Speculation About Marriott's New Timeshare Structure [merged]

[ocdb8r]

You seem to think that those "upgrading" are harming the current system. That is far from the case. I have upgraded through II using a 1BR and studio units in to 2BR units. However these were far from upgrades over all. Sure we got larger units, but we had to sacrifice some things. Trading a peak week for an off peak travel time. Traveling on short notice. Just because one is upgrading in unit size doesn't mean the trade isn't equal overall.

We are ultimatly absorbing inventory that other people don't want or can not use. In that I think we are performing a service to the overall system. Full resorts means more money for the developers, HOAs and II.

Quite the contrary...I agree with you completely. We are indeed absorbing inventory others would not want or use...if you look above I am quite happy with what I have been able to get. That said, I think you overstate the "service" we are providing to the system. I have garnered several unequal trades, a point system might work as a better equalizer by providing more flexibility but ultimately less ability to "upgrade." As you can see from my earlier posts...it's just a tradeoff - one I am on the fence about as I have been happy thus far.

 

[SueDonJ]

(just an FYI - ignore if you want)

The storm today on the east coast delayed a fabric delivery that I was expecting early this morning; it didn't show up here from Philly until 8 tonight. That was great for me today because I pretty much killed the day here, but it means that I'll be chained to the sewing machine for most of tomorrow and Friday. Not that you care what I'm doing, but I want to say that this has been one of the most enjoyable, informative discussions on this topic that I've been a part of and it's going to be difficult to not check in on it frequently tomorrow. Thanks, all.

 

[JimIg23]

Once they do come out with the new system, I know it will be discussed throughly here, so we will be able to make an informed choice!

 

[PerryM]

Wolfman howling....

I honestly believe that we are the butt end of a practical joke from Marriott – they must be howling each morning! I can just imagine the morning management meetings with a rousing round of laughter.

The forces that caused the real estate spike and subsequent implosion are still there – they have not gone away yet. So don’t look for any improvements to the long term real estate market in 2010. 2011 is probably shot too.

For Marriott to release such a radical departure from their business model is insanity in this climate. 3 years ago, at the height of the insanity, sure it was something to consider but NOT now!

So leave me out of this – I’m having too much fun howling each morning myself; this is a well executed practical joke. Congratulations Marriott.....

 

[ocdb8r]

I'm kind of surprised at the resistance and concern over a Marriott internal trading system in general. While I understand there are valid concerns about the specific implementation, I would think in general people would be happy to deal directly with Marriott as opposed to II. Sure, there is a possibility that Marriott is extremely harsh or arbitrary in the implementation of such a system, but I think overall it will be quite fair. Again, I think the point is to ENCOURAGE as much trading as possible as they are going to collect a fee on each exchange.

As for those of us that have been able to garner great trades in the current system, I don't see an internal Marriott system destroying that either. I also own in Starwood and am still able to get many great trades back into starwood resorts with II despite a very active internal system on their part. There will still be good deposits into II and those of us who have perfected gaming the system will still find a way to game it....it may not be AS good, but if we get the opportunity to participate in the internal system as well, I would be happy with that.

 

[GaryDouglas]

Happiness is...

I will be happy if:

• I can trade internally and keep my ocean front location
• Pay no more than I currently pay II for trades
• It does not devalue my properties

I will wait until the rumors end and the facts appear...

 

[KathyPet]

New system is coming. They hope to release in June. This was confirmed to me by the Sales Manager at St. Kitts. He either did not know the details or did not wish to discuss as he said some things are still not written in concrete but there will be a new system.

 

[ldanna]

The forces that caused the real estate spike and subsequent implosion are still there – they have not gone away yet. So don’t look for any improvements to the long term real estate market in 2010. 2011 is probably shot too.

Perry, you're right. It will take some time until we can see some improvement into the real state business, specially on the luxury segment (TS is a luxury).

If, and only if, Marriott is thinking about a new internal system with or without points, now it's defenitly not the right time. Even spreading a rumor it will might drive buyers away because if you're thinking about buying and there maybe changes on the horizon, why not wait and see?

 

[dougp26364]

Perry, you're right. It will take some time until we can see some improvement into the real state business, specially on the luxury segment (TS is a luxury).

If, and only if, Marriott is thinking about a new internal system with or without points, now it's defenitly not the right time. Even spreading a rumor it will might drive buyers away because if you're thinking about buying and there maybe changes on the horizon, why not wait and see?

I disagree. If the real estate market is hurting, then revenue will be hurting as well. What better time to introduce a revenue enhancer like a new internal points based exchange system than now. It will bring in additional income from current owners and it could be seen as giving their sales staff an edge over the resale market. Note I didn't say it WILL give them an edge. Only that it could be viewed by Marriott as an advantage to buying direct rather than resale.

 

[SueDonJ]

Perry, you're right. It will take some time until we can see some improvement into the real state business, specially on the luxury segment (TS is a luxury).

If, and only if, Marriott is thinking about a new internal system with or without points, now it's defenitly not the right time. Even spreading a rumor it will might drive buyers away because if you're thinking about buying and there maybe changes on the horizon, why not wait and see?

I agree with Dean - this is the perfect climate to introduce something that could generate new revenue from weeks that have already been purchased as well as new developer inventory. The idea of an internal exchange system has apparently been in the works for some time longer than the current economic conditions, it's a business no-brainer to implement it sooner rather than later while the developer inventory is stagnant.

About the "wait and see" - that's my thought too with any luxury purchase these days. But some folks disagree and think that now is the time to buy while the prices are depressed. I'm amazed at how many on TUG think that this is the time to buy a resale Marriott week despite these rumors floating around. Granted, they're only rumors, but there are enough of them out there to make me think that some change is coming. IF the speculation about resales being impacted more by higher initiation fees and possible usage differences pans out, isn't there more risk now in buying resale than developer? (Not financial risk, I mean in usage.)

 

[KathyPet]

I am in escrow on a platinum RESALE St. Kitts unit. I went ahead in spite of all the rumors for two reasons. 1. I am not purchasing this unit to trade. We love St. Kitts and expect to go there every year for many years to come. and, (2) I hope that Marriott will change the system and grandfather in the existing resale purchasers as of a certain date. I am pushing to complete our sale ASAP in the hopes that I am correct and that I will get in "under the wire"

 

[ldanna]

Doug and Susan, you two got a point. What I said is that a new internal trading system won't make Marriott sell more units. It might generate some revenue, but not new sales.

I do thinks it's time to buy and not to sell, but not direct, resale instead. I did, and many people here got real bargains. But, unfortunatly there's alot more people selling than people with money to buy, and it will be like that for a while. I hope it won't last long, but maybe it will.

 

[DanCali]

Granted, they're only rumors, but there are enough of them out there to make me think that some change is coming. IF the speculation about resales being impacted more by higher initiation fees and possible usage differences pans out, isn't there more risk now in buying resale than developer? (Not financial risk, I mean in usage.)

Wouldn't that rational thought be reason enough for Marriott to start the rumors in the first place?

No that I don't think changes might be coming... but I think making any changes that discriminate against resale buyers (especially retroactively) opens them to class action lawsuits. If they make changes on a forward looking basis and hurt resale values for all, I think it will hurt them in the long run due to the viral word of mouth effect from hundreds of thousands of owners.

 

[PerryM]

Barfing by the side of the road?

I disagree. If the real estate market is hurting, then revenue will be hurting as well. What better time to introduce a revenue enhancer like a new internal points based exchange system than now. It will bring in additional income from current owners and it could be seen as giving their sales staff an edge over the resale market. Note I didn't say it WILL give them an edge. Only that it could be viewed by Marriott as an advantage to buying direct rather than resale.

This is just my theory - everyone has their own:

It's insane to completely change the way you sell a product when the company and country are hurting - the risk is HUGE and the rewards are dubious at best.

The instant Marriott introduces a Point Based Exchange System it simply becomes a copycat of Wyndham - whoopee!

The salesreps will stop selling fixed units/weeks/seasons at fixed Marriott resorts to a Point Based Vacation System. The salesreps will start to sell Points and dump fixed seasons at fixed resorts.

This is a HUGE change in sales and a HUGE risk. We all know that screwups will happen and owners will have to go through a HUGE learning curve - all while the resale value of their investment in Marriott is barfing by the side of the road.

It's simply lunacy and no grown-up at Marriott will introduce this until real estate is making a healthy recovery. Sales managers and the such are always selling things they don't have - it's an occupational hazard.

But it seems like our entire country has gone insane, so who knows.

 

[SueDonJ]

Wouldn't that rational thought be reason enough for Marriott to start the rumors in the first place?

No that I don't think changes might be coming... but I think making any changes that discriminate against resale buyers (especially retroactively) opens them to class action lawsuits. If they make changes on a forward looking basis and hurt resale values for all, I think it will hurt them in the long run due to the viral word of mouth effect from hundreds of thousands of owners.

I suppose the conspiracy theory that Marriott deliberately started these rumors to negatively impact external resales has a few teeth, sure. But if we're thinking rationally, then aren't we thinking that any impending change which will substantially affect usage - which an internal exchange system will - will impact both developer and external sales? That's how I think of it, although like I said earlier, I didn't believe that any of the rumors would probably pan out until Dave posted his insider information. That was when I decided that any Marriott purchase should wait until whatever is being changed, is announced.

As far as discrimination, I'm not sure that different initiation fees could be called discriminatory. The multi-week owners have an advantage with Marriott reservations, that's not discriminatory. II charges lesser fees for Marriott-to-Marriott than Marriott-to-external exchanges, that's not discriminatory. And, I'm still not sure how this could affect all resales to the extent that some here speculate. A bit? Sure. Say external resales are charged $1K to join - so what might have garnered $6K on the resale market now garners $5K. That's not zero, and that's not a substantial devaluation (as compared to the devaluation between existing developer and resale inventory.) The possibility even still exists to get that $6K, if a buyer wants only home usage.

 

[Stefa]

I'm not sure that different initiation fees could be called discriminatory. The multi-week owners have an advantage with Marriott reservations, that's not discriminatory. II charges lesser fees for Marriott-to-Marriott than Marriott-to-external exchanges, that's not discriminatory. And, I'm still not sure how this could affect all resales to the extent that some here speculate. A bit? Sure. Say external resales are charged $1K to join - so what might have garnered $6K on the resale market now garners $5K. That's not zero, and that's not a substantial devaluation (as compared to the devaluation between existing developer and resale inventory.) The possibility even still exists to get that $6K, if a buyer wants only home usage.

I agree. Marriott could charge $1k to join the internal system and simply waive the fee as a purchase incentive for direct buyers. As long as they are not interfering with owners' rights to use their home resort, they are not breaking any laws.

I believe the idea of devalued resales comes more from some of the sales rumors that resale owners will be treated differently when making reservations. I don't believe Marriott could or would do this, so I don't see a significant resale devaluation.

 

[kjd]

I don't know what motivates other people to buy a timeshare but my motivation was to use it every year for vacations. Personally I reject any notion of an "investment" or a "portfolio of properties." I've heard references to it by sales staff and others.

The fact is that you have purchased a license to reserve a week at a Marriott timeshare with certain conditions such as availability, payment of fees, etc. That is irregardless of the fact that it is "deeded property"--a favorite term used by some sales staff. It's more like a golf membership. You have the right to play but you really don't own much of the golf course and you can't effectively make any decisions about your ownership. That is out of your hands.

Therefore it makes sense that one should assume that a timeshare will be worthless when you stop using it. It can be passed on to family members who can decide whether they wish to continue to pay maintenance fees. Any value derived by a sale is an extra benefit. If you hold this point of view it really doesn't matter what Marriott has in store for it's owners.

 

[PerryM]

I don't know what motivates other people to buy a timeshare but my motivation was to use it every year for vacations. Personally I reject any notion of an "investment" or a "portfolio of properties." I've heard references to it by sales staff and others.

The fact is that you have purchased a license to reserve a week at a Marriott timeshare with certain conditions such as availability, payment of fees, etc. That is irregardless of the fact that it is "deeded property"--a favorite term used by some sales staff. It's more like a golf membership. You have the right to play but you really don't own much of the golf course and you can't effectively make any decisions about your ownership. That is out of your hands.

Therefore it makes sense that one should assume that a timeshare will be worthless when you stop using it. It can be passed on to family members who can decide whether they wish to continue to pay maintenance fees. Any value derived by a sale is an extra benefit. If you hold this point of view it really doesn't matter what Marriott has in store for it's owners.

Don't include me in that group!

I've bought and sold 5 Marriotts over the years and made a profit - small but my goal was to make a profit. Throw in 5 years of usage and rentals and I made out exactly as I had hoped for - the risk of timeshare ownership was superior to renting the same exact units.

Everyone seems to look at timeshare ownership in a different way. However, that recurring MF that you are responsible for is sobering and I personally want to view timeshare ownership as something superior to renting.

Right now that view isn't working - timeshares make little sense in a declining real estate market - rentals fall too. So my advice to anyone listening is to NOT buy a timeshare, no matter how juicy the deal, in 2010 - probably 2011 too.

The risks of timeshare ownership are just too great now - but this will cycle and at some point timeshare ownership will be superior to renting.

 

[SueDonJ]

I don't know what motivates other people to buy a timeshare but my motivation was to use it every year for vacations. Personally I reject any notion of an "investment" or a "portfolio of properties." I've heard references to it by sales staff and others.

The fact is that you have purchased a license to reserve a week at a Marriott timeshare with certain conditions such as availability, payment of fees, etc. That is irregardless of the fact that it is "deeded property"--a favorite term used by some sales staff. It's more like a golf membership. You have the right to play but you really don't own much of the golf course and you can't effectively make any decisions about your ownership. That is out of your hands.

Therefore it makes sense that one should assume that a timeshare will be worthless when you stop using it. It can be passed on to family members who can decide whether they wish to continue to pay maintenance fees. Any value derived by a sale is an extra benefit. If you hold this point of view it really doesn't matter what Marriott has in store for it's owners.

Exactly, its value is in its use. Marriott has never concerned itself with upholding the resale dollar values of inventory, and in fact suffers no legal requirement to do so.

Although, I can sort of understand why resale buyers think that there are financial benefits to timeshares; after all, the've reaped the benefit of being able to enjoy almost exactly the same usage of their weeks while paying less for them than the developer purchasers who are lounging beside them at the resort pools.

But that's why I don't get the outcry from folks who bought resale and may now suffer a slight devaluation in their weeks. If developer purchasers have no legal footing to mount a class action suit against Marriott for not upholding the dollar value investment they've made, what possible legal footing could the owners of resale inventory hold? It boggles my mind.

 

[timeos2]

They can't change ownership rights but they can play with perks. Don't bite!

Wouldn't that rational thought be reason enough for Marriott to start the rumors in the first place?

No that I don't think changes might be coming... but I think making any changes that discriminate against resale buyers (especially retroactively) opens them to class action lawsuits. If they make changes on a forward looking basis and hurt resale values for all, I think it will hurt them in the long run due to the viral word of mouth effect from hundreds of thousands of owners.

No company has done more to kill resale value their product than Wyndham yet they continue, really unbelievably, to sell retail AND hold a fair to pretty good reputation except, of course, for sales tactics. So it is a perfectly reasonable thing for Marriott to look to new sources of revenue, most likely an internal exchange system that gets them away from II and generates money both for new members and ongoing use. The fact that most of the "hurt resale" stuff can't actually be done due to the original ownership rights doesn't stop them, like Wyndham, from dreaming up bogus things that AREN'T guaranteed by ownership such as VIP or the ability to exchange for some type of hotel credits which can be withheld from those cheeky enough to save big buying resale.

But if owners really look at the benefits those types of programs offer vs the incredible additional cost to buy retail then they quickly learn the value isn't there. But that fact doesn't come easy to buyers. If it did Wyndham retail sales would have been zero years ago yet they continue to sell. The small amount of buyers that figure out the game, at least so far, doesn't hurt the big boys. Hopefully it will someday and balance will return to resale vs retail pricing. Don't hold your breath expecting it any decade soon.

 

[PerryM]

Here's the straight poop...

Exactly, its value is in its use. Marriott has never concerned itself with upholding the resale dollar values of inventory, and in fact suffers no legal requirement to do so.

Although, I can sort of understand why resale buyers think that there are financial benefits to timeshares; after all, the've reaped the benefit of being able to enjoy almost exactly the same usage of their weeks while paying less for them than the developer purchasers who are lounging beside them at the resort pools.

But that's why I don't get the outcry from folks who bought resale and may now suffer a slight devaluation in their weeks. If developer purchasers have no legal footing to mount a class action suit against Marriott for not upholding the dollar value investment they've made, what possible legal footing could the owners of resale inventory hold? It boggles my mind.

Over the years the definition of timeshares has changed - originally they were sold as a time-slice of a fixed week at a fixed condo at a fixed resort, now folks want flexibility and want usage of many condos at many destinations from their "unit".

Points adds this capability but affects the existing sold out Marriotts - those folks bought their timeshare under older definitions and now Marriott is to completely redefine their timeshare - into a vacation club and they might really get screwed by this.

Depending on how Marriott treats resales they will have a HUGE impact on existing resorts where Marriott simply cleans the toilets. That 800 pound gorilla drops big smelly poops.

So we shall see how the janitor's wishes and desires impacts the lives of the owners who employ him; and if they will just sit on their hands while this takes place.

P.S.

People buy stability and sell instability - something Marriott seems to have never hear of....

 

[DanCali]

Therefore it makes sense that one should assume that a timeshare will be worthless when you stop using it.

Sure that's an assumption you can make... probably a "worst case assumption".

But if that's the way it should be and it makes the most sense than why isn't it sold that way by developers?

If the answer is "nobody will buy if it's sold that way" then the numbers are probably hard to justify...

 

[timeos2]

Hurting the retail buyer doesn't bother the developers as they think it hurts resale

I agree. Marriott could charge $1k to join the internal system and simply waive the fee as a purchase incentive for direct buyers. As long as they are not interfering with owners' rights to use their home resort, they are not breaking any laws.

I believe the idea of devalued resales comes more from some of the sales rumors that resale owners will be treated differently when making reservations. I don't believe Marriott could or would do this, so I don't see a significant resale devaluation.

You have that correct. The points system - or whatever the new internal system turns out to be - is an OPTION so selling it at different prices to resale or retail buyers breaks no laws or ownership rights. They can't step on use rights or deeded rights but anything optional can be handled anyway they see fit. Ask Wyndham.

The resale buyers should be overjoyed as if the Wyndham pattern hold the introduction of this type of owner unfriendly option and resale put down results in terrific prices for resale buyers. Of course its at the expense of retail buyers but Marriott couldn't care less about that. And the hit that a retail buyer takes will only get worse (and its already bad). Buying retail timeshare is a fools move and has been for a long time. It is just becoming less and less easy to ignore that fact.

 

[Simplify]

That 800 pound gorilla drops big smelly poops.

I know it's juvenile, but I literally laughed out loud when I read this.

Darren:hysterical:

 

[SueDonJ]

Sure that's an assumption you can make... probably a "worst case assumption".

But if that's the way it should be and it makes the most sense than why isn't it sold that way by developers?

If the answer is "nobody will buy if it's sold that way" then the numbers are probably hard to justify...

Ours was sold that way. It was explained to us during the sales presentation and it's in the Contracts for Purchase that we signed:

... Purchaser acknowledges that the purchase of the Time Sharing Interest(s) is made for the Purchaser's personal use, and that neither Seller nor any of its agents, employees and/or affiliates has made any oral or written representations that the Purchaser would derive economic benefits or expectation of profit from appreciation ...

It's also explained in further detail in several of the governing docs; this is from the Time Sharing Plan:

Purchaser should purchase a time sharing interest as a vacation experience and for his or her personal use and enjoyment. Purchaser should not purchase a time sharing interest as an investment or for profit upon its rental or resale.

It was quite clear to us from the start and it's confirmed with each and every related entry in all of the ownership documents. Marriott isn't charged with protecting its owners' financial investments, and the value of a timeshare is in its use.

That said, is it possible to make money buying and selling on the external markets? Yes, of course, although not so much in this economic climate today as was possible previously. But Marriott doesn't sell it that way and the contracts don't guarantee it.