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Marriott Vacations Worldwide 4th Quarter 2019 Earnings Conference Call

JIMinNC

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Just finished listening to the Marriott Vacations Worldwide (VAC) 4th Quarter Earnings Conference Call. Nothing really new on the MVC/Vistana integration front was mentioned. Here are a few bullets:
  • Vacation ownership contract sales increased 10% in the 4th quarter versus 2018.
  • They are continuing to narrow the sales performance gap between the legacy ILG sales centers and the MVC sales centers by adopting best practices from MVC. The legacy ILG locations are growing at a faster rate due to these improvements, so the gap in performance is narrowing. More opportunity to improve.
  • Have realized $65 million in run-rate expense synergies from the ILG acquisition by the end of 2019; expect that to grow to at least $95 million by year end 2020 and $125 million by year end 2021.
  • Mentioned that they will be "repositioning their product offerings" in 2020 and I interpreted that as a general reference to the common points currency and eventual common points product that was mentioned in the October Investor Day presentation.
  • They mentioned the previously-announced new resorts in Costa Rica and Waikiki. He did not specifically refer to the Waikiki location as Pulse and called it a "resort", so I guess the verdict is still out on how that will be branded. He did say mid-2022 was the target for opening the Waikiki sales center.
  • The have finalized a long-term licensing agreement with Hyatt for the Hyatt Residence Club brand and have identified new locations for that brand which will be announced in the months ahead as plans progress.
  • Online points transactions grew 23% in 2019.
  • Plan to introduce improved online points reservations capabilities and the ability to do "on-site" transactions in 2020. I need to listen to the call replay to get the exact wording of this statement. Once that is posted later today, I will post an update/clarification.
  • Plan to introduce more customer-facing digital tools and an MVC consumer mobile app in 2020.
  • They are using Artificial Intelligence to better target their offerings and improve the likelihood of purchase. Also using AI to evaluate and optimize their various tour generation channels.
  • They completed the sale of excess development parcels in Cancun, Mexico and Avon, Colorado and expect to complete other dispositions in 2020.
  • Coronavirus has so far not had a material impact on occupancy or tour flow.
  • Open to strategic acquisition alternatives that fit their business model and are accretive to earnings.
It is interesting to note that since the whole virus scare began, their stock has dropped from about $130/share to $93/share at about 9:45am this morning. The stock actually opened up today by about $4/share at $100 on the strength of their earnings report, but then with the overall market dropping again by 600+ points after the open, it took VAC down with it.

UPDATE: As of 10:26 am, VAC stock has reversed and is up about $5/share to around $101/share even though the market is down now by about 800 points. So, the Street is receiving their earnings well, even though the stock has whipsawed quite a bit this morning.
 
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Swice

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Thank you.
-- I find the Hyatt point interesting. I guess if you are a Hyatt person, nothing really changes from what you bought. But seems a shame they will end up being the company step child compared to the Sheraton/Westin owners who get folded into the Marriott system (= more choices).

-- Also maybe I'm showing my age. But putting aside the "hip and cool" factor (because every company HAS to have one). I really don't see much need/use for the mobile app. I have too many apps on my phone already!
 

Fasttr

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-- Also maybe I'm showing my age. But putting aside the "hip and cool" factor (because every company HAS to have one). I really don't see much need/use for the mobile app. I have too many apps on my phone already!
That and the fact that the actual website in not the most stable site on the internet, so what confidence do we have that their IT folks are going to be able to effectively play in the App game.
 

JIMinNC

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-- Also maybe I'm showing my age. But putting aside the "hip and cool" factor (because every company HAS to have one). I really don't see much need/use for the mobile app. I have too many apps on my phone already!

I also own in Hilton Grand Vacations and they have a very nice mobile app. While I don't make reservations with it (I could, it has that functionality; I just choose to use my Mac), I've found it very handy to check point balances, look up information on upcoming reservations, or just shop for availability while on the go. It's actually faster than the HGVC web site.
 

JIMinNC

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That and the fact that the actual website in not the most stable site on the internet, so what confidence do we have that their IT folks are going to be able to effectively play in the App game.

Interestingly, HGVC has had some of the same kind of IT challenges as MVC (seems it's a requirement that any timeshare company must have poor IT), but their mobile app seems to function as good or better than the main web site.
 

Fasttr

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Interestingly, HGVC has had some of the same kind of IT challenges as MVC (seems it's a requirement that any timeshare company must have poor IT), but their mobile app seems to function as good or better than the main web site.
We can only hope. Perhaps one of the synergies will be using whoever HGVC outsourced their app creation to, for the MVC app. ;-)
 

JIMinNC

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We can only hope. Perhaps one of the synergies will be using whomever HGVC outsourced their app creation to, for the MVC app. ;-)

I think they said they were using the same team that built the Interval International mobile app. I've never downloaded or used that, but may try it even though I don't use II any more. May try to shop for some Getaways and see how the app works. It's supposedly highly-rated.
 

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Interested in the future of Hyatt. They are boutique TS so it would be nice to have additional “unique” locations.

I own HGVC as well and love their mobile app. I handled everything via the app. It will be a nice addition.
 

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Thank you.
-- I find the Hyatt point interesting. I guess if you are a Hyatt person, nothing really changes from what you bought. But seems a shame they will end up being the company step child compared to the Sheraton/Westin owners who get folded into the Marriott system (= more choices).

-- Also maybe I'm showing my age. But putting aside the "hip and cool" factor (because every company HAS to have one). I really don't see much need/use for the mobile app. I have too many apps on my phone already!
I don’t think they will be the company step child. I just think they couldn’t plan on full integration possibly due to licensing agreements. MVC/Marriott licensing has been in place. It seems that they finalized that licensing with Hyatt and you may see a full integration including HRC soon. Again, we don’t know what that licensing agreement is and Hyatt May have limitations on what MVC can and cannot do. I think Hyatt properties are pretty high end and I don’t see MVC missing out on taking full advantage of what HRC has to offer.
 

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thank you Jim, a great summary
 

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Interested in the future of Hyatt. They are boutique TS so it would be nice to have additional “unique” locations.

I own HGVC as well and love their mobile app. I handled everything via the app. It will be a nice addition.
I’m interested in what those locations will be and how the integration would look for all MVC owners.
 

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@JIMinNC Thanks for summarizing. You will love the ILG getaway app. The getaway alerts function is terrific.

+1 on the HGVC apps and website. Although not perfect, they have made great strides modernizing over the past few years because their website(s) 5 years ago were a disjointed mess. HGVC investor call just mentioned future capability of purchasing additional points to top off owner reservations/upgrades without having to purchase a new deed/points which will be interesting to see how that plays out.
 
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1Kflyerguy

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I don’t think they will be the company step child. I just think they couldn’t plan on full integration possibly due to licensing agreements. MVC/Marriott licensing has been in place. It seems that they finalized that licensing with Hyatt and you may see a full integration including HRC soon. Again, we don’t know what that licensing agreement is and Hyatt May have limitations on what MVC can and cannot do. I think Hyatt properties are pretty high end and I don’t see MVC missing out on taking full advantage of what HRC has to offer.

My guess is that Hyatt Hotels does not want their branding to be mixed with the Marriott brands. I am not sure you will see common marketing and booking tool for HRC and there rest of the MVC brands.

I think the fact that they called out potential new HRC resorts separate from the MVC resorts helps to support that.
 

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My guess is that Hyatt Hotels does not want their branding to be mixed with the Marriott brands. I am not sure you will see common marketing and booking tool for HRC and there rest of the MVC brands.

I think the fact that they called out potential new HRC resorts separate from the MVC resorts helps to support that.
That’s could be very true. As I said, it depends on the terms of the licensing agreements. So if HRC is separate from MVC properties it still goes back to selling multiple systems. Would MVC locations sell HRC or only HRC can sell HRC. Again, depends on the agreement. I think that they will be kept separate. If that’s the case, I wouldn’t consider HRC the step child as someone said.
 
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