Speculation About Marriott's New Timeshare Structure [merged]

[dougp26364]

I would like to think that the internal exchange program would not have exchange fee's but, Marriott's history to date is to charge a fee for everything.

One other component would be the issue of I.I. membership fee's. With the two points programs we own, the exchange company membership fee is included with our membership fee's.

It could be that all the exchange fee's and Interval membership fee's are included in any membership fee and that there are no internal exchange fee's. Or it could be that legacy owners would continue to have to pay the Interval membership fee, a Marriott management fee for the points program and pay exchange fee's of some sort.

So we could have a system in which there is just the annual membership fee and nothing else or, we could have a system that charges a management fee, still require we pay for a personal membership with Interval and pay an exchange fee of some sort to make internal exchanges. It might be that this new system is to expensive to make it worthwhile to most owners.

 

[jlf58]

points will NOT have a earlier home resort booking window

The million dollar question...

 

[NJDave]

Except that Marriott will be selling generic points going forward and not "Orlando" points, so it doesn't matter how much Orlando inventory is left.

I think it will depend upon how Marriott defines value. If they take the stance, like HGVC, that most resorts are valued similarly for a given season, than we may only see a few different point structures. However, IF they value each resort on its own merit, possibly taking their own rental rates into consideration (since there was some reference to a hotel type value structure), Orlando's value may reflect the relatively cheaper rates that the properties can be rented for on the open market, and on Marriott's own website.

The points sold by Marriott would represent the underlying ownership that is put into the trust. The higher the points assinged to that ownership, the more points Marriott has to sell. Future decisions on where to add resorts would be based on the cost to build and sell per point. Orlando should be a good location since construction costs are lower, they already have the sales infustructure, and it is the most traveled to destination which means more opportunities to sell. I hope that Marriott doesn't get more like Hilton and keep building in the same locations.

 

[jlf58]

don't expect any new resorts soon. They have an unhealthy amount of unsold inventory to sell that will take years

The points sold by Marriott would represent the underlying ownership that is put into the trust. The higher the points assinged to that ownership, the more points Marriott has to sell. Future decisions on where to add resorts would be based on the cost to build and sell per point. Orlando should be a good location since construction costs are lower, they already have the sales infustructure, and it is the most traveled to destination which means more opportunities to sell. I hope that Marriott doesn't get more like Hilton and keep building in the same locations.

 

[jlf58]

Doug

Its known already. It will be $159 to use the points

I would like to think that the internal exchange program would not have exchange fee's but, Marriott's history to date is to charge a fee for everything.

One other component would be the issue of I.I. membership fee's. With the two points programs we own, the exchange company membership fee is included with our membership fee's.

It could be that all the exchange fee's and Interval membership fee's are included in any membership fee and that there are no internal exchange fee's. Or it could be that legacy owners would continue to have to pay the Interval membership fee, a Marriott management fee for the points program and pay exchange fee's of some sort.

So we could have a system in which there is just the annual membership fee and nothing else or, we could have a system that charges a management fee, still require we pay for a personal membership with Interval and pay an exchange fee of some sort to make internal exchanges. It might be that this new system is to expensive to make it worthwhile to most owners.

 

[Dean]

I disagree with your analysis. Once a deed is in the Trust and sold as points all those that own points own some of that resort. No one will be in the Trust from just that resort.

If Marriott blocks some resorts from joining and keeps all deeds in individual owners’ hands then they could be dropped just as they are now.

Ray

It depends on how they do it. I was talking for existing resorts. For a trust they can either tie the points to an underlying week OR to an UDI of a given resort. Either way your membership basis is based in a given resort and if that week or resort goes away, so do you. They MIGHT give you options to convert somewhere else but wouldn't be required to. You are NOT an owner generically in the points system though that'll be the sales pitch if there is no home resort priority. I can tell you for certain with DVC that this is the case and I"m about 99% sure that it's true with BG as well, Jim can correct me if he knows differently.

 

[Clark]

Its known already. It will be $159 to use the points

Well that verifies (at least what passes for verification in this string) an assumption I have been making -- that there would be enough of a fee that even points users could benefit from free independent exchanges.

Guess I better start working on adding an option to *****.com where userA and UserB can use points to reserve what each other wants and swap for free --

 

[dioxide45]

Well that verifies (at least what passes for verification in this string) an assumption I have been making -- that there would be enough of a fee that even points users could benefit from free independent exchanges.

Guess I better start working on adding an option to *****.com where userA and UserB can use points to reserve what each other wants and swap for free --

I wouldn't invest a lot of time just yet. I am sure you will have enough time after we get official verification to implement any changes. By official, I mean verification from a current Marriott employee regarding the cost.

 

[dioxide45]

If there is a fee exchange fee that is higher than the current II fee, I think you will see II do a lot of legwork to promote this and try to get your weeks. I also think a lot of people will still take the gamble and try to trade in II.

 

[Asia2000]

The points sold by Marriott would represent the underlying ownership that is put into the trust. The higher the points assinged to that ownership, the more points Marriott has to sell. Future decisions on where to add resorts would be based on the cost to build and sell per point. Orlando should be a good location since construction costs are lower, they already have the sales infustructure, and it is the most traveled to destination which means more opportunities to sell. I hope that Marriott doesn't get more like Hilton and keep building in the same locations.

Interesting thoughts here. I would think Marriott would branch out to newer places. I know Macau China is in the works (not that many from the USA would go). I'm not sure what the up and coming hot spots are, but I would think Marriott would consider building or buying there. It would be really incredible if Marriott has a buyout in the works to coincide with the timing of the MVCI retooling. Talk about a great way to boost your stock price. New MVCI and bam!, 12 new resorts to go along with it. I'm not sure who they would buy or partner with.

Overall, I think the target audience of this new program are more "point driven" type people. People love point programs and love the flexibility of them. They have become hobbies for many people all the way down to buying gas and necessities so they can receive a free Coke. People are automatically drawn in by the idea of a new point program. Especially for big time things like timeshares. People will want large point accounts with tons of options to fit every need. I know other companies have had points for years, but Marriott people love points via the Marriott Rewards program.

If $159 annually is all Marriott is asking for, I'll be shocked. I will be happy too.

 

[hipslo]

points will NOT have a earlier home resort booking window

Does that mean that those who do not convert will be competing with ALL points owners the minute reservations open for the prime weeks at their home resort?

 

[dougp26364]

Doug

Its known already. It will be $159 to use the points

So is that a $159 membership fee and then no more charges per exchange, a $159 fee per exchange without a membership fee, Or is there a membership fee and a $159 fee every time you use your points?

 

[m61376]

points will NOT have a earlier home resort booking window

Hi Fletch- Hope you will be around a lot over the next week to help us sort all of this out!

The bigger question is whether points will have the same booking window or a later booking window- will legacy owners booking their owned resort have first crack before generic points owners (whether newly purchased points owners or weeks owners opting to use points for the year)?

Will I have a 1 month (or even 1 week) jump on everyone else if I am booking my deeded unit (or what was once my deeded unit assuming that the underlying deeds change if one joins the new program)? Or will I be competing with anyone who has enough points to try to book my home resort?

 

[dougp26364]

If there is a fee exchange fee that is higher than the current II fee, I think you will see II do a lot of legwork to promote this and try to get your weeks. I also think a lot of people will still take the gamble and try to trade in II.

I think something is lost in translation. I can't see Marriott charging to join the points program and then charging an exchange fee higher than Interval. If that's the case, I would expect enrollment to be pretty slim amongst the "legacy" owners. I know I'll lose interest pretty quickly if that's the case.

There's to much precendent that's been set by other points based exchange systems. Essentially, there is a fee to join and a yearly membership/management fee. Internal exchanges are either at fee's greatly reduced from the exchange companies fee's or free.

I suppose I could see Marriott charging to join, not charging a yearly membership/management fee but charging a fee per exchange (those that use are the ones who pay) but, I see no benefit to a program that charges more than the existing option (I.I.) for exchanging. In order to make that work, Marriott would have to sell fear. I guess some people buy based on fear but I'm not one of them. I know that the DRI manager who tried to convince me that the trust was better used the fear of having to pay SA's as leverage. When they turn to fear, I stop listening and close the checkbook.

 

[m61376]

Well that verifies (at least what passes for verification in this string) an assumption I have been making -- that there would be enough of a fee that even points users could benefit from free independent exchanges.

Guess I better start working on adding an option to *****.com where userA and UserB can use points to reserve what each other wants and swap for free --

It depends if there is transactional fee or just an annual membership in the club fee. I may be wrong, but my impression from what was posted is that there was an annual fee, regardless of whether you used your week or the points option for the year. And, if so, that fee would cover you if you just used your home resort, or made a dozen reservations.

IF that is the case, then the only advantage to internal trades between owners would be IF there is a home resort booking advantage or for those owners not opting into the new program.

 

[dougp26364]

It depends if there is transactional fee or just an annual membership in the club fee. I may be wrong, but my impression from what was posted is that there was an annual fee, regardless of whether you used your week or the points option for the year. And, if so, that fee would cover you if you just used your home resort, or made a dozen reservations.

IF that is the case, then the only advantage to internal trades between owners would be IF there is a home resort booking advantage or for those owners not opting into the new program.

I hope you're right. One fee for all exchanges would probably work well for us if that fee is reasonable. A membership fee PLUS exchange fee's requires some calculation

 

[Captron]

Again, to use WM as an example, you own a small amount of each and every resort in the trust. No one gets hurt if a resort gets dropped, it just ceases to be an option. Ok I guess the people hurt are the ones who love to go to the resort that is dropped or bought because they wanted to go to that resort, but no one gets left in the lurch with a worthless ownership unless.... the whole trust goes up in smoke.

Who is to say what type of system they will use? We will see soon enough.

That also means that MF are based on the total cost of the units in the trust divided by the number of points assigned. New owners should have the same cost PER POINT. Those who have more points to stay in bigger units or several smaller units off season pay more. I wonder what the minimum buy in will be set at. For WM it is 5000 but most accounts are 6000+. The average stay for WM is 3.? days and external exchange is reported at less than 10%, if I remember my numbers right.

Starwood charges their annual fee and no exchange fees for internal exchanges but there system is still not a pure points system in that your points are assigned to a specific unti deed at a specific resort, the points system is just an exchange venue similar to the RCI or Redweek points systems.

 

[dougp26364]

This brings up a good question - Can folks, who opt not to join, ever get into a new Marriott?

My guess is no.

Marriott has negotiated a new contract with II and they might have told them that at the new resort II will not get developer weeks since II is a competitor to Marriott in the exchange world now, and new sales will NOT be week oriented at the new resort.

I'm not sure Marriott will give us any guidance on what they will do but 4 years of "Better not buy resale" mean something - new Marriotts are off limits to outsiders.

WM did this to II when it switched to RCI - the basket of resorts that went into the generic unit given to II for exchange purposes let out ALL new resorts after they switched to RCI.

This might weigh heavily on one's decision to join for just the ability to get into all new Marriotts.

Actually, it could be possible. If Marriott points trade through Interval then Marriott will have negotiated a contract with Interval that requires a certain number and quality of weeks are given to the exchange company. That is how Interval will place an exchange value on Marriott's points when an owner want to exchange outside of Marriott.

What weeks, how many and what resorts won't be know to the general public. My guess would be that you're not going to see a lot of the new resorts hit Interval for the first few years. I don't know that it's a lot different now. Let's face it, when someone pays developer pricing for a new resort, I would imagine they would be more likely to use their owned week the first few years rather than exchange it. In our own case we didn't exchange the two bedroom portion of our Grand Chateau unit for the first two years and we've never exchanged our two bedroom master suite at Ocean Pointe with Interval.

Eventually, I would expect that weeks based Marriott owners will be able to get into the newer resorts that are points only.

 

[m61376]

I hope you're right. One fee for all exchanges would probably work well for us if that fee is reasonable. A membership fee PLUS exchange fee's requires some calculation

I was just basing it on what was posted before about a $169 annual fee (and hoping that Fletch's 159 was really the same fee but that someone made a typo).

Think about what a great source of revenue this is potentially for Marriott- $595 or $695 to join and $169 per year as a membership fee. The membership fee alone for 400,000 owners could be in excess of 46 million dollars per annum, if all were to join (assuming there are 400,000 owners- is it 400,000 owners or 400,000 timeshare weeks?), with the initial fee of 595/695 an added bonus. Even if Marriott split the sign on fee with its sales people, imagine the influx of funds- a windfall without selling a single additional unit (or points therein).

Of course, guaranteed you'll hear "wouldn't you like to go to---, or perhaps I see you own a 3BR already- wouldn't you like to always be able to reserve a 3BR... now it's easy- just buy x,y or z additional points at our inaugural roll out price of $$." I fully expect there to be an initial discount for points and/or a waver of the joining in cost if you add points up front.

I would be surprised if there weren't initial incentives. The bigger question will be if joining will be time limited wrt benefits or costs and, of course, where do resale owners fit into the overall scheme of things, because IF offers are time limited, grandfathering options, so to speak, may be more time sensitive.

 

[dougp26364]

I was just basing it on what was posted before about a $169 annual fee (and hoping that Fletch's 159 was really the same fee but that someone made a typo).

Think about what a great source of revenue this is potentially for Marriott- $595 or $695 to join and $169 per year as a membership fee. The membership fee alone for 400,000 owners could be in excess of 46 million dollars per annum, if all were to join (assuming there are 400,000 owners- is it 400,000 owners or 400,000 timeshare weeks?), with the initial fee of 595/695 an added bonus. Even if Marriott split the sign on fee with its sales people, imagine the influx of funds- a windfall without selling a single additional unit (or points therein).

Of course, guaranteed you'll hear "wouldn't you like to go to---, or perhaps I see you own a 3BR already- wouldn't you like to always be able to reserve a 3BR... now it's easy- just buy x,y or z additional points at our inaugural roll out price of $$." I fully expect there to be an initial discount for points and/or a waver of the joining in cost if you add points up front.

I would be surprised if there weren't initial incentives. The bigger question will be if joining will be time limited wrt benefits or costs and, of course, where do resale owners fit into the overall scheme of things, because IF offers are time limited, grandfathering options, so to speak, may be more time sensitive.

I don't know about you but, IMHO, those fee's will cover the cost of the start up for the program and the expenses. I don't see any profit for Marriott coming from this source of revenue.

 

[m61376]

What weeks, how many and what resorts won't be know to the general public. My guess would be that you're not going to see a lot of the new resorts hit Interval for the first few years. I don't know that it's a lot different now. Let's face it, when someone pays developer pricing for a new resort, I would imagine they would be more likely to use their owned week the first few years rather than exchange it. In our own case we didn't exchange the two bedroom portion of our Grand Chateau unit for the first two years and we've never exchanged our two bedroom master suite at Ocean Pointe with Interval.

Eventually, I would expect that weeks based Marriott owners will be able to get into the newer resorts that are points only.

On the other hand, you do on occasion see bulk deposits of unsold inventory of newer resorts- look at the Marco units and Lakeshore units, for ex., that have surfaced in II. Don't forget it is still all about sales. The biggest sales tool is still on site tours and guests in vacation mode. These are the impulse buyers that every property needs. You got to get them there to sell - and putting weeks in II gets not only Marirott owners there, but Starwood owners and other owners there. Happy timeshare owners are a salesperson's best shot at a sale.

 

[m61376]

I don't know about you but, IMHO, those fee's will cover the cost of the start up for the program and the expenses. I don't see any profit for Marriott coming from this source of revenue.

I agree that the 595/695 will basically be a wash, although if it turns out to be a sales tool it may be of financial benefit. However, I think the $169 will be found money, so to speak, because the program will likely not be much more expensive to run than the current reservation system and, whatever excess costs there are will probably be passed on to the resorts and reflected in the MF's as management costs.

In reality, today's reservation system does cost money, except that it is funded either by Marriott or billed to MF's.

$169 per year doesn't sound a lot- but multiply it by potentially 400,000 owners, and now we are talking about 67.6 million dollars- a nice round figure to add to the income column of the annual report.

 

[PerryM]

My Recap to date

Here's my interpretation of the new MVCD (Marriott Vacation Club Destinations) from all the rumors (and my input):

Release date: June 21,2010

For existing week based owners (Legacy):

Costs:

• $595 for lifetime membership of one week
• $695 for lifetime membership of multi-weeks

Membership is nontransferable when week(s) resold.

Deed's are NOT turned in to Marriott. Owner decides annually (don't know when that starts) either to use their unit as a Legacy unit or to relinquish unit to MVCD in exchange for one-time Points in the MVCD system. The number of Legacy Points received is a generic number for the season within resort turned in and varies each year.

No banking and no borrowing of Legacy generated Points.

MVCD Point Sales:

100% Points oriented which come from a Master Trust of Deeds. Points are generated annually (don't know when that starts) and can:

• Be banked one year forward
• Be borrowed from next year's usage
• Be transferred from account to account allowing Points renting to take place (10% probability of happening)
• Be converted into MRPs or Ritz-Carlton Points or other Marriott business Points

Points can be resold with a loss of some developer goodies; perhaps reverting to Legacy Points but without a deed.

Legacy generated Points have access to all inventory as of 6/21/10 but NO access to any new units added after that.

MVCD system:

• No home advantage
• Access to ALL units in system
• 12 month reservations for one reservation
• 13 month reservations require consecutive or concurrent usage by same owner
• 59-day specials at reduced Points
• Gifting reservation allowed for a fee
• No renting of reservations
• Points turned in for II generic reservation to exchange

Fees:

• $169 yearly membership fee
• $159 exchange fee
• $59 gift certificate
• $159 II exchange fee (at least)
• $159 to convert to MRPs or other Marriott authorized points

Points Calendar:
A Points calendar exists for each resort and unit configuration and each day of the year has a Point value.

Each resort has a fixed number of Points that is generated each year and this number can't be changed - ever; unless a condo is unavailable due to unforeseen circumstances. However, Points will shift around and within the ENTIRE resort. The daily Point value will change to reflect supply and demand. Calendar changes are probably at Marriott's discretion.

Exchange Rate Tables:
Tables will exist, which change frequently, giving the exchange rate between Points and MRPs and any other points Marriott wants to incorporate.

Small print:
And of course Marriott can change just about anything anytime it wants for any reason it wants and without any notice and you agree to it.
---------------------------------------------------------

Some of the above is my interpretation of the rumors.

All in all I am impressed with the direction Marriott is rumored to be taking - yes it's Perry saying this and not my evil twin (or is it good twin?). Will it mean more flexibility over the Legacy system - sure. Will legacy Point folks get "better" exchanges - well that depends on your definition of "better"; upgrades a definite NO.

Will I convert our one Gold Summit Watch - probably not.

Let me know if I got something wrong and I'll change this post for as long as I can.
------------------------------------

Wild speculation on my part (hey, even wilder than normal):

Legacy accounts are really RESALE Points accounts to Marriott - you did not buy Points from them so you are a resale and entitled to resale level Points stuff.

This is why Marriott doesn't care if you bought your current week from them or resale - you're all resale/legacy Points accounts to them now.

Another program will be introduced where you can turn in your deed, to the trust, and buy Points, at a reduced rate, that are not flagged as Resale/Legacy Points.

This will be by INVITATION ONLY! Marriott wants high demand Platinum Plus weeks and not Silver weeks. This is exactly what Marriott will do when it exercises the ROFR and snaps up a week it thinks will help it; if it every exercises the ROFR again, which could spell trouble for resale weeks.

Just a WAG.

 

[Asia2000]

MVCD Point Sales:

100% Points oriented which come from a Master Trust of Deeds. Points are generated annually (don't know when that starts) and can:

• Be banked one year forward
• Be borrowed from next year's usage
  [*]Be transferred from account to account allowing Points renting to take place (my hope)
• Be converted into MRPs or Ritz-Carlton Points or other Marriott business Points

Let me know if I got something wrong and I'll change this post for as long as I can.

Sorry to keep bombarding you with the Asia program, but here goes. As far as I know, you cannot combine accounts or transfer points within two accounts. I'm not sure if this is what you meant or not. I think if you owned three timeshares, all three would be rolled up into one points account.

A while back I looked into buying two Asia programs and combining them. I was told that I cannot, but would rather have to manage two accounts with two II annual fees, etc. With limited amounts of vacation (2-3 weeks) I calculated that managing two accounts would be extremely difficult without having points expire after two years. This would throw an interesting twist into resales if the USA keeps similar guidelines.

The purpose of this rule is to keep you from buying resale points and to, of course, buy the points from Marriott at a 30%+ premium.

I have never seen points for rent in Asia, but rather classifieds offering to book one of the six Asia resorts for a price. Once again, it's Asia and next week's offering may be altogether different.

Outstanding summary. Thank you.

 

[m61376]

Here's my interpretation of the new MVCD (Marriott Vacation Club Destinations) from all the rumors (and my input):

Release date: June 21,2010

For existing week based owners (Legacy):

Costs:

• $595 for lifetime membership of one week
• $695 for lifetime membership of multi-weeks

Membership is nontransferable when week(s) resold.

Deed's are NOT turned in to Marriott. Owner decides annually (don't know when that starts) either to use their unit as a Legacy unit or to relinquish unit to MVCD in exchange for one-time Points in the MVCD system.

No banking and no borrowing of Legacy generated Points.

MVCD Point Sales:

100% Points oriented which come from a Master Trust of Deeds. Points are generated annually (don't know when that starts) and can:

• Be banked one year forward
• Be borrowed from next year's usage
• Be transferred from account to account allowing Points renting to take place (my hope)
• Be converted into MRPs or Ritz-Carlton Points or other Marriott business Points

Points can be resold with a loss of some developer goodies; perhaps reverting to Legacy Points but without a deed.

Legacy generated Points have access to all inventory as of 6/21/10 but NO access to any new units added after that.

MVCD system:

• No home advantage
• Access to ALL units in system
• 12 month reservations for one reservation
• 13 month reservations require consecutive or concurrent usage by same owner
• 59-day specials at reduced Points
• Gifting reservation allowed for a fee
• No renting of reservations
• Points turned in for II generic reservation to exchange

Fees:

• $169 yearly membership fee
• $159 exchange fee
• $59 gift certificate
• $159 II exchange fee (at least)

Points Calendar:
A Points calendar exists for each resort and unit configuration and each day of the year has a Point value.

Each resort has a fixed number of Points that is generated each year and this number can't be changed - ever; unless a condo is unavailable due to unforeseen circumstances. However, Points will shift around and within the ENTIRE resort. The daily Point value will change to reflect supply and demand. Calendar changes are probably at Marriott's discretion.

And of course Marriott can change just about anything anytime it wants for any reason it wants and without any notice.

Some of the above is my interpretation of the rumors.

All in all I am impressed with the direction Marriott is rumored to be taking - yes it's Perry saying this and not my evil twin (or is it good twin?). Will it mean more flexibility over the Legacy system - sure. Will legacy folks get "better" exchanges - well that depends on your definition of "better"; upgrades a definite NO.

Will I convert our one Gold Summit Watch - probably not.

Let me know if I got something wrong and I'll change this post for as long as I can.

Of course, let's not forget that not only is this based on "conversations" with sales staff in part, there is also quite a bit of Perry's speculation here. I haven't read anywhere that there will be a differentiation between legacy owners and those that buy directly into the points system after June.

IF Marriott were to create such a schism, and exclude even its most loyal customers from any future properties, I think they would be making one huge mistake. Talk about throwing away customer loyalty. People bought direct with the expectation of being able to trade into current and future resorts. Dividing the old and the new is not in anybody's best interests and, while I could be proved wrong next week, I anticipate you'll have to do quite a bit of editing.

Time will tell who says "I told you so." Hopefully we'll all be mature enough to :ignore: