• The TUGBBS forums are completely free and open to the public and exist as the absolute best place for owners to get help and advice about their timeshares for more than 27 years!

    Join tens of thousands of other owners just like you here to get any and all Timeshare questions answered!
  • TUG started 28 years ago in October 1993 as a group of regular Timeshare owners just like you!

    Check out our happy birthday post here: Happy Birthday TUG!
  • TUG is asking for recent reviews of older resorts, earn a free year membership!

    Read more here
  • TUG has now saved timeshare owners more than $17,000,000 dollars just by finding us in time to rescind a new Timeshare purchase! A truly incredible milestone!

    Read more here: TUG saves owners more than $17 Million dollars
  • Follow the TUG Member Banner as it travels the world on vacation with Timeshare owners! Also sign up to get the banner sent to you so you can submit a photo of your vacation with the banner to share with TUG! Banner Thread
  • Sign up to get the TUG Newsletter for free! Join tens of thousands of other owners who get this every week! Latest resort reviews and the most important topics discussed by owners during the week!
  • Our official "end my sales presentation early" T-shirts are available again! Also come with the option for a free membership extension with purchase to offset the cost!

    Read more Here
  • A few of the most common links here on the forums for newbies and guests!

Some global MVCI financial data

Dave M

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
12,242
Reaction score
9
Points
473
Location
Sun City Hilton Head, SC
From Marriott's meeting with investor security analysts on June 5 (a PDF file):
  • The typical Marriott purchaser has annual household income of $75k-$200k+
  • Horizon purchasers typically have household income of $50k-$90k
  • 81% of Marriott's vacation ownership sales are MVCI timeshare sales; 3% are Horizons; 14% are Ritz-Carlton; 2% are Grand Residence
  • 53% of Marriott's 2004 profit from timeshares came from sales. An astounding 33% came from financing! The remainder came from management fees and rental commissions.
  • The typical Marriott timeshare project takes 7-10 years to sell out and generates $300-500 million in sales. Marketing and selling costs are about 43% of sales, construction and other hard costs are about 40% and the remaining 17% is profit.
  • 50% of buyers finance their purchases. The typical borrowing is $21,000 at an interest rate of 12.5% to 12.8%. Automatic credit approval requires a credit score of 600 or higher.
  • Marriott expects its percentage of fractional interest vacation ownership sales to increase from 16% in 2004 to 26% in 2008. (Thus, timeshare sales would decrease as a percentage of the total from 84% to 74%.)
  • Marriott's profits from vacation ownership activities ranged from $123 million in 1999 to $149 million in 2003 before jumping to $203 million in 2004.
 

jancurious

TUG Review Crew: Rookie
TUG Member
Joined
Jun 7, 2005
Messages
811
Reaction score
17
Points
378
Location
Roseville, CA
Dave,
Thanks for extrapolating those details from that report. Very interesting information.

I originally thought that probably most of the 50% that finance their timeshares did it initially just to earn reward points or frequent flyer miles, however, not with Marriott earning 33% profit from financing!

Glad to see only 14% of their profit is coming from management fees and rental commissions. It doesn't seem like they are gouging the resorts with those percentages.

Jan
 

gatoredy

TUG Member
Joined
Jun 6, 2005
Messages
50
Reaction score
0
Points
6
Dave M said:
construction and other hard costs are about 40% .[/list]

HMMMM....is it only a coincidence that resales trade in this area?????


edo
 

Blue Skies

TUG Member
Joined
Jun 6, 2005
Messages
454
Reaction score
3
Points
228
Location
SE Minnesota
Very Interesting

Thanks for sharing all your great information with us. I've learned a lot from your posts!
 

MOXJO7282

Tug Review Crew
TUG Member
Joined
Jun 6, 2005
Messages
5,187
Reaction score
887
Points
549
Dave M. continues to be the best, IMHO

Very interesting data.

I've said it before, but it is worth repeating, Dave M. is a tremendous asset to TUG because of posts like this. Thanks for your dedication to helping so many people.

Regards.
Joe
 

jme

TUG Member
Joined
Jul 12, 2005
Messages
4,315
Reaction score
2,101
Points
598
Location
Southeast,TUG since '98
Resorts Owned
Marriotts:
Grande Ocean x 6
Barony x 2
OceanWatch x 1
Manor Club x 1
.
Waterside by Spin x 2
Sheraton Bdw Pln x2
ChurchSt/Charleston x2
nice post, Dave

Most of the facts are along the lines I would have expected, except for the grossly high % of "financers"....that is ludicrous. I guess folks are wanting the Marriott experience whatever the cost! Very interesting. I'll just say that they could have bought another (off-season?) timeshare for what they'll pay for the financing alone ;) ! Marty (jme)
 

John Cerra

TUG Member
Joined
Jun 13, 2005
Messages
63
Reaction score
1
Points
368
Location
Westfield NJ
Last summer, when I had a brief discussion about a MVCI sales representation, he spent more time trying to convince me to finance a property than he did trying to sell me on the property. Despite my stated preference to pay cash.

Finance and get extra points....get a card and put the downpayment on the card...get extra points.

He can't be happy that I bought a resale for cash, can he?
 

JimC

TUG Member
Joined
Jun 7, 2005
Messages
972
Reaction score
0
Points
226
Resorts Owned
Disney - AKV, BCV, OKW, VGC; Marriott - Canyon Villas/Shadow Ridge, Cypress Harbour
Marriott's cost of capital has to be much less than the rate and they take on very little risk since they can control the use of the contract. It is no wonder that they put incentives on financing.

If you buy direct the financing I like is put the whole contract on the Marriott Visa, get triple MR points on top of any other incentives then pay the bill in full when it comes in. That is even better than cash.

I also want to add my thanks to Dave for his efforts to keep us informed as well as his helpful responses to our many questions.
 
Last edited:

John Cerra

TUG Member
Joined
Jun 13, 2005
Messages
63
Reaction score
1
Points
368
Location
Westfield NJ
There are some folks who think that one of the major reasons that GM and Ford went into a decline was the realization and focus that they were making more money at GMAC and Ford Motor Credit than they were at General Motors and Ford Motor Company. Am I forecasting a decline in MVCI? No. But when you take you focus off the most important facet of your business....it leads to trouble.
 

JimC

TUG Member
Joined
Jun 7, 2005
Messages
972
Reaction score
0
Points
226
Resorts Owned
Disney - AKV, BCV, OKW, VGC; Marriott - Canyon Villas/Shadow Ridge, Cypress Harbour
John Cerra said:
There are some folks who think that one of the major reasons that GM and Ford went into a decline was the realization and focus that they were making more money at GMAC and Ford Motor Credit than they were at General Motors and Ford Motor Company. Am I forecasting a decline in MVCI? No. But when you take you focus off the most important facet of your business....it leads to trouble.
Very good point...Marriott is in the hospitality and leisure industry, not the finance industry
 

pwrshift

Tug Review Crew: Rookie
TUG Member
Joined
Jun 6, 2005
Messages
5,528
Reaction score
28
Points
333
Location
Toronto
Resorts Owned
Marriott Manor Club - 3 weeks platinum, 2 weeks at Marriott Beachplace Towers, and 1 week at Marriott Canyon Villas
As a Marriott shareholder I'm pleased to see that Marriott makes money wherever they can, and it is very enterprising of them to branch into financing where 33% of the money is for them. What should they do, just refer their customers to a neighborhood bank? The biggest surprise in this whole thing is that there are people out there who finance their vacation purchases at really high rates - imagine what that does to your annual Maintenance costs and total cost of ownership. If you can't afford to buy with cash, don't buy IMO. :)

Brian
 

heislerj

Guest
Joined
Jun 6, 2005
Messages
42
Reaction score
0
Points
6
Agree

If you finance at 12% over 10 years you are paying a 50% premium on your purchase. The $25,000 ts now becomes $37,500. The if you sell at 50% of cost you take a bath of $25,000. It makes it even worse. You should only buy a ts if you know that you will not need the money for at least 5 years and also will not finance.
 

Dave M

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
12,242
Reaction score
9
Points
473
Location
Sun City Hilton Head, SC
heislerj said:
You should only buy a ts if you know that you will not need the money for at least 5 years and also will not finance.
I agree, except I would tend to say "...if you will never need most of the money", considering the likely loss of value from developer price to sell at resale.

Most of us believe it's generally not a good idea to spend the megabucks to buy from a developer. There are so many lower priced attractive resales as to make purchasing from the developer unattractive from an economic standpoint.

In spite of that, many of us rationalize that it's okay to buy from a developer like Marriott, particularly to obtain the incentive Marriott Rewards points that might be available, to get that must-have-now purchase that won't be available at resale for several years and/or when buying at comparatively low initial pre-construction prices. That's a tenuous position, but one that many of us follow.

However, when one factors in the roughly 50% added cost associated with financing at 12+%, the economics become skewed far off the page in terms of what makes economic sense versus the various alternatives available.
 

jerseyfinn

TUG Member
Joined
Jun 6, 2005
Messages
750
Reaction score
72
Points
238
Location
Sedona AZ
Resorts Owned
MMB MVO
Marty,

A 50% MVCI finance rate doesn't sound too far off the mark to me. How many folks lease automobiles or finance a new car purchase? It's got to be a huge majority.

I think that it would be more interesting to find out how many folks stick with MVCI financing after one or two years since other alternatives for borrowing exist once the momentary "timeshare high" which accompanies a TS purchase fades away. Likewise one would wonder if the bulk of this 50% of financers are folks purchasing their first week.

Marriott appears to be going gang busters at the moment. But TS is a discretionary spending item and a flip in the economy could slow the rush. On the other hand, Marriott TS would seem to be resistant to unfortunate terrorist events such as those in the UK as the bulk of MVCI resorts are in the US and while folks might not travel abroad, the urge to vacation near home would remain largely unabated.

Barry
 

JimC

TUG Member
Joined
Jun 7, 2005
Messages
972
Reaction score
0
Points
226
Resorts Owned
Disney - AKV, BCV, OKW, VGC; Marriott - Canyon Villas/Shadow Ridge, Cypress Harbour
pwrshift said:
As a Marriott shareholder I'm pleased to see that Marriott makes money wherever they can, and it is very enterprising of them to branch into financing where 33% of the money is for them. What should they do, just refer their customers to a neighborhood bank? The biggest surprise in this whole thing is that there are people out there who finance their vacation purchases at really high rates - imagine what that does to your annual Maintenance costs and total cost of ownership. If you can't afford to buy with cash, don't buy IMO. :)

Brian
Yes, that is what the very best organizations do. They focus on what they do best and do not let themselves get diverted.

Now you might convince me if you said that financing timeshare purchases is the only way Marriott can move the inventory in the quantity and timeframe they consider acceptable.

I agree whole heartedly on the pay cash or do not buy advice.
 

John Cerra

TUG Member
Joined
Jun 13, 2005
Messages
63
Reaction score
1
Points
368
Location
Westfield NJ
I'm glad that Marriott can make money on timeshare finance. However, it concerns me that they make so much of their money in finance. Credit terms are easy right now, let's hope that Marriott isn't blind to the downside and is ready for the day that timeshares are tough to sell. I would hate tspo think they are just in this for the finance income.
 
Last edited:

pwrshift

Tug Review Crew: Rookie
TUG Member
Joined
Jun 6, 2005
Messages
5,528
Reaction score
28
Points
333
Location
Toronto
Resorts Owned
Marriott Manor Club - 3 weeks platinum, 2 weeks at Marriott Beachplace Towers, and 1 week at Marriott Canyon Villas
Even if someone did want to finance a timeshare purchase, why would they consider doing it through Marriott at those rates? Surely there are 'outside' sources for money that would have lower rates - or are timeshare purchases considered risky or just hard to 'sell' to the bank manager?

Brian
 

jancurious

TUG Review Crew: Rookie
TUG Member
Joined
Jun 7, 2005
Messages
811
Reaction score
17
Points
378
Location
Roseville, CA
I think a lot of the people financing are those that went to the timeshare presentation with no clue they would ever buy....and walked away owning a timeshare.

When I was looking for resale weeks last year I spoke on the phone to quite a few people who basically couldn't budge from their over-market prices because they owed more than that on their loans. To sell at resale market value they would actually have to come up with cash to take the loss!

Jan
 

Dave M

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
12,242
Reaction score
9
Points
473
Location
Sun City Hilton Head, SC
Unfortunately, there is apparently only one outside source for financing a timeshare purchase. That's Tammac Financial. Most conventional lending sources won't touch a timeshare loan, unless the lender is connected to or has an agreement with the developer. Too much paperwork and too much risk for not enough income.

That's a major reason why we often advise here that if one has to borrow, get a home equity loan or refinance an exisitng home mortgage on the primary residence. Doing so cuts the interest rate by half or more and gets a tax deduction for the interest expense. Interest on Marriott's loans is not tax deductible. And those options are about the only practical alternative!
 
Top