enrollment points was my Hawaiian week. Had I had a Caribbean week, for example, I would not have bought the points because it does not appear that they awarded the Caribbean weeks as richly as they did the Hawaiian weeks. Moreover, to start from scratch, having no points at all, requires too much of a commitment in this weak economy that looks to be going nowhere fast.

 

[jdunn1]

I really dislike the destination club. I think it is a system best designed for only the most elite of marriott owners. Owners with the best weeks (i.e. summer beach weeks, winter ski weeks, etc...) already had the best trading power, why did Marriott need to create another portal for these owners to get even more for their weeks at the cost of all the other Marriott owners.

My biggest problem with the DC is that Marriott can take a prime deposit from II that wasn't deposited by a DC member exchanging their week for points. I have no problem with prime week owners getting more points than the rest of us but then limit the weeks available for exchange to only the weeks deposited by other enroled members exchanging for points or developer inventory.

The avereage Joe Marriott owner is getting stepped on by Marriott with ever increasing dues and now the DC club stealing inventory from II. I feel like Marriott has created a system for the "haves" to take from the "have nots" with the DC.

No offense to all the Legacy week owners that enroled in the DC.

 

[dougp26364]

I forgot about that one. I guess that is worth something. The only trouble is that with the way the DC program is currently structured, there is relatively little inventory available 13 months. If a Premier-plus member has to wait until 10 months, he loses most of his 13 month advantage.



One of my main points is that most Trust owners will not have enough points to reserve good weeks at the best resorts. How many people are going to buy points so they can stay for a week (or less) at a seasonal resort in its off-season? So, in reality, legacy DC members are only competing again a fraction of the Trust owners for, for example, most of the Hawaiian weeks. The critical question is how long will Marriott wait until they concede the inventory is excess and give others a shot at it?

They really don't need enough to reserve a full week. They only need enough to reserve a partial week. Once a partial week is reserved anyone looking to book that full week is out of luck. If you think about it from that angle, trust owners with just a few points can have the same impact as if they have enough points to reserve the full week at expensive resorts.

How many will do this? I guess that's up to speculation. I can say that if I had paid full freight for those points and if I was paying the MF's on those points, I'd be using those points. I'd either save or borrow to get what I wanted for where I wanted to go.

Hawaiian resorts tend to be expensive for many to get to but, that's not always the case if you live on the west coast. I can see weekend stays getting booked at Hawaiian resorts by trust owners with a couple thousand points and that takes that full week out of the exchange bucket. Even though I wouldn't do it, I do know people with enough disposable cash who do similar things.

And let's not forget the mother Marriott, as owner of those trust weeks, might elect to give the rental option a shot. That could make it an even longer period of time before legacy week owners have access to the inventory.

The main problem I see is that there are no rules for Marriott. They can do what they want with the inventory they control. This is no different and no improvement over what RCI or I.I. offer owners now. The main difference I see is that Marriott controls the inventory rather than I.I. Marriott can elect to put inventory in the exchange pool, use if for promotions, rent or do whatever Marriott decides. There are no rules and there is no transparency for owners to see what it going on.

For many years now I've said it's best to own where you want to go. I've amended that to saying it's best to own where you want to go or be with an internal system that fits you needs. Fortunately for us, with Marriott we purchased units we liked in destinations we enjoy. If all else fails, we'll go to our home resort. The one exception was that we purchased a three bedroom unit in Vegas rather than a two bedroom unit with the thought in mind that we'd lock-off and trade that one bedroom side. So, in a way, we bought to own and use but also to exchange. Fortunately I can still opt out of the DC if necessary and exchange through I.I., even if it means exchanging to non-Marriott resorts.

I feel for those who have purchased weeks with the loan intention of trading within the Marriott system. These changes have to be a little bit of a stressor. Vacations and vacation planning should not involve stress. Planning should be as simple as possible and as stress free as possible. Unfortunately, Marriott doesn't seem to see it that way.

 

[dougp26364]

I really dislike the destination club. I think it is a system best designed for only the most elite of marriott owners. Owners with the best weeks (i.e. summer beach weeks, winter ski weeks, etc...) already had the best trading power, why did Marriott need to create another portal for these owners to get even more for their weeks at the cost of all the other Marriott owners.

My biggest problem with the DC is that Marriott can take a prime deposit from II that wasn't deposited by a DC member exchanging their week for points. I have no problem with prime week owners getting more points than the rest of us but then limit the weeks available for exchange to only the weeks deposited by other enroled members exchanging for points or developer inventory.

The avereage Joe Marriott owner is getting stepped on by Marriott with ever increasing dues and now the DC club stealing inventory from II. I feel like Marriott has created a system for the "haves" to take from the "have nots" with the DC.

No offense to all the Legacy week owners that enroled in the DC.

Your point is well taken. Unfortunately, Marriott seems to have overlooked the smaller owners who have just one week or owners who have weeks in less desirable seasons. I agree the system in inherantely unfair to single week owners. Especially those owners who's units don't lock-off. If not for the fact we own two weeks and both of those weeks are lock-off units, I'd see no advantage to us joining the DC.

No one should take offence to anything posted. It's all just debate as we hash out the pro's and con's of this system. It's important to know how to get the best use out our ownerships. For some, that's joining the DC. For others that staying out of the DC and continuing to use their weeks as they have.

One thing is certain in timeshare exchanging. The rules WILL change. You either need to be able to turn over ownerships (sell what's not working and buy what is working) or be able to modify your usage to get what you want/need from the system. I've had to change the way we get our exchanges several times since we first started in 1998. In some instances it's cost me a little more money. In others it's just been changing how I look for, or how I request, exchanges. Sometimes this means not going to one destination but finding new destinations instead.

It's not just timeshare exchange rules that have done this but the economy and airline rules as well. For instance, I have nearly 40,000 FF miles with Delta but, due to changes in their FF program, I haven't been able to use them. Some area's are now considerably more expensive to fly into so, we don't go there anymore. TSA changes have us looking at drive to destinations more frequently. Car rental prices have me considering drive to destinations or, fly to destinations where renting a car is optional rather than mandatory to enjoy ourselves.

The one constant is change. It's forums like that that allow us to keep up with those changes and debate what they mean for each individual.

 

[dioxide45]

I forgot about that one. I guess that is worth something. The only trouble is that with the way the DC program is currently structured, there is relatively little inventory available 13 months. If a Premier-plus member has to wait until 10 months, he loses most of his 13 month advantage.

That Premier Plus owner has a three month lead on all reservations of less than seven nights. So even if the inventory isn't there at 13 months, it may be there at 12, 11 or even 10 1/2. So they do have a good advantage over a Premier or Standard owner with reservations of less than 7 nights. As Doug pointed out, those less than seven night stays break an entire week that will potentially also make it more difficult for Premier and Standard owners to confirm their exchanges at the 12, 11, etc month mark.

 

[dioxide45]

I think the only way that Marriott could make all unreserved trust inventory available to the Exchange Company at a certain date would to also make all unreserved weeks inventory available in the exchange company as well. They would have to do this based on the percentage of enrolled DC members to enrolled members. Once the date rolls around that is X months from the end of your season, you are automatically converted to points and you can't make a weeks based reservation. Imagine this thread if that were the plan...

Obviously the governing documents don't allow them to do that. But, by making all trust inventory available to legacy owners without equal access of trust owners to legacy weeks, it would make owning legacy weeks more advantageous. Marriott doesn't want that. They want the advantage there for new trust owners, if there is even a real advantage. It helps sell points.

 

[dougp26364]

I think the only way that Marriott could make all unreserved trust inventory available to the Exchange Company at a certain date would to also make all unreserved weeks inventory available in the exchange company as well. They would have to do this based on the percentage of enrolled DC members to enrolled members. Once the date rolls around that is X months from the end of your season, you are automatically converted to points and you can't make a weeks based reservation. Imagine this thread if that were the plan...

Obviously the governing documents don't allow them to do that. But, by making all trust inventory available to legacy owners without equal access of trust owners to legacy weeks, it would make owning legacy weeks more advantageous. Marriott doesn't want that. They want the advantage there for new trust owners, if there is even a real advantage. It helps sell points.

I belong to two other points based reservations systems, both of which are successful. If they can do it, Marriott could/should be able to do it.

DRI, for example, began by selling deeded weeks, then added a points based reservations system and then added trust based ownerships to the mix. Yet, DRI handles this issue with ease. It is a much more owner/user friendly system as far as reserving and enjoying vacations.

 

[m61376]

One of the things I don't understand is why Marriott decided to sell trust points without any "home" resort. Most of the systems sell a home resort. In a way, I think that discourages large point purchases. For example, I think a prospective buyer might opt for enough points for a Hawaii week, for example, if they were guaranteed first crack at booking one, if Hawaii is where they want to frequently travel to. It seems that they turned the whole timeshare concept upside down. I guess in theory it sounds nice to buy points that have access to any of 53 resorts just for the asking, until the buyer finds out that their access is really subject to restricted availability.

Maybe it's me, but if someone is asking me to plunk down 40-50K for something, plus obligate me to another $1600-2000 annually in MF alone, I'd want to feel that I was guaranteed getting a reservation that I wanted. Maybe it's just that I am coming from a weeks mentality, but at least with an owned week I know I am buying one week during a specific time period at a specific location, and I am guaranteed one of those weeks. Furthermore, my right to access one of those weeks will be the same now and in ten years from now. With points, there is no guarantee that there will be a single week available at the resort I want to travel to, and there is no guarantee that my access today will be the same as it will be in ten years down the road. Next year Marriott can decide that where I like to go now costs more points, and my only option at that point will be to buy more points, or go for a shorter period (or use a smaller unit). I may be missing something, but the DC set-up seems to have the same potential for point devaluation that Marriott has ascertained is an inherent necessity in the rewards program, except that the rewards program is a perk, while the DC is a pre-paid vacation program being touted basically as buying today and travel tomorrow at today's prices. I fail to see how the DC ensures against future point inflation and, thus, why would buying points make economic sense?

As much as I love week ownership, to me renting makes more sense than points ownership in the Marriott system. At least with Starwood, DVC, etc., I am guaranteed something tangible (ie- a set period of time in a set size unit in a set location) each year, for a set cost. And, while what I own may not be enough for me to reserve equivalent size/number of days elsewhere, at least in these systems I am given the value of what I own, so I don't lose value (and thus am always downgrading because of the ever present Marriott skim) if I choose to try to book elsewhere at 10,9, or 8 months (at pre-specified openings that the various systems allow).

 

[dioxide45]

I belong to two other points based reservations systems, both of which are successful. If they can do it, Marriott could/should be able to do it.

DRI, for example, began by selling deeded weeks, then added a points based reservations system and then added trust based ownerships to the mix. Yet, DRI handles this issue with ease. It is a much more owner/user friendly system as far as reserving and enjoying vacations.

I am not saying it can't necessarily be done, but in order to do so, weeks owners would have to give up some rights to their weeks based reservations at x date before checkin. Are enrolled weeks owners willing to do so? If we get access to the trusts inventory at 9 months, trust owners should get access to weeks inventory at 9 months too.

All of this really only effects someone if they exchange in points, from the beginning it was determined that exchanging in points really isn't the best option for most.

 

[dougp26364]

I am not saying it can't necessarily be done, but in order to do so, weeks owners would have to give up some rights to their weeks based reservations at x date before checkin. Are enrolled weeks owners willing to do so? If we get access to the trusts inventory at 9 months, trust owners should get access to weeks inventory at 9 months too.

All of this really only effects someone if they exchange in points, from the beginning it was determined that exchanging in points really isn't the best option for most.

That's what I was trying to point out, but apparently did so rather poorly. Legacy weeks owners wouldn't give up much, if anything.With DRI & HGVC I have a home resort priority to book any week I want. I still hold my deeded weeks and I can still reserve my home resort week, using points, during home the home resort advantage period. After the home resort advantage period has expired, anyone can book a week at any resort they want and can book partial weeks if they prefer. So there would have been very little given up and so much more gained IMO.

The difference is, both DRI & HGVC still hold true to their seasons rather than charging different amounts of points for each individual week. Marriott's fatal flaw is straying from their original seasons and event weeks formula. Now, I'm not certain there's any turning back to fix that flaw.

 

[dougp26364]

One of the things I don't understand is why Marriott decided to sell trust points without any "home" resort. Most of the systems sell a home resort. In a way, I think that discourages large point purchases. For example, I think a prospective buyer might opt for enough points for a Hawaii week, for example, if they were guaranteed first crack at booking one, if Hawaii is where they want to frequently travel to. It seems that they turned the whole timeshare concept upside down. I guess in theory it sounds nice to buy points that have access to any of 53 resorts just for the asking, until the buyer finds out that their access is really subject to restricted availability.

Maybe it's me, but if someone is asking me to plunk down 40-50K for something, plus obligate me to another $1600-2000 annually in MF alone, I'd want to feel that I was guaranteed getting a reservation that I wanted. Maybe it's just that I am coming from a weeks mentality, but at least with an owned week I know I am buying one week during a specific time period at a specific location, and I am guaranteed one of those weeks. Furthermore, my right to access one of those weeks will be the same now and in ten years from now. With points, there is no guarantee that there will be a single week available at the resort I want to travel to, and there is no guarantee that my access today will be the same as it will be in ten years down the road. Next year Marriott can decide that where I like to go now costs more points, and my only option at that point will be to buy more points, or go for a shorter period (or use a smaller unit). I may be missing something, but the DC set-up seems to have the same potential for point devaluation that Marriott has ascertained is an inherent necessity in the rewards program, except that the rewards program is a perk, while the DC is a pre-paid vacation program being touted basically as buying today and travel tomorrow at today's prices. I fail to see how the DC ensures against future point inflation and, thus, why would buying points make economic sense?

As much as I love week ownership, to me renting makes more sense than points ownership in the Marriott system. At least with Starwood, DVC, etc., I am guaranteed something tangible (ie- a set period of time in a set size unit in a set location) each year, for a set cost. And, while what I own may not be enough for me to reserve equivalent size/number of days elsewhere, at least in these systems I am given the value of what I own, so I don't lose value (and thus am always downgrading because of the ever present Marriott skim) if I choose to try to book elsewhere at 10,9, or 8 months (at pre-specified openings that the various systems allow).

I agree whole heartedly. At the very least, Marriott should have placed resorts in trust groups and given new owners the choice of which group they wanted to belong too. They could have "home" resort advantage at that grouping of resorts and open booking at a set timeframe for any resort in the system. That way, one could buy into the Hawaiian group and have their choice of the resorts in Hawaii. They could also have done something like a Western grouping and Eastern grouping, with emphasis on those area's so that owners living either east or west would have a great selection of resorts in their home trust.

I've said it before. Marriott, for whatever reason, appears to have decided to cut a new road when a four lane super highway already existed. I makes absolutely no sense to me.

We've joined the DC but, the way this thing is set up, I don't see how Marriott is likely to benefit as much as they could have. Because of the skim and the destruction of the season I purchased (each individual week requires different amounts of points), I have no intention of ever exchanging my week for DC points. I'm a member but not a participant. I would have thought it better to have all legacy owners want to participate.

Had Marriott kept their seasons and, if they had given the amount of points for each week as it took to reserve those same weeks, I think they would have had nearly 100% participation in the program. Owners still want to be guaranteed they have the original availability as when they plunked down those several thousands of dollars. If they join and convert their weeks to points, they lose that benefit. If they join and don't convert there weeks to points, where's the advantage to the owner? Only those who see a benefit of one annual fixed fee vs ala carte fee's will see any benefit.

Right now, the main benefit I see is to multiple week owners, owners with units that lock-out and owners of very high value resort weeks. Single week owners and owners who bought and use their home resort week will see no benefit from joining. I'm not even so sure that very high value resort week owners will see much value as I would think the majority of those owners purchased specifically to use that very expensive week rather than exchange. This limits how many legacy week owners will find the new system appealing. It further limits those that do find some appeal as to the advantage of giving up their home resort week for the promise made by points based reservations. With the skim, there is a definate cost felt by most legacy week owners.

 

[m61376]

The only added value I might see is in the potential point rental market. For those finding themselves in need of an extra unit, renting points can be a much cheaper avenue.

 

[GregT]

All,

This has been an interesting dialogue -- allow me to further speculate, with the same disclaimer that this is repetitive to much of what has been posted by other smart TUGgers.

1) There are approximately 23,000 weeks currently in the Trust (87M points/average of 3,600 points per week -- adjusted a little for Hawaii)
2) 23,000 weeks is a little more than 3% of the ~720,000 weeks that exist
3) Accept that DClub will find brand new buyers of Trust Points (not just current week owners), because SpinCo must
4) Imagine that all of those new buyers purchase 2,500 Trust Points, paying $25K apiece to SpinCo
5) We all believe the days of $1B in annual timeshare sales are gone, but perhaps $250M in annual timeshare sales are not
6) Marriott will need inventory to sell at some future point and will begin ROFRing properties, which will be deposited in the Trust
7) The Trust will begin to grow in size
8) $250M in sales is likely $40M in inventory cost to Marriott for the ROFR'd properties, which were deposited in the Trust
9) $40M in inventory cost (at an average of $5K per week -- my guess) is 8,000 weeks per year

So, in this hypothetical scenario, at the future point in time where Marriott is successfully selling $250M/year in new product and needs replenishment inventory (via ROFR), then at that future point the Trust begins to grow by ~8,000 weeks per year.

The 23,000 week Trust -- after 5 years of success from that future point in time, is now bigger by 40,000 weeks -- and is 63,000 weeks in size.

That's still less than 10% of the total Marriott population of weeks. However, I expect that 10% will represent a much higher percentage of the premium weeks -- and will likely be the weeks that many people using points will want to access.

What if they sell $500M/year? The Trust grows faster....but can they find those weeks to ROFR (at $5K????). Hmm....

There are many holes in these assumptions, but this does demonstrate the relative size (small) of the Trust versus the Legacy Weeks. And it also shows the potential for the very gradual shift of the location of some of the most desirable week for actual users of points -- from the Legacy Weeks bucket and into the Trust Inventory bucket.

I do believe that SpinCo will find new buyers -- I don't want to discount the skill of a commissioned sales force, selling the dream of flexible vacations in some of the best timeshares in the world. It's a powerful vision -- and pure Trust Point owners will be shielded from some of the issues that will annoy and frustrate the Legacy Point user. They will still have to deal with the complicated points chart and expiring points, but they won't feel skimmed and won't have to juggle the usage of both Legacy and Trust points.

Interesting implications for the future.

Best to all,

Greg

 

[TheTimeTraveler]

All,

This has been an interesting dialogue -- allow me to further speculate, with the same disclaimer that this is repetitive to much of what has been posted by other smart TUGgers.

1) There are approximately 23,000 weeks currently in the Trust (87M points/average of 3,600 points per week -- adjusted a little for Hawaii)
2) 23,000 weeks is a little more than 3% of the ~720,000 weeks that exist
3) Accept that DClub will find brand new buyers of Trust Points (not just current week owners), because SpinCo must
4) Imagine that all of those new buyers purchase 2,500 Trust Points, paying $25K apiece to SpinCo
5) We all believe the days of $1B in annual timeshare sales are gone, but perhaps $250M in annual timeshare sales are not
6) Marriott will need inventory to sell at some future point and will begin ROFRing properties, which will be deposited in the Trust
7) The Trust will begin to grow in size
8) $250M in sales is likely $40M in inventory cost to Marriott for the ROFR'd properties, which were deposited in the Trust
9) $40M in inventory cost (at an average of $5K per week -- my guess) is 8,000 weeks per year

So, in this hypothetical scenario, at the future point in time where Marriott is successfully selling $250M/year in new product and needs replenishment inventory (via ROFR), then at that future point the Trust begins to grow by ~8,000 weeks per year.

The 23,000 week Trust -- after 5 years of success from that future point in time, is now bigger by 40,000 weeks -- and is 63,000 weeks in size.

That's still less than 10% of the total Marriott population of weeks. However, I expect that 10% will represent a much higher percentage of the premium weeks -- and will likely be the weeks that many people using points will want to access.

What if they sell $500M/year? The Trust grows faster....but can they find those weeks to ROFR (at $5K????). Hmm....

There are many holes in these assumptions, but this does demonstrate the relative size (small) of the Trust versus the Legacy Weeks. And it also shows the potential for the very gradual shift of the location of some of the most desirable week for actual users of points -- from the Legacy Weeks bucket and into the Trust Inventory bucket.

I do believe that SpinCo will find new buyers -- I don't want to discount the skill of a commissioned sales force, selling the dream of flexible vacations in some of the best timeshares in the world. It's a powerful vision -- and pure Trust Point owners will be shielded from some of the issues that will annoy and frustrate the Legacy Point user. They will still have to deal with the complicated points chart and expiring points, but they won't feel skimmed and won't have to juggle the usage of both Legacy and Trust points.

Interesting implications for the future.

Best to all,

Greg

Greg:

I think you hit the nail on the head. As I recall, Fletch (the ex Marriott Employee) thought it would take 5 to 7 years before this point program would really be rolling.

This is why I think it's important for Legacy Week owners to sign up now, use their weeks the traditional way until the DC point opportunities open up a few years down the line...

Who knows how long the opportunity to convert to points will exist, and at what price to join? Right now there is a deadline of 6/30/2011, but will that be extended again




.

 

[windje2000]

All,

This has been an interesting dialogue -- allow me to further speculate, with the same disclaimer that this is repetitive to much of what has been posted by other smart TUGgers.

1) There are approximately 23,000 weeks currently in the Trust (87M points/average of 3,600 points per week -- adjusted a little for Hawaii)
2) 23,000 weeks is a little more than 3% of the ~720,000 weeks that exist
3) Accept that DClub will find brand new buyers of Trust Points (not just current week owners), because SpinCo must
4) Imagine that all of those new buyers purchase 2,500 Trust Points, paying $25K apiece to SpinCo
5) We all believe the days of $1B in annual timeshare sales are gone, but perhaps $250M in annual timeshare sales are not
6) Marriott will need inventory to sell at some future point and will begin ROFRing properties, which will be deposited in the Trust
7) The Trust will begin to grow in size
8) $250M in sales is likely $40M in inventory cost to Marriott for the ROFR'd properties, which were deposited in the Trust
9) $40M in inventory cost (at an average of $5K per week -- my guess) is 8,000 weeks per year

So, in this hypothetical scenario, at the future point in time where Marriott is successfully selling $250M/year in new product and needs replenishment inventory (via ROFR), then at that future point the Trust begins to grow by ~8,000 weeks per year.

The 23,000 week Trust -- after 5 years of success from that future point in time, is now bigger by 40,000 weeks -- and is 63,000 weeks in size.

That's still less than 10% of the total Marriott population of weeks. However, I expect that 10% will represent a much higher percentage of the premium weeks -- and will likely be the weeks that many people using points will want to access.

What if they sell $500M/year? The Trust grows faster....but can they find those weeks to ROFR (at $5K????). Hmm....

There are many holes in these assumptions, but this does demonstrate the relative size (small) of the Trust versus the Legacy Weeks. And it also shows the potential for the very gradual shift of the location of some of the most desirable week for actual users of points -- from the Legacy Weeks bucket and into the Trust Inventory bucket.

I do believe that SpinCo will find new buyers -- I don't want to discount the skill of a commissioned sales force, selling the dream of flexible vacations in some of the best timeshares in the world. It's a powerful vision -- and pure Trust Point owners will be shielded from some of the issues that will annoy and frustrate the Legacy Point user. They will still have to deal with the complicated points chart and expiring points, but they won't feel skimmed and won't have to juggle the usage of both Legacy and Trust points.

Interesting implications for the future.

Best to all,

Greg

I agree that Dclub currently represents a small piece of the Marriott timeshare universe. I think it will stay that way for a while. It may have a proportionally greater impact on legacy owners than its size would warrant because of the weeks breakage caused by non-traditional days based occupancy.

One thing to keep in mind is that nowhere near all of inventory owned by MAR has been contributed to the trust.

The last inventory data for MAR's I've seen was about $1.4 B, .. after the $0.7 B impairment.

Retail value of that inventory (assuming the historical 60% gross profit margin) is between $3.5 B and $5.25 B. The high end of the range assumes the impairment was temporary.

If the Trust has 87 M points, that's about $870 million in retail value. Therefore MAR has plenty more to contribute before they need to buy anything, especially if one expects a sales run rate of $250M.

I think it will be a while before they purchase or ROFR much of anything. They will probably grab popular weeks for nonpayment of MF and/or debt.

From the first quarter earnings release.

In the first quarter, Marriott's timeshare business remained focused on increasing the number of existing customers enrolled in its new points-based program. The program allows customers to purchase timeshare in smaller increments than the traditional one-week product and allows greater flexibility of use.

Since the program launched in June 2010, over 64,000 existing owners have enrolled more than 123,000 weeks in the points program, continuing to exceed the company's expectations.

Contract sales to existing owners represented more than 61 percent of sales in the quarter compared to 48 percent in the year-ago quarter. While sales to existing customers were strong, with fewer sales to new customers year-over-year and a lower average contract price, first quarter adjusted Timeshare segment contract sales declined $27 million to $145 million (excluding a $1 million reversal of an allowance for fractional contract cancellations recorded in a prior period).

In the prior year's quarter, Timeshare adjusted segment contract sales totaled $172 million (excluding an $8 million allowance for fractional and residential contract cancellations).

A $250 M run rate may well be a little low - it currently looks like it may well be twice that. The customer mix changed and is decidedly skewed towards existing customers - and not towards 'new meat.' How long that will last remains to be seen.

They may well have some ability to 'manage' earnings by selecting what they contribute to the trust - either low priced foreclosures and/or ROFRed inventory versus new existing never sold inventory on their books.

Lastly, I recollect that MAR announced the SEC filings for SPINCO were scheduled for the end of June. Anyone seen them?

 

[infamazz]

With points, there is no guarantee that there will be a single week available at the resort I want to travel to, and there is no guarantee that my access today will be the same as it will be in ten years down the road. Next year Marriott can decide that where I like to go now costs more points, and my only option at that point will be to buy more points, or go for a shorter period (or use a smaller unit). I may be missing something, but the DC set-up seems to have the same potential for point devaluation that Marriott has ascertained is an inherent necessity in the rewards program, except that the rewards program is a perk, while the DC is a pre-paid vacation program being touted basically as buying today and travel tomorrow at today's prices. I fail to see how the DC ensures against future point inflation and, thus, why would buying points make economic sense?

This is the word I've been trying to get out about the Marriott DC program - you expose yourself to point "inflation". THIS is how Marriott will continue to generate revenue from previously sold timeshares and points - devalue them over time forcing the owners to purchase additional points simply to keep their prior purchasing power. Anyone who thinks this is not where the program is heading obviously has an overly-altruistic view of Marriott.

 

[Born2Travel]

This is the word I've been trying to get out about the Marriott DC program - you expose yourself to point "inflation". THIS is how Marriott will continue to generate revenue from previously sold timeshares and points - devalue them over time forcing the owners to purchase additional points simply to keep their prior purchasing power. Anyone who thinks this is not where the program is heading obviously has an overly-altruistic view of Marriott.

I believe you are ABSOLUTELY CORRECT - they are not alone in trying to "resell" to their owners and up the ante and fees any way they can - it's all about the money.

 

[kedler]

Thanks

Hi Greg,

Thanks for taking the time to find out this information it is similar to what I was told - though much more in depth - when I called Customer Advocacy because in my daily hunt to better my initial reservation one of the VOAs told me that she had a Ko Olina 3 bdrom, OV (my first choice) when I wanted that was available with a combination of trust/legacy points and that she would reserve it. To make the reservation I needed to convert another week but I told her that not to convert the weeks to points UNLESS she was absolutely sure the reservation could be made with my combination of trust/legacy points. Well not only did she deposit the week, she cancelled the prior reservation, and then told me that she was looking at it all wrong and could not make the reservation. She told me that the week deposited could not be retrieved as it as a "final" transaction. She never told me about cancelling the first reservation (I found out after the fact when I was checking email and found the cancellation) but was trying to find me another, somehow disconnected me and never called me back! I called back and after 45 min on hold another knowledgeable VOA was able to get me another Ko Olina reservation - 2 bdrm MV for 8 days.

In any event I called Customer Advocacy the next day to complain bitterly and I'm still told that the deposited week cannot be retrieved even though it was their mistake but that they will try to get me what I wanted in the first place to make it right. The next call I get is that even Customer Advocacy apparently cannot override the inventory system - I was told that there are no more trust/legacy weeks available for Ko Olina for June, unless a cancellation occurs. Apparently on the first of each month more inventory is placed in the system so that is when more mixed weeks will be available. The Customer Advocacy rep - who has been very nice though so far useless - has a request in to get me what I want on July 1 and she is supposed to call me on Friday to update the status and hopefully give me good news.

I fail to understand why 1. Marriott cannot correct their own mistake by "undepositing" my week (the only answer I have been given is it can't be done) OR 2. override their own inventory system to fix their mistake.

I like the concept of the point system, flexible reservations, longer and shorter stays, but Marriott's execution of their own system - which it seems many VOAs don't even understand is - is horrific at best and verging on unfair advertising at worst.

IMO Premier status is near worthless right now unless the majority of your points are trust points. If you are after a reservation with primarily legacy points it appears that even 12 months may be too soon to get the better weeks/views/longer stays, etc.

All venting aside we do still have an 8 day reservation at Ko Olina for the week of July 4th but I'll be one very angry owner if I can't get the reservation I want (3 BR OV) and the other week is still converted to points, even though I told her not to do so unless she was 100% sure she could make the reservation.

 

[kedler]

Check your trust/legacy reservation on Marriott.com

I was checking another reservation on Marriott.com and noticed that my Ko Olina reservation contained the following information under the link that says "View Details":

"Monday, July 2, 2012 - Wednesday, July 4, 2012
(2 nights)
MVC EXCHANGE

Wednesday, July 4, 2012 - Friday, July 6, 2012
(2 nights)
MVC TRUST

Friday, July 6, 2012 - Tuesday, July 10, 2012
(4 nights)

MVC EXCHANGE"

I find this breakdown very interesting as it seems to be a window into how they are handling these reservations.

If you have trust/legacy reservations please check it out and let us know what shows up.

Thanks,
kedler

 

[dioxide45]

I agree that Dclub currently represents a small piece of the Marriott timeshare universe. I think it will stay that way for a while. It may have a proportionally greater impact on legacy owners than its size would warrant because of the weeks breakage caused by non-traditional days based occupancy.

One thing to keep in mind is that nowhere near all of inventory owned by MAR has been contributed to the trust.

The last inventory data for MAR's I've seen was about $1.4 B, .. after the $0.7 B impairment.

Retail value of that inventory (assuming the historical 60% gross profit margin) is between $3.5 B and $5.25 B. The high end of the range assumes the impairment was temporary.

It seems that a lot of their inventory is in undeveloped land. Inventory that they really won't place in the trust. I wonder how much inventory they have in built or to be built units.

 

[m61376]

Reading some of the experiences posted above, it seems to me that Marriott has, whether purposefully or not, included yet another "skim" into this convoluted system. Owners are virtually guaranteed to be left with excess points, with legacy enrollees who have purchased trust points virtually guaranteed that they will have excess points left in two pots. It would take an accounting degree and a spreadsheet just to fully utilize ownership- something which 99% of owners will never do.

What a system!...