MVC article in WSJ.

[timsi]

The indication would be that people would not be able to book prime time stays via Abound/VSN, only via cash stays on marriott.com, so I'd say there's nothing even close to "may" about you being right. But yet you keep harping on this conspiracy theory of yours. You almost never post anything on TUG unless it's to show that you still have some kind of axe to grind with MVC about what you *think* they *might* be doing. It gets to the point where you have nothing actually useful to share with anyone. Your posts just end up being an opportunity for me to exercise my eyes by rolling them. I guess I should thank you for keeping whatever muscles control that in shape.

I do not think you are right. Whether they own 10% of a prime season at a resort, or alternatively 10% of the silver season, you would not notice a difference in availability since owners would still have access to 90% or 100% of the prime season.

 

[jmhpsu93]

I do not think you are right. Whether they own 10% of a prime season at a resort, or alternatively 10% of the silver season, you would not notice a difference in availability since owners would still have access to 90% or 100% of the prime season.

Then what's the problem?

 

[timsi]

Then what's the problem?

We are discussing. Is that a problem for you?

 

[timsi]

The total keys in the 10-K are the total keys at the resorts, not just what they own. But that is the most relevant number as to what percentage of the total resort capacity is put into rentals and taken away from owners/exchangers. That is the most relevant number for us.

The number of units owned by Marriott is very important, and without it your whole calculation no longer makes sense.

 

[JIMinNC]

The number of units owned by Marriott is very important, and without it your whole calculation no longer makes sense.

Why?

I’m calculating/estimating what likely percentage of the available room nights are rented by MVW. In the end, that is the only thing that should matter to owners/exchangers, as that is the portion of total available room nights that is taken away from our potential usage. It’s probably only less than or around 10%.

 

[jmhpsu93]

Why?

I’m calculating/estimating what likely percentage of the available room nights are rented by MVW. In the end, that is the only thing that should matter to owners/exchangers, as that is the portion of total available room nights that is taken away from our potential usage. It’s probably only less than or around 10%.

Additionally, MVC has the option to rent all unused inventory inside of 60 days, regardless of who owns the inventory. That's probably a not-insignificant part of that 10%, and those T&Cs are very clear in the ownership documents. That's likely to be low-value inventory for the most part or a few higher-value last-minute cancellations.

 

[jmhpsu93]

We are discussing. Is that a problem for you?

I don't have a problem with good-faith discussions and arguments on ownership-relevant issues.

I don't understand what the problem statement is, and when presented with facts you simply state "You're wrong!!! Marriott Vacation Club BAD BAD BAD"

 

[timsi]

Why?

I’m calculating/estimating what likely percentage of the available room nights are rented by MVW. In the end, that is the only thing that should matter to owners/exchangers, as that is the portion of total available room nights that is taken away from our potential usage. It’s probably only less than or around 10%.

You just have too many variables.

 

[timsi]

I don't have a problem with good-faith discussions and arguments on ownership-relevant issues.

I don't understand what the problem statement is, and when presented with facts you simply state "You're wrong!!! Marriott Vacation Club BAD BAD BAD"

There is no shortage of GOOD GOOD GOOD with no facts.

 

[1Kflyerguy]

Does MVC actually have inventory they own just for the purpose of renting it out? Seems like they might have a some inventory available from owners that convert for Bonvoy points, plus anything they buy back via ROFR that has not yet been conveyed to the trust. Think i read they only transfer the ROFR inventory to the trust on a scheduled basis.

 

[timsi]

I beleive they convey it all to the trust. It doesn't make a lot of sense to carry that inventory when they can instead sell it for a 1000% markup. Money in timeshare is in contract sales. While they make a lot of money from rental income, it is secondary or even further down the list. And they can also rent out primo weeks if they so choose as they have access to inventory from so many sources (owned, cruise/tours exchanges, convert to Bonvoy, etc).

We know they do not convey them all to the trust given the units conveyed to the Marriott trust so far include Princeville but not Maui. However Marriott should own at least few Maui units through ROFR

 

[curitiba_tapley]

I like to ask the sales agent about their close rates; the reply is often 1 in 4. So even when it comes to closing the sales agents lie....I mean exaggerate.

 

[kozykritter]

The indication would be that people would not be able to book prime time stays via Abound/VSN, only via cash stays on marriott.com, so I'd say there's nothing even close to "may" about you being right. But yet you keep harping on this conspiracy theory of yours. You almost never post anything on TUG unless it's to show that you still have some kind of axe to grind with MVC about what you *think* they *might* be doing. It gets to the point where you have nothing actually useful to share with anyone. Your posts just end up being an opportunity for me to exercise my eyes by rolling them. I guess I should thank you for keeping whatever muscles control that in shape.

Haha. I advise using the ignore button in this case like I have done for this user over a year ago. Blissful peace!

 

[kozykritter]

In the context of all this, I had an interesting experience this week when I was contacted by Marriott MountainSide marketing staff pre-arrival and invited for a sales presentation. The options they gave as a gift didn't include any Plus Points for the first time I could remember. When I asked the staff person why, that person told me that they eliminated that option about a month ago because they were losing too much money on it. I didn't press them any further as to what that meant or if it was a companywide change but find it interesting now in light of the discussion here. When I have tried in the past to negotiate the gift to attend, they have always told me those gifts are set by corporate each month and cannot be changed so perhaps a corporate action here?

 

[sponger76]

We know they do not convey them all to the trust given the units conveyed to the Marriott trust so far include Princeville but not Maui. However Marriott should own at least few Maui units through ROFR

Nanea is completely trust-based, so any of those that get picked up by ROFR/deedback/foreclosure just go into the pot of Nanea HomeOptions they have available to sell. So far they haven't conveyed any Westin or Sheraton trust ownership into the MVC trust. There's probably some kind of complication with transferring from one trust to another that's keeping them from doing so. As for KORV and KORV-N weeks, who knows. Maybe they decided to convey those into the Westin Flex trust instead which, like Nanea trust points, they are still selling at certain locations. I just don't see them holding onto them to rent. When you see people complain about not finding availability via MVC/VSN but see it for rent, it's via Redweek, etc. and not marriott.com.

 

[JIMinNC]

You just have too many variables.

The only relevant data element that is a variable in my calculations is the estimated average rental rate per night. It’s pretty easy to put some bounds on that, though, by putting a high and low bound on the number as I did. But even if the $500/night low bound is still a bit too high, the percentage of nights rented by MVW probably isn’t much more than about 10%.

The point of the whole calculation though was to show that it’s fairly easy for MVW to earn a half a billion dollars renting without renting out an exorbitant portion of the total available inventory. You seem focused on pushing the theory that their $500 million in rental revenue is proof that they are significantly reducing inventory availability for owners and exchangers by their rental business. My numbers show $500 million can easily be earned without taking away much more than 10% of all inventory.

 

[timsi]

The only relevant data element that is a variable in my calculations is the estimated average rental rate per night. It’s pretty easy to put some bounds on that, though, by putting a high and low bound on the number as I did. But even if the $500/night low bound is still a bit too high, the percentage of nights rented by MVW probably isn’t much more than about 10%.

The point of the whole calculation though was to show that it’s fairly easy for MVW to earn a half a billion dollars renting without renting out an exorbitant portion of the total available inventory. You seem focused on pushing the theory that their $500 million in rental revenue is proof that they are significantly reducing inventory availability for owners and exchangers by their rental business. My numbers show $500 million can easily be earned without taking away much more than 10% of all inventory.

As I said, too many variables and you know that.

 

[sponger76]

As I said, too many variables and you know that.

Why is it that you always resort to saying that people with opposing views either don't have enough evidence or concrete information or their real experiences don't count, but you hold yourself to no such standard to insist on the correctness of your unsubstantiated conspiracy theories? Asking for a friend...

 

[timsi]

Nanea is completely trust-based, so any of those that get picked up by ROFR/deedback/foreclosure just go into the pot of Nanea HomeOptions they have available to sell. So far they haven't conveyed any Westin or Sheraton trust ownership into the MVC trust. There's probably some kind of complication with transferring from one trust to another that's keeping them from doing so. As for KORV and KORV-N weeks, who knows. Maybe they decided to convey those into the Westin Flex trust instead which, like Nanea trust points, they are still selling at certain locations. I just don't see them holding onto them to rent. When you see people complain about not finding availability via MVC/VSN but see it for rent, it's via Redweek, etc. and not marriott.com.

They did convey Princeville to the Marriott trust but not Korv so probably there is a different reason, not technicalin nature. It is possible but not likely they have continued to convey Korv to the Westin flex since they announced they will faze out selling the Vistana flex programs (except Aventuras)

 

[sponger76]

They did convey Princeville to the Marriott trust but not Korv so probably there is a different reason, not technicalin nature. It is possible but not likely they have continued to convey Korv to the Westin flex since they announced they will faze out selling the Vistana flex programs (except Aventuras)

They conveyed Princeville weeks, but not anything that was held in the Westin Flex trust. Nothing has been conveyed from the Sheraton or Westin trusts to Abound. The point I was trying to make is that they probably made a value judgement on the Maui properties that they may be better utilized conveying any weeks they acquire to the Westin trust instead of the Abound trust, while deciding that Princeville could go to Abound.

 

[JIMinNC]

As I said, too many variables and you know that.

That's simply wrong...and you obviously don't understand that.

There's only ONE unknown variable - the nightly room rate - and even if that number is as low as $350/night (unlikely based on marriott.com rates), the $509 million could be earned by renting only about 13% of the total available room nights. I am doing a pro forma sensitivity analysis after all, not a to-the-penny accounting book entry for their earnings report. It's clear from any reasonable sensitivity analysis of that ONE relevant variable (nighty room rate) that by only renting somewhere in the general neighborhood of 10% or so +/- 3% of inventory, MVW can easily earn the half a billion dollar figure that concerns you so much. Whether it's actually 7%, 10%, or 13% is largely irrelevant. The fact is, by any measure, it is a very small percentage, and MVW is totally entitled to rent any inventory they control through Bonvoy/Explorer Collection points exchanges, unused intervals inside 60 days, unsold Trust interests, and any other weeks they may own that have not yet been placed into the Trusts.

Bottom line, for a company with over 32,000 available keys, it doesn't take a large percentage of those keys to fall under their control for them to be able to earn $500 million in rental income. That's fairly small potatoes for them - as the chart below shows, it's only about 15% of EBITDA.

 

[Huskerpaul]

Haha. I advise using the ignore button in this case like I have done for this user over a year ago. Blissful peace!

Me too and it sure makes for strange reading following along just one side of the arguement

 

[sponger76]

Haha. I advise using the ignore button in this case like I have done for this user over a year ago. Blissful peace!

Yeah, but since I'm in the Army I guess I'm used to doing things the hard unpleasant way. Embrace the suck!

 

[StaceyM]

I've always been impressed by how innovative Marriott (either MAR and now VAC - Marriott Vacation Worldwide) in the hospitality business. My understanding is that they were one of the first to recognize that they didn't really need to own the assets, just manage where they could generate maximum value. This asset-light strategy was also used by Pepsi many years ago and has now been widely adopted by many - Uber for one is an example of a supremely asset-light business! Anyway, the article was interesting although JIMinNC who seems to follow the company probably has much better perspective on the company. One very interesting part was the information on the "amount it takes in per tour/Volume per guest of $3,968" and the 400,000 tours a year where the minimum number of "volume per guest" - if successful - would be $25,500. I tried to figure out what the "fish bite rate" or conversion rate of these tours (or in TUG vernacular - "lies, lies and more lies" ) . If I divided $3,968 into the ideal volume per guest for a tour ($25,500) - I come up with an unbelievable 15.6% take rate on these presentations. If my arithmetic is correct, this is an amazing percentage on these presentations. No wonder Marriott keeps doing this and no wonder, they continue to entice people to attend with reasonably attractive offers. I'm also shocked that there these many folks that buy during the presentations! Gotta hand it to Marriott, they know how to run their business. As for me, I'll continue to hold on to my legacy weeks, thank you very much!

Your math mistake is that you are effectively using $25,500 as an "average" or "ideal" when it is actually the minimum purchase package Marriott offers. Your math assumes every buyer bought the smallest package possible. So your 15.6% number is valid, but it's the ceiling: Marriott's percentage must be less-than-or-equal-to 15.6%.

I'm not familiar enough with Marriott to guess what is the average amount of a direct sale - maybe someone has an estimate or data we can use.

 

[timsi]

That's simply wrong...and you obviously don't understand that.

There's only ONE unknown variable - the nightly room rate - and even if that number is as low as $350/night (unlikely based on marriott.com rates), the $509 million could be earned by renting only about 13% of the total available room nights. I am doing a pro forma sensitivity analysis after all, not a to-the-penny accounting book entry for their earnings report. It's clear from any reasonable sensitivity analysis of that ONE relevant variable (nighty room rate) that by only renting somewhere in the general neighborhood of 10% or so +/- 3% of inventory, MVW can easily earn the half a billion dollar figure that concerns you so much. Whether it's actually 7%, 10%, or 13% is largely irrelevant. The fact is, by any measure, it is a very small percentage, and MVW is totally entitled to rent any inventory they control through Bonvoy/Explorer Collection points exchanges, unused intervals inside 60 days, unsold Trust interests, and any other weeks they may own that have not yet been placed into the Trusts.

Bottom line, for a company with over 32,000 available keys, it doesn't take a large percentage of those keys to fall under their control for them to be able to earn $500 million in rental income. That's fairly small potatoes for them - as the chart below shows, it's only about 15% of EBITDA.

View attachment 80546

If you think half a billion dollars is insignificant, you don't understand their business model. Renting all of these units allows them to maintain and grow their inventory without investing in capital-intensive projects. I believe you agreed with me on another thread that, as a business, they have a duty to optimize their rental income. One way is by owning the best units possible, another way is by booking good weeks. I'm not sure what's so controversial about what I've been saying. Perhaps the issue is that I haven't sung Marriott’s praises as effusively as others have. They acquire inventory for next to nothing, can keep the units they want for as long as they want, transfer the units they want to the trusts (since they also manage the trusts and there is no known to me independent oversight on that side), and rent out the units they want in the meantime. They can also book any week of the season they want for the units they own without any competition from other owners. They don't have to stay up late to book their units. And when they find people willing to pay ten times the acquisition cost, they will unload part of this inventory. If this is a "conspiracy theory" so be it.