Ritz-Carlton Yacht Collection

[Eric B]

Sorry, are you saying that MVC is underwriting/purchasing/acquiring Ritz inventory, holding it for points people at these inflated rates, and if they don't get rented, MVC eats it?

I doubt it. I think that MVC is renting out the inventory they predict will be unused in Abound for whatever reason and designating the proceeds to use when someone books a cruise or hotel using Abound points. If the points don't get used in Abound or anywhere else, they expire at the end of the calendar or are saved and expire sometime in the future. Once that happens, the books are balanced and MVC earns whatever profit MVC earns. It doesn't look to me like they are setting things up to take a loss.

 

[dioxide45]

Sorry, are you saying that MVC is underwriting/purchasing/acquiring Ritz inventory, holding it for points people at these inflated rates, and if they don't get rented, MVC eats it?

When you convert your points to a cruise or something else, other than a timeshare stay, MVC is taking your points and converting them to a reservation that they rent out on Marriott.com. They then use the cash proceeds from the rental to cover the costs associated with booking the cruise. The cruise lines don't accept points for a cruise, MVC is facilitating the transaction by converting the points to cash.

 

[Eric B]

When you convert your points to a cruise or something else, other than a timeshare stay, MVC is taking your points and converting them to a reservation that they rent out on Marriott.com. They then use the cash proceeds from the rental to cover the costs associated with booking the cruise. The cruise lines don't accept points for a cruise, MVC is facilitating the transaction by converting the points to cash.

I don't think it's quite as simple as that. I think MVC makes predictions of how many people will convert points to cruises or something else, how many will book Abound stays, etc., and allocates the available stays in a year based on those predictions, renting out a certain percentage by whatever means they do (Marriott.com or others). When an individual actually books a cruise, they merely make a bookkeeping entry that attributes the rental income to the points and pay for the cruise. They clearly don't give the points to the cruise operator but they also aren't waiting for someone to book one before renting out resort stays.

 

[dioxide45]

I don't think it's quite as simple as that. I think MVC makes predictions of how many people will convert points to cruises or something else, how many will book Abound stays, etc., and allocates the available stays in a year based on those predictions, renting out a certain percentage by whatever means they do (Marriott.com or others). When an individual actually books a cruise, they merely make a bookkeeping entry that attributes the rental income to the points and pay for the cruise. They clearly don't give the points to the cruise operator but they also aren't waiting for someone to book one before renting out resort stays.

Very true, but Marriott also has lots of inventory in the rental pool at any given time. As noted, they do forecast anticipated usage and allocate inventory for rental throughout the year. I agree they aren't necessarily waiting for an owner to book a cruise, but they may also just have some of their owned inventory in there that they rent out and then replace with additional inventory as they see a need for it for these cash based transactions.

 

[marriottdude]

When you convert your points to a cruise or something else, other than a timeshare stay, MVC is taking your points and converting them to a reservation that they rent out on Marriott.com. They then use the cash proceeds from the rental to cover the costs associated with booking the cruise. The cruise lines don't accept points for a cruise, MVC is facilitating the transaction by converting the points to cash.

So in my example, are you saying MVC would be "charging" me 27,500 points, "renting" the $7,800 inventory on Marriott.com (or Ritz Yachts or whatever), and pocketing the difference?

 

[Eric B]

My interpretation would be that you would have given up 27,500 Abound points to MVC's control, some percentage of which they would have been able to rent and cover the $7,600 cost you cited earlier plus whatever profit they have decided they should get as well as costs and fees to the various intermediaries in the transaction. Everyone has sticky fingers. Some of the inventory allocated to the 27,500 points won't rent and will wind up being unused inventory because there isn't a perfect one-to-one conversion anywhere in the chain of transactions necessary to accomplish this. Unless the stars line up well for you, you're much better off using money than points, though if you've got that many points lying around and less cash it could be an option. I would weigh it against the 4 or 5 weeks that many points could get you at a Ritz-Carlton resort through Abound instead. I know what my choice would be.

 

[bizaro86]

I doubt it. I think that MVC is renting out the inventory they predict will be unused in Abound for whatever reason and designating the proceeds to use when someone books a cruise or hotel using Abound points. If the points don't get used in Abound or anywhere else, they expire at the end of the calendar or are saved and expire sometime in the future. Once that happens, the books are balanced and MVC earns whatever profit MVC earns. It doesn't look to me like they are setting things up to take a loss.

Part of this is an outflow of them choosing to put low value weeks in the trust. If they'd spend more money exercising ROFR on high value weeks the quality of the "leftovers" would be higher. That would also lower the cost of the trust MF (which would make these options look more favourable to trust owners as well). But it would lower their profit margin on sales...