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

[DeniseM]

DVC and Diamond resorts are not involved in this merger in any way. There is no good reason to start multiple threads in forums for resort systems that are not even involved.

*The published TUG policy is not to permit duplicate posts, but Brian and the Vistana and Marriott Mods have agreed to allow 2 threads in those specific forums, because both systems are equally involved in the merger.

 

[BigMac]

GREGT wrote:

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:
9) We will continue to see hotel conversions of Starwood/Marriott properties as the primary source of new properties.

Yep that's what it looks like. This was from an ILG Investor presentation in 2017.

 

[WBP]

DVC and Diamond resorts are not involved in this merger in any way. There is no good reason to start multiple threads in forums for resort systems that are not even involved.

*The published TUG policy is not to permit duplicate posts, but Brian and the Vistana and Marriott Mods have agreed to allow 2 threads in those specific forums, because both systems are equally involved in the merger.

"There is no good reason to start multiple threads in forums for resort systems that are not even involved." Really? I entirely disagree with you. I believe that this topic has a place in each of the places where it sits, or once sat.

This merger has widespread implications, and as an owner with Diamond (not by choice) and DVC (and several other developers), I can say with certainty, that this merger has implications on both brands, one being the opportunity for one or the other to escape or be evicted from their current exchange company relationship. Unfortunately, because of your short sightedness, you have chosen to deny TUG members, who are DVC or Diamond owners/enthusiasts the opportunity to talk about/rally for a defection, in the context of MVW's acquisition of ILG.

 

[sb2313]

 

[SeaDoc]

http://ir.marriottvacationsworldwide.com/static-files/67b0c3ff-d538-4d5f-82d3-4d125f821d3b

 

[VacationForever]

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

This is a good stab at what may happen. These predictions imply Marrriott Trust as the center of the universe. My prediction is that Hyatt, Vistana and Marriott will be kept separate and only developer purchases have access across the other systems, much like Wyndham model. I do agree that there will likely to be a retro/requalify/junk fee model for each system to make resale weeks or points whole in the future.

 

[DeniseM]

Unfortunately, because of your short sightedness, you have chosen to deny TUG members, who are DVC or Diamond owners/enthusiasts the opportunity to talk about/rally for a defection, in the context of MVW's acquisition of ILG.

Based on your statement - we should post the same info on every forum on TUG, because maybe those owners would like to defect too?

I'm sorry that the forum rules are so difficult for you. Feel free to contact TUG Brian and ask him to make a special exception for you.

Avoid posting duplicate messages
Choose the most appropriate forum for your message and place it there and only there. Posting the same message in multiple forums spreads the replies around to different parts of the board and makes them much harder to locate later. If your message does not fit with the stated theme of any of the other forums, please place it in the TUG Lounge forum. This is a special place for "Idle Chit Chat", notices of member meetings, etc. Duplicate posts will be removed when found.
​

 

[nanceetom]

DVC and Diamond resorts are not involved in this merger in any way. There is no good reason to start multiple threads in forums for resort systems that are not even involved.

*The published TUG policy is not to permit duplicate posts, but Brian and the Vistana and Marriott Mods have agreed to allow 2 threads in those specific forums, because both systems are equally involved in the merger.

Wow! A lot has been stated on this thread! Don't mean to sound ignorant, but I guess I am. Do long time tuggers believe that enrolled Legacy owners will be left out in the cold without bought Trust points?

 

[CalGalTraveler]

Thanks @SeaDoc for the info. Interesting competitive comparisons at the end of the presentation. Does not include Diamond, Westgate, DVC, or HICV. I did not know BlueGreen was as large as depicted.

Reading the low hanging fruit tea-leaves:

• Exchanges and Rentals most likely garner the highest margin (and don't require much capital investment) and so they will seek to expand those products e.g.:
  • increase exchange fees, and possibly eliminate free exchanges such as SVN to enable a pay-for-exchange model across the entire network - although this will have to be balanced against charging the SVN club fee to all owners that is assessed today - which might be more lucrative to remain as is.
  • Also find ways to grab unreserved units earlier to rent and use the rentals as a way to acquire/educate new customers.
• Cross-selling vacation ownership/points to existing customers to grow revenue will be another source of growth albeit lower margin due to high marketing costs. Cross-selling an existing customer will be much easier and less costly than selling to a new customer. This gives them a LOT of fresh TS educated customers to sell points etc.
• Although they will gain cost savings from scale in Resort Operations, that seems to have the most limited upside and they cannot raise MFs too much or they will have other issues with too many foreclosures/deedbacks and difficult to resale units which will make it more difficult to sell high-end vacation products.
• It is interesting that they don't include Financing (8%) in sales related revenue. Seems like they are trying to build a case that "non-sales related revenue" is the business going forward. Perhaps this is because timesharing sales have such a bad reputation and sales are not consistent and predictable like Maintenance Fee income. If Financing were included in VOI Sales then the business would be 50%/50%.

 

[nuwermj]

Interesting competitive comparisons at the end of the presentation. Does not include Diamond, Westgate, DVC, or HICV. I did not know BlueGreen was as large as depicted.

They can't include private companies since the data isn't available.

As for Diamond ... Club membership is about 185,000 (2016 number); about 112 managed resorts; 2015 EBITDA was $385 million, it is probably a bit over $400 million for 2017.

 

[vikingsholm]

I'm going to speculate that Marriott will treat the acquisitions of Vistana and Hyatt similar to how they treated the incorporation of Ritz.

That is, instead of requiring existing members of Marriott, Hyatt, and Vistana systems to buy into each of the other systems specifically for better access, it will be based on the level of points (DC for Marriott, other amounts to be reckoned for the other systems) owned. I see them eventually merging the points systems similar to what Marriott hotels is doing with Starwood. That would involve some conversions to determine what Vistana and Hyatt points are worth vis a vis Marriott's, then assigning the level based on Marriott DC points equivalency.

So, although the timeshares would still likely keep their separate brandings (like Marriott VC and Ritz timeshares do), the points system would be merged eventually as they are when a Marriott DC owner accesses and reserves a Ritz timeshare through the DC system, and vice versa.

So, instead of a Marriott owner having to specifically buy into points for a Hyatt or Vistana system to reserve them, it would be based on the level of points one owns, similar to how Chairman level has different access rules for Ritz now than the lower levels of point ownership do. If someone currently owns Marriott DC points and Hyatt points, for example, these would be converted and merged into one larger number of points for use in reserving any of the systems, each with point charts showing required points for each reservation place and time, and rules for reserving criteria based on your overall level of points ownership. This is more or less a continuation of how MVC and Ritz timeshares do it now if I understand that correctly, so it simplifies the transition.

The reason this makes sense to me are:

1. Marriott VC did it with Ritz. Continuity.
2. It allows easier access to all of the systems' units. Marriott is making a strong point in its merger document that this merger is in large part about offering the most premium properties. So doing that fairly, efficiently, and easily is an important aspect of that.
3. If current owners of Marriott, Vistana, and Hyatt all had to separately purchase points that are designated for each of the other systems, it would be a mess, IMO, and owners may be disinclined to do so.

If, however, it's based on number of points owned, existing owners of a lot of points would have better access to the other systems, while other owners of fewer points (and new prospects) would be encouraged to upgrade their points to gain such access. I think this would encourage more points to be placed by owners into the system and be available more widely. If I as a Marriott owner am forced to buy into Hyatt and Vistana separately to get access, I don't think I would (unless for a very small cost). II has currently pinched off access to these Hyatt and Vistana trades for Marriott owners compared to prior years before they owned them, from what I've observed, and I'm not about to pay a lot more for what I used to be able to access more easily in II. So Marriott would gain both more points for exchange deposits and customer goodwill if they took this approach, plus more revenue from those who are new points buyers and upgraders who want access to an easily accessible unified system. Simpler is better. JMO.

 

[JIMinNC]

This just came in an email from Marriott Vacation Club. I omitted a bunch of legal statements at the end about forward-looking statements, etc.

.......


We are pleased to announce that Marriott Vacations Worldwide℠ ("MVW") has agreed to acquire ILG, our longstanding exchange partner and a leading provider of premier vacation experiences under its Sheraton®, Westin® and Hyatt® Vacation Ownership portfolios. We are excited about this transaction and hope that you share our enthusiasm. As always, we are committed to providing you with the best vacation experience and service in the industry and will continue striving to further improve on our offerings and find ways to serve you even better in the future. A copy of the press release we issued can be found on the Investor Relations section of our website.

We are pleased that this transaction will bring together two industry leading partners with properties in some of the most highly demanded vacation destinations, including Mexico and the Caribbean. As one company, MVW and ILG will have approximately 650,000 owners, over 100 vacation ownership properties and more than 20,000 units located around the world. The combined company will be the global licensee of seven upper-upscale and luxury vacation brands, including Marriott Vacation Club®, Grand Residences by Marriott®, Ritz-Carlton Destination Club, Sheraton ® Vacation Club, Westin®Vacation Club, St. Regis Residence Club and Hyatt® Residence Club. With additional high-quality properties and ILG's Vistana™ Signature Experiences Owners premier exchange networks, we are hopeful that we can enhance our ability to provide you with more flexibility and vacation options in the future. With that in mind, please note that we have just announced this transaction today, and for now, there will be no changes in MVW's programs or products. Of course, MVW and Vistana Signature Experiences Owners will continue to have access to the Marriott Rewards®, Starwood Preferred Guest®and Ritz-Carlton Rewards® loyalty programs, which are expected to be combined into a single loyalty program in early 2019.

We expect the transaction to close in the second half of 2018. Until then, MVW and ILG will continue to operate as separate companies. Your contacts at MVW will remain the same and you should continue to expect the same high level of service.

If you have any questions, please do not hesitate to contact your MVW representative. We have also included a set of Frequently Asked Questions, which provide additional information. As always, thank you for your continued relationship with Marriott Vacations Worldwide.

Sincerely,

Steve Weisz
President and Chief Executive Officer, Marriott Vacations Worldwide Corporation

FAQ

1. What was announced today?
   • We announced that Marriott Vacations Worldwide will acquire ILG in a cash and stock transaction with an implied equity value of approximately $4.7 billion.
   • The acquisition will create a leading global provider of premier vacation experiences. We believe that bringing together MVW and ILG will be a major win for all our stakeholders, including you — our valued Owners.
   • We expect the transaction to close in the second half of 2018. Until then, MVW and ILG will continue to be separate companies.
2. Who is ILG?
   • ILG is a leading provider of premier vacation experiences with over 40 properties and more than 250,000 owners in its Sheraton, Westin and Hyatt Vacation Ownership portfolio. ILG is also our longstanding exchange partner with exchange networks comprising nearly two million members and over 3,200 resorts worldwide.
   • Importantly, ILG shares our dedication to providing top notch service to customers and owners, as well as our commitment to creating unparalleled vacation experiences.
   • For additional information about ILG, please visit its website at www.ilg.com.
3. Why is Marriott Vacations Worldwide acquiring ILG? How will this impact me?
   • This transaction will bring together two industry-leading partners with properties in some of the most highly demanded vacation destinations, including popular vacation locations in Mexico and the Caribbean.
   • Together, MVW and ILG will have over 100 vacation properties and more than 20,000 vacation ownership units around the world. We will also be the global licensee of seven upper-upscale and luxury vacation brands including Marriott Vacation Club, Grand Residences by Marriott, Ritz-Carlton Destination Club, Sheraton Vacation Club, Westin Vacation Club, St. Regis Residence Club and Hyatt Residence Club.
   • With additional high-quality properties and premier exchange networks, we remain committed to providing the same high level of service and will continue to strive to further improve our offerings and find ways to serve you even better in the future.
   • That said, please note that we have just announced this transaction today, and for now, there will be no changes in MVW's programs or products.
   • Of course, MVW, Sheraton and Westin Owners will continue to have access to the Marriott Rewards, Starwood Preferred Guest and Ritz-Carlton Rewards loyalty programs, which are expected to be combined into a single loyalty program in early 2019.
4. Will I still have access to all of the destinations that I can visit now?
   • Please note that, until the transaction closes, MVW and ILG remain independent companies and we will continue to operate separately.
5. Will there be any changes in the ways in which I can use my ownership? Will I be able to use my ownership to visit ILG properties?
   • For now, there will be no changes in MVW's programs or products.
   • As always, we are committed to providing you with the best vacation experience and service in the industry.
   • With additional high-quality properties and premier exchange networks, we remain committed to providing the same high level of service and will continue to strive to further improve our offerings and find ways to serve you even better in the future.
   • With that said, it is still early in the process and there are many decisions to be made, including opportunities to enhance MVW's programs and product. It is important to note that until the transaction closes, which we expect to occur in the second half of 2018, MVW and ILG remain independent companies and we will continue to operate separately.
   • We will provide additional information as appropriate as decisions are made.
6. Will there be any changes to my ownership contracts or pricing?
   • We do not expect this transaction to result in any changes in your ownership contracts or the pricing of points.
   • With that said, it is early in the process and there are still many decisions to be made.
   • It is important to note that until the transaction closes, which we expect to occur in the second half of 2018, MVW and ILG remain independent companies and we will continue to operate separately.
7. When will the transaction be completed?
   • We expect that the transaction will close in the second half of 2018, subject to regulatory approvals and approval by shareholders of both MVW and ILG.
8. Who can I contact if I have more questions?
   • As we move through this process, we will do our best to keep you informed.
   • If you have any questions, please do not hesitate to reach out to your normal MVW contact.

 

[thinze3]

Just got the same email as Jim just posted.

 

[Tokapeba]

[Threads merged.]

With the acquisition does this open up an opportunity to buy into say Sheraton and have it converted to DC points when the transition is completed?

Is there another way to benefit from buying one of these before it closes?

 

[kds4]

Unlike merging hotel loyalty, I don't expect there to be an easy 'merging' of Starwood and Marriott timeshare points programs. I won't say it can never be done, but I can say it won't be done as quickly/easily as it was for Starwood Preferred Guest and Marriott Rewards. If it were me, I would not buy Starwood's timeshare product with the expectation that it will be morphing into Marriott Destination Club points ...

 

[JIMinNC]

Anything now is just speculation. We have no way of knowing whether DC points will even be the "currency" used in any cross-club reservation offerings or whether they will develop an entirely new model for bookings between MVC, Sheraton, Westin, and Hyatt. Buying anything now in anticipation of that would be very risky. It may also be several years before anything really changes. The merger won't close until later this year, so I would expect it to be later in 2019 or even 2020 and beyond before any meaningful enhancements are implemented.

The 2020 year however does give Marriott a great opportunity to roll-out some sort of enhanced cross-program booking process in 2020 to "celebrate" the 10th anniversary of the Destination Club. Expect any such celebration though to require points to be purchased from the developer to get the maximum benefits.

 

[chemteach]

I just recently purchased Marriott, but have been with Starwood/Vistana for about 15 years now. The Starwood/Vistana system is VERY different from Marriott. All the Westin resorts require exactly the same number of "staroptions" (the Vistana monetary system) for a 2 bedroom lockout in high season. The Westin system treats the same room type and season the same regardless of whether the resort is in Hawaii, St. John, Harborside, Cancun, Arizona, or California. The Sheraton brand has some resorts with the same room type/same season for the same number of staroptions, and some resorts with lower staroption amounts for same season/same room type. It's nowhere near as complicated as Marriott's DC points system. It will be interesting to see if/how Marriott combines the Vistana/DC point systems since a Palm Desert unit in Westin is worth the same staroptions right now as Maui/Princeville, whereas the DC Trust has very different values for Hawaii compared to Palm Desert. Only time will tell...

Of course, Vistana could just completely scrap the staroptions program... That would be very unfortunate for many Vistana owners who have been using their Palm Desert/Kierland units to go to Maui/Princeville/Harborside/St. Johns/Cancun. It's important to remember that only what is written on your deed is what you own. Systems can change at the whim of the owning company. I've had my share of great vacations with Westin, am looking forward to having great vacations with Marriott, and hope this merger doesn't make things more difficult to get the trades I have been getting up till now.

 

[Colt Seavers]

As long as enrolled owners get $0 trades to Hyatt and Westin I will be happy as a clam.

Although I'm not sure exactly how happy the average clam is.

 

[dougp26364]

This could be great......or maybe not. It just depends on how they merge this I relationship to the owners. I’ve always been to impatient to wait on Hyatt to release inventory for exchange into Key West or Sedona.
If I can gain internal exchange access into those resorts (eventually at least), then it’s s win for me. If nothing really great comes from it from an ownership perspective, I’ve lost nothing.
I doubt we see much movement from an owners perspective anytime soon. And when we do, it won’t surprise me to see a new fee associated with any enhancements

 

[BocaBoy]

*The published TUG policy is not to permit duplicate posts, but Brian and the Vistana and Marriott Mods have agreed to allow 2 threads in those specific forums, because both systems are equally involved in the merger.

Why is the Hyatt system not as equally affected?

 

[DeniseM]

Why is the Hyatt system not as equally affected?

Hyatt is also part of the merger. DVC and Diamond are not involved at all.

 

[Pathways]

Why is the Hyatt system not as equally affected?

With HRC being affected as part of the entitiy being purchased, I might speculate (as a HRC owner) that we are least 'affected' by whatever MVC rolls out. Our ownership is fixed week/fixed unit which most of us purchased for that exact benefit which is deeded and cannot be changed.

Possible negatives would be changes to the point values for reservations outside our owned week, or changes to the points required for II trades.

Positives: I will speculate one of the first items of the new business will be to kill the already crippled HPP. It has been underperforming since the rollout, and I believe is a large component of the unhappiness of the ILG shareholders, who then put pressure on the board to sell.

If the HPP is not selling well now, how many sales will be made between now and the close of the merger? Any salesman making their quota selling HPP in the next six months is worthy of a high level sales position at Wyndham or even Vidanta!

 

[Marathoner]

Yes, lets speculate for the fun of it and to predict the future of timeshares.

I believe we can all agree on the mission statement of the new Marriott Corporation: Maximize Revenue Growth. Every other consideration is immaterial in a capitalistic environment.

Now, here are my 4 principles to support their mission statement:
1. Leverage the ILG acquisition to continue and expand their main cash cow product, the DC point
2. Keep and support the revenue growth capability of their legacy products such as II exchange fees, sale of Hyatt Maui weeks, income from their existing property management business, etc
3. Identify cost synergies, merge back office and support activities, consolidate technology, and reduce headcount of the combined entity
4. While a very distant after-thought: keep the legacy customers from becoming dissatisfied with their legacy purchase. They are the best fodder for the sales of DC points, after all

So, we must get rid of any expectation of some of the ideas in previous posts which do not support these principles. These silly ideas include free exchanges between timeshare systems, reduction of any fees, convenience of exchanges between systems for the legacy customer (unless they are willing to pay), etc.

So, what could the future look like? well, in the short-term, very little will change. Internal management and employees will be jockeying to come out on top of the combined firm, merger and rationalization of similar business groups will need to occur, the combined firm will need to hire strategy consultants to develop a new go-forward strategy, etc.

However, in the long-term, there are some things that would be interesting that support the 4 principles:
1. Every property across Marriott, VSE, and Hyatt will have DC points assigned to them
2. Both a one-time and an annual enrollment fee will be created to allow existing VSE/Hyatt owners to convert their week to DC points
3. Buying into DC points will allow everyone in the legacy system to reserve days in the other legacy systems, with the requisite reservation fees
4. Retain the legacy exchange systems but keep raising legacy exchange fees to help Marriott meet its quarterly Wall Street revenue estimates
5. Using ROFR, place the specific legacy VSE and Hyatt weeks into the DC Trust which enables Marriott salespeople to more effectively sell DC points. These properties include Hyatt Key West and Colorado ski weeks (Aspen, Beaver Creek, Breck)
6. Slowly decommission legacy websites and support staff. Consolidate into the strategic website (II) and support groups.
7. Maintenance fees will increase at a faster rate for VSE and Hyatt properties so that they fit into the 5yr/10yr renovation cycles which Marriott property management favors. After all, the DC point owner are already conditioned to have "Marriott" standards when they reserve into a VSE or Hyatt property.

So, I expect that we will see some legacy buyers happy with the merger and some unhappy. All will pay more and, to be fair, offered more as a result of the merger.

 

[Superchief]

As someone who has been through several mergers in various industries, I predict that most MVC owners will be worse off overall in three years than we are today.

• Higher costs per vacation night
• More limited availability at our own MVC resorts
• Lower appreciation/benefuts for ownership levels
• More 'black box' regarding how inventory is allocated
• Total chaos regarding villa assignment priorities
• Less appreciation by corporate for 'loyal' owners
• Higher staff turnover
• Less 'family' feeling at the resorts

 

[jeepie]

As someone who has been through several mergers in various industries, I predict that most MVC owners will be worse off overall in three years than we are today.

• Higher costs per vacation night
• More limited availability at our own MVC resorts
• Lower appreciation/benefuts for ownership levels
• More 'black box' regarding how inventory is allocated
• Total chaos regarding villa assignment priorities
• Less appreciation by corporate for 'loyal' owners
• Higher staff turnover
• Less 'family' feeling at the resorts

Superchief, you may be right. Will you be selling your interests now? Just curious. Cheers.