The Marriott ROFR Debate: helpful to sellers or not?

[AwayWeGo]

R. O. F. R. = R. O. F. L.

But notice that when the ROFR is in effect resale prices are steady or increasing and when the ROFR is not in effect resale prices are falling.

It's the other way round.

When timeshare prices are dropping, the timeshare companies don't even bother with ROFR.

When timeshare prices are steady or increasing, then the timeshare companies -- at their option -- may (or may not) use ROFR to snatch up a lowball deal that otherwise would have gone to 1 of us regular walking around bottom-feeding bargain hunters.

Mox nix for the seller, who gets the same lowball amount either way.

ROFR = ROFL. (Still does. So it goes.)

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

 

[JimC]

I believe the ROFR is a good thing for owners - that's my opinion.

I know of no way to prove the ROFR acts as price support - my contention is that every buyer in the market adds to increasing prices; lack of buyers reduces prices....But notice that when the ROFR is in effect resale prices are steady or increasing and when the ROFR is not in effect resale prices are falling.

I don't know if the ROFR is causing this but that's what is happening....

DVC may serve as proof of your position. DVC used ROFR to support direct sales at open resorts and to provide inventory for sales at closed resorts. It appeared that ROFR supported prices of resales at about 85% of developer for many years. When DVC began to selectively alter how they used ROFR market prices adjusted downward.

DVC has the added twist of a deeded property with a termination date. For the first ten years of the program all properties had the same termination date. Since then all new properties have a full 50 year deeded interest. There is also the original property that has had a deeded rights extension which some owners have and other opted out of. DVC ROFR will be far more interesting in this environment.

 

[Pit]

Interesting idea.

I too thought since Marriott will start using ROFR again, that anyone wishing to buy a Marriott will have to increase their offers to get pass ROFR, therefore increasing price.

BUT if you're saying that the new point based system, may seem to most buyers a complete new and different system than what is offered resale, then maybe there will be even fewer buyers and even less demand, therefore lower prices.

My opinion is based on observations of Starwood SVN. There is a sizeable difference in resale value between mandatory weeks (where point system membership transfers with the resale at no additional cost) versus voluntary weeks (point system does not transfer with resale).

I am assuming that MVC point system membership will not trasfer with the resale - as with SVN voluntary weeks. That being the case, I expect there will be a glut of owners looking to dump their week(s) and fewer buyers interested in a devalued product. Prices will decline, Marriott will pick up the resales via rofr, pull them into the point system, and resell them as pointed, developer weeks.

Perry, this will give us an opportunity to see if Marriott really cares about their owners. If they do, they will grandfather current owners into the system and allow point membership to transfer with the resale. Let's see if they pass this test. I'm not expecting it, but who knows.

I agree with Alan, that rofr does not cause price stability. Demand is what provides for price stability. Rofr is just a symptom.

 

[dioxide45]

The question that is always asked is, does ROFR protect sellers or owners from low resale prices? The answer is NO. ROFR always exists regardless if it is being exercised or not. So even today we have ROFR but it is not protecting the price for anyone. Just because Marriott is not exercising, is meaningless to the answer to the question. ROFR is always there and always an option. Sure it may prop up prices if they actively and consistently exercise, but there is no guaranty for that, thus no guaranty protecting the owners and sellers.

 

[AwayWeGo]

The Ongoing Timeshare Comedy.

ROFR is always there and always an option. Sure it may prop up prices if they actively and consistently exercise, but there is no guaranty for that, thus no guaranty protecting the owners and sellers.

Jacking up prices resale buyers have to pay is not the same as propping up the amounts that sellers receive.

Via ROFR, only the timeshare companies get to buy cheap -- if they choose (their option). And when they do, that same el cheapo price is all the seller gets -- not a nickel more.

ROFR = ROFL.

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

 

[Pit]

Any guesses as to when Marriott will resume rofr? Timeshare sales improved last quarter, but still well below pre-recession levels.

Here is a chart showing the ratio between Marriott timeshare inventory vs. sales for the past 6 quarters. I'm guessing we won't see any significant comeback of ROFR until this ratio drops back to 6ish. At the current rate of sales, they are sitting on > 2 years of inventory.