This is an interesting move by MVW, "Marriott Vacations Worldwide Appoints Christian Alejandro Asmar to Board of Directors"

[jwalk03]

No doubt it has the potential to be a last ditch effort but the problem is that even having the option suggests to many members that it's a reasonable value. Many people will just assume it's reasonable and proceed or they get clay feet and use points for convenience or comfort not even thinking if they just let the points expire and paid cash they'd come out ahead financially, have far more flexibility and more options up front and later on. We have 3 cruises booked next year for a total of 9 cabins and I've worked the prices down about $2000 total across all cabins, something that would not have been an option using points.

I really don't think they have any incentive to make it a reasonable option. I think these options exist solely as a marketing tool for the sales weasels- and they are very good at leaving out the gory negative details and still using them to get people to buy. And then by the time one figures out its not a good deal its far too late for them to do anything about it.

 

[goodbadugly]

It is vaguely useful as an answer to "what can I do with points I can't use at MVC". So a sales pitch, but also a last ditch "better lose 40% of value than 100% of value" in some situations right?

The original sales pitch was..."we are MVC and bring a large, vetted and premium customer base to these parties. This allows MVC to negotiate better deals for our owners". What a crock that turned out to be!!!

 

[mbstn6254]

If this is a private equity firm attracted to VAC's assets, it is a very ominous sign. If history is any judge, they will look to leverage the properties, strip out the equity, and leave owners with a pile of debt and little to show.

So what's ominous or what is your concern?

 

[dioxide45]

If this is a private equity firm attracted to VAC's assets, it is a very ominous sign. If history is any judge, they will look to leverage the properties, strip out the equity, and leave owners with a pile of debt and little to show.

MVC doesn't own any properties they can strip. This actually came up on the Morgan Stanley Travel and Leisure Conference where John Geller was being interviewed. The interviewer showed they really had no clue how the timeshares worked. They asked if Marriott Vacations could reclaim the resorts by buying them back if the value of the underlying real estate could be reflected in their stock price. It can't. The reacquired inventory goes into the trust and is sold to owners as beneficial interests in the trust.

At most of the resorts, the association owns everything, inclusing common elements and commercial space. For commercial space, Marriott leases it back from the association for $0. Marriott Vacations has decided to take a similar approach to resort management as Marriott International. They don't want to own resorts. They are actively working to sell the hotel portion of Sheraton Kauai and also want to sell the commercial space that sits under MVC Waikiki.

Marriott's primary revenue streams are resort management and operations and contract sales.

 

[daviator]

MVC doesn't own any properties they can strip. This actually came up on the Morgan Stanley Travel and Leisure Conference where John Geller was being interviewed. The interviewer showed they really had no clue how the timeshares worked. They asked if Marriott Vacations could reclaim the resorts by buying them back if the value of the underlying real estate could be reflected in their stock price. It can't. The reacquired inventory goes into the trust and is sold to owners as beneficial interests in the trust.

At most of the resorts, the association owns everything, inclusing common elements and commercial space. For commercial space, Marriott leases it back from the association for $0. Marriott Vacations has decided to take a similar approach to resort management as Marriott International. They don't want to own resorts. They are actively working to sell the hotel portion of Sheraton Kauai and also want to sell the commercial space that sits under MVC Waikiki.

Marriott's primary revenue streams are resort management and operations and contract sales.

What MVC does own is all the unsold inventory, both weeks and trust points, along with the carrying costs of that inventory (they have to pay the MFs on what they own.) So I suspect that one of their challenges is to own, at any given time, sufficient inventory so that they have plenty to sell (essentially the weeks and points they own are their products sitting on the shelf for buyers to purchase) while not holding so much inventory that they are overburdened by the carrying costs.

And of course they do their best to monetize what they own, by renting rooms on Marriott.com, by using rooms for Encore packages and other promotional uses, using PlusPoints as a purchase incentive, etc.

When they get low on inventory, they either need to increase their purchase of resale VOIs (through ROFR, etc.) or build new properties. As we've seen, they've moved toward building more hotel=like properties, which gives them Abound points to sell while they promise access to the beach resorts they no longer create.

 

[dioxide45]

They've acquired more shares.

Christian Asmar Buys 337,551 Shares of Marriott Vacations Worldwide Corporation (NYSE:VAC) Stock

Marriott Vacations Worldwide Corporation (NYSE:VAC - Get Free Report) Director Christian Asmar bought 337,551 shares of Marriott Vacations Worldwide stock in a transaction dated Wednesday, June 18th. The shares were acquired at an average price of $68.11 per share, with a total value of...

www.marketbeat.com

 

[pedro47]

More shares ownership by Asmar, means more changing are coming. IMHO.

 

[cubigbird]

More shares ownership by Asmar, means more changing are coming. IMHO.

…..At the expense of owners. Activist investors generally are bad for the consumer value. Just ask Southwest Airlines. Remember the goal of a publicly traded company is increase shareholder value not consumer value. With developer points and maintenance fees already really high, it will be interesting to see where these changes come and if it erodes the value of ownership.

 

[daviator]

…..At the expense of owners. Activist investors generally are bad for the consumer value. Just ask Southwest Airlines. Remember the goal of a publicly traded company is increase shareholder value not consumer value. With developer points and maintenance fees already really high, it will be interesting to see where these changes come and if it erodes the value of ownership.

Agreed. But it seems to me they've already eroded the value of ownership to about its limit. Further erosion of value will likely result in large numbers of owners abandoning their ownerships. I feel like it's nearing that kind of tipping point.

 

[cubigbird]

Agreed. But it seems to me they've already eroded the value of ownership to about its limit. Further erosion of value will likely result in large numbers of owners abandoning their ownerships. I feel like it's nearing that kind of tipping point.

I guess they could raise the developer price per point well above $17.72 and maintenance fees above $1/point but that won’t come without some fallout to sales and resort budgets. I feel they’re about at market maximum tolerance for cost on both of those and we’re only a major recession away from the whole system taking a major hit. I guess we just await the what “exciting changes” are implemented by this activist investor.

 

[tamu_bu]

 

[tamu_bu]

Not a great historical performance is it?

 

[zentraveler]

Not a great historical performance is it?

A true understatement - in a market like the last several+ year has been it is downright dismal.

 

[dioxide45]

View attachment 112303

It is certainly underperforming its piers (TNL and HGV).

 

[TST]

Operating cash flow does not lie. They are in trouble.

 

[pedro47]

It is certainly underperforming its piers (TNL and HGV).

But why.

 

[jp10558]

But why.

Well, I have only uninformed speculation. My guess is something's killing their ability to make sales at retail. Without that I think all of these developers start losing money. I'd love to have someone more clued into the financials look for some data - but I'm going to guess again (why not?) that there's something different about their people in for tours or their salespeople.

Some potential ideas would be

• MVC isn't enticing as many people to presentations - maybe it's strategy.
  • T&L was always kinda downmarket
  • HGV went downmarket with DRI and BG acquisitions.
  • MVC added Sheraton, Vistana, Hyatt I think? These are upmarket in comparison.
• The more upmarket buyers aren't as interested as they both see high MFs and are less bothered by AirB&B etc costs? So the sales pitch is falling flat?
• The mid range buyers or anyone value conscious coming to TUG or just doing some real numbers by themselves don't see any value to the developer pricing. Maybe the MVC offers are so high that people nope right out instead of being cajoled into "deals"?
  • I think people can be enticed to overspend, but there's also a number for people where they just immediately go - not affordable for me. For example, I'm walking away from a $300,000 "supercar", but maybe I could be talked into an additional $5k or so on a $50k car. I wonder if MVCs starting number is higher than T&L or HGV, and if so, is it maybe enough higher to tilt over to "no magic but winning the lottery is affording that" territory?
  • This could well be the strategy - bigger spenders but less of them. It might be backfiring though.
• defaulted MF costs? Maybe people are walking away and MVC ends up having to eventually take back at least some of these weeks and pay the MF on them to not have a resort enter a death spiral?
  • T&L and HVC maybe with the lower MFs and or trust subsystems either have less defaults, can spread out the defaults, and obv have less per week to cover if they have to cover, and maybe lower ongoing costs helps re-sell these weeks faster.
• MVC is getting hit harder faster with the "changing tastes" the various ARDA reports mentioned? It sounds like all 3 are chasing the newer demographics supposed different tastes. Though I wonder if it's just smaller demographics too - less younger people so less people easily interested in TS at all?

I don't think MVC (so far) really has problems wowing people with their resorts, whereas T&L certainly can if the people get the luck of a bad resort.

Or - it really is MVC having really bad operations and the activist investor really can cut some fat or fix up the corporate org. If it just costs MVC some percentage more to operate than it does T&L or HGV, I can see investors selling it off.

 

[TST]

Well, I have only uninformed speculation. My guess is something's killing their ability to make sales at retail. Without that I think all of these developers start losing money. I'd love to have someone more clued into the financials look for some data - but I'm going to guess again (why not?) that there's something different about their people in for tours or their salespeople.

Some potential ideas would be

• MVC isn't enticing as many people to presentations - maybe it's strategy.
  • T&L was always kinda downmarket
  • HGV went downmarket with DRI and BG acquisitions.
  • MVC added Sheraton, Vistana, Hyatt I think? These are upmarket in comparison.
• The more upmarket buyers aren't as interested as they both see high MFs and are less bothered by AirB&B etc costs? So the sales pitch is falling flat?
• The mid range buyers or anyone value conscious coming to TUG or just doing some real numbers by themselves don't see any value to the developer pricing. Maybe the MVC offers are sohigh that people nope right out instead of being cajoled into "deals"?
  • I think people can be enticed to overspend, but there's also a number for people where they just immediately go - not affordable for me. For example, I'm walking away from a $300,000 "supercar", but maybe I could be talked into an additional $5k or so on a $50k car. I wonder if MVCs starting number is higher than T&L or HGV, and if so, is it maybe enough higher to tilt over to "no magic but winning the lottery is affording that" territory?
  • This could well be the strategy - bigger spenders but less of them. It might be backfiring though.
• defaulted MF costs? Maybe people are walking away and MVC ends up having to eventually take back at least some of these weeks and pay the MF on them to not have a resort enter a death spiral?
  • T&L and HVC maybe with the lower MFs and or trust subsystems either have less defaults, can spread out the defaults, and obv have less per week to cover if they have to cover, and maybe lower ongoing costs helps re-sell these weeks faster.
• MVC is getting hit harder faster with the "changing tastes" the various ARDA reports mentioned? It sounds like all 3 are chasing the newer demographics supposed different tastes. Though I wonder if it's just smaller demographics too - less younger people so less people easily interested in TS at all?

I don't think MVC (so far) really has problems wowing people with their resorts, whereas T&L certainly can if the people get the luck of a bad resort.

Or - it really is MVC having really bad operations and the activist investor really can cut some fat or fix up the corporate org. If it just costs MVC some percentage more to operate than it does T&L or HGV, I can see investors selling it off.

I am speculating too, but I agree. I think their resort operations are excellent and top notch. I think the problem is that consumers are not to pay or cannot afford the high quality product that is the Marriott resort.

 

[billymach4]

I am speculating too, but I agree. I think their resort operations are excellent and top notch. I think the problem is that consumers are not to pay or cannot afford the high quality product that is the Marriott resort.

Put simply. Sales have slumped and hit a brick wall. The economy is fickle, we are constantly telling all to buy resale. The same can be said of the dozens of FB Timeshare and Marriott groups.

 

[TST]

I don't see how they can avoid raising MF across the board given what I can discern from their publicly available cash flow statements. The statistic this investor wants to see but cannot find anywhere is attrition of existing members. Does anyone have any information on that front from their home property?

 

[TST]

If existing users are okay with MF and regular increases, then I am less worried. That is why I am looking for attrition statistics.

 

[pedro47]

Hilton, Wyndham, Holiday Inn, Shell and Westgate will invite any couple on the planet to attend their sale presentations. MVC, IMHO, is a little more selective who they invite to attend their timeshare presentations. This is why their developers sales are down, That is my opinion only.

 

[jp10558]

Hilton, Wyndham, Holiday Inn, Shell and Westgate will invite any couple on the planet to attend their sale presentations. MVC, IMHO, is a little more selective who they invite to attend their timeshare presentations. This is why their developers sales are down, That is my opinion only.

And Single people - I have been invited several times.

 

[billymach4]

I don't see how they can avoid raising MF across the board given what I can discern from their publicly available cash flow statements. The statistic this investor wants to see but cannot find anywhere is attrition of existing members. Does anyone have any information on that front from their home property?

The bulk of MF are determined by each resort board. From what everyone here states is that as the budget increases the management fee will in turn increase. What I am saying is that MVC does not directly increase MF's, however MVC benefits in the overall Management fee as the budget increases over time. In other words MVC would have a hard time justifying an across the board increase in their management fee.

There are ton's of dirt cheap resales in weeks and points flooding the market. The flood of resale availability is most likely having a drag on new points sales. It almost feels like 2008 - 2010 when MVC had to reinvent their sales model to Points and severely limit new development in properties.

As far as attrition? Please define that further. What metric are you looking for with respect to attrition?

Why are so many resales on the market. For one the older Boomer Generation from 1945 to 1960 is age 80 - 65. Certainly the 70ish and 80 yr old set is aging out. Dying or having health issues affecting their travel lifestyle. The 65yr to 80yr set is not likely to buy new into MVC. The younger Boomers post 1960 - 64 are likely more tech savvy and have heard about resale.

Gen X and millennials are likely smart enough to avoid purchasing direct sales (Yes I know there are plenty of examples to the contrary I am speaking in broad terms).

My overall opinion is that MVC is having a hard time selling to this current demographic due to the proliferation of Social Media info and the bad reputation of timeshare ownership. There are plenty of news stories regarding the pitfalls of Timeshare scams and abuse all over the news, talk shows and social media.

 

[TST]

The bulk of MF are determined by each resort board. From what everyone here states is that as the budget increases the management fee will in turn increase. What I am saying is that MVC does not directly increase MF's, however MVC benefits in the overall Management fee as the budget increases over time. In other words MVC would have a hard time justifying an across the board increase in their management fee.

There are ton's of dirt cheap resales in weeks and points flooding the market. The flood of resale availability is most likely having a drag on new points sales. It almost feels like 2008 - 2010 when MVC had to reinvent their sales model to Points and severely limit new development in properties.

As far as attrition? Please define that further. What metric are you looking for with respect to attrition?

Why are so many resales on the market. For one the older Boomer Generation from 1945 to 1960 is age 80 - 65. Certainly the 70ish and 80 yr old set is aging out. Dying or having health issues affecting their travel lifestyle. The 65yr to 80yr set is not likely to buy new into MVC. The younger Boomers post 1960 - 64 are likely more tech savvy and have heard about resale.

Gen X and millennials are likely smart enough to avoid purchasing direct sales (Yes I know there are plenty of examples to the contrary I am speaking in broad terms).

My overall opinion is that MVC is having a hard time selling to this current demographic due to the proliferation of Social Media info and the bad reputation of timeshare ownership. There are plenty of news stories regarding the pitfalls of Timeshare scams and abuse all over the news, talk shows and social media.

These are good points. What I mean by attrition is probably best measured by bad debt at any given property combined with bad debt for the MVC Trust. How many members (or owners if that is what you want to call them) are simply returning the keys without even reselling? And how are individual properties handling bad debt? Is the developer taking delinquent interests off the hands of the property associations or are any affected properties having to raise MF to absorb bad debt?