Marriott Vacations Worldwide 3Q Sales Decline; Stock Tanks

[chosshaul]

Interesting most of their sales are still flattish at all locations except Orlando and Maui. Maui was specifically mentioned as being 10% of all their sales. So people are still buying these abound points. They are trying to screen for higher-quality guests by FICO scores and have better retention of their top-performing sales people. The market hasn't fallen out yet, but Wallstreet will give no good forward guidance if a company is showing negative growth.

"Total company rental profit declined $17 million to $21 million, primarily driven by higher unsold maintenance fees and getaways at Interval."

Orlando and the desert were mentioned as areas that were underperforming and thus MVC has to dump their unsold MF inventory into interval getaways where MVC presumably loses money.

" Yes, Maui, pre-fires was 10% of our contract sales. We're the largest, I think, in West Maui by far. It's a big part of our business versus our competitors."


The Maui section was a little sad. Orlando and Maui were the top 2 properties that had underperformed, Maui for obvious reasons. Orlando would probably be a hard sell with so much competition in the area.

 

[chosshaul]

"Our new owner experience initiative, which helps reduce rescissions and boost our tour pipeline is creating excitement at the sales table by giving buyers a preplanned vacation to look forward to after their presentation. And with over 270,000 packages in our pipeline at the end of Q3, the impacts of these changes will be realized over the course of the coming year."

Here is their anti-TUG strategy to prevent recissions. Have owners book a pre-planned vacation before leaving the building.

 

[Hindsite]

"Total company rental profit declined $17 million to $21 million, primarily driven by higher unsold maintenance fees and getaways at Interval."

I am always amazed at how low many of the MVC Getaways are, often a third of MF for decent dates. A month ago I got an end of April week in Spain using an AC for less than $400

 

[Fasttr]

Brian Miller is out as well. “Retiring”

 

[WaikikiFirst]

in timeshare terms, arbitrage is when I trade a low-MF tiger trader for a high-cost Hawaii week via RCI or II (or use differentials in MF values between SO and Abound points). Alpha is when I try to buy low cost deeds, book high value weeks and rent them out

That is good. I like that. The problem is TS people love to spend time talking about the stock mkt, when most of them know basically squat about it

 

[WaikikiFirst]

"the stock market explains everything" is one hell of a starting point for life

Constant strawmen is one hell of a starting pt. Explains everything? Nobody said that. Nobody believes that.
But I guess strawmen are better than your typical wild-bleep tangents.

 

[WaikikiFirst]

U N H I N G E D.

Oh oh. An Archer hater. Let's do lunch. I'll pay. You just have to handle the tip. Just the tip!

 

[jabberwocky]

Brian Miller is out as well. “Retiring”

I'm sure this is just the start of the housekeeping.

 

[jp10558]

Nope - I didn't say that dividends are bad - it's just that they don't create value.

A thought experiment: suppose I have a company that has $1 billion in assets and the company trades at book value (let's say $100/share). If the company pays out $100 million as a dividend ($10/share) - are you better or worse off?

The answer in a world with no tax is that you should be in the same position. Your net worth is unchanged. Pre-dividend you have a shares worth $100 each. Ex-dividend you have shares worth $90 each, but your personal cash position has gone up by $10/share - so no difference. Now if you introduce a tax on dividend income you are in a worse-off position since your net worth per share will be $90 + (1-tax rate)*$10 .

Dividends are a good way to signal stability, but they can also mask weakness. I get the point about buybacks eventually running out of stock to buy, but companies routinely split their shares when the price has gone up, so you don't have to sell off your whole stake if you are seeking liquidity. This was the whole reason why BRK.B was introduced alongside the BRK.A shares - and BRK as you know has never paid a dividend.

Interesting. I guess to me stock valuations aren't "real" till I've sold them. Because they can change wildly with little warning. Dividends are at least locked in as I get them. Mathematically based on how things are now I think you're right, avoiding taxes is good. Most of my investments are in my retirement so I avoid taxes anyway till I take money out. I just think that stocks that you only make any money on if the stock goes up really lead to things that eventually tank the stock in the way companies operate. If you get lucky or you do semi complicated staggered sales (assuming the companies do actually do splits, which given how high some of the share prices are I feel like not all companies are doing them like we'd hope) or get out before there's a crash then great.

 

[jp10558]

That is good. I like that. The problem is TS people love to spend time talking about the stock mkt, when most of them know basically squat about it

Constant strawmen is one hell of a starting pt. Explains everything? Nobody said that. Nobody believes that.
But I guess strawmen are better than your typical wild-bleep tangents.

Except I've consistently said I'm looking at things excluding the stock market. You're the one who insists that there's no way to understand a business not selling well to consumers (like me) except via the stock market. That doesn't even make sense to me how they're connected in that direction. The Stock Market here is the trailing indicator - business practices aren't working well so income goes down, there's less customers, less renters, whatever else went down and THEN the stock tanked. I don't believe the stock tanking is causing potential TS buyers to avoid presentations or to say no to buying in those presentations. If you think that's what's happening, please explain.

If you aren't making the argument about causality in that way, then I don't really understand why you think I'm talking about the stock market at all in this discussion (outside of replying to others who've brought it up). Again, I think most of us are talking about what makes a good business, and the stock market is ancillary to that. At best, it's one measure of a business.

 

[Big Matt]

Just my two cents, but when you look at the history of MVC over time it went from a weeks based system to points and now you can use points for whatever you want, but none of it is a good value. Lots of shiny objects don't make the maintenance fees worth more. I still use II for much of my activity and use my points strategically. The current focus on selling (more) points is way harder than selling a week at a beautiful resort in Hawaii, Florida, etc. Owning a week is tangible. Owning points is very cloudy to me. Maybe its time for them to regain focus on what worked 25 years ago.

 

[dioxide45]

Just my two cents, but when you look at the history of MVC over time it went from a weeks based system to points and now you can use points for whatever you want, but none of it is a good value. Lots of shiny objects don't make the maintenance fees worth more. I still use II for much of my activity and use my points strategically. The current focus on selling (more) points is way harder than selling a week at a beautiful resort in Hawaii, Florida, etc. Owning a week is tangible. Owning points is very cloudy to me. Maybe its time for them to regain focus on what worked 25 years ago.

Eveyrthing works until it doesn't work. Weeks were great until they had to sell the off season stuff that no one wanted. So they created a trust to dump those weeks into so they could sell the high season dream using low season inventory. That too worked until it didn't work. Constant and steady price increases along with increasing maintenance fees. Much of it was based on a poorly conceived plan to seed inventory to the trust. They took back a lot of weeks via deed back and put them into the trust. The problem was that much of what they took back had high fees to point ratio driving up the maintenance fee per point.

It also seems they have been too aggressive on new builds driving up their inventory and required fees on that inventory. That did seem to be something they mentioned several times during the call. They had more inventory this year than they had at the same time last year. Couple with lower demand for certain locations, it is driving up their carrying costs.

 

[dioxide45]

Orlando and the desert were mentioned as areas that were underperforming and thus MVC has to dump their unsold MF inventory into interval getaways where MVC presumably loses money.

But if they didn't dump the inventory into II getaways, it would be a 100% loss. It seems that overall rentals has declined in Q3. As they noted. That could certainly be seen with more, and cheaper, getaway inventory and also a lot more Marriott weeks showing up as available on Accommodation Certificates. The travel companies rode high on the hog during the post pandemic surge, but that could only last so long.

 

[chosshaul]

MVC now at a 1.6B market cap. Diamond resorts was purchased for 1.4b 3 years ago, but I’m not sure any of the timeshare companies could handle a buyout of Marriott

 

[jabberwocky]

MVC now at a 1.6B market cap. Diamond resorts was purchased for 1.4b 3 years ago, but I’m not sure any of the timeshare companies could handle a buyout of Marriott

Maybe a return to the mothership? Why does it have to be a TS company? MAR has a valuation approaching $80 billion. It would be a rounding error for them.

 

[jabberwocky]

Eveyrthing works until it doesn't work. Weeks were great until they had to sell the off season stuff that no one wanted. So they created a trust to dump those weeks into so they could sell the high season dream using low season inventory. That too worked until it didn't work. Constant and steady price increases along with increasing maintenance fees. Much of it was based on a poorly conceived plan to seed inventory to the trust. They took back a lot of weeks via deed back and put them into the trust. The problem was that much of what they took back had high fees to point ratio driving up the maintenance fee per point.

It also seems they have been too aggressive on new builds driving up their inventory and required fees on that inventory. That did seem to be something they mentioned several times during the call. They had more inventory this year than they had at the same time last year. Couple with lower demand for certain locations, it is driving up their carrying costs.

You're right that this worked for a while, but I think their mistake was not making traditional weeks available for those who wanted them (at least for US properties - edge cases that we hear on TUG excepted). Essentially making Abound the only product available reduces who you can sell to. People who want a simple system primarily based on weeks have other good options.

It's not surprising that the points system was introduced shortly after the financial crisis of the late 2000s. The approach was almost the same, just take some weeks that people don't really want, put it in a new vehicle and sell that off. It reminds me of this scene from the Big Short. Just replace CDO with Abound and you get the idea.

 

[WaikikiFirst]

You're right that this worked for a while, but I think their mistake was not making traditional weeks available for those who wanted them (at least for US properties - edge cases that we hear on TUG excepted). Essentially making Abound the only product available reduces who you can sell to. People who want a simple system primarily based on weeks have other good options.

Spot on

It's not surprising that the points system was introduced shortly after the financial crisis of the late 2000s. The approach was almost the same, just take some weeks that people don't really want, put it in a new vehicle and sell that off. It reminds me of this scene from the Big Short. Just replace CDO with Abound

Excellent stuff, and I don't just mean the film, which is capital EXCELLENT. I mean the insight.

 

[WaikikiFirst]

You're the one who insists that there's no way to understand a business not selling well to consumers (like me) except via the stock market.

What exactly is your daily quota for strawmen?

 

[WaikikiFirst]

I've consistently said I'm looking at things excluding the stock market.

Yup, b/c you're not the only one here who finds virtue in being ignorant about what you discuss. Purposefully ignorant. Good stuff

 

[WaikikiFirst]

The problem is TS people love to spend time talking about the stock mkt, when most of them know basically squat about it

AAAAAAAAAAANNNNNNNNNNNDDDDDDDDDDDDDDDDD right on schedule

I guess to me stock valuations aren't "real" till I've sold them. Because they can change wildly with little warning. Dividends are at least locked in as I get them. Mathematically

That sure didn't take long. Cherry on top is how there is supposedly something "mathematical" about the wild-bleep rambling.

 

[Big Matt]

Eveyrthing works until it doesn't work. Weeks were great until they had to sell the off season stuff that no one wanted. So they created a trust to dump those weeks into so they could sell the high season dream using low season inventory. That too worked until it didn't work. Constant and steady price increases along with increasing maintenance fees. Much of it was based on a poorly conceived plan to seed inventory to the trust. They took back a lot of weeks via deed back and put them into the trust. The problem was that much of what they took back had high fees to point ratio driving up the maintenance fee per point.

It also seems they have been too aggressive on new builds driving up their inventory and required fees on that inventory. That did seem to be something they mentioned several times during the call. They had more inventory this year than they had at the same time last year. Couple with lower demand for certain locations, it is driving up their carrying costs.

I agree with everything you say in this response. What's happening now is that they have gotten so big with all of the acquisitions that it is getting ready to collapse. The assumption that people would buy more points to get to a higher status and only those people could get to the inventory isn't working. That's why they are limiting inventory (to artifically limit supply).

 

[goodbadugly]

Third Quarter 2025 Investor Relations Call is interesting:

Audio/video, here: https://edge.media-server.com/mmc/p/nm3dva75/

Presentation: https://ir.marriottvacationsworldwide.com/static-files/0d81b2da-9789-4e08-85f6-68d78349e187

Hysterical to hear Geller, et al, refer to a major source of losses as “curb third party commercial rental activity by a small subset of owners, that has depressed owner arrivals at some of MVC’s most popular destinations,” rhetoric follows. Listen to him respond to questions about this, during the Question and Answer period.

My take, when I listened to Geller’s rhetoric, I quickly realized why MVC’s financial performance has plummeted.

Amazing to think that Mr. Geller walked away from MVW with a $5M Platinum Parachute.

My take: MVC Executives and Board members have no understanding of where and why MVW is failing.

Oh, I just heard this (listening to the presentation, again): Interval International Getaways have massacred MVW’s rental revenue.

They should look "inside". A good chunk of salespeople own and rent. They know all the tricks.

 

[heathpack]

Much of it was based on a poorly conceived plan to seed inventory to the trust.

We own a garden view Gold Barony week that we purchased resale shortly after the points system was implemented, so we never had a serious expectation of enrolling. However, its a decent week that can be booked during fine beach weather and it seemed reasonable to me that after maybe 7-10 years of ownership, MVCI might have considered offering me some kind of enrollment opportunity- maybe something like $3000 to enroll my week. I understand they would not want to encourage buying a cheap resale just to enroll it, but if I've held the thing for a decade, that probably wasn't my motivation. It felt to me like they should want access to that inventory that I'm paying the MF on, and to get some additional money from me since I am someone who would wasn't interested in buying their retail points, and maybe once I was enrolled I would actually like the points system and change my mind about buying retail. Admittedly that was never likely but there would be a logic to trying to enroll my week.

Instead they went so all-in on selling to the highest end of the market that they seemed to be steadily moving away from something I would actually buy. I understand they want to be a premium product but I clearly already like MVCI timeshares, why not try to entice me to buy? It felt so misguided to me to have one sales approach and to disregard even trying to sell to me.

 

[goodbadugly]

Just my two cents, but when you look at the history of MVC over time it went from a weeks based system to points and now you can use points for whatever you want, but none of it is a good value. Lots of shiny objects don't make the maintenance fees worth more. I still use II for much of my activity and use my points strategically. The current focus on selling (more) points is way harder than selling a week at a beautiful resort in Hawaii, Florida, etc. Owning a week is tangible. Owning points is very cloudy to me. Maybe its time for them to regain focus on what worked 25 years ago.

They need to add value to the point system. Why would anyone buy points from MVC when they can get them for less on the secondary market?

 

[m61376]

We own a garden view Gold Barony week that we purchased resale shortly after the points system was implemented, so we never had a serious expectation of enrolling. However, its a decent week that can be booked during fine beach weather and it seemed reasonable to me that after maybe 7-10 years of ownership, MVCI might have considered offering me some kind of enrollment opportunity- maybe something like $3000 to enroll my week. I understand they would not want to encourage buying a cheap resale just to enroll it, but if I've held the thing for a decade, that probably wasn't my motivation. It felt to me like they should want access to that inventory that I'm paying the MF on, and to get some additional money from me since I am someone who would wasn't interested in buying their retail points, and maybe once I was enrolled I would actually like the points system and change my mind about buying retail. Admittedly that was never likely but there would be a logic to trying to enroll my week.

Instead they went so all-in on selling to the highest end of the market that they seemed to be steadily moving away from something I would actually buy. I understand they want to be a premium product but I clearly already like MVCI timeshares, why not try to entice me to buy? It felt so misguided to me to have one sales approach and to disregard even trying to sell to me.

It's interesting that you said that. When they first introduced the program, they allowed the enrollment of resale weeks for a fee similar to what you're describing- it was 1999 for one and 2399 for 2 or more weeks, and that included bonus DC points (I think it was 6500 one time use good for a year, but I might be off on the number). Anyway, it was a great incentive. I know that within the year it went to $600 or so and then fee even, but I thought it was a great deal at the time to grandfather my resale weeks. And they kept me happy. And 15 years later we're still happy owners, so even if it hasn't gotten them more sales, it has engendered good will.

I'm not so sure the problem is the retail vs resale price difference, since many people truly believe the product purchased from Marriott is better. There are so many complaints about difficulty reserving what you want with points though, especially from people who need/want only peak travel weeks, whereas with week ownership or even with point systems like the original Starwood ones, there's a guarantee at least of getting a week in your owned season.