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Question for DC Trust Members (Points Purchasers)

SueDonJ

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- from the Table of Contents page of the 2012-2013 Points Chart at my-vacationclub.com:
1. UNLESS OTHERWISE PERMITTED BY APPLICABLE LAW, WITH RESPECT TO ANY ACCOMMODATION, NO CHANGE EXCEEDING TEN PERCENT (10%) PER ANNUM IN THE MANNER IN WHICH POINT VALUES MAY BE USED MAY BE MADE WITHOUT THE ASSENT OF AT LEAST TWENTY-FIVE PERCENT (25%) OF THE VOTING POWER OF THE ASSOCIATION OTHER THAN THE DEVELOPER.
2. NO TRUST OWNER WILL BE PREVENTED FROM USING THE TRUST PLAN AS A RESULT OF CHANGES IN THE MANNER IN WHICH POINT VALUES MAY BE USED.
3. IN THE EVENT POINT VALUES ARE CHANGED, NO TRUST OWNER WILL BE PREVENTED FROM USING THE ACCOMMODATIONS IN THE SAME MANNER AS WAS PROVIDED FOR UNDER THE ORIGINAL PURCHASE CONTRACT.
4. Subject to the limitations in items 1 through 3 above, the Points requirements set forth on this Points Schedule are subject to change by the Program Manager at any time, in accordance with Article III of the Reservation Procedures for Marriott Vacation Club Destinations program. For the most current Points Schedule, please refer to My-VacationClub.com.
5. This is the Points Schedule for MVC Trust.

*******
I think we're all in agreement that Marriott has the right to make changes to the Points Charts, as well as to the amount of (Legacy) Points allotted to Weeks enrolled by Exchange Members. Yes?

But up there, what I bolded in the quote that's specific to only Trust Members - what does that mean? It appears that it can be interpreted to mean that the Points Chart in effect at the time of a Trust Member's purchase, will remain in effect for as long as the Trust Member retains that specific purchase. IOW, if you buy 2,500 DC Points today, for as long as you own those 2,500 points then you can reserve intervals with those 2,500 points according to the Points Chart in effect today. BUT there is language in so many other places in the docs which doesn't support that interpretation.

So, have any of you DC Points purchasers asked a Marriott rep - other than a sales rep* - for an explanation that can be relied upon as an official statement? (*Sorry, but I just wouldn't rely on a sales rep's answer here.) If so, did your contact show you elsewhere in the documents that his/her statement can be supported?

I'd guess that chances are very good that I have this all wrong, in which case I'd really appreciate someone setting me straight. :)
 
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windje2000

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- from the Table of Contents page of the 2012-2013 Points Chart at my-vacationclub.com:


*******
I think we're all in agreement that Marriott has the right to make changes to the Points Charts, as well as to the amount of (Legacy) Points allotted to Weeks enrolled by Exchange Members. Yes?

But up there, what I bolded in the quote that's specific to only Trust Members - what does that mean? It appears that it can be interpreted to mean that the Points Chart in effect at the time of a Trust Member's purchase, will remain in effect for as long as the Trust Member retains that specific purchase. IOW, if you buy 2,500 DC Points today, for as long as you own those 2,500 points then you can reserve intervals with those 2,500 points according to the Points Chart in effect today. BUT there is language in so many other places in the docs which doesn't support that interpretation.

So, have any of you DC Points purchasers asked a Marriott rep - other than a sales rep* - for an explanation that can be relied upon as an official statement? (*Sorry, but I just wouldn't rely on a sales rep's answer here.) If so, did your contact show you elsewhere in the documents that his/her statement can be supported?

I'd guess that chances are very good that I have this all wrong, in which case I'd really appreciate someone setting me straight. :)

Sue, that provision has been there since day one. I've always interpreted it mean the points prices for occupancy are locked. Not all on this board agree.
 

Beefnot

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Sue, that provision has been there since day one. I've always interpreted it mean the points prices for occupancy are locked. Not all on this board agree.

That would seem to be the case that the points are locked from the wording of this provision. Would that provision survive an eventual sale?
 

m61376

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If that was the case, can you imagine the accounting nightmare if/when point values change? Reservation costs would have to be figured out for each individual trust owner, and if they purchased points at different times, theoretically some point usage would be subject to one set of reservation costs and other points might have different reservation rates applicable. I couldn't even begin to imagine the confusion that would create!!
 

windje2000

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If that was the case, can you imagine the accounting nightmare if/when point values change? Reservation costs would have to be figured out for each individual trust owner, and if they purchased points at different times, theoretically some point usage would be subject to one set of reservation costs and other points might have different reservation rates applicable. I couldn't even begin to imagine the confusion that would create!!

There are two types of price adjustments.

The first is where they leave the points total unchanged and change the allocations for resorts by days and seasons.

The second would be a general price increase of, say, 5%.

The way they could avoid the accounting and record keeping headaches you aptly anticipate would be for Marriott to simply raise prices by 5% and raise every existing owners point ownership by the same percent. What cost 1,000 points to rent now costs 1,050. The 1,000 points you own is now 1,050. Your ownership is unchanged.

This is just like a stock (as opposed to cash) dividend or a stock split.. Everyone's percent ownership in the pie stays the same.

And now the prices have increased 5% for new points owners and, of course, for those legacy owners whose points allocations are fixed.

With no accounting headaches. :)
 
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SueDonJ

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There are two types of price adjustments.

The first is where they leave the points total unchanged and change the allocations for resorts by days and seasons.

The second would be a general price increase of, say, 5%.

The way they could avoid the accounting and record keeping headaches you aptly anticipate would be for Marriott to simply raise prices by 5% and raise every existing owners point ownership by the same percent. What cost 1,000 points to rent now costs 1,050. The 1,000 points you own is now 1,050. Your ownership is unchanged.

This is just like a stock (as opposed to cash) dividend or a stock split.. Everyone's percent ownership in the pie stays the same.

And now the prices have increased 5% for new points owners and, of course, for those legacy owners whose points allocations are fixed.

With no accounting headaches. :)

Except, everything related to purchased Trust Points - amounts which can be purchased, maintenance fees, transfer costs, etc. - is correlated to the Beneficial Interests, and those are defined as 250 Trust Points each. I don't think they can easily change a defined amount, which means they can't increase a BI by 5%.

Plus, I'd guess that Marriott would want to be able to make changes in the usage Points Charts according to specific usage patterns rather than across the board. That way they can justify the max 10% increases for super-performing resorts by off-setting those with lesser increases (or even decreases har-de-har-har ;) ) for the under-performers. Not that they're constrained to limit the number of resorts subject to the 10% increase, but any such increases can be made 'more palatable' by a statement that Marriott is relying upon transparent occupancy numbers to support them where they institute them.

M, I agree this presents a logistical nightmare if it's being interpreted by me correctly. If it's not, though - then what DOES that language mean?! And look at #4 in the quote which begins, "Subject to the limitations in items 1 through 3 ..." That's an acknowledgement that they're somewhat limited to the changes they can make in the "Points Schedules." Somebody somewhere must have asked someone in the know exactly what those limitations are. I hope.
 
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windje2000

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I don't think they can easily change a defined amount, which means they can't increase a BI by 5%. And why not? I don't believe that is written in stone. :)

Plus, I'd guess that Marriott would want to be able to make changes in the prices and usage charts according to specific usage patterns rather than across the board. That way they can justify the max 10% increases for super-performing resorts by off-setting those with lesser increases (or even decreases har-de-har-har ;) ) for the under-performers.

OK -- lets say 20% which makes a BI 300 points. A nice round number. (I think VAC can do just about anything it wants in this regard, as long as they don't change the 'real' price of occupancy to existing owners.)

I would postulate that changes made for usage patterns would be adjustments in point allocations (my price increase example 1) rather than a general change (my price increase example 2)
 

windje2000

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Oh gah! Math! I should have known this would bring on a headache.

I'm off to walk the dawg and think on this ...

Take two aspirin and call me in the morning. :)
 

dioxide45

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My interpretation is more like this. A BI is worth 250 points. I think the cheapest night you can book on points is 50 points for a single night. This works out to 5 nights per BI. As long as any change in point allocations still permits a BI to book 5 nights at any resort with that single BI, then they have met the requirements set forth.
 

m61376

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Not to create more math headaches (sorry Sue ;) ), but increasing point costs by windje2000's hypothesis would also mean a commensurate increase in MF's. IF Marriott was to adopt such a policy, every owner would get shafted in one way or the other- legacy owners by having less buying power, and trust point owners by paying higher fees for the same slice of pie.

And don't the trust documents prevent Marriott from simply creating more points from existing inventory? Can they simply wave a magic wand and "poof" they have 5 or 10% more points to sell? I thought that once created the distribution of points therein could be changed (as Sue suggested, to reflect usage patterns), but the total number of points was fixed, unless more real property was added to the trust.
 

windje2000

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Not to create more math headaches (sorry Sue ;) ), but increasing point costs by windje2000's hypothesis would also mean a commensurate increase in MF's. IF Marriott was to adopt such a policy, every owner would get shafted in one way or the other- legacy owners by having less buying power, and trust point owners by paying higher fees for the same slice of pie.

And don't the trust documents prevent Marriott from simply creating more points from existing inventory? Can they simply wave a magic wand and "poof" they have 5 or 10% more points to sell? I thought that once created the distribution of points therein could be changed (as Sue suggested, to reflect usage patterns), but the total number of points was fixed, unless more real property was added to the trust.

MF per week is determined by the resort boards and is not related to the number of points outstanding.

MF per point would therefore decline because the number of points increased 20%.

More points to sell? Suppose Marriott owned 1,000,000 points representing 10% of the total. Assume a 20% change. They would then own 1,200,000. But that would still be 10% of the total.

The sales price per points could/should be adjusted, although VAC will charge as much as the traffic will bear.

The net effect is that legacy points electors whose weeks points allocations remain unchanged pay a 20% higher price for points based occupancy.
 

dioxide45

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I don't think that MVCI can just indiscriminately increase points across the board that are allocated in the trust. Each week conveyed to the trust is worth X number of points. That is in recorded notices that are filed with the Orange County Comptroller. They can't increase the value of those weeks now that they are conveyed. So the number of points in the the trust can't go up unless they convey more weeks to the trust. Trust point owners own BIs, they are deeded as BIs. MVCI would be walking a risky path if they tried to change the value of what is in the trust and what they sold to customers.

That doesn't mean they can't change the allocation of points across the trust, increasing something here while decreasing it there. However, a flat out increase across the board simply won't happen.

Now as legacy owners working through an exchange company, there isn't anything to say that what they give us for a week (the Trade Power valued in points) will not change. This happens in II all the time and changes for the same week depending on when it is deposited. With DC, that trade power is fixed until 9/30 the year prior to use when you have to commit to convert to points or not.
 

windje2000

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I don't think that MVCI can just indiscriminately increase points across the board that are allocated in the trust. Each week conveyed to the trust is worth X number of points. That is in recorded notices that are filed with the Orange County Comptroller. They can't increase the value of those weeks now that they are conveyed. So the number of points in the the trust can't go up unless they convey more weeks to the trust. Trust point owners own BIs, they are deeded as BIs. MVCI would be walking a risky path if they tried to change the value of what is in the trust and what they sold to customers.

That doesn't mean they can't change the allocation of points across the trust, increasing something here while decreasing it there. However, a flat out increase across the board simply won't happen.

Now as legacy owners working through an exchange company, there isn't anything to say that what they give us for a week (the Trade Power valued in points) will not change. This happens in II all the time and changes for the same week depending on when it is deposited. With DC, that trade power is fixed until 9/30 the year prior to use when you have to commit to convert to points or not.

They wouldn't be changing the value of anything. All they would be doing is giving every owner an extra 50 points per BI (representing 250 points), and redefining a BI to be 300 points.

Everyone's relative or percentage ownership in the trust would be unchanged.

The trust indenture grants Marriott broad powers. No trust owner's interest would be changed or harmed by that action.

The points price of occupancy to legacies would increase. But that fact doesn't matter because they are not associated with the trust, just the exchange co.
 

Beefnot

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Not to create more math headaches (sorry Sue ;) ), but increasing point costs by windje2000's hypothesis would also mean a commensurate increase in MF's. IF Marriott was to adopt such a policy, every owner would get shafted in one way or the other- legacy owners by having less buying power, and trust point owners by paying higher fees for the same slice of pie.

And don't the trust documents prevent Marriott from simply creating more points from existing inventory? Can they simply wave a magic wand and "poof" they have 5 or 10% more points to sell? I thought that once created the distribution of points therein could be changed (as Sue suggested, to reflect usage patterns), but the total number of points was fixed, unless more real property was added to the trust.

Apparently DVC owners face a similar scenario.
 

SueDonJ

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Apparently DVC owners face a similar scenario.

Because DVC was never sold as Weeks intervals but instead has always been a pure Points system, they don't have to deal with what Marriott does with convertible existing Weeks as well as pure Points. DVC is also set up differently from Marriott in that each DVC resort has its own corresponding Trust to which the inventory is conveyed, the per-point price and MF's are set according to the individual resorts' operating expenses and demand, and, the Points Charts are different for each resort. Their docs stipulate that Disney can re-allocate Points according to usage patterns, but any increases must be offset by decreases so that the total Points amount for a single resort cannot fluctuate.

But it is possible for DVC contracts to have different terms despite being attached to the same resort, depending on when the contract was purchased. This is probably most glaringly obvious with Aulani contracts - what happened there was that at a certain point after Disney had started selling Aulani contracts, the state of HI shut down the operation when they realized that the MF's as set at the roll-out would seriously under-fund the resort. Disney had to re-do the MF's and when they were approved to sell again some months later, the MF's attached to the new contracts were something like 33% higher. Whether Disney was legally prohibited from increasing the MF's on the already-sold contracts wasn't admitted, but for whatever reasons they didn't go back and charge those owners the new fees. And they've officially announced that in ensuing years, the MF's of those original contracts will be subsidized by DVC for as long as the original owners continue to own them.

There are many things that are similar between DVC and Marriott's Trust Point systems; they both are based in Florida and subject to that state's laws and regulations which mandate inventory and auditing controls. For that reason I don't think that windje's ideas here about increasing amounts by percentages across the board can be implemented. At least not with respect to purchased DC Points, anyway. But I could be wrong. :shrug:

Tomorrow's another day to think through more of this. Dioxide could very well be on the right track.
 
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