Supply is shrinking....look for higher prices in 2009

[thinze3]

If 90% of all Marriott sales are developer sales, it seems hard to believe that the "very small amount of inventory needed gets taken" will actually ever get taken. If Marriott decides to use their ROFR option in lieu of a portion of its new construction, a new pricing equilibrium will be reached - at a higher level than it would be without ROFR.

John, its a really simple concept that you cannot seem to grasp. Today there are five resale purchases and no Marriott purchases. Tomorrow there will be five resale purchases and possibly 5, 10 or 20 Marriott purchases.

If this happens, simple supply and demand laws will come into effect, and the prices will go up. When the economy strengthens, as the OP states, soon there will be shrinking inventory. One reason - because Marriott will be buying.

Terry

 

[BocaBum99]

If 90% of all Marriott sales are developer sales, it seems hard to believe that the "very small amount of inventory needed gets taken" will actually ever get taken. If Marriott decides to use their ROFR option in lieu of a portion of its new construction, a new pricing equilibrium will be reached - at a higher level than it would be without ROFR.

John, its a really simple concept that you cannot seem to grasp. Today there are five resale purchases and no Marriott purchases. Tomorrow there will be five resale purchases and possibly 5, 10 or 20 Marriott purchases.

If this happens, simple supply and demand laws will come into effect, and the prices will go up. When the economy strengthens, as the OP states, soon there will be shrinking inventory. One reason - because Marriott will be buying.

Terry

EXACTLY. I completely agree.

 

[timeos2]

John, its a really simple concept that you cannot seem to grasp. Today there are five resale purchases and no Marriott purchases. Tomorrow there will be five resale purchases and possibly 5, 10 or 20 Marriott purchases.

If this happens, simple supply and demand laws will come into effect, and the prices will go up. When the economy strengthens, as the OP states, soon there will be shrinking inventory. One reason - because Marriott will be buying.

Terry

But that overlooks that NO ROFR occurs until the seller (owner) has a verified private sale already agreed to. Why would those buyers offer more tomorrow than they know they can buy for today? That's not the way things work. Ask all the major retailers with inventory they cannot sell because people are looking for better deals, not to pay more than "black Friday". And it also ignores that to getting that offer to buy - now and presumably going forward - the seller will have to offer the week at a low price. You can ask more even now but you won't get any interest from buyers. You certainly won't get a signed purchase offer with earnest money or down payment. Once you offer the low price and get the buyer only then does ROFR kick in - at that LOW price. Marriott isn't stupid enough to pay more for what they can get cheap - why would other buyers offer more? The seller only gets what he offered to sell for and that has to be low enough to attract a buyer. The whole concept is flawed and if I say more about why it is sure to be excised so I'll stop there. Read the past posts and the University Professors' explanations if you need to know the details.

 

[m61376]

But that overlooks that NO ROFR occurs until the seller (owner) has a verified private sale already agreed to. Why would those buyers offer more tomorrow than they know they can buy for today? That's not the way things work. Ask all the major retailers with inventory they cannot sell because people are looking for better deals, not to pay more than "black Friday". And it also ignores that to getting that offer to buy - now and presumably going forward - the seller will have to offer the week at a low price. You can ask more even now but you won't get any interest from buyers. You certainly won't get a signed purchase offer with earnest money or down payment. Once you offer the low price and get the buyer only then does ROFR kick in - at that LOW price. Marriott isn't stupid enough to pay more for what they can get cheap - why would other buyers offer more? The seller only gets what he offered to sell for and that has to be low enough to attract a buyer. The whole concept is flawed and if I say more about why it is sure to be excised so I'll stop there. Read the past posts and the University Professors' explanations if you need to know the details.

I think you are ignoring the difference between these types of purchases and some other retail purchases that do work the way you have outlined. Yes, today major retailers are stuck with inventory and people are just looking to pay lower prices, and they are holding out for better sales because they feel they can get it at the lower price point. They pay the asking price today if they really want the item.

Timeshare buyers frequently really want what they are buying. If they lose a unit to ROFR, they likely will up their offering price if they keep on losing units and really want to purchase it. So, Marriott lucks out by nabbing the bargain-priced units, but ultimately anxious buyers oftentimes increase their offers.

 

[larue]

I think you are ignoring the difference between these types of purchases and some other retail purchases that do work the way you have outlined. Yes, today major retailers are stuck with inventory and people are just looking to pay lower prices, and they are holding out for better sales because they feel they can get it at the lower price point. They pay the asking price today if they really want the item.

Timeshare buyers frequently really want what they are buying. If they lose a unit to ROFR, they likely will up their offering price if they keep on losing units and really want to purchase it. So, Marriott lucks out by nabbing the bargain-priced units, but ultimately anxious buyers oftentimes increase their offers.

I agree. And also, most resale buyers are not going to waste their time setting up an escrow, sending in a $1,000 deposit, just so that Marriott can sweep in and take their deal. Speaking from personal experience, we lost a Ko Olina mountainview to ROFR about 2 years ago at $23,000, so we went back in and offered and purchased a separate unit at $24,000 to avoid wasting our time twice.

 

[BocaBum99]

But that overlooks that NO ROFR occurs until the seller (owner) has a verified private sale already agreed to. Why would those buyers offer more tomorrow than they know they can buy for today? That's not the way things work. Ask all the major retailers with inventory they cannot sell because people are looking for better deals, not to pay more than "black Friday". And it also ignores that to getting that offer to buy - now and presumably going forward - the seller will have to offer the week at a low price. You can ask more even now but you won't get any interest from buyers. You certainly won't get a signed purchase offer with earnest money or down payment. Once you offer the low price and get the buyer only then does ROFR kick in - at that LOW price. Marriott isn't stupid enough to pay more for what they can get cheap - why would other buyers offer more? The seller only gets what he offered to sell for and that has to be low enough to attract a buyer. The whole concept is flawed and if I say more about why it is sure to be excised so I'll stop there. Read the past posts and the University Professors' explanations if you need to know the details.

This explains why your view on ROFR is so flawed. It is based on a completely wrong assumption. What Larue says above is the rule of thumb, not the outlier. When someone decides they want to purchase a Marriott and they learn about ROFR, they look for the best deal they can find that will pass ROFR. If the broker is educated on the rate at which ROFR has been exercised recently, then the broker helps the buyer offer a price in a good range. Some buyers don't want to wait and offer a bit more than the ROFR rate. Others don't mind waiting and offer something slightly below ROFR. Then, they keep raising their offer until they get it. So, one buyer can end up taking several units off the market thereby reducing supply while keeping the same number of buyers. Reduced supply and same demand = increasing resale price.

 

[tombo]

I think you are ignoring the difference between these types of purchases and some other retail purchases that do work the way you have outlined. Yes, today major retailers are stuck with inventory and people are just looking to pay lower prices, and they are holding out for better sales because they feel they can get it at the lower price point. They pay the asking price today if they really want the item.

Timeshare buyers frequently really want what they are buying. If they lose a unit to ROFR, they likely will up their offering price if they keep on losing units and really want to purchase it. So, Marriott lucks out by nabbing the bargain-priced units, but ultimately anxious buyers oftentimes increase their offers.

Major Timeshare developers (and resellers) are stuck with a lot of inventory. Why would a timeshare shopper not hold out for lower prices on timeshares just like they do on other things they buy? Timeshares are after all simply a purchase. Also whether the purchase is a timeshare, a car, or a computer, I would assume that people really WANT any high ticket item they purchase or they wouldn't spend their money.

Many people (like myself) lose a week to ROFR after winning a bid, paying a deposit, and setting up escrow only to have the week they paid more than anyone else would stolen from them. No one knows the percentages for sure, but I feel sure that the majority get mad and never bid on a week from that developer again. In this case the developer got the week for a price they wouldn't have offered the seller. The buyer who made the seller the highest offer he received never bids on any week in the future because they feel like doing so would be a waste of time. The next seller is wishing someone would offer him any reasonable price, but offers aren't made because buyers feel that what they would pay won't pass ROFR. The seller is stuck with a week he can't sell even though there are buyers that would offer him enough to buy the week if there was no ROFR. Everyone loses but the developer.

I doubt that there are any people who will raise their e-bay bid higher than it takes to win the auction. If you win a bid for $3000 would you really offer the seller $5000 for a week you won for $3000 just in case it might be ROFR'd? If you are willing to pay more than it took to win the auction please bid on some of mine.

I think rather than raising offers, most buyers simply quit making offers. That is what I did. I sold a week that was ROFR'd from my buyer who offered me more money than anyone else (including the developer) offered me. I didn't want the developer to get the week, I wanted the buyer who made me the offer to get it, but he didn't. I also had a week I purchased stolen from me by ROFR. I no longer make offers or submit bids for any week at any resort that has ROFR. I am an example of ROFR hurting sales.

 

[AwayWeGo]

Dare I Ask . . .

I am an example of ROFR hurting sales.

. . . whether you are also an example of ROFR = ROFL ?

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[timeos2]

Never let facts stand in the way of a good theory. It can hurt sales.

This explains why your view on ROFR is so flawed. It is based on a completely wrong assumption. What Larue says above is the rule of thumb, not the outlier. When someone decides they want to purchase a Marriott and they learn about ROFR, they look for the best deal they can find that will pass ROFR. If the broker is educated on the rate at which ROFR has been exercised recently, then the broker helps the buyer offer a price in a good range. Some buyers don't want to wait and offer a bit more than the ROFR rate. Others don't mind waiting and offer something slightly below ROFR. Then, they keep raising their offer until they get it. So, one buyer can end up taking several units off the market thereby reducing supply while keeping the same number of buyers. Reduced supply and same demand = increasing resale price.

If that actually occurred on any regular basis (of course there are a few cases I'm sure - heck, some people pay list price for a car or rack rate for a room and then talk about the "deal" they got!) then the old saying, that by now everyone should be familiar with after all these years, "There's a sucker born every minute" (PT Barnum) apparently hasn't been understood. Perhaps that's why there were billions in sales of retail timeshares until recently? Anyone who would raise their bid after losing to ROFR really hasn't a clue. Anyone who paid attention as recently as the past 6 months and LOWERED their bid on any ROFR properties found out how well that works. And will always work if you stick to it. But it flies in the face of "must have it NOW" society we seem to have become.

I hate those that prey on the uninformed, be it the high pressure Wastegate Weasel type or the resale agent that says ROFR "needs to be beaten" to get a week. They shouldn't be able to sleep at night, but it most likely isn't a problem for either group. That doesn't even account for the ruse that an owner "is better off if there's ROFR" as that usually goes hand in hand with the reasoning "to pay more now", never mentioning that you'll have a very limited audience of buyers and get less later when YOU want to sell. It's unbelievable that people still fall for this stuff. We mock and marvel at Wyndham for selling points they know resell for pennies on the retail dollar days after the ink dries, yet some would promote ROFR as a benefit to buyers/owners which has the same end result. See the PT quote above for the only plausible explanation. Folks will believe what they want but lets not support beliefs that have been proven false. If they have the facts and still feel better thinking it doesn't (won't) apply to them and have the money to spend so be it. You cannot protect people from themselves. And no I told you so's later, as that just isn't nice. Snicker quietly to yourself please.

 

[m61376]

Tombo-
I guess it boils down to whether more people get turned off and don't want to try again or whether more people really want what they were trying to buy and will pay the price they need to to get it. In your case, you seemingly belong to the former camp, but I know personally that once I made a decision to buy, even though I lost out to ROFR I was determined to find another and was willing to accept that I would not be able to replicate my "bargain." There are many posts by others who persevered until they, too, got a unit past ROFR, generally paying more for the one they ultimately bought (although on occasion a lower price did, in fact, pass).

If everyone who lost a unit to ROFR vowed never to buy from Marriott again then your analysis would be correct. However, there are many, many instances of people taking the exact opposite approach.

And, while you are correct in saying that timeshare purchases are similar to other high ticket item purchases, I think for many people they are a bit different. Most people buy timeshares far less frequently than they buy other items and, oftentimes once they've made the purchase decision they really, really want it; they start to think about how great it would be to spend vacation time there, etc. This may not be true for the casual purchaser just looking to add another unit if he/she can get a good enough price, but for the buyer with none or minimal timeshare holdings I think once they have the impetus to buy they will likely go a little higher if they need to in order to buy what they want.

 

[BocaBum99]

Major Timeshare developers (and resellers) are stuck with a lot of inventory. Why would a timeshare shopper not hold out for lower prices on timeshares just like they do on other things they buy? Timeshares are after all simply a purchase. Also whether the purchase is a timeshare, a car, or a computer, I would assume that people really WANT any high ticket item they purchase or they wouldn't spend their money.

Many people (like myself) lose a week to ROFR after winning a bid, paying a deposit, and setting up escrow only to have the week they paid more than anyone else would stolen from them. No one knows the percentages for sure, but I feel sure that the majority get mad and never bid on a week from that developer again. In this case the developer got the week for a price they wouldn't have offered the seller. The buyer who made the seller the highest offer he received never bids on any week in the future because they feel like doing so would be a waste of time. The next seller is wishing someone would offer him any reasonable price, but offers aren't made because buyers feel that what they would pay won't pass ROFR. The seller is stuck with a week he can't sell even though there are buyers that would offer him enough to buy the week if there was no ROFR. Everyone loses but the developer.

I doubt that there are any people who will raise their e-bay bid higher than it takes to win the auction. If you win a bid for $3000 would you really offer the seller $5000 for a week you won for $3000 just in case it might be ROFR'd? If you are willing to pay more than it took to win the auction please bid on some of mine.

I think rather than raising offers most buyers will simply quit making offers. That is what I did. I sold a week that was ROFR'd from my buyer who offered me more money than anyone else (including the developer) offered me. I didn't want the developer to get the week, I wanted the buyer who made me the offer to get it, but he didn't. I also had a week I purchased stolen from me by ROFR. I no longer make offers or submit bids for any week at any resort that has ROFR. I am an example of ROFR hurting sales.

What you are missing is that there is a difference between the price a person is willing to pay vs. the price they actually get. When a person finds a unit for below the price they are willing to pay, they gladly accept it. However, if they lose that unit to ROFR and they are willing to pay more, they would be willing to offer more to make sure they get it on the next deal.

If you drop out after losing one unit to ROFR, it doesn't change the demand curve. The unit you would have bought was bought by Marriott. However, if just ONE buyer decides to make another offer on another unit at any price, then the demand is increased by at least one unit more than if there was no ROFR. The most I have ever heard is one buyer, 15 sales. 14 to Marriott. 1 to the buyer.

 

[m61376]

The most I have ever heard is one buyer, 15 sales. 14 to Marriott. 1 to the buyer.

Wow- that's some record of perseverance. So- was the final price paid the highest or did they manage to get something through ROFR at a lower price than had been nabbed?

 

[AwayWeGo]

Why They Fall.

It's unbelievable that people still fall for this stuff.

I think folks drink the ROFR kool-aid in Emperor's New Clothes fashion. They're told ROFR protects them because it keeps future resale prices of what they're buying for big bux from going "too low."

"Too low" for what ?

Easy. Too low for the riffraff to be able to buy in cheap, thereby giving the full-freight buyers the security of knowing they won't have to make eye contact at the resort with any bottom feeding bargain hunters.

It is semi-understandable that people who shell out big bux for an upscale high-end timeshare might not look favorably upon the prospect of having to rub shoulders in the pool or over at the workout room with the el cheapo riffraff. Better for the timeshare company to monopolize all the cheap buybacks than to let any just anybody become an upscale owner on the cheap.

Of course, that doesn't mean resale timeshares aren't sold ever so cheap anyway now & then. All it means is that the timeshare company exclusively gets to gobble'm up when they go cheap, which is perfectly OK with the full-freight buyers so long as it preserves the perceived rarefied air at their fancypants timeshares.

For everybody else, ROFR = ROFL.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[tombo]

Tombo-
I guess it boils down to whether more people get turned off and don't want to try again or whether more people really want what they were trying to buy and will pay the price they need to to get it.

If everyone who lost a unit to ROFR vowed never to buy from Marriott again then your analysis would be correct. However, there are many, many instances of people taking the exact opposite approach.

I know there are people from both camps. My feeling that most people will give up and quit offering is clouded by my personal feelings on the matter.
However, in addition to my feelings are the comments from my buyer who lost the week he bought from me to ROFR. He told me that he already owned a week at that resort I was selling and that he was trying to get 2 weeks so that he could stay 2 weeks in a row in Hawaii every year. However after having them steal my week from him he said that he would never buy another week at any of their resorts ever again at any price. Not a scientific study, but there are at least 2 of us who feel that way.

For some I am sure that losing their purchase to ROFR makes them more determined to get a week and they raise their price. I assume that the price raisers are the minority group. For others it is time to try again with the same maximum price they are willing to pay hoping to get one to pass ROFR for their price, not the developers. How many times they will try will vary, but I would think that most would give up after losing a couple of purchases to ROFR. For the last group, losing their purchase to ROFR makes the time and effort to try and buy again not worth it. For someone who doesn't have to have a particular brand, there are too many good timeshare choices available to play games with the developer using your money, time and effort.

 

[tombo]

If you drop out after losing one unit to ROFR, it doesn't change the demand curve. The unit you would have bought was bought by Marriott. However, if just ONE buyer decides to make another offer on another unit at any price, then the demand is increased by at least one unit more than if there was no ROFR. The most I have ever heard is one buyer, 15 sales. 14 to Marriott. 1 to the buyer.

What you miss is the fact that I have purchased 15 different weeks since I lost my week I bought to ROFR and swore I would never make another ffer on a week that has ROFR. I have seen at least 5 Marriotts I would have purchased if there was no ROFR, and these 5 weeks all sold for less than I would have paid had I have bid or were listed for a asking price I would have paid. So by not getting the first purchase due to ROFR, I didn't buy a minmum of 5 (or more) weeks I would have bought in addition to the first week. Marriott got one from me, the next 5 sellers got a lot less or no offer at all since I didn't bid or make an offer thanks to ROFR.

 

[BocaBum99]

What you miss is the fact that I have purchased 15 different weeks since I lost my week I bought to ROFR and swore I would never make another ffer on a week that has ROFR. I have seen at least 5 Marriotts I would have purchased if there was no ROFR, and these 5 weeks all sold for less than I would have paid had I have bid or were listed for a asking price I would have paid. So by not getting the first purchase due to ROFR, I didn't buy a minmum of 5 (or more) weeks I would have bought in addition to the first week. Marriott got one from me, the next 5 sellers got a lot less or no offer at all since I didn't bid or make an offer. All thanks to being robbed on my original purchase thanks to ROFR.

I agree that there is a population of potential purchasers that are turned off by ROFR and won't buy because of it. I am actually in that same category. I would have bought 100 of them by now if I could get them at the price I wanted and I had access to sellers at those prices. I was absolutely convinced when I first started in timesharing that I was in the majority. However, after spending 4 years studying it in more detail than most on this message board, I changed my opinion based on the facts that manifested themselves to me. The bottom line is that ROFR has had a positive effect on resale prices when the developer exercises like Marriott and HGVC have done it. When they start again, prices will rise.

I have been against buying Platinum Marriott's due to ROFR. Same with Disney. Now that ROFR has been temporarily put on hold, I think it is now time to buy so people on the lower end of the demand curve can find sellers at the price they are willing to pay.

If I didn't see with my own eyes what ROFR did for certain timeshare resorts, I would have never predicted or believed it.

 

[tombo]

I agree that there is a population of potential purchasers that are turned off by ROFR and won't buy because of it. I am actually in that same category. I would have bought 100 of them by now if I could get them at the price I wanted and I had access to sellers at those prices. I was absolutely convinced when I first started in timesharing that I was in the majority. However, after spending 4 years studying it in more detail than most on this message board, I changed my opinion based on the facts that manifested themselves to me. The bottom line is that ROFR has had a positive effect on resale prices when the developer exercises like Marriott and HGVC have done it. When they start again, prices will rise.

I have been against buying Platinum Marriott's due to ROFR. Same with Disney. Now that ROFR has been temporarily put on hold, I think it is now time to buy so people on the lower end of the demand curve can find sellers at the price they are willing to pay.

If I didn't see with my own eyes what ROFR did for certain timeshare resorts, I would have never predicted or believed it.

If ROFR kept prices high they would only have fallen in the last couple of months when Mariott quit ROFR'ing. The reality is that prices kept falling all spring and summer while they were still ROFR'ing. The simple fact is that the week sells for what it sold for ,ROFR or not, all that changes is who finally owns it. The resort buys the weeks for current market value (the price it already sold for) when they can use the inventory, nothing else matters. The week sells for what a buyer is willing to pay with or without ROFR.

The fact that the ROFR resorts consistently sell for the highest prices is because those are the best resorts, not because of ROFR. This is why the developer wants ROFR, to buy back a hot item they can resell for a profit. These resorts will sell for more money (ROFR or not) as is evident in the higher than average resale prices on Marriott currently even though ROFR hasn't been exercised in months. If there was ROFR on gold, and no ROFR on Silver and lead, the gold would consistently sell for more. Many gold owners would claim gold is worth more due to ROFR. The simple fact is that Gold is worth more, so it will sell for more whether there is ROFR or not. Another fact is that sellers would want ROFR on gold to make a profit because the high resale gives them a profit margin. The developers wouldn't try to put ROFR on lead because it wouldn't be profitable to them. There is ROFR on the best resorts only because the developers know that they can make money reselling those top resorts.The best resorts will always sell for the most money, and ROFR or the lack of ROFR won't change that.

 

[BocaBum99]

If ROFR kept prices high they would only have fallen in the last couple of months when Mariott quit ROFR'ing. The reality is that prices kept falling all spring and summer while they were still ROFR'ing. The simple fact is that the week sells for what it sold for ,ROFR or not, all that changes is who finally owns it. The resort buys the weeks for current market value (the price it already sold for) when they can use the inventory, nothing else matters. The week sells for what a buyer is willing to pay with or without ROFR.

The fact that the ROFR resorts consistently sell for the highest prices is because those are the best resorts, not because of ROFR. This is why the developer wants ROFR, to buy back a hot item they can resell for a profit. These resorts will sell for more money (ROFR or not) as is evident in the higher than average resale prices on Marriott currently even though ROFR hasn't been exercised in months. If there was ROFR on gold, and no ROFR on Silver and lead, the gold would consistently sell for more. Many gold owners would claim gold is worth more due to ROFR. The simple fact is that Gold is worth more, so it will sell for more whether there is ROFR or not. Another fact is that sellers would want ROFR on gold to make a profit because the high resale gives them a profit margin. The developers wouldn't try to put ROFR on lead because it wouldn't be profitable to them. There is ROFR on the best resorts only because the developers know that they can make money reselling those top resorts.The best resorts will always sell for the most money, and ROFR or the lack of ROFR won't change that.

I don't agree. First of all, nobody says that ROFR keeps prices high. I am saying that ROFR provides temporary price supports and creates artificially higher prices points than would exist otherwise.

I believe the business model is such that if any resort developer exercised ROFR that it would provide temporary price supports for their resorts. In other words, the price would be higher than the nominal resale market. I am not claiming it will stay "high." I am claiming it would be higher than if they stopped exercising. The reason for it is that it evens out an other wise chaotic marketplace by establishing more consistent price points in the open market. In addition, it's because the resort developer can command a significant premium over the resale price. As long as the developer has strong demand for a product at $X and the nominal resale value is less than .25X, then ROFR will prop up resale prices when it exercises at .6X or lower. That is the necessary pre-condition for propping up resale prices.

The reason why prices dropped for Marriott and all other timeshares is that the over supply exceeded the demand from Marriott to sell at developer prices. Once that balance shifts back, Marriott will start exercising ROFR again and prices will firm. The math doesn't lie. There are definitely scenarios that can be created where ROFR raises resale prices.

 

[dioxide45]

This really should be picked up here:

http://www.tugbbs.com/forums/showthread.php?t=79996&page=2&highlight=ROFR

 

[dioxide45]

----deleted-----

 

[tombo]

I don't agree. First of all, nobody says that ROFR keeps prices high. I am saying that ROFR provides temporary price supports and creates artificially higher prices points than would exist otherwise.

The reason why prices dropped for Marriott and all other timeshares is that the over supply exceeded the demand from Marriott to sell at developer prices. Once that balance shifts back, Marriott will start exercising ROFR again and prices will firm. The math doesn't lie. There are definitely scenarios that can be created where ROFR raises resale prices.

Prices dropped because of free market principles, supply versus demand. The prices were dropping as Marriott continued to exercise ROFR, and prices would still be dropping if Marriott was still using ROFR for the same reasons, lots of supply with little demand. What possible help does Marriott give by buying a week from the original buyer for the same price it already sold for? If it sold for $5000, it sold for $5000. No price support here, just the simple theft of the sale from the only person who would offer the poor seller anything to buy his week. Marriott won't offer $5 or $5000 to buy the week (which would actually stabilize prices by setting a floor price below which no weeks could sell). You have to market your week, find a buyer, agree on a price, get a contract all on your own at any price the market will bear. After all of this is done a sale has occured. Marriott stepping in and stealing it if they can make a profit on it has helped no one but Marriott because the sale is over and the price has been finalized before Marriott even enters the picture.


Once the demand increases and supply decreases Marriott will step back in and firm up prices? You have got to be kidding. First of all prices firm themselves up when supply decreases and demand increases, not an ROFR effect, simple economics. Prices will also increase when supply decreases and demand increases, once again not the result of ROFR, it is simple economics. When the market improves Marriott will start ROFR'ing again because it will be profitable for them since they will have buyers for their weeks. Since demand will increase they will be able to sell weeks they steal from the rightful owners for a profit. It will have nothing to do with firming up prices, it will have everything to do with simple economics. If the market is better resale, it will be a better market for developers too.

To believe that ROFR works for sellers after watching the prices plunge this year while Marriott ROFR'd ,and then believing that when prices start to increase and Marriott starts ROFR'ing that the reason they are increasing is because of ROFR is poking one's head into the sand after drinking all of the Kool-aid. For any rational person 2008 should forever answer the question about whether ROFR helps stabilize prices or not. ROFR does not help prices, it only helps the developer. While we are dispelling myths, there is no tooth fairy or Santa Clause either.

 

[AwayWeGo]

It Works The Other Way Round.

Once the demand increases and supply decreases Marriott will step back in and firm up prices? You have got to be kidding.

Once the prices firm up, then the timeshare company might (if it chooses) jump in & snap up the occasional lowball resales, just to keep'm out of the hands of the bottom-feeding bargain hunters.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[thinze3]

Hypothetical in 2009:

Marriott developers sales begin to increase at Resort 'A'. Marriott expects to sell 10,000 timeshare weeks at Resort 'A' in 2009, and Marriott knows it can build those timeshares at $10K per week.

Resales have also increased, and in 2009 there is expected to be 2000 resales at Resort 'A'. Prices had fallen so far that the resale week, which was at $3K in 2008, has rebounded and is now at $5K per week. I am suggesting total equilibrium here (2000 sellers and 2000 buyers).

Suppose, a potential resale buyer tries twice to purchase a Marriott week at Resort 'A' for $5K, and he loses both sales to Marriott. At this point three things can happen.

One, the buyer decides he no longer wants a Marriott and walks (some may do this).
Two, the buyer decides to buy direct from Marriott for $30K (the same unit he lost through ROFR).
Three, the buyer trys again at $6 or 7K and becomes a new Marriott owner (most likely scenario).

If this scenario holds true, Marriott may actually buy TWO weeks through ROFR for every ONE that gets through, and may actually buy more weeks back than the 2000 suggested above.

Marriott has the option to construct 10,000 new timeshare weeks at Resort 'A' for $10K per week cost, or to buy through ROFR virtually every attempted resale at $5K and build the remaining 8,000 units at $10K. Most likely Marriott will choose the latter with a savings of over $10 million.

Remember there are only 2000 people willing to sell for $5K and Marriott buys them ALL. There are another X number of people willing to sell for $6K and even more at over $7K. Any potential buyer will simply have to pay a higher price to own a Marriott. Most of them will not walk away from Marriott and buy a Westgate or Wyndham. Even if a several of them do walk away the others will have buy at a higher price. As a result, the resale prices WILL increase.

Terry

 

[tombo]

Hypothetical in 2009:

Suppose, a potential resale buyer tries twice to purchase a Marriott week at Resort 'A' for $5K, and he loses both sales to Marriott. At this point three things can happen.

One, the buyer decides he no longer wants a Marriott and walks (some may do this).
Two, the buyer decides to buy direct from Marriott for $30K (the same unit he lost through ROFR).
Three, the buyer trys again at $6 or 7K and becomes a new Marriott owner (most likely scenario).

If this scenario holds true, Marriott may actually buy TWO weeks through ROFR for every ONE that gets through, and may actually buy more weeks back than the 2000 suggested above.

Terry

First you assume every buyer will offer to buy 2 times. Once was all I tried and all I ever will.

I agree with part of option one. I walked away permanently as several others here have done too. I am not a buyer anymore even though I would have purchased at least 6 weeks if there was no ROFR. Marriott got one week from me for the price I was willing to pay, the seller didn't get a dollar more. The current sellers will never get a bid or offer from me (and others like me) reducing the price they sell for (if they can sell at all) and reducing the number of sellers who have a potential buyer. When I am selling something I want as many buyers as I can get competing for my product. Remember that increased demand increases prices.

Option 2 takes a rare breed. If you know about the resale market and know that you can buy weeks for $5000 or $6000, who would really say what the heck I am going to pay $30,000 so I don't get ROFR'd. If they do the old adage of a fool and his money are soon parted rings true.

Some will do option 3 and raise their prices. A few sellers will get a little more if they do raise their prices. Most people who are fiscally responsible set a maximum price they will pay for anything and stick to it or stay at least close.

Option 4 you don't mention is that they might keep offering $5000 or less hoping to get past ROFR which doesn't raise the price for the seller one cent, and could lower the price the sellers receive, or at least not raise the price one cent. If they keep doing that they will help move inventory although the prices won't go up.

For all the buyers who would buy 2 or more Marriott weeks but get turned off by losing the week they bought to ROFR, there is no sale so Marriott has nothing to ROFR.

Any way it happens the week sells for what it sold for. Marriott could only raise the price if they offered more.

If Marriott would bid against me or make owners offers to buy their weeks, I wouldn't care how many weeks they bought. I personally will not do what it takes to buy a week that Marriott won't compete with me on just to lose it because they have a legal clause allowing them to steal it from me at the price I negotiated.

All of our theories are great, but the fact is that the sale prices kept plummeting in 2008 while Marriott was ROFR'ing. Finally Marriott ROFR'd so many that they don't want any more of their weeks even at these unheard of low prices. Now sale prices keep dropping and ROFR didn't stop it when they exercised it, and nothing has changed that trend since they stopped ROFR'ing.

Prices will increase when demand increases and supply decreases (if that ever occurs), and that is fact not hypothetical scenarios.When that happens Marriott will start ROFR'ing again and some here will say thank goodness they are ROFR'ing again and raising the prices. Please remember what really happened in 2008 when ROFR did nothing to stop the downward slide or stabilize prices. Also please remember that when Marriott prices were at historical lows that Marriott did not ROFR even though according to them it is designed to help keep prices stable and high. Has there ever been a time ROFR was more needed? If it Is true that ROFR helps resale prices, where is Marriott and their ROFR when they are needed most and why aren't they ROFR'ing during timeshares darkest hours?

Don't drink the Kool Aid. Marriott will ROFR again when it is good for them and they don't give a damn about the prices owners receive for their weeks. Well actually they do care when they are activelly exercising ROFR. If resale prices get too high Marriott won't ROFR them because they only want to steal cheap weeks they can resell for a good profit margin. Cheap resale prices are actually good for Marriott, but bad for owners who need to sell.

 

[BocaBum99]

Prices dropped because of free market principles, supply versus demand. The prices were dropping as Marriott continued to exercise ROFR, and prices would still be dropping if Marriott was still using ROFR for the same reasons, lots of supply with little demand. What possible help does Marriott give by buying a week from the original buyer for the same price it already sold for? If it sold for $5000, it sold for $5000. No price support here, just the simple theft of the sale from the only person who would offer the poor seller anything to buy his week. Marriott won't offer $5 or $5000 to buy the week (which would actually stabilize prices by setting a floor price below which no weeks could sell). You have to market your week, find a buyer, agree on a price, get a contract all on your own at any price the market will bear. After all of this is done a sale has occured. Marriott stepping in and stealing it if they can make a profit on it has helped no one but Marriott because the sale is over and the price has been finalized before Marriott even enters the picture.


Once the demand increases and supply decreases Marriott will step back in and firm up prices? You have got to be kidding. First of all prices firm themselves up when supply decreases and demand increases, not an ROFR effect, simple economics. Prices will also increase when supply decreases and demand increases, once again not the result of ROFR, it is simple economics. When the market improves Marriott will start ROFR'ing again because it will be profitable for them since they will have buyers for their weeks. Since demand will increase they will be able to sell weeks they steal from the rightful owners for a profit. It will have nothing to do with firming up prices, it will have everything to do with simple economics. If the market is better resale, it will be a better market for developers too.

To believe that ROFR works for sellers after watching the prices plunge this year while Marriott ROFR'd ,and then believing that when prices start to increase and Marriott starts ROFR'ing that the reason they are increasing is because of ROFR is poking one's head into the sand after drinking all of the Kool-aid. For any rational person 2008 should forever answer the question about whether ROFR helps stabilize prices or not. ROFR does not help prices, it only helps the developer. While we are dispelling myths, there is no tooth fairy or Santa Clause either.

You couldn't be more wrong. First of all, when Marriott buys back a unit, that unit gets sold and there is still one unit of demand left over to buy another unit. Do you seriously not understand that is a net increase of at least one unit of demand and that that demand isn't satisfied when the developer buys it back? Even if only 1/2 of these buyers try a second time, that is a NET INCREASE in demand. Do you believe that 100% of all buyers stop buying after ONE ROFR exercise? For every example you come up with where a buyer dropped out, I have 100 examples of where they tried not only 2 times, but up to 15 times. That is a serious increase of demand.

Also, do you believe a) that the developer market for resales will never return? b) It will return, but their increased buying will NOT material impact resale prices. I believe the developer market for resales will return and the amount of buying will positive impact resale prices. Resale prices will increase when Marriott's ability to sell resales at developer prices creates enough demand that they start exercising ROFR in enough volume to be material the resale market. It can happen, it has happened and I believe it will likely happen again. Are you saying it has never happened and never will happen? Or, it has happened, but will never happen again. Or, it has happened, is not likely to happen again, but could happen?

You are entitled to your opinion. We will see over time who is right. It will be very obvious to everyone. If resale prices firm up when the market comes back and Marriott exercises ROFR, I will be right. If resale prices continue to fall and never return, you will be right. Please bookmark this thread. We will revisit it in a few years.