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I think SeaDoc was implying that as the stock price declines, management from the top down pressures the sales team to grow/maintain sales. The sales reps feel the pressure to make sales to boost earnings (which impacts stock price), so resort to more desperate "techniques."
Not usually true either. Only really bad management would do this and probably more likely in small companies than large established companies to react to stock prices in this manner. I have worked at many large corporations in the past and I never saw this happen but I worked for good companies. Marriott International is one of the best managed companies in America and it constantly wins awards for being an excellent employer. I think I saw that VAC is also a good employer. BTW, I personally do not think Marriott timeshare salespeople are that aggressive. I have not noticed any change in their approach since the stock price started going down.
I have no clue on direction this stock or any other stock will take but we cant lose sight that any market does’t go up or down forever. We have a general market concern of a almost circus like political climate, increase in interest rates and increasing deficient. Some economists are saying a bear market for 2019 and a recession for 2020. This is the reason all stocks are significantly down from their highs but as pointed out marginally down for the year.
Specific to VAC, we know timeshares are discretionary spending and often of the middle class. The awareness of Stock market volatility does impact how people feel and how they spend.
As far as MVCI sales people feeling pressure, I hope the sales people don’t resort to using misleading or untruthful sales techniques. Silly fear, MVCI would never allow that.
Not usually true either. Only really bad management would do this and probably more likely in small companies than large established companies to react to stock prices in this manner. I have worked at many large corporations in the past and I never saw this happen but I worked for good companies. Marriott International is one of the best managed companies in America and it constantly wins awards for being an excellent employer. I think I saw that VAC is also a good employer. BTW, I personally do not think Marriott timeshare salespeople are that aggressive. I have not noticed any change in their approach since the stock price started going down.
The pressure doesn't have to be overt. If the sales reps' bonus/compensation is tied to certain sales levels that are set by management to meet profit goals expected by Wall Street, and they aren't hitting their numbers, that can put real pressure on the rep and can perhaps cause bad choices. Look at what happened at Wells Fargo, another good company. Their incentive structure was tied to cross-selling more products to existing customers, so to boost their comp, employees sold people products they didn't want or need, sometimes without the customer's own knowledge.
The pressure doesn't have to be overt. If the sales reps' bonus/compensation is tied to certain sales levels that are set by management to meet profit goals expected by Wall Street, and they aren't hitting their numbers, that can put real pressure on the rep and can perhaps cause bad choices. Look at what happened at Wells Fargo, another good company. Their incentive structure was tied to cross-selling more products to existing customers, so to boost their comp, employees sold people products they didn't want or need, sometimes without the customer's own knowledge.
I agree there is a lot sales pressure. But I am not sure it is tied to a change in the stock price. That’s all I am saying. For Wells Fargo, it was a culture thing. I worked at Wells Fargo for a couple years in a management position in the early 1990s. It always had a cut throat culture, even back then. Cross selling was a buzz word back then too. I decided I would never have a Wells Fargo account after working there and seeing how they treat customers. It always shocked me at how well they did and does not surprise me they had the problems they did. They did not award stock to employees so stock price did not drive behavior. Maybe at the executive levels of management but not below that. I think bonuses are the biggest driver of employee behavior at most companies. If times are bad, then I agree you would see more pressure but the stock price and business performance are not always linked. For example, Apple is doing great and the stock is down $80 a share. My DH works there. Nothing changes when the stock is up or down. And all employees at Apple get stock awards. If MVC has a more aggressive sales approach right now, it is due to other factors, not the recent stock decline. The culture had to be in place before because the stock just dropped this year.
IMHO, I think that the VAC stock was over-valued a year ago. It had a price earnings of perhaps 35 ? Now it is down to a P/E of about 18. Also, its Price Earnings growth ratio is kind of low (roughly 0.6). In addition, they have missed their earnings estimates (on a negative side) by a not insignificant amount. It is not uncommon for the market to punish companies who miss their estimate. So, perhaps it is currently priced at about what it should be. In fact, it can be argued that the majority of the investors have "spoken" and think that it is where it should be.
I am not sure I would compare the corporate culture at Apple with the one at Mvc.
But that may change if people start lining up at night to buy timeshares, if Apple starts telling potential customers they have to buy now or lose the deal of their life or if MVC builds up 250 billion dollars in cash. Now seriously, i am not saying that MVC is not a good company, just that they live in different worlds.
IMHO, I think that the VAC stock was over-valued a year ago. It had a price earnings of perhaps 35 ? Now it is down to a P/E of about 18. Also, its Price Earnings growth ratio is kind of low (roughly 0.6). In addition, they have missed their earnings estimates (on a negative side) by a not insignificant amount. It is not uncommon for the market to punish companies who miss their estimate. So, perhaps it is currently priced at about what it should be. In fact, it can be argued that the majority of the investors have "spoken" and think that it is where it should be.
A low PEG is a GOOD thing. VAC's is currently 1.12 (by some sources). Not bad, but it's the result of a tumbling share price. Zack's investment service rates VAC as a "5" - a strong sell. One major reason is that they have increased their debt load (ILG purchase) from $1.2 Billion to $3.9 Billion. They missed 3rd quarter profits by 20% and they missed revenues by 30%. Those are BIG misses. Additionally, they issued a revised form 8K about 4 months ago. In it, they slipped in the fact that they expect continued legal expenses and possible financial award payments regarding litigation in Spain. Spain does not allow perpetual contracts, point systems, or accepting deposits during a "cool-off" period. Anfi and Silverpoint have paid out big settlements in this regard. Diamond and Marriott cases are just starting to be heard. Time will tell.
I am not sure I would compare the corporate culture at Apple to the one at Mvc.
But that may change if people start lining up at night to buy timeshares, if Apple starts telling potential customers they have to buy now or lose the deal of their life and if MVC builds up 250 billion dollars in cash. Now seriously, i am not saying that MVC is not a good company, just that they live in different worlds.
I am not comparing Apple’s corporate culture to MVC. My point was that a huge stock decline does not drive employee behavior, even at a company like Apple where everyone owns the stock. In fact, if anything, when the stock declines and employees own it, they get demotivated and if it goes on a long time, employees start to leave. I saw this when I worked at Microsoft in the mid 2000s when the stock was flat for many, many years.
A low PEG is a GOOD thing. VAC's is currently 1.12 (by some sources). Not bad, but it's the result of a tumbling share price. Zack's investment service rates VAC as a "5" - a strong sell. One major reason is that they have increased their debt load (ILG purchase) from $1.2 Billion to $3.9 Billion. They missed 3rd quarter profits by 20% and they missed revenues by 30%. Those are BIG misses. Additionally, they issued a revised form 8K about 4 months ago. In it, they slipped in the fact that they expect continued legal expenses and possible financial award payments regarding litigation in Spain. Spain does not allow perpetual contracts, point systems, or accepting deposits during a "cool-off" period. Anfi and Silverpoint have paid out big settlements in this regard. Diamond and Marriott cases are just starting to be heard. Time will tell.
Can you say more about the lawsuit in Spain? I own a Marbella week and it is enrolled in DPs. Do you mean that Spain does not sell the pure points system?
There is not one lawsuit in Spain. Owners of different timeshares have sued individual companies for selling products that don't meet Spanish timeshare laws. The law regarding timeshare was changed in 1999, and most developers did not change their selling product or tactics. Lawsuits started a number of years ago, and wound their way through the courts. Recently, cases have finished and appeals have been heard, and judgments awarded. The big losers have been the European developers, but anyone selling in Spain can be affected. Most of what I have been exposed to has come from www.insidetimeshare.com. Here is an article which discusses the Spanish law and it's pertinent points:
Can you say more about the lawsuit in Spain? I own a Marbella week and it is enrolled in DPs. Do you mean that Spain does not sell the pure points system?
Do you know what happens to owners Of enrolled weeks in Spain when the RTU expires? Will we will lose our points and status in MVC when the RTU expires? Do you know when Marbella expires? I do not recall reading about this when I signed my contract but maybe it is in there.
Do you know what happens to owners Of enrolled weeks in Spain when the RTU expires? Will we will lose our points and status in MVC when the RTU expires? Do you know when Marbella expires? I do not recall reading about this when I signed my contract but maybe it is in there.
We don’t own at Marbella, but the RTU end date for Playa Andaluza is 2052 and for Club Son Antem is 2078.
I contacted Owner Services back in 2015 seeking clarification about RTU resorts and what happens at their end date.
Their response was
"the property goes to the land owner and if the lease is renewed then the usage of the weeks for the owners will still continue."
I also checked the HOPA for our Playa Andaluza RTU ownership and if I read the "legalese" correctly then at the end of term either
- after discharging any liabilities and management charges, the net proceeds of sale are distributed to existing holiday owners in good standing
or
- the plan is renewed along with the RTU ownership for existing holiday owners in good standing
We don’t own at Marbella, but the RTU end date for Playa Andaluza is 2052 and for Club Son Antem is 2078.
I contacted Owner Services back in 2015 seeking clarification about RTU resorts and what happens at their end date.
Their response was
"the property goes to the land owner and if the lease is renewed then the usage of the weeks for the owners will still continue."
I also checked the HOPA for our Playa Andaluza RTU ownership and if I read the "legalese" correctly then at the end of term either
- after discharging any liabilities and management charges, the net proceeds of sale are distributed to existing holiday owners in good standing
or
- the plan is renewed along with the RTU ownership for existing holiday owners in good standing
That is indeed my understanding.
Personally though, I would be amazed to still be alive at the age I would be then, so I won’t be worrying about this too much myself.
Alternatively, looking at this from a very positive perspective, it will be a most welcome bonus to celebrate me being a Centenarian haha.
VAC is now $80. Of course the markets are way off the lows of December. I still find it interesting since the stock went up fast from $61 on December 24th. Maybe the investors are starting to factor all the revenue increases from MF, the new Interval membership fees, new exchange fees etc. Of course the Fed kind of said it is going to take it easy with the interest rate increases and this is very important for a company with significant debt ratios.
I want to thank whoever started this thread. Bought a small stake with some cash I had in my IRA that I kept forgetting to put in something. Up 15% already.
I want to thank whoever started this thread. Bought a small stake with some cash I had in my IRA that I kept forgetting to put in something. Up 15% already.
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