Speculation About Marriott's New Timeshare Structure [merged]

[PerryM]

Perry...

Please forgive this query but I can't possibly come up with any GOOD reason for the owner of a ONE gold week to convert to points. I am assuming your unit is a 2 bedroom lock off. With your skills and know how you can probably convert this to TWO plat weeks (especially if you are flexible and can use FLEXCHANGE). Since you only have 1 unit, you cannot combine points to TRADE UP.

THe only possible benefit is that you could possibly get a few "short stays" with points!!!

Please let me know if I am missing anything!!!

One thing I've learned about the words NEVER or ALWAYS is that they are absolute. There are a whole host of words that take on a lifetime meaning.

Let's say that Marriott's pre-construction goodies includes the ability to pass on the exchange membership when I sell my unit. I'm assuming Marriott doesn't want that to be the norm but might offer it to get the ball rolling.

That's why you can count on me making time the day of release to understand what Marriott is offering and what it means to owners. (And, of course, how to exploit it)

 

[GregT]

Perry...

Please forgive this query but I can't possibly come up with any GOOD reason for the owner of a ONE gold week to convert to points. I am assuming your unit is a 2 bedroom lock off. With your skills and know how you can probably convert this to TWO plat weeks (especially if you are flexible and can use FLEXCHANGE). Since you only have 1 unit, you cannot combine points to TRADE UP.

Puckman,

I agree with you -- I would think a Gold Week owner is better off staying with II -- there is the possibility that if there are reduced Marriott owner/developer deposits into II (because of a competing exchange mechanism), then there will be residual greater trading power for those Marriott deposits (Platinum/Gold/Silver) that are made into II. They may no longer be traded for other Marriotts because of reduced availability, but they may be higher in the II food chain to get Westins and others if they aren't competing with as many other Marriott deposits.

Perry taught me this phenomenon with Worldmark -- when Worldmark left II as their preferred exchange network to go to RCI, that meant that when II does get a Worldmark deposit, its surprisingly powerful because of the scarcity. Even my WM blue studio in Oklahoma in January (what a dog) traded for a 2BR into the Marriott Shadow Ridge in May.

I do believe it will make it tougher for that Marriott Gold Week owner to trade up within the Marriott system itself, and I continue to believe Marriott never intended to make it so easy to trade up (without benefitting financially from the trade up). And a points system will make their revenue stream more stable, removing the volatility and dependence on new unit sales.

Good luck to all,

Greg

 

[DanCali]

Personally I believe Marriott will come out with "The hammer" - offers that expire in hours/days that will attract a lot of owners. There will be little time to do any "head scratching" - just panic to get the "pre-construction" goodies that Marriott will entice owners with.

I agree. Unfortunately, the timeshare industry is based on impulse buying. How many people would still buy from the developer if they had 60 days to truly learn about the market and realize they lose 50%+ of their equity the moment they buy? Probably a select few who truly value points or the Elite status some other systems give for multiple week retail owners.

Many who bought retail (or who didn't do enough research in general) would do things otherwise if given a chance, whether it's buy resale, but at a different resort, but from a different developer, not buy at all etc... I myself rescinded a retail purchase after discovering TUG and even after I did some research I made a couple of purchases I didn't like and subsequently unloaded.

Any form of pressure to make a decision fast should raise red flags. I would happily give up all the incentives just to have the extra time to make an informed decision. If it's truly beneficial to join, I'll join without any incentives and if it's not then I don't want to regret it... Nobody should make a decision that will affect their ownership for years to come based on a few free hotel nights.

 

[puckmanfl]

good morning

perhaps II will try to encourage deposits of MVCI weeks with more generous granting of "ac's" for even the most mundane MVCI units... Maybe even Perry's Gold Summit Watch!!!!!

 

[PerryM]

In soccer a 0 to 0 game is fantastic!

My son played youth soccer and I've been to hundreds of soccer games and some of the best were 0 to 0. Soccer is a game about making the least amount of mistakes.

Marriott makes mistakes all the time - some are whoppers; take Maui Ocean Club's week 1 - 51 being all Platinum or Summit Watch not making Week 7 a Platinum Plus Holiday week or collapsing Thursday, Friday, Saturday, and Sunday reservations into one day. This list goes on and on.

Each of those mistakes is an opportunity for the savvy timeshare owner.

If Marriott chucks week based timeshares for Point based timeshares and adds an internal exchange system on top of that you can bet there are going to be mistakes Marriott makes.

Exploiting those mistakes is what I live for.....

 

[timeos2]

Perry taught me this phenomenon with Worldmark -- when Worldmark left II as their preferred exchange network to go to RCI, that meant that when II does get a Worldmark deposit, its surprisingly powerful because of the scarcity. Even my WM blue studio in Oklahoma in January (what a dog) traded for a 2BR into the Marriott Shadow Ridge in May.
Greg

There is an absolute truth to this idea based on history. Whereas a Wastegate deposit to II might as well be thrown into the gutter - it will get you virtually nothing except maybe another low value Wastegate throwaway, they are awash in unwanted Wastegate time. Since they parted ways (and took up trashing the formerly touted RCI option) the same deposit with RCI trades very well as they get few and have demand for everything they get. We figured that out way back in 1997 after a few terrible runs with II & Wastegate.

It is similar for DRI units after they changed "preferred" affiliation to II as well as Marriott for those resorts that are dual affiliated in that group. So an increase in value if the flow in is reduced by Marriott changing the process is a very real possibility in my view.

"Wait until we set up the dastardly Marriott points based system Muttley. We'll rake in the dough selling Christmas in September!"
[IMGL]http://www.freewebs.com/shamikdas/Pictures/Dick-Dastardly-and-Muttley.jpg[/IMGL]

 

[BocaBum99]

Here is the bottom line of the alleged new Marriott Point system.

1) It's about time that Marriott move in this direction. Point systems are a superior model for Timesharing. Unfortunately, it will be a very painful change from fixed weeks to points for most owners. For sharp owners, it will be a renaissance of opportunity for buying, selling, renting and travelling to Marriott resorts.

2) The big losers in this program will be the same population as it always is. Those who buy directly from the developer. These people fund the entire industry and all its players. I thank you all developer purchasers.

3) Marriott is doing this to increase sales opportunities and competitiveness. Their program will be defined in such a way that owners equity will depreciate slowly, but surely over time. Costs will increase higher than inflation because fees will be initially set below actual costs to make it appear that it's a very good deal. Over time, the real costs will manifest themselves in high maintenance fees.

4) As long as you employ the correct buy, hold and sell strategy, TUG members will be fine over time. I can't wait for Marriott to launch this new program. I am 100% certain that this new program will have rules and those rules will have loopholes which TUG members will exploit relentlessly.

 

[puckmanfl]

Boca...

please riddle me this!!!

How does a conversion to points make "losers" out of developer purchasers??? I agree with the hypothesis that developer purchasers (including myself) have paid too much for their weeks. But the cost excess applies to BOTH weeks AND points ownership. My stupidity/ignorance in buying developer doesn't get worse in a point system!! Or does it??? Please explain!!!

 

[BocaBum99]

Boca...

please riddle me this!!!

How does a conversion to points make "losers" out of developer purchasers??? I agree with the hypothesis that developer purchasers (including myself) have paid too much for their weeks. But the cost excess applies to BOTH weeks AND points ownership. My stupidity/ignorance in buying developer doesn't get worse in a point system!! Or does it??? Please explain!!!

Developer purchasers of all kinds funds the entire industry. Weeks or Points, it doesn't matter.

Resort Developers ALWAYS take actions that depreciate owner equity. It's a nature of their sales and marketing model. As long as they continue it, they will make rules that make your ownership worth less over time.

The way to capitalize on it is to project the expected decrease over time, purchase below market and sell it before the timeshare is worth less than you bought it for. Then, get the next product in the life cycle of forced obsolescence. The good news is that there is such a disorganized resale market that it is easy to purchase below market.

 

[winger]

Here is the bottom line of the alleged new Marriott Point system.

1) It's about time that Marriott move in this direction. Point systems are a superior model for Timesharing. .....

Yes, point-based systems ROCK! We have been spoiled the past three years enjoying Diamond Resorts' point-based system. At the time we joined that points system, we were about to sell/donate our weekly ownership since we already had our Marriott weekly interval/ownership.

 

[puckmanfl]

The above points are very true, but this thread is not debating developer purchase vs. resale. It is discussing a point system and its effects on value. If a points system decreases value it will do it for BOTH developer and resale weeks. The developer weeks devaluation just starts from a higher set point!!!

In other words, as a developer purchaser (shame on me) the points conversion should not BENEFIT or HURT me anymore than a resale owner!!!

 

[GregT]

In other words, as a developer purchaser (shame on me) the points conversion should not BENEFIT or HURT me anymore than a resale owner!!!

Puckman,

I actually think you're in the best spot in approaching a points conversion. As a direct purchaser, you should be partially insulated from any "punitive" incremental cost that a resale purchaser might bear to join the points system -- and you always have your deed if you decide to stay with what you have. And as a direct purchaser, I suspect you'll have longer to choose to join the points system.

I do believe that future direct developer purchasers OF POINTS are the ones that are really going to be subsidizing the system (per Boca's reference above) -- will be interesting to watch.

Good luck to all, and I look forward to all of us ripping apart the new system to find the loopholes.

 

[billymach4]

I am still sitting on the fence regarding the actual launch of this so called points rumor.

Notice I am still calling it a rumor.

BUT.... Here is the kicker. If it does come to fruition next month or in the next quarter... I predict Marriott will reinstate ROFR to firm up the prices on the resale market.

Sorry but I just had to add that comment, if it has not already been mentioned.

 

[PerryM]

Good V Bad - and the winner is.....

The above points are very true, but this thread is not debating developer purchase vs. resale. It is discussing a point system and its effects on value. If a points system decreases value it will do it for BOTH developer and resale weeks. The developer weeks devaluation just starts from a higher set point!!!

In other words, as a developer purchaser (shame on me) the points conversion should not BENEFIT or HURT me anymore than a resale owner!!!

The more the developer defames resales the more resale prices fall - what else would you expect?

Disney is an example of the developer praising owners and not going out of their way to bash resales - the resale prices don't plummet from Disney's antics.

Marriott has bashed resales for years and years and resale prices have fallen - is the loss all Marriott's fault - no but they don't help our resale prices with bashing our ownership.

The main problem with timeshares is that the developer is selling a used product and pretending that no one has ever slept in the beds.

Now if you are in the business of recycling your owners' units then you want resale prices to be as low as possible. Anything that causes Marriott resale prices to plummet is good for Marriott.

So I believe Marriott will not shed any tears as the more they try to make their sales different than ours causes our resale prices to fall - what's bad for resales is good for Marriott.

 

[BocaBum99]

In other words, as a developer purchaser (shame on me) the points conversion should not BENEFIT or HURT me anymore than a resale owner!!!

It depends on the program details. We will learn it sure enough. There are some circumstances when it makes sense to purchase from the developer. Most times, though, it doesn't make economic sense. The problem with a developer purchase is not the benefits, it's the loss you take when you sell it.

 

[m61376]

The more the developer defames resales the more resale prices fall - what else would you expect?

Disney is an example of the developer praising owners and not going out of their way to bash resales - the resale prices don't plummet from Disney's antics.

Marriott has bashed resales for years and years and resale prices have fallen - is the loss all Marriott's fault - no but they don't help our resale prices with bashing our ownership.

The main problem with timeshares is that the developer is selling a used product and pretending that no one has ever slept in the beds.

Now if you are in the business of recycling your owners' units then you want resale prices to be as low as possible. Anything that causes Marriott resale prices to plummet is good for Marriott.

So I believe Marriott will not shed any tears as the more they try to make their sales different than ours causes our resale prices to fall - what's bad for resales is good for Marriott.

I am not so sure that's true today. People are more knowledgeable and more and more people travel with Internet access. IF Marriott's actions decimate the resale market, I am not so sure that's to Marriott's benefit. I think it is likely it will hurt them in the long run.

 

[BocaBum99]

I am not so sure that's true today. People are more knowledgeable and more and more people travel with Internet access. IF Marriott's actions decimate the resale market, I am not so sure that's to Marriott's benefit. I think it is likely it will hurt them in the long run.

I disagree. Marriott has learned from other resort developers that the resale market doesn't yet have that much impact on retail sales.

 

[m61376]

I disagree. Marriott has learned from other resort developers that the resale market doesn't yet have that much impact on retail sales.

I understand that. Of course, no one knows what will happen in the long run. From my limited vantage point I think consumers are getting increasingly savvy, so I am not so sure that Perry's statement that "what's bad for resales is good for Marriott" will be true down the road. That's why I think it is a business decision that warrants concern.

I just think that Marriott could learn a lot from Disney and a few others- offering a better product, which sustains both retail and resale value. If there is only a small pricepoint difference, buyers naturally will flock to the developer and everyone wins (except those of us who like to get good deals...).

 

[PerryM]

Christmas morning?

I understand that. Of course, no one knows what will happen in the long run. From my limited vantage point I think consumers are getting increasingly savvy, so I am not so sure that Perry's statement that "what's bad for resales is good for Marriott" will be true down the road. That's why I think it is a business decision that warrants concern.

I just think that Marriott could learn a lot from Disney and a few others- offering a better product, which sustains both retail and resale value. If there is only a small pricepoint difference, buyers naturally will flock to the developer and everyone wins (except those of us who like to get good deals...).

What is a Week 52, New Year's week, worth at MountainSide - on the resale market?

Answer: whatever the dumbest/panicky Marriott seller and smartest buyer say it's worth.

It is to Marriott's advantage to crush resales - for 4 years that's what ALL the sales reps we have toured with keep telling my wife and I - "Better not buy resale or you'll be sorry".

I have no doubt that Marriott woke up to the fact that 2005 - 2007 were apex years for timeshares and want to recycle cheap Marriott units for peanuts. So I'm guessing that with the new exchange system goes a corporate edict to depress the resale market as much as possible.

Don't know how I'd prove that and don't know if it really matters.

We'll see if and when Marriott throws out the old and tries something brand new while real estate circles the toilet.

But I'm getting sucked into this guessing game once again - I'm out of here until June, just a few weeks away. Bye; can't wait - like waiting for Christmas morning and Santa.

 

[taffy19]

I disagree. Marriott has learned from other resort developers that the resale market doesn't yet have that much impact on retail sales.

I guess that is true for a little longer but the younger generation is computer savvy and knows how to buy stuff on the Internet the cheapest way possible so it has to change. JMHO. They have Internet connection in the palm of their hand so are going to search what they just purchased while standing in line somewhere. If resale prices pop up and are for next to nothing, they are going to rescind. How can developers stop this trend?

This is one nice thing that Disney has for their program. It is a win win situation for Disney as well as for the people who own there for quite a few years. Resale prices pop up but not at much lower prices than what the developer is charging so why bother to rescind and going through all the hassle? They are very aware that there is an end date in the contract and that it isn't real estate what so many people assume when they are buying a deeded timeshare.

The developer knows that he will get the points back eventually so can sell at top prices again if he upgrades or rebuilds the resort because of the super locations. They missed out on Newport Beach but they have a great location in Oahu now as that is becoming a well planned resort area too.

 

[GregT]

So I'm guessing that with the new exchange system goes a corporate edict to depress the resale market as much as possible.

Perry,

I don't think so (and come on....you can't really stay away for 3 more weeks -- it's too tempting.).

Even if Marriott intended this I don't believe that will be the impact. I think the value of non-prime weeks is already crushed and that the prime weeks that are deeded will retain their value. I can even get into crazy speculation and say Marriott may actually exercise ROFR prime weeks at properties where they have little inventory for their points pool (like at MOC).

It will be interesting to see!

All the best,

Greg

 

[taffy19]

Greg, I agree with you. If you want to own at this resort for use mainly, I would be tempted to buy a resale there before the change as they may start exercising the ROFR again pretty soon and the same for all the prime locations in the high season.

I am positive that the people, who do this, will get an attractive offer to convert from the Marriott. They have to or they won't get the weeks but is there still enough time to get it done?

 

[GregT]

Greg, I agree with you. If you want to own at this resort for use mainly, I would be tempted to buy a resale there before the change as they may start exercising the ROFR again pretty soon and the same for all the prime locations in the high season.

I am positive that the people, who do this, will get an attractive offer to convert from the Marriott. They have to or they won't get the weeks but is there still enough time to get it done?

It is running a bit short of time to get it done -- when I bought earlier this year, I think it took me 3 weeks to get thru ROFR from when the escrow company sent in the paperwork -- and there were a number of weeks to negotiate the purchase and get the paperwork done in front of that.

Practically speaking though, I think it's the 1BR MOC at $5K that MIGHT get ROFR'd, versus the 2BR Ko Olina OV at $15K, since they have loads of Ko Olina inventory already. And someone who really wants the MOC deed may pay $8K to minimize the ROFR risk, so.... deeds might have more value?

Who knows.....fun to speculate!

 

[Dean]

Perry, I find your posts to be far too gloom and doom and frankly, unrealistic, on this matter. To a degree all of our investments in Marriott (or any timeshare) comes down to the integrity of the company and people in question. I don't know what will happen, if anything, but a reasonable conversion to a points system is certainly possible and can easily be done as a win-win for a large segment of the membership. That's true in terms of both cost and usage models. I doubt a quick but cheap option that's limited in numbers is reasonable as the more people they get to convert early, the better off any new system will be, however, Marriott will also want to make at least some money on any such conversion as well. We'll all see what will happen but I would predict there will be a few that hate any new system (if it happens) and a lot that will like it. Change is hard even when done well.

The above points are very true, but this thread is not debating developer purchase vs. resale. It is discussing a point system and its effects on value. If a points system decreases value it will do it for BOTH developer and resale weeks. The developer weeks devaluation just starts from a higher set point!!!

In other words, as a developer purchaser (shame on me) the points conversion should not BENEFIT or HURT me anymore than a resale owner!!!

The subject of the thread was a rumored change in the system that might devalue current members ownership whether resale or retail. There are many nuances to this issue including the retail vs resale issue. That any change will equally affect both groups equally is not necessarily true and many on this thread believe it will not affect them equally. I don't see any conspiracy that Marriott will purposefully shaft resale members but even if done truly fairly in our eyes, there will be winners and losers and it's possible, actually likely, that this will fall differently for retail vs resale.

 

[m61376]

I think the far bigger issue than how a possible new system might differentiate between retail and resale purchasers is how it will affect all who opt to join- specifically:
-will it be an overlay system or a trust based system? Will deeds be retained or signed over? Will there be any home resort preference?
-How will MF's be calculated- per resort or an average of all resorts and assigned on a per point basis? If on a per point basis, Plat. week owners may be in for a real shock wrt escalating MF's.
-What will the different point allotments be? Will 2 BR Plat. owners in Orlando, for example, need 2 weeks to trade into a single week in Hawaii or for a winter Caribbean week, etc.?
-What are the point allotments based on? Do they correspond to some objective factor (like the fair market rental rate) or are they arbitrarily set by Marriott- which means that, in all likelihood, point values of future resorts will be artificially inflated to enhance sales.
-For resorts with all too lengthy Plat. season, will the point value assigned reflect an average value across the season (may not be so good for owners at NCV, for ex.)?
-What will be the costs, both initial and per transaction?

As they say, the devil is in the details. While the notion of a point system is intriguing and may make for more equitable trades, if Marriott can just keep on upping the ante, so to speak, so that any new resort requires more and more points regardless of the location/quality (if there is no objective quantification of value) and if MF's for Plat. weeks just spiral out of control, the possibly lesser flexibility of a weeks system may be a lot more appealing.