Marriott Vacations Worldwide (VAC) purchase of Interval Leisure Group (ILG) discussion!

[dioxide45]

I’m curious about this thought. It seems to me that, as other systems have merged, all resorts have been folded into the availability pool. DRI has probably been the most active in purchasing and merging systems. I can’t think of any others off the top of my head. At any rate I don’t see as much value if MVW can’t merge the inventory of both stystems. It does seem to me that it has taken DRI years for their members to have reasonable access into new resorts purchased/merged by DRI.

While I hope they do as there are a couple of Hyatt locations we’d like access too, I’m not holding my breath as to a timeframe. If they merge the inventory great. If they don’t it’s no big loss. At least it’s not for us at this point in our lives.

The biggest merger that perhaps mirrors MVC/ILG is Wyndham and Shell. There still to this day is not really any major merging of their two systems. I think that high status level owners can perhaps make cross reservations using their Wyndham or Shell points in to the other properties, but generally they are not good use of your points.

Diamond is a little unique. They have in most cases been acquiring very small independent timeshare properties and folding them in to their system. Outside of Monarch Grand Vacations, they haven't made any other big name acquisitions that I am aware of. Their model seems to be to acquire and sell people new DRI points while taking back the deeded weeks to add them to the trust collections. Marriott could try something very similar, of course only time will tel.

 

[VacationForever]

I’m curious about this thought. It seems to me that, as other systems have merged, all resorts have been folded into the availability pool. DRI has probably been the most active in purchasing and merging systems. I can’t think of any others off the top of my head. At any rate I don’t see as much value if MVW can’t merge the inventory of both stystems. It does seem to me that it has taken DRI years for their members to have reasonable access into new resorts purchased/merged by DRI.

While I hope they do as there are a couple of Hyatt locations we’d like access too, I’m not holding my breath as to a timeframe. If they merge the inventory great. If they don’t it’s no big loss. At least it’s not for us at this point in our lives.

Wyndham keeps all 3 systems, Wyndham, Shell and Worldmark, separate and only allows developer-purchased points to book across into the other 2 systems at 10 months. I think this maximizes $ to Wyndham's pockets. MVC will be smart to do the same in pushing for owners to buy from the developer so that they can book across into the other 2 systems at 10 months or something like that. Most owners are loyal to one brand and are heavily invested in one. By keeping them separate, these owners are incentivised to buy more from the developer so that they can book into the other systems, or that they will now be educated about the availability in the other systems and buy directly in those systems. Lots of sales opportunities to get new money. Combining all 3 under one program will see decreased sales as a whole as opposed to increased sales.

 

[dougp26364]

Wyndham keeps all 3 systems, Wyndham, Shell and Worldmark, separate and only allows developer-purchased points to book across into the other 2 systems at 10 months. I think this maximizes $ to Wydham's pockets. MVC will be smart to do the same in pushing for owners to buy from the developer so that they can book across into the other 2 systems at 10 months or something like that. Most owners are loyal to one brand and are heavily invested in one. By keeping them separate, these owners are incentivised to buy more from the developer so that they can book into the other systems, or that they will now be educated about the availability in the other systems and buy directly in those systems. Lots of sales opportunities to get new money. Combining all 3 under one program will see decreased sales as a whole as opposed to increased sales.

Interesting perspective. I have no doubt they’ll slant things to favor developer purchased inventory for the biggest bang in booking between systems, assuming they allow it at all.

Personally I’d LOVE to have access to a few of the Hyatt locations, but at the end of the day, I’m not handing over thousands of dollars for that access. I’d be happy with a 9 month or 10 month window. Anything less than that and I’ll be less than thrilled. It would probably make cross system booking nearly worthless with how we plan out our vacations.

 

[VacationForever]

Without combining the systems, the current owners lose nothing and have no grounds for complaints. If the systems are combined, some owners may be happier because they have access to more inventory but some will be unhappy to have more competition for the same units that were in the old system. The main thing is it does not bring high $ sales to MVCI. Hence I believe many of the speculations here about a combined system is wishful thinking.

 

[Steve Fatula]

Without combining the systems, the current owners lose nothing and have no grounds for complaints. If the systems are combined, some owners may be happier because they have access to more inventory but some will be unhappy to have more competition for the same units that were in the old system. The main thing is it does not bring high $ sales to MVCI. Hence I believe many of the speculations here about a combined system is wishful thinking.

Not sure I agree. Keeping the systems as is means more likely sales as is unless something big changes. Sales as is does not pay the purchase price. Something major has to happen to have a major cash inflow. Status quo is not possible.

 

[Ralph Sir Edward]

Which is why I think there will be something like a "superpoint system", so they can "milk" more money out of all their existing owners. . .

 

[VacationForever]

Not sure I agree. Keeping the systems as is means more likely sales as is unless something big changes. Sales as is does not pay the purchase price. Something major has to happen to have a major cash inflow. Status quo is not possible.

But I am not talking about total status quo, keep them separate and then introduce a benefit to book across systems at 10, 9 or 8 months with developer-bought points will make huge $ for MVCI.

 

[gblotter]

Keeping the systems as is means more likely sales as is unless something big changes. Sales as is does not pay the purchase price. Something major has to happen to have a major cash inflow. Status quo is not possible.

I agree with this reasoning, but who knows what the future actually holds. Uncertainty about future plans for a possible "superpoint" system could paralyze sales of existing Destination Points (but most potential buyers are not paying attention).

 

[youppi]

I’m curious about this thought. It seems to me that, as other systems have merged, all resorts have been folded into the availability pool. DRI has probably been the most active in purchasing and merging systems. I can’t think of any others off the top of my head. At any rate I don’t see as much value if MVW can’t merge the inventory of both stystems. It does seem to me that it has taken DRI years for their members to have reasonable access into new resorts purchased/merged by DRI.

While I hope they do as there are a couple of Hyatt locations we’d like access too, I’m not holding my breath as to a timeframe. If they merge the inventory great. If they don’t it’s no big loss. At least it’s not for us at this point in our lives.

Normally,

• DRI move the unsold inventory to a Collection trust affiliated to THE Club like US Collection, Hawaii Collection, ...
• DRI Create a collection separated from THE Club for existing members of the acquired system and manage it separately.
• DRI move units to a Collection trust affiliated to THE Club each time an owner pay to convert its weeks/points to a Collection affiliated to THE Club by buying points from the Collection affiliated to THE Club.

Sometime they give access to some of THE Club resorts to the acquired system and form a mini system to tease those owners about THE Club resorts like
https://cmstest.diamondresorts.com/...ch-Grand-Vacation-Club-Collection-Booklet.pdf
https://cmstest.diamondresorts.com/sites/default/files/florida-club-connection-booklet-test.pdf
https://cmstest.diamondresorts.com/sites/default/files/DMCC-booklet.pdf

 

[TravelTime]

But I am not talking about total status quo, keep them separate and then introduce a benefit to book across systems at 10, 9 or 8 months with developer-bought points will make huge $ for MVCI.

If MVC were to introduce a new "Super Point" system that integrated all inventory, it would need to have a 13 month booking window option at the higher benefits levels to make it attractive. I bought at Executive Level for the 13 month booking window. I would not pay into a new system that offered me less than what I have because by 8-10 months, less good dates and locations would be available that I can already get at 13 months with MVC at the luxury resorts (currently only a handful of Ritz Carltons) and at 12 months at my home resort with Westin. 8-10 months would be a downgrade and not worth paying extra for since with Star Options, I can already book across all their resorts in this timeframe. My gut says MVC will not do a new "super point" system. It is too complicated. I think they will follow the model of the Marriott Hotel merger with SPG Hotels and integrate the MVC and Vistana systems and grandfather in people with points in either MVC or Vistana and keep weeks owners the same unless weeks owners buy points, like the offer they have going now. If the new DC program is attractive enough, it may be worth it to weeks owners to buy 3000, 4000 or 5500 to enroll their post 2010 weeks and MVC can make a lot of money that way.

One thing no one has mentioned and that would be extremely attractive to me to buy more points would be if the new DC Points program expanded their luxury timeshares and converted rooms in more of the Ritz Carltons and the St Regus into 2 bedroom units we could book with DC Points. I would certainly want to move up to Chairman's Level if the new DC had a timeshare luxury collection like the hotel side.

 

[VacationForever]

If MVC were to introduce a new "Super Point" system that integrated all inventory, it would need to have a 13 month booking window option at the higher benefits levels to make it attractive. I bought at Executive Level for the 13 month booking window. I would not pay into a new system that offered me less than what I have because by 8-10 months, less good dates and locations would be available that I can already get at 13 months with MVC at the luxury resorts (currently only a handful of Ritz Carltons) and at 12 months at my home resort with Westin. 8-10 months would be a downgrade and not worth paying extra for since with Star Options, I can already book across all their resorts in this timeframe. My gut says MVC will not do a new "super point" system. It is too complicated. I think they will follow the model of the Marriott Hotel merger with SPG Hotels and integrate the MVC and Vistana systems and grandfather in people with points in either MVC or Vistana and keep weeks owners the same unless weeks owners buy points, like the offer they have going now. If the new DC program is attractive enough, it may be worth it to weeks owners to buy 3000, 4000 or 5500 to enroll their post 2010 weeks and MVC can make a lot of money that way.

One thing no one has mentioned and that would be extremely attractive to me to buy more points would be if the new DC Points program expanded their luxury timeshares and converted rooms in more of the Ritz Carltons and the St Regus into 2 bedroom units we could book with DC Points. I would certainly want to move up to Chairman's Level if the new DC had a timeshare luxury collection like the hotel side.

I have never suggested a Super Point system - it is bad for business as it won't bring more money to MVCI when you let existing owners instant access to all 3 brands of inventory. What I think MVCI might do is to keep the 3 point systems as they are, except Vistana may have some cleaning up to do and possibly Hyatt and its new point systems, and then to book across into the other 2 brands, you need developer bought point to access at 10/9/8 months out.

 

[GregT]

All, don't we always do predictions (that lack any factual basis) when something major is announced?

I would like to make my predictions as follows:

1) Marriott-to-Marriott preference trading via II will remain unchanged (and similar results as the past)
2) Starwood-to-Starwood preference trading via II will remain unchanged (and similar results as the past)
3) Starwood owners will continue to be able to trade to other Starwood properties using StarOptions
4) Starwood owners wishing to book Marriott properties (not via II trade) will need to buy Trust Points (which enrolls the Starwood week)
5) Marriott owners wishing to book Starwood properties (not via II trade) will need to use Trust Points
6) Some Starwood inventory will be deposited into the Trust for WSJ and the four Mexico properties
7) Hyatt properties will only be accessible to Starwood/Marriott owners via II trade
8) II trade fees will continue to increase
9) We will continue to see hotel conversions of Starwood/Marriott properties as the primarily source of new properties
10) Those hotel conversions will be deposited into the Marriott Trust
11) HGVC will become a hot target, as Diamond and Wyndham look to compete with Marriott's planted flag in the high-end space
12) Directly purchased Trust Points (and grandfathered Trust Points) will become valuable
13) There will be an amnesty for post-2010 weeks to be enrolled (for a fee), but time will prove that Elected Points are powerful in the Marriott system and less so for the broader system that is being created.

I do think if anyone is on the fence about buying Trust Points (resale), you should buy them now before the merger is completed. I am speculating, but I believe that Trust Points will be the skeleton key that accesses everything. And that Marriott will discriminate between Directly purchased Trust Points and resale Trust Points -- but will grandfather existing resales, kind of like the pre-2010/post-2010 weeks. Wyndham discriminates between resale points and directly purchased points, and Marriott could too.

This opens up an entire universe of potential Trust Point purchasers to Marriott and they must be salivating like Pavlov's dog. We will see pictures of Westin St. John, Cancun and Cabo San Lucas in every Marriott sales office -- and Starwood sales offices will show Aruba, Newport Coast and the Big Island.

It will be interesting to see how it unfolds. I do not think it will be harmful for us, and there will be benefits if there is a post-2010 amnesty (since now Marriott needs even more Marriott inventory available because of the potential demand). This is all pure speculation, but this is what I would do if I was designing the system.

Best,

Greg

It's interesting to see the back and forth from many of my fellow TUGgers.

I'm quoting myself, but I still believe this is how it will end up. This doesn't create a super point system, but it does allow cross-pollination of the Starwood and Marriott systems (with Trust points) and yet each system remains intact as a standalone -- so they "don't take anything away" from the existing ownership.

Best,

Greg

 

[AlmostRetired]

Maybe this is rambling more than a point so let me apologize in advance.

I created a few timeshare FB groups (II, HHI and Monarch). They are not huge but across all three we have maybe 3000 members but a fair sample. Many members are mid 50 and above, a lot are retired or near retirement. I never gave it much thought before but I believe that timeshares are a baby boomer thing.

I am not a market timer but I am a battle tested investor and markets don't go up and down forever. The includes stock market, real estate, interest rates and Bitcoin (or whatever new cryptocurrency gets created). Marriott could not have timed the DP program any better and it has enjoyed the perfect environment for a continued increase based on purely creating marketing demand with no real equivalent underlying value.

This merger has cost synergy, marketing synergy and cross branding synergy no question about that. Whatever MVCI marketing / sales strategy they develop and execute, they need to be careful they do not alienate their core base of (aging) baby boomers at the same the perfect environment starts deteriorating. Simplification and inclusion will be the direction they will take. What will that mean, I have no clue.

 

[gblotter]

I attended a timeshare sales presentation today at Grande Ocean. It was a very pleasant experience overall. The sales agent was quick to mention the ILG acquisition, highlighting that ILG properties would soon be available for Destinations Club Point reservations (by year-end). The "Super Point" program *IS* the existing Marriott Destinations Club program, and ILG owners will be invited to join. He claimed that all unsold ILG inventory will be placed in the Destinations Club trust, so it's all legal.

Yes, I know - his lips were moving.

 

[JIMinNC]

I attended a timeshare sales presentation today at Grande Ocean. It was a very pleasant experience overall. The sales agent was quick to mention the ILG acquisition, highlighting that ILG properties would soon be available for Destinations Club Point reservations (by year-end). The "Super Point" program *IS* the existing Marriott Destinations Club program, and ILG owners will be invited to join. He claimed that all unsold ILG inventory will be placed in the Destinations Club trust, so it's all legal.

Yes, I know - his lips were moving.

The transaction isn't even scheduled to close legally until September 30, so it's hard to imagine any real customer-facing changes would occur as soon as year end. I suspect his year end statement was referring to the legal merger -- blended with an ample dose of "sales hyperbole".

I've felt from the beginning that if and when they do link the "clubs", the Destination Club is the most likely vehicle for that linkage rather than a Super Points system. An overlaid points system just seems to be an added complexity on top of already complex structures.

 

[gblotter]

The transaction isn't even scheduled to close legally until September 30

I actually raised this, but my salesman insisted the deal was finalized in April. I didn't press the point with him.

 

[bizaro86]

It would be against the law for Marriott and ILG staff to have discussed their post merger plan.

If they decided to do so illegally, I guarantee a salesman wouldn't be involved.

 

[dioxide45]

He claimed that all unsold ILG inventory will be placed in the Destinations Club trust, so it's all legal.

I am not sure there is really all that many unsold weeks that they could add to the trust. Vistana already created two flex programs; Sheraton Flex and Westin Flex. Any unsold weeks would have already been conveyed to those trusts. They do have new weeks that they acquire through buyback, ROFR (limited) and foreclosure. I suspect that wouldn't really amount to much. They have lots of unsold inventory, it is just all tied up in their trusts. I think removing it to place it in to the DC trust would have challenges. Not impossible, but not really all that easy either.

 

[controller1]

It would be against the law for Marriott and ILG staff to have discussed their post merger plan.

If they decided to do so illegally, I guarantee a salesman wouldn't be involved.

Having been involved in several public company mergers in the U.S. that dwarf this merger, I can guarantee you that your statement is incorrect. At this point in the pre-merger timeframe there are a dozen or more teams comprised of specialists from both companies designing post-merger operations, etc.

As to whether a salesman would be privy to the details, I doubt it.

 

[bizaro86]

Having been involved in several public company mergers in the U.S. that dwarf this merger, I can guarantee you that your statement is incorrect. At this point in the pre-merger timeframe there are a dozen or more teams comprised of specialists from both companies designing post-merger operations, etc.

As to whether a salesman would be privy to the details, I doubt it.

That was put poorly, I apologize. However, a planned merger does not provide antitrust immunity, and pricing and anti-competitive information cannot be shared. Prosecutions have occurred in the past.

For more see: https://www.ftc.gov/news-events/blo...avoiding-antitrust-pitfalls-during-pre-merger

 

[JIMinNC]

I actually raised this, but my salesman insisted the deal was finalized in April. I didn't press the point with him.

He is correct that the agreement to merge was finalized/announced in April. However, the merger has to go through the normal post-agreement regulatory approvals and other such details before the transaction can be consummated. Steve Weisz said during their last quarter earnings conference call that the transaction would close financially/legally by September 30. That means on that closing date, ILG stock will no longer trade and ILG will become wholly-owned by Marriott Vacations Worldwide. But...that will likely include very few, if any, operational merger details. Those will all come later. Immediately after "legal" merger, the two companies will basically continue separate operations as usual and any operational changes/combinations will happen over time. The sale rep probably doesn't understand how mergers work...or he does and was just hoping you didn't!

 

[controller1]

. . .
Steve Weisz said during their last quarter earnings conference call that the transaction would close financially/legally by September 30. That means on that closing date, ILG stock will no longer trade and ILG will become wholly-owned by Marriott Vacations Worldwide.
. . .

And that date is still an estimate. The merger still hasn't cleared Hart-Scott-Rodino even though that is not anticipated to be a problem.

 

[rpk113]

Having also been in a merger, I would say some things are being worked on. Some are not.. I would say IT things (on a high level) are being worked on (can the DP website query the Vistana or Hyatt inventory)... I would say current real estate agreements are not... Folks in a merger like to go right to the line of what they can/can't do. But agree with previous posts, that line is never crossed.

 

[dougp26364]

I was recently in a sales presentation at a timeshare we own (we rarely go but these guys have truely been low key and I was curious about the new additional building build out dates). We got to talking about II and I casually mentioned MVW’s purchase of ILG and he hadn’t heard about it. I pulled up the article and he took it to his boss. When he came back he said his boss told him it was a “done deal”.And would be closing in 5 months.

Of course we all know how reliable information from the sales floor can be but, when a direct competitor in Breckenridge (both Hyatt and Marriott) have a merger on the table that could affect your bottom line, not to mention alter the exchange landscape, admits that it’s a “done deal”, it probably is in the eyes of the industry.

 

[dioxide45]

It is a done deal, no one is really arguing that. There really shouldn't be any reason why the deal doesn't close. Of course anything can happen between now and the closing date.