Speculation About Marriott's New Timeshare Structure [merged]

[David10225]

New Survey Yesterday

I got a survey from MVC yesterday. The survey was geared around how you partake of various activities in a resort and how you would make use of the kitchen if your stay was for 3 days or less vs 4 days or more.

If you add that into the points rumors, sounds like they are going to differentiate weekend points from weekday points (similar to what Disney does).

Of course this is just my interpretation of the survey questions.

David

 

[Twinkstarr]

Although I don't believe the salesperson referred to in the OP was accurate, particularly with respect to assigning units at a home resort, the salesperson was almost certainly accurate that big changes are forthcoming.

It is pretty clear that Marriott will be making some changes in June or, if the new program is delayed, sometime soon thereafter. What will the new program be? We don't know very much. What does seem pretty clear is that there will be a points program that will apply to many (most?) future timeshare sales by Marriott, will involve exchanging based on points and will be available to current Marriott timeshare owners - for a price. That price is supposed to be nominal (whatever that means) for those who have purchased their timeshares from Marriott and probably quite a bit more expensive for those who have purchased resale. The changes are not likely to affect the privileges that we are all guaranteed by the legal documents of our respective resorts. Rather they will likely offer an exchanging “enhancement” for those who wish to participate.

How do we know that some big changes are coming? We first heard about the changes almost two years ago. I have had some clearly-in-the-know Marriott people confirm those changes to me on several occasions over the past two years and I reported that information here each time. What we are now hearing is about the same as what I originally heard way back when. The only difference is that the effective date has been delayed by about six months, not unreasonable for such a big project in a down economy. Further, Fletch, a much respected member of the TUG community in past years who has just resigned from a very lucrative sales position at Marriott, has confirmed that a new program will be forthcoming this year (see the above link to his posts).

All we can do is wait to see what the details are and continue to speculate.

As to whether the changes will be good or bad, I'm certain the answer is a resounding YES! There is no way to be sure, but I'm guessing that platinum week owners at top resorts who bought from Marriott will love the new program and resale owners of bronze and silver weeks will hate it.

I think if you have bronze or silver weeks bought anyway you are probably going to hate it. I came to this conclusion when we talked to a Marriott sales person(one of Fletch's office mates) when we were considering a platinum Marriott week at Surfwatch or Oceanwatch. I asked about the "system" and he did indicate that they had hired a few people from other TS companies that use points to develop the Marriott system.

 

[billymach4]

There are only two groups of people who have a problem with people who bought or are buying resale, sale people and some people who bought developer. Marriott as a whole, Owner Services and resort staff, could really care less how you bought.

When June comes and goes with no changes, as I would rate at about a 80% chance, those who said that these changes will happen will say that deadlines change and talk about how big changes take time to implement and hammer out causing the delays. We have heard this and excuses for delays for years now, why is June 2010 any different?

I am with you Dioxide. I have heard of these so called changes since 2006, and I understand they go way back even further than 2006. While we have some very good inside information here, I am of the opinion that all of these so called changes are self perpetuating.

We here on Tug tend to generate these rumors, Marriott Corp can easily tip off someone that can spread like fire over the net, at a sales presentation. In fact I would not even put it past MVCI to intentionally test the waters by seeking Marketing information from the experts right here on TUG.

Marriott would have to be insane, even suicidal if they were to even contemplate any changes in this down economy. I agree that the economy is on the upswing, however the Travel, Leisure, Timeshare sector will lag for years to come. The only thing Marriott has going for it is its loyal owners. Why would they even attempt to make a change that could and likely would backfire in their face?

 

[GrayFal]

The thing I am concerned about the most is giving up control - just go over to the Starwood board and read how Starwood has now taken away the right of owners to deposit reserved weeks in II - everything is now a 'generic' deposit.
They have also downgraded many ownerships with II all for the purpose of keeping owners within the Starwood StarOption (point) system.

Instead of a week deposit - they deposit a 'level'
Plat +, Plat, Gold +, Gold, Silver

My summer myrtle beach ownership that used to trade fabulously into other SVN resorts as well as other II resorts and was in Platinum season has now been arbitrarily rated as Gold + under then new II/SVN contract - the same as June & Sept in the Arizona desert....yeah, right! That's a real equal valuation....:annoyed:

II values Arizona June and Sept as 75 out of 150 demand and Summer Myrtle Beach as 150 out of 150

This is where my concerns lie - that and the fact that be penalizing resale owners by charging them a 'significant amount' to join a points program will make our weeks worth even less - because everyones ownership will eventually be someone elses resale.

 

[SueDonJ]

Is the 24 day deposit/ reservation period with II a guaranteed "right" of ownership? I am not sure it enters in to any of our agreements. More likely it si written somewhere they have the right to change or scrap it. Not sure if that would extend to changing introducing a preference system to developer bought versus secondary market purchases.

Beverley

No, the only thing guaranteed by the ownership docs is a right to exchange, whether it's privately or through an exchange company. Owners don't have any say in which (if any) exchange company MVCI elects to contract with and/or ownership rights to demand that certain provisions be included in such a contract.

Do we know when the current contract between MVCI and II is due to expire? Folks have speculated that if they don't join the rumored points program then they will be able to continue as is with II. What if MVCI elects to not renew the existing contract with II and enters into a new one with different terms, or doesn't continue with II at all?

 

[Stefa]

I can't imagine a reason Marriott would not wish to be affiliated with an exchange company. It is a nice perk for owners even when a well-functioning internal system is in place.

The bottom line is Marriott has a lot of power in this situation and there are any number of things they could do to devalue our ownerships. The reality is they don't have any reason (and I can't believe any desire) to to this needlessly. The new system (if/when it happens) will have a negative impact on some ownerships, but I don't believe Marriott is out to screw owners just so they can say they did.

Maybe I'm naive, but things like the 24 day preference make Marriott look good to other timeshare owners and that can only benefit Marriott.

 

[timeos2]

Down the road of misinformation and lies

There are only two groups of people who have a problem with people who bought or are buying resale, sale people and some people who bought developer. Marriott as a whole, Owner Services and resort staff, could really care less how you bought.

When June comes and goes with no changes, as I would rate at about a 80% chance, those who said that these changes will happen will say that deadlines change and talk about how big changes take time to implement and hammer out causing the delays. We have heard this and excuses for delays for years now, why is June 2010 any different?

It is beginning to sound like the changes in June will revolve around a new points based system (long overdue and expected from Marriott). While technically that may have some impact on reservations, as in those that choose to convert or add (whatever they decide to call membership in the new system) will no longer have inventory in the "old" system and it would be within the rights of Marriott to sell memberships to the Points system with a different price to retail buyers vs resale (as it is an option for yet another exchange there is nothing that prevents them from doing that). But none of that should impact the base rights that an existing owner - resale or retail - has now or would continue to have going forward. Having some of the weeks assigned to a new points based, internal system is no different than weeks being assigned to II or RCI. Either way the week is no longer in the available assignment pool as it has been "used" for potential trade.

It is a word game from sales to further confuse buyers and scare them off of resale purchase. Marriott just continues to spiral down the typical timeshare presentation of half truths, outright lies and pressure sales. They used to be above that but hard times seem to have changed their approach toward the typical Wastegate, Wyndham, et al garbage. If you attend one expect the worst.

 

[SueDonJ]

Of course the reason Marriott would want to "take over" some/all of the exchange business now being done through II is to generate revenue - several people in the various threads here demonstrated exactly how that could happen, and Fletch said it, too, in the thread linked here.

I understand how an exchange system that gives a priority to direct purchasers can ultimately hurt every owner by devaluing weeks on the resale market. But I also understand that Marriott has been dealing with and needs to combat devaluations of developer weeks. It isn't just the current economic climate that has slowed Marriott sales. Over the last ten years the resale market has become much more mainstream, mainly through the now-common internet usage, and Marriott has watched more and more would-be developer purchasers buy their weeks externally. It only makes good business sense that they would be developing ways to increase the usage value of their product, and it appears that an internal exchange system that places a premium on developer weeks could be one way to do that.

Several years ago Marriott somehow managed, despite the contracts, to give multi-week owners an ownership advantage over single-week owners. Though I don't know if they WILL manage to figure out something which gives an advantage of some sort to developer weeks over resale weeks, I do believe that they CAN. It's obvious they've spent already quite a bit of time and resources to consider it - if it was as impossible as some here speculate, the idea would have been abandoned a long time ago.

 

[timeos2]

Don't worry. Be happy

Do we know when the current contract between MVCI and II is due to expire? Folks have speculated that if they don't join the rumored points program then they will be able to continue as is with II. What if MVCI elects to not renew the existing contract with II and enters into a new one with different terms, or doesn't continue with II at all?

Once a resort is in II (or RCI) the deeded owners cannot be forced to use a different exchange company if they don't wish to. It is different when dealing with RTU type ownerships such as DVC or Diamond Club but for weeks owners they cannot be "disavowed" from whatever company they had when the original week was purchased. New options such as another company or points can be added but the original option cannot be taken away. That's why some Marriott resorts are II & RCI as the RCI option was there at purchase and can never be removed. Don't worry about it.

 

[timeos2]

Here today maybe gone tomorrow

I can't imagine a reason Marriott would not wish to be affiliated with an exchange company. It is a nice perk for owners even when a well-functioning internal system is in place.

The bottom line is Marriott has a lot of power in this situation and there are any number of things they could do to devalue our ownerships. The reality is they don't have any reason (and I can't believe any desire) to to this needlessly. The new system (if/when it happens) will have a negative impact on some ownerships, but I don't believe Marriott is out to screw owners just so they can say they did.

Maybe I'm naive, but things like the 24 day preference make Marriott look good to other timeshare owners and that can only benefit Marriott.

There is no guarantee that any preference with II, or any other exchange, would be maintained. It could be but if Marriott felt that it helps their potential sales of whatever new, assumedly internal (read $$ for them) to remove that perk they can and will do so. There is nothing in any documents guaranteeing an exchange preference so it is an at will type bonus.

 

[SueDonJ]

Once a resort is in II (or RCI) the deeded owners cannot be forced to use a different exchange company if they don't wish to. It is different when dealing with RTU type ownerships such as DVC or Diamond Club but for weeks owners they cannot be "disavowed" from whatever company they had when the original week was purchased. New options such as another company or points can be added but the original option cannot be taken away. That's why some Marriott resorts are II & RCI as the RCI option was there at purchase and can never be removed. Don't worry about it.

I'm not sure I understand. This is from one of my deeds, similar language is in the ownership docs:

EXCHANGE PROGRAM
Seller has entered into an agreement with II, Inc. ... Seller has retained the right to change its exchange program affiliation at a future date.

Once in II, always in II? Sure, if the owner chooses to continue with II. But MVCI isn't forced to continue a contract with II for every week purchased while an MVCI/II contract was in effect. So if MVCI elects not to continue with II, what protections does an owner have that the existing exchange provisions will apply if s/he contracts individually with II? I don't think any.

 

[GrayFal]

The thing I am concerned about the most is giving up control - just go over to the Starwood board and read how Starwood has now taken away the right of owners to deposit reserved weeks in II - everything is now a 'generic' deposit.
They have also downgraded many ownerships with II all for the purpose of keeping owners within the Starwood StarOption (point) system.

Instead of a week deposit - they deposit a 'level'
Plat +, Plat, Gold +, Gold, Silver

My summer myrtle beach ownership that used to trade fabulously into other SVN resorts as well as other II resorts and was in Platinum season has now been arbitrarily rated as Gold + under then new II/SVN contract - the same as June & Sept in the Arizona desert....yeah, right! That's a real equal valuation....:annoyed:

II values Arizona June and Sept as 75 out of 150 demand and Summer Myrtle Beach as 150 out of 150

This is where my concerns lie - that and the fact that be penalizing resale owners by charging them a 'significant amount' to join a points program will make our weeks worth even less - because everyones ownership will eventually be someone elses resale.

There is no guarantee that any preference with II, or any other exchange, would be maintained. It could be but if Marriott felt that it helps their potential sales of whatever new, assumedly internal (read $$ for them) to remove that perk they can and will do so. There is nothing in any documents guaranteeing an exchange preference so it is an at will type bonus.

Once a resort is in II (or RCI) the deeded owners cannot be forced to use a different exchange company if they don't wish to. It is different when dealing with RTU type ownerships such as DVC or Diamond Club but for weeks owners they cannot be "disavowed" from whatever company they had when the original week was purchased. New options such as another company or points can be added but the original option cannot be taken away. That's why some Marriott resorts are II & RCI as the RCI option was there at purchase and can never be removed. Don't worry about it.

Read my post above - Starwood has significantly changed how owners now interact with II - effectively taking away their right to reserve a week and deposit it into II. II is also complicete in this by agreeing to this arrangement EVEN FOR NON-SVN OWNERS with non-SVN accounts.

It is a slippery slope....

 

[timeos2]

Once II or RCI always II or RCI or both

I'm not sure I understand. This is from one of my deeds, similar language is in the ownership docs:


Once in II, always in II? Sure, if the owner chooses to continue with II. But MVCI isn't forced to continue a contract with II for every week purchased while an MVCI/II contract was in effect. So if MVCI elects not to continue with II, what protections does an owner have that the existing exchange provisions will apply if s/he contracts individually with II? I don't think any.

The owner has the absolute right to the use/trade/rental of the deeded week(s). No matter if Marriott has an agreement with II (or RCI or whoever) or not the owner can place that time with the exchange of their choice. Only RCI & II have the requirement that the resort had signed an affiliation at some point in time but once they did the ability to deposit your week(s) with that company never ends UNLESS the company decides to drop the resort (which would only be if it fails to meet that companies minimum standards for affiliation). The resort cannot drop the exchange company. If you turn over your week to control of the management/developer (as currently seems to be the case with DRI Club which requires new buyers into Club to give up their deeded weeks and become members in the Trust) then you lose the ability to deposit with any company except those approved by the Club. We don't know how Marriott plans to handle whatever points program they appear to be ready to announce but in any case it doesn't affect those that say with their deeded ownerships.

 

[pianodinosaur]

I think the wisest move for Marriott would be to treat the resale owners the same way they treat the people who purchased directly from Marriott. Both kinds of owners pay exactly the same MFs.

 

[TheTimeTraveler]

Doesn't Marriott own or control a piece of Interval International?

Is Marriott the only Timeshare Company that has Interval International exchange desks on their (Marriott's) premises?

 

[SueDonJ]

The owner has the absolute right to the use/trade/rental of the deeded week(s). No matter if Marriott has an agreement with II (or RCI or whoever) or not the owner can place that time with the exchange of their choice. Only RCI & II have the requirement that the resort had signed an affiliation at some point in time but once they did the ability to deposit your week(s) with that company never ends UNLESS the company decides to drop the resort (which would only be if it fails to meet that companies minimum standards for affiliation). The resort cannot drop the exchange company. If you turn over your week to control of the management/developer (as currently seems to be the case with DRI Club which requires new buyers into Club to give up their deeded weeks and become members in the Trust) then you lose the ability to deposit with any company except those approved by the Club. We don't know how Marriott plans to handle whatever points program they appear to be ready to announce but in any case it doesn't affect those that say with their deeded ownerships.

John, I'm not sure where we are agreeing and disagreeing here. Agreed, the deeded right to exchange - whether privately with other owners or through an individual contract with any exchange company, or through the exchange company with which MVCI contracts - can never be revoked.

But the ownership docs are clear in that the current agreement between MVCI (as Developer, Seller and management company) isn't a binding one. For SurfWatch again, this time from the Time Sharing Plan:

... the Developer reserves the right, in its sole discretion, to change its affiliation to another exchange company at a future date, and any such change will not be deemed a material change. The Purchaser's participation in the internal or external exchange program is voluntary and the use of either such exchange program is subject to availability of other timeshare interests in the exchange network, rules, regulations, terms, and other restrictions (including transaction fees) which may be set by Interval from time to time.

IF Marriott implements the rumored internal exchange system which will siphon inventory from II, of course those owners who choose to stay with II will be affected just from the reduced exchange availability. But the reason I'm asking about the MVCI/II contract effective date is that the possibility exists for it to be dissolved or amended such that those owners who do not join Marriott's points program could be even more negatively affected. I'm confused by what you're saying - do you think the existing contract can't be dissolved/amended?

 

[DanCali]

The thing I am concerned about the most is giving up control - just go over to the Starwood board and read how Starwood has now taken away the right of owners to deposit reserved weeks in II - everything is now a 'generic' deposit.
They have also downgraded many ownerships with II all for the purpose of keeping owners within the Starwood StarOption (point) system.

There is no guarantee that any preference with II, or any other exchange, would be maintained. It could be but if Marriott felt that it helps their potential sales of whatever new, assumedly internal (read $$ for them) to remove that perk they can and will do so. There is nothing in any documents guaranteeing an exchange preference so it is an at will type bonus.

I hate speculation and I'm of a similar opinion as dioxide45 and billymach4. I'll believe it when I see it, and I think it would be a terrible idea since so many owners love the current system. Just compare the satisfaction surveys of Marriott versus Starwood...

Since it's been brought up, here is an example of how the Starwood policy would work in the Marriott world. I'll use NCV as an example, but you will get the idea... :

Owners depositing in II don't choose the week to deposit. In fact, even if you had a good reservation you need to cancel it prior to depositing. You would deposit a generic Platinum week and get a trading power equal to the average trading power of the season. For Platinum owners that means weeks 23-52. For Gold owners it would be the average of weeks 1-22. This may help some and hurt others. This may or may not include Platinum Plus weeks 26 and 52 but those owners are a small minority by definition. Marriott would retain control of what actually goes into II - obviously the intent would be to keep the "good" weeks for internal exchanges (that's why under this policy they would want weeks 26 and 52, although it's officially a different "season") so summer weeks will hardly make it to II and owners from other resorts using II will not get NCV summer weeks no matter how strong their deposit. All this of course, promotes usage of an internal system and allegedly props up retail sales.

However, any attempt to discriminate against resale buyers will hurt resale values. Most owners will realize this and will be quite vocal about it - which will hurt Marriott's retail sales. There are only so many units they can sell to buyers who are totally clueless about the resale market, especially when there is a right of recission involved. The "installed base" is too large to be ignored.

A completely different approach to promote retail sales would be to copy a different page from Starwood's book. For example, allow retail buyers to "retro" a resale unit (i.e., buy a retail unit and also get the ability to convert to hotel points on your resale unit). They can create an "Elite" program for multiple week owners with substantial perks (upgrades, waitlisting for reservations, no lockoff fee, no hotel point conversion fee, etc). Owners who will value these perks may view it beneficial to buy more weeks retail - and they already have a large customer base that likes the product. This is a better way that allows retail and resale markets to co-exist at different prices.

Ultimately they will do what they think is best for them - and they probably know better than us...

 

[DanCali]

IF Marriott implements the rumored internal exchange system which will siphon inventory from II, of course those owners who choose to stay with II will be affected just from the reduced exchange availability. But the reason I'm asking about the MVCI/II contract effective date is that the possibility exists for it to be dissolved or amended such that those owners who do not join Marriott's points program could be even more negatively affected. I'm confused by what you're saying - do you think the existing contract can't be dissolved/amended?

If it comes up for renewal it can be amended. That's when they can probably remove the 24 day priority for example. However, II may want to keep in in place just to get Marriott deposits...

I don't think they would want to dissolve it if anything for retail sale purposes. They need to sell prospective owners on the ability to trade to "thousands of resorts worldwide".

 

[SueDonJ]

If it comes up for renewal it can be amended. That's when they can probably remove the 24 day priority for example. However, II may want to keep in in place just to get Marriott deposits...

I don't think they would want to dissolve it if anything for retail sale purposes. They need to sell prospective owners on the ability to trade to "thousands of resorts worldwide".

That's what I thought, that it can be amended or dissolved. I also wouldn't expect them to dissolve it and not put another agreement with a different exchange company in its place. Agreed, the "thousands worldwide" is a major selling point but that isn't only available with II. My opinion is that IF they implement this points program, owners will be more likely to consider it if they know that the current, familiar exchange system will not be available to them.

 

[Stefa]

It is likely they will do something to devalue the II trade option. It may be a situation like with Starwood where they control what gets deposited. Under such an arrangement the best weeks would be saved for internal exchangers and only the less desirable weeks would find their way into Interval outside of flexchange.

 

[Latravel]

Come on everyone! You are asking why Marriott would make changes in this economic climate and why they would treat resale and developer sales differently. It's to increase sales and the performance of their company!!!

They have to offer new products. They have to be creative and change the way they do business because it's stagnant right now.

They have to treat resale and developer purchases differently or why else would anyone buy directly from them? They have to give people a reason to pay more money for the same product and the only way they can do that is offer more perks, like points, better reservations, whatever. It seems like points isn't enough so they are trying new options.

They can't just think about Joe from Kansas who spent only $2000 on a silver resale unit. They have to think about ways to make people part with $30,000 and up.

It makes perfect sense and it should have been expected from a profitable global company.

 

[Stefa]

I would be less likely to part with $30,000 if I knew Marriott was actively working to devalue my new purchase.

 

[DanCali]

They have to treat resale and developer purchases differently or why else would anyone buy directly from them?

Why would anyone buy from them if they treat resale units differently and consequently drive resale values to zero?

The only way to sell a product that loses 90% the day you buy it is to sell it to someone who is unaware of the resale value. How sustainable is that model when people have internet access and 7-10 days to rescind?

I guess this applies to today's situation and also strengthens the argument that changes have to come. Personally, I don't think that changes that have an adverse impact on resale values help Marriott's cause.

 

[dive-in]

I usually just skim speculation/rumor threads so sorry if I missed these questions previously.

• Will my MVCI property be devalued on the resale market if it is converted to a points system? Or, put another way, would the value MVCI property be greater as a week or a points system?
• If the owners at a particular resort aren't happy with the new system, what prevents them from getting rid of Marriott?

Darrell

 

[SueDonJ]

Why would anyone buy from them if they treat resale units differently and consequently drive resale values to zero?

The only way to sell a product that loses 90% the day you buy it is to sell it to someone who is unaware of the resale value. How sustainable is that model when people have internet access and 7-10 days to rescind?

I guess this applies to today's situation and also strengthens the argument that changes have to come. Personally, I don't think that changes that have an adverse impact on resale values help Marriott's cause.

Considering Marriott's cause is to sell developer inventory at such a rate that their timeshare business can support new development, it makes perfect sense that the developer inventory must contain usage value relative to its cost. And that as the external resale market infringes on developer inventory more and more, Marriott must respond by offering an enhanced product to its potential customers.

Again with the developer purchasers being "unaware" - do we have to?

Marriott has NEVER done anything to prop up resale value. ROFR exists solely to allow them to pick up inventory on the cheap so that they can turn around and sell it at developer prices to waiting-and-willing buyers. The contracts contain provisions that state unequivocally that Marriott is not charged with protecting the purchaser's financial investment. (Which does not at all mean that a Marriott week is worthless.)

I knew all that going in and so do many, many other developer purchasers. My choice was to optimize my financial investment as best I could by protecting my weeks against possible future usage devaluations. As near as I can figure, a resale purchaser's primary motivation is cost savings.

But there isn't any right or wrong way to buy a timeshare! What works for one won't work for another. Financial risk is such a personal thing, isn't it? There are billionaires who won't bet $5 on tonight's game, and at the same time there are minimum wage earners who budget $20/week for the lottery. What each of us has paid for our timeshare weeks is irrelevant when it comes to the usage value we can reasonably, as supported by the contracts, expect to get out of them. IMO, we should all be hoping that Marriott is able to figure out something here that does work to make developer purchases more attractive, because without them eventually Marriott will be out of the business entirely.