Marriott Vacations Worldwide 3Q Sales Decline; Stock Tanks

[Hindsite]

doubt it would be difficult or require any sort of significant "sleuthing" skills to easily identify a number of entities that fall into this category of megarenter.... should they actually start driving down that road.

One problem they might face is that they themselves are possibly the largest megarenter in the system, so they need to ensure that they don't shoot themselves in the foot in the process. There already questions about how MVC, Sheraton and Westin inventory for the points system is carved out from the total inventory vs what gets made available for their rentals, weeks reservations, VSN and II and we really don't know other than they do some forecasting (guessing) and allocate from there.

This all seems to be focussed on the points system, assuming its Abound inventory and not on weeks inventory or Flex.

 

[dougp26364]

But do they say you can run a commercial operation amounting to many, many weeks, for profit vs. usage? I've never heard them say that. And I am far from an MVC apologist.

Yes, at Oceana Palms approx 5 years ago. The salesman was trying to sell us a “quarter share” with the intention of renting for profit. At least enough profit to pay all our MF’s and maybe a little more. He even went as far as to show how he was doing this by using Vacation Candy

Of course the salesman also used some of that famous timeshare “magical math” to show how the purchase really wasn’t going to cost what it was going to cost. Plus we’ve seen the “rent to pay for what you own” presentation in the past, so I was mentally taking a nap while he was doing his mathematical gymnastics to get the numbers dance like a dancing bear at the circus.

 

[m61376]

I think there are several problems they need to contend with, and maybe this is a wake-up call. Sadly, we didn’t sell our stock
20-30 years ago there was the enticement of buying pre-construction, with below market pricing for something new and enticing. MFs were under 1k and purchases came with not only the illusion of fabulous trips, but with enough Marriott points to take that fabulous European vacation and many older owners traded for Marriott points and reaped great value from hotel and airline packages. The math really worked early on.
Today the value of trading for Bonvoy points has been decimated and MFs have gone way up.

Additionally, today’s market is a different generation. Their discretionary income is less in their early to mid 40s since many are first buying homes and even first having children. Also, when at least some of the new resorts started selling there were Tug and perhaps a few related sites, access was primarily limited to the more computer savvy. Today there’s already access to sites like FB and the vast majority of the pool of potential buyers have easy access to the good, the bad and the ugly. Sales have to counter all the complaints of dissatisfied owners, since social media has made that easily available.

Moreover, while many of us here get great value from our ownership, it’s time consuming to do so. This generation is busier. The target market is largely 2 income households and it’s not as easy for them to plan, let alone secure reservations at a precise time and date for high demand properties. And their expectations are higher for vacations, and many want more services when they go on vacation. Many resorts are starting to accommodate those needs, with some increase in poolside or beach service, but I think availability has lagged demand, and perhaps Marriott needs to up their game to appeal to today’s generation of buyers. And, yes, I know it’s a timeshare and personally am happy to bring down a cooler with drinks, snacks and lunch, but I think today’s parents want more services. In general, they work harder and have less free time, so have higher expectations. From my own observations and perspective of having “kids” in their early 40s, I think adding more hotel like amenities, especially those related to food and drinks, would increased the perceived value of timeshare vacations.

As for cracking down on commercial renters, in all deference to those on here who do so, I do think it would go a long way towards customer satisfaction. I’ll use Aruba as an example. I know Aruba Christmas and New Years weeks are one of the top, if not the top, of the rental market. They were sold as holiday weeks at the Surf Club, which is newer, but included as Platinum weeks at the Ocean Club. And there are mega week owners that own so many weeks they basically nab all the 13 month inventory since they’re using so many gold weeks to start reserving them months before. Marriott could easily impose restrictions on such reservations. For example, how it stands today, a mega owner can string 10 gold weeks and 10 Platinum weeks, allowing them to lock off and reserve 20 weeks before Christmas week and then reserve 10 Christmas and or New Years weeks. That’s a simplified example of what goes on. They could limit the number of weeks you can reserve at the end of a consecutive reservation. Perhaps another way to crack down would be to limit the number of name changes per year. The flip side is, of course, while the language excludes commercial renting, sales people touted profit from renting.

It’s a fine line, but clearly Marriott isn’t addressing these issues sufficiently, and as the original owners age it’s increasingly problematic. I’m not as concerned about the 500 shares of VAC we own as I am about the future value of my ownership. I’m concerned that a downward spiral in the stock value will ultimately be reflected in the properties.


Sent from my iPhone using Tapatalk

 

[dougp26364]

I am sure this is a common discussion item internally. One one hand, I imagine that statistically, those who have purchased before might have a higher likelihood of purchasing again than the average person off the street. And just using myself as an example, I purchased, then said "no" at many presentations before eventually buying something more... and later something more. So there is probably some benefit to them in chipping away at current owners.

But a lot of current owners are now in their 60s and 70s and I think that becomes a tougher and tougher pill to swallow, since for a purchase to make sense, you need to be able to amortize the purchase cost across a number of years of use. Even a completely healthy 70-year-old would be hard-pressed to assume that they were going to get 20 years of use out of a new timeshare purchase. So I do think they need to attract younger buyers. Part of that problem is that the value proposition that existed 20 years ago just doesn't exist today.

My interpretation of the highlighted phrase is that they're going to increase sales incentives, which will almost certainly lead to higher-pressure presentations and more deceptive claims. It's unfortunate that they focus on "selling harder" instead of on trying to deliver a better value that might be easier to sell.

In 2001 we purchased an ocean front 3 bedroom unit at Ocean Pointe for less than $20,000 PLUS we received a 7 night cruise (ocean view Alaskan cruise) and an exchange certificate with II (7 nights in Scotland) as incentives for the purchase. Even with the insane increase in MF’s we still can validate spending the money despite this being a developer purchase.

We took a presentation last month and used the exact logic you mention to not make another purchase. We don’t feel we will live long enough and/or remain healthy enough to travel long enough for the finances to work out.

 

[Hindsite]

Moreover, while many of us here get great value from our ownership, it’s time consuming to do so. This generation is busier. The target market is largely 2 income households and it’s not as easy for them to plan, let alone secure reservations at a precise time and date for high demand properties. And their expectations are higher for vacations, and many want more services when they go on vacation. Many resorts are starting to accommodate those needs, with some increase in poolside or beach service, but I think availability has lagged demand, and perhaps Marriott needs to up their game to appeal to today’s generation of buyers. And, yes, I know it’s a timeshare and personally am happy to bring down a cooler with drinks, snacks and lunch, but I think today’s parents want more services. In general, they work harder and have less free time, so have higher expectations. From my own observations and perspective of having “kids” in their early 40s, I think adding more hotel like amenities, especially those related to food and drinks, would increased the perceived value of timeshare vacations.

Those additional Amenities are not part of the "ownership" so they have to wash their face financially for them to be available at resorts. My experience is that back 20-10 years ago there were many more amenities at the resorts I go to. You could have your refrigerator pre-stocked prior to arrival, pool-side service and many other things. I suspect in the early days when resorts were in active sales there was some bleeding of cost across the HOA and non-HOA services, but as owners have demanded maint fees be kept low, those additional services have gone. Personally I don't want to pay in my maint fees to pick up people's trash from beside the pool from food and drink service when there is a restaurant making the money, even if there are pool attendants that I pay for that are around that "could" do that. The F&B outlets should pay for that so the customer pays the full cost.

As for cracking down on commercial renters, in all deference to those on here who do so, I do think it would go a long way towards customer satisfaction. I’ll use Aruba as an example. I know Aruba Christmas and New Years weeks are one of the top, if not the top, of the rental market. They were sold as holiday weeks at the Surf Club, which is newer, but included as Platinum weeks at the Ocean Club. And there are mega week owners that own so many weeks they basically nab all the 13 month inventory since they’re using so many gold weeks to start reserving them months before. Marriott could easily impose restrictions on such reservations. For example, how it stands today, a mega owner can string 10 gold weeks and 10 Platinum weeks, allowing them to lock off and reserve 20 weeks before Christmas week and then reserve 10 Christmas and or New Years weeks. That’s a simplified example of what goes on. They could limit the number of weeks you can reserve at the end of a consecutive reservation. Perhaps another way to crack down would be to limit the number of name changes per year. The flip side is, of course, while the language excludes commercial renting, sales people touted profit from renting.

What is notable is that the talk at the meeting only mentioned the points system and not the weeks system, so your example won't get addressed by the look of it. I also know of at least one travel company that has bought MVC weeks for commercial use, and I suspect there are more. It is likely that those companies have a separate contract that covers their usage, so the general terms and conditions that individual owners have may not be applied.