Why is Marriott Vacations struggling?

[Red elephant]

I've asked before but I haven't seen any suggested solution that would work for your stated issue, that of those who chose to plan last minute. As I stated before, there are other time frames that could be chose but anything less than that of the airlines is likely not a workable core approach. What is your suggestion of how to do this AND service the masses? The only approach I can see that would do so would include more supply than sold availability and thus a higher cost. I'll state unequivocally that simply having multiple release dates that end at 4 months out will not help this problem at all.

This is the nature of ALL points systems though it is magnified at Marriott, esp at legacy resorts where there significant differences in demand that also have different seasons and as you point out, differing available units. In truth, points owners have an advantage over weeks owners who are trying to reserve at 12 or 13 months out in many cases. Those with the best chances of suggest are those with volume stringing multiple weeks together at 13 months out but points owners are often in the next best situation to secure that desired reservation because MVC opens up all remaining units for points reservations.

I have noticed this as well. At 13 months I could not book my week MOW in August the week I wanted but did so on points and rented the week I could get. I am still waiting for a week in Aruba in November thru interval but I was able to book 9 days already with points. Next year I will try stringing weeks at 13 months now that I have multiple weeks instead of just one.

 

[davidvel]

The arguments in the is thread remind me of Seinfeld being about nothing. Salespeople already tell unknowing marks that when they buy points they can just call up and reserve what they want. They don't tell them that inventory is limited and they need to call 12/13 months in advance.

We know that someone wants the system(s) to change to fit their lifestyle (late booking) but it ain't gonna happen at MVC, so this is all just a big waste of bandwidth. The weeks system has its deeded reservation rights, and that's just how it is.

 

[sponger76]

Calling those who cannot plan a year out “procrastinators” is a bit off and elitist, I am not looking to penalize anyone unlike those of you who like to see the owners who cannot plan a year out “penalized”. Not sure how it’s selfish to want to see ALL owners (the early planners and those who can’t plan early) with equal opportunities to book high demand weeks, but ok.

With that being said, Have a blessed holiday season and a wonderful New Year.

The thing is, as in most areas of life, those who are late to the party are going to get the leftovers that earlier arrivals didn't take. They can make use of what is still available, or if it doesn't work for them, timeshares just probably aren't the right fit for them. It's just how it is, and trying to engineer alternative outcomes from this sort of natural outcome is just sour grapes and usually only results in added inefficiencies and more upset people than there were originally. What I can say is that timeshare companies should be doing a far better job of explaining the reality instead of setting the blatantly false expectations they currently peddle.

As has has been pointed out numerous times by numerous people in this thread, moving the releases, even partially, to a later date simply doesn't make desirable inventory available to more people. The eager planners will simply shift their planning to be online on the new date and scoop it up before the casual searcher is ever aware it was posted. But even though those planners, or "greedy retirees" as you called them, may still eventually get those same bookings, it does introduce penalties for them, in that they have to wait longer to finalize their plans, including but not limited to things such as airfare, car rentals, etc that may now have gone up significantly in price.

But yes, with all that being said, I do hope you have a happy holiday season and a great New Year.

 

[jorcus]

Below is one analysts take - reminds me of what I said 1 year ago

Shares of Marriott Vacations Worldwide (NYSE:VAC) have been hit hard thus far in 2023, falling 44%. Shares have suffered for a number of reasons, including:

• Significant reduction in full year guidance
• Fears that a pullback in consumer spending could further dampen results going forward
• Relatively high financial leverage with net debt at ~3.6x 2023e EBITDA
• Lowered guidance/tougher outlook coupled with financial leverage could lead to reduced capital returns (buybacks) going forward
• General lack of enthusiasm for the timeshare industry
• I also suspect year end (tax loss) selling has driven shares down

The one thing I have learned, (many times the hard way) It is rare that a stock increases in value without top line revenue growth. I pulled down the latest 10Q and if you go to page 3 the first set of numbers show that sales revenue is down and total revenue is is down some as well. It does not matter what caused it unless that excuse is clearly reversible in the near term, it will always be a negative for the stock. In general this does not look like a bad company on paper. They pay a decent dividend, although the debt is high (not uncommon for a company involved in real estate) at this point it is under control. I find it interesting that they carry a lot of the loans they issue when selling the units. There was a lot of discussion about high loan loss provisions. Interest rates certainly affect this. Lower rates could help this company but always have to get back to that top line growth issue.

https://ir.marriottvacationsworldwide.com/static-files/beabb77b-7edc-4f6e-977b-493b500252cf

 

[dana843]

Are there going to be similar down turns at HGVC, Wyndham, etc?

Wyndham has been old and tired for many years. Check feedback at desired locations before exchanging into from RCI!

 

[pedro47]

Please forgive me for asking this question. But Is Marriott’s Hotels , Marriott’s Vacation Clubs and II struggling for money ?

There is something going on behind the new Marriott’s business model.
Prices are going up…..IMHO

 

[VacationForever]

Please forgive me for asking this question. But Is Marriott’s Hotels , Marriott’s Vacation Clubs and II struggling for money ?

There is something going on behind the new Marriott’s business model.
Prices are going up…..IMHO

I know MVC is having earnings issues, with VAC stock price way down. I haven't followed the hotel side but it is a separate business altogether. VAC price one year ago it was $156.80, today it is $87.51. Their earnings missed analysts' estimates.

 

[JIMinNC]

Please forgive me for asking this question. But Is Marriott’s Hotels , Marriott’s Vacation Clubs and II struggling for money ?

There is something going on behind the new Marriott’s business model.
Prices are going up…..IMHO

Marriott Vacations Worldwide is not “struggling for money”. They earned over $40 million in net income for third quarter 2023, on over $400 million in revenue. Their earnings were negatively impacted by a significant increase in loan loss provisions for financed contracts and $24 million in revenue lost due to the Maui fires. The same quarter last year they earned $109 million, so they are not showing the revenue growth Wall Street needs to see to allow their stock to trade at a market multiple or better. That’s why their stock price is down. They're not at risk of going out of business, but they need to boost earnings to get their growth mojo back.

 

[daviator]

Many a great company, with a strong business and stable earnings, has fallen and killed the golden goose by chasing growth instead of focusing on their core business and the satisfaction of their customers. One of the big downsides of being a public company in the U.S. is the constant pressure for growth at all costs.

Let’s hope MVC won’t kill their golden goose.

 

[DanCali]

Let’s hope MVC won’t kill their golden goose.

Perhaps they already did....?

It seems like a great business model - get weeks for almost nothing at ROFR or foreclosures, put in a trust and sell at over $15/pt. Until you realize that those cheap weeks are the ones with the highest MF/point. Keep doing that for over 10 years and you priced out most of your customers. Not an easy or cheap fix... You need a lot of expensive Platinum and Platinum Plus weeks to offset all that other stuff.

Based on this recent thread, many here wouldn't take points for "free" (or at the price of junk fees of $3/pt only). You'd have to be highly uninformed, or highly incentivized, to buy their point product directly at todays maintenance costs. ~$5000 annually to afford the 6000 trust points for a 2BR in Hawaii? That's not for everyone. And recent increases of ~15% per year don't inspire confidence.

If you stood to inherit 10,000 Abound Points in MVC would you accept or reject the gift ?

Like many I already own too many timeshares At times I am enthused and find it hard to not buy another if I find a great deal At other times I am less enthusiastic and see dark clouds ahead If I stood to inherit 10,000 Abound points knowing I would be assuming at least a $7,900 yearly...

tugbbs.com

 

[jp10558]

Perhaps they already did....?

It seems like a great business model - get weeks for almost nothing at ROFR or foreclosures, put in a trust and sell at over $15/pt. Until you realize that those cheap weeks are the ones with the highest MF/point. Keep doing that for over 10 years and you priced out most of your customers. Not an easy or cheap fix... You need a lot of expensive Platinum and Platinum Plus weeks to offset all that other stuff.

Based on this recent thread, many here wouldn't take points for "free" (or at the price of junk fees of $3/pt only). You'd have to be highly uninformed, or highly incentivized, to buy their point product directly at todays maintenance costs. ~$5000 annually to afford the 6000 trust points for a 2BR in Hawaii? That's not for everyone. And recent increases of ~15% per year don't inspire confidence.

If you stood to inherit 10,000 Abound Points in MVC would you accept or reject the gift ?

Like many I already own too many timeshares At times I am enthused and find it hard to not buy another if I find a great deal At other times I am less enthusiastic and see dark clouds ahead If I stood to inherit 10,000 Abound points knowing I would be assuming at least a $7,900 yearly...

tugbbs.com

I think people are really starting to question that sort of MF for what you get. Especially when competitors are often much less.

 

[DanCali]

I think people are really starting to question that sort of MF for what you get. Especially when competitors are often much less.

I suspect it's not fun to be in sales these days. I remember in late 2019 or so raising objections to point MFs being $0.58 in a sales presentation and asking "what will they be next year - $0.60"? The answer was "Oh, no - we hope not!" Well, now they are around $0.80.... The saddest part is that some of my enrolled Platinum weeks are now in that $0.60/point range, which seemed so outlandish just a short 4 years ago.

On top if that resale prices are down for obvious reasons. And even though maintenance fees are up 30% in 2 years, rental prices are also down due to what seems to be a huge number of listings as owners seek to offset costs (Redweek today: 933 NCV listings, 353 Grande Ocean listings, 382 Barony listings, 1277 Westin Kaanapali Villas (South + North phases) listings, 651 Crystal Shores listings). It's a highly vibrant rental market for all the wrong reasons.

I don't mean to sound so negative, but I guess I am! I don't think anyone expected value to erode so quickly.

 

[pedro47]

In the last few years something has changed with the overall Marriott’s philosophy. I cannot describes the new philosophy of Marriott’s in words.

On Dec 2, 2023 I posted this about the Marriott’s philosophy .
I feel Something is going on in the upper management tier of the Marriott’s Corp.
Just think about all the negative comments posted on this website about MVC.

 

[Superchief]

On Dec 2, 2023 I posted this about the Marriott’s philosophy .
I feel Something is going on in the upper management tier of the Marriott’s Corp.
Just think about all the negative comments posted on this website about MVC.

I think MVC's management is following the same policies as other major manufacturers by taking advantage of this high inflation period to pad their profits. They realize they can blame all of the excessive increases on inflation and get the added bonus of the 10% management fee. It is even worse for Florida resorts because they are using the reserve funding changes to double their MF's at many resorts. Why aren't the reserves amounts increasing nearly as much for the other Timeshare companies in Florida? MVC has the additional power of controlling many of the BOD's so the owners truly have no power. This strategy will kill the goose that laid their golden egg as owners start leaving the program.

My previous company is doing the same thing after a new CEO took over prior to my retirement. The focus is on margin enhancement, which means increasing prices more than increases in costs. In their latest quarter, $sales only increased 2% but profits increased by 19%. Market shares in their key categories are declining due to higher prices and 'downsized' packaging. You can only fool consumers for so long before they start looking elsewhere.

 

[JIMinNC]

I suspect it's not fun to be in sales these days. I remember in late 2019 or so raising objections to point MFs being $0.58 in a sales presentation and asking "what will they be next year - $0.60"? The answer was "Oh, no - we hope not!" Well, now they are around $0.80.... The saddest part is that some of my enrolled Platinum weeks are now in that $0.60/point range, which seemed so outlandish just a short 4 years ago.

On top if that resale prices are down for obvious reasons. And even though maintenance fees are up 30% in 2 years, rental prices are also down due to what seems to be a huge number of listings as owners seek to offset costs (Redweek today: 933 NCV listings, 353 Grande Ocean listings, 382 Barony listings, 1277 Westin Kaanapali Villas (South + North phases) listings, 651 Crystal Shores listings). It's a highly vibrant rental market for all the wrong reasons.

I don't mean to sound so negative, but I guess I am! I don't think anyone expected value to erode so quickly.

We explicitly see the percentage increases in timeshare maintenance fees from year-to-year because we pay the same ones every year and have a direct comparison. Hotel rates are also rising, but unless you go to the same hotel the same week every year, you won't have the same direct year-to-year comparison we have with timeshares.

I do have an airshow event I go to about the same week every year in Florida. In 2021, I paid $145/night for a hotel just outside of Tampa. That same hotel is $220/night for the 2024 dates for the airshow. That's a 52% increase in three years. Hotel operating costs are rising, just like timeshare HOAs. Hotels do have a demand pricing/profit component to their prices that timeshare HOAs do not, but timeshares are not at all unique in seeing sizable cost increases.

The only place rentals may have gone down in price are on owner-rental sites like Redweek which are driven by very different pricing dynamics. Owners will often rent at below-market rates just to cover some or all of their maintenance fees and there is a race to the bottom in that market - rent it at any price or eat it. It's more like a distressed sales market than a cost or profit-based model. But that bargain market comes with pitfalls and risks for renters not encountered with hotel bookings or timeshare ownership. If you're willing to play the renting from owners game, deals can be had, but not all deals are worth the risk.

 

[ljmiii]

We explicitly see the percentage increases in timeshare maintenance fees from year-to-year because we pay the same ones every year and have a direct comparison. Hotel rates are also rising, but unless you go to the same hotel the same week every year, you won't have the same direct year-to-year comparison we have with timeshares.

I do have an airshow event I go to about the same week every year in Florida. In 2021, I paid $145/night for a hotel just outside of Tampa. That same hotel is $220/night for the 2024 dates for the airshow. That's a 52% increase in three years. Hotel operating costs are rising, just like timeshare HOAs. Hotels do have a demand pricing/profit component to their prices that timeshare HOAs do not, but timeshares are not at all unique in seeing sizable cost increases.

We've seen the same thing. Most notably, pretty much every year we stay three or so summer nights in London on our way to or from somewhere else. The increase in hotel prices over the past three years boggle the mind (and wallet). When we vacation, I make speculative bookings early and look at prices often (and try to use BPs, HHonors points, and FNCs when I can)...but WOW! None of my MF increases (assuming I don't count assessments like MOC's) come anywhere close.

 

[jwalk03]

We explicitly see the percentage increases in timeshare maintenance fees from year-to-year because we pay the same ones every year and have a direct comparison. Hotel rates are also rising, but unless you go to the same hotel the same week every year, you won't have the same direct year-to-year comparison we have with timeshares.

I do have an airshow event I go to about the same week every year in Florida. In 2021, I paid $145/night for a hotel just outside of Tampa. That same hotel is $220/night for the 2024 dates for the airshow. That's a 52% increase in three years. Hotel operating costs are rising, just like timeshare HOAs. Hotels do have a demand pricing/profit component to their prices that timeshare HOAs do not, but timeshares are not at all unique in seeing sizable cost increases.

The only place rentals may have gone down in price are on owner-rental sites like Redweek which are driven by very different pricing dynamics. Owners will often rent at below-market rates just to cover some or all of their maintenance fees and there is a race to the bottom in that market - rent it at any price or eat it. It's more like a distressed sales market than a cost or profit-based model. But that bargain market comes with pitfalls and risks for renters not encountered with hotel bookings or timeshare ownership. If you're willing to play the renting from owners game, deals can be had, but not all deals are worth the risk.

I totally agree. Hotel prices are up dramatically and not just in popular desirable places either! I'm going to Mississippi next week and thought Feb in Mississippi should have some really cheap hotel rates. I'm paying $150/nt for a Fairfield Inn. The Westin in Jackson was almost $300 for a random Feb week night. A few short years ago I could typically get a Fairfield or a Courtyard for about $100/nt. Seems $150 has become the new bargain price.

 

[timsi]

We explicitly see the percentage increases in timeshare maintenance fees from year-to-year because we pay the same ones every year and have a direct comparison. Hotel rates are also rising, but unless you go to the same hotel the same week every year, you won't have the same direct year-to-year comparison we have with timeshares.

I do have an airshow event I go to about the same week every year in Florida. In 2021, I paid $145/night for a hotel just outside of Tampa. That same hotel is $220/night for the 2024 dates for the airshow. That's a 52% increase in three years. Hotel operating costs are rising, just like timeshare HOAs. Hotels do have a demand pricing/profit component to their prices that timeshare HOAs do not, but timeshares are not at all unique in seeing sizable cost increases.

The only place rentals may have gone down in price are on owner-rental sites like Redweek which are driven by very different pricing dynamics. Owners will often rent at below-market rates just to cover some or all of their maintenance fees and there is a race to the bottom in that market - rent it at any price or eat it. It's more like a distressed sales market than a cost or profit-based model. But that bargain market comes with pitfalls and risks for renters not encountered with hotel bookings or timeshare ownership. If you're willing to play the renting from owners game, deals can be had, but not all deals are worth the risk.

One common myth appears to be the relationship between hotel room prices and timeshare maintenance fees.

Many hotels carry significant loans (55-65% of the property value), leading to substantial interest expenses. Recent rate hikes translate to significant additional interest costs (e.g., $4.8 million per year more on a $200 million property), impacting overall expenses. This is a huge annual cost increase for a property with a pre-pandemic budget of say 15 million dollars. In contrast, timeshare resorts operate debt-free, shielding them from rising interest rate pressures.

Additionally, during and after Covid, the hotels occupancy rate dipped and has still not fully recovered due to the slow recovery of business travel (70-80% pre-pandemic levels), creating a revenue crunch. To maintain profitability, hotels have been forced to hike room rates, focusing on maximizing per-rented-room income. Timeshare owners pay regardless: whether you use your unit or not, maintenance fees are paid, offering cost stability per unit amidst occupancy fluctuations.

In summary, hotel room price inflation and timeshare maintenance fee inflation operate under different dynamics. While hotels react to occupancy troubles and rising interest rates by adjusting room prices, timeshare fees primarily reflect resort operational costs and should increase at a much lower rate. I hope everyone can keep this in mind when quoting the current cost of a hotel room compared to 4 years ago.

 

[Dean]

One common myth appears to be the relationship between hotel room prices and timeshare maintenance fees.

Many hotels carry significant loans (55-65% of the property value), leading to substantial interest expenses. Recent rate hikes translate to significant additional interest costs (e.g., $4.8 million per year more on a $200 million property), impacting overall expenses. This is a huge annual cost increase for a property with a pre-pandemic budget of say 15 million dollars. In contrast, timeshare resorts operate debt-free, shielding them from rising interest rate pressures.

Additionally, during and after Covid, the hotels occupancy rate dipped and has still not fully recovered due to the slow recovery of business travel (70-80% pre-pandemic levels), creating a revenue crunch. To maintain profitability, hotels have been forced to hike room rates, focusing on maximizing per-rented-room income. Timeshare owners pay regardless: whether you use your unit or not, maintenance fees are paid, offering cost stability per unit amidst occupancy fluctuations.

In summary, hotel room price inflation and timeshare maintenance fee inflation operate under different dynamics. While hotels react to occupancy troubles and rising interest rates by adjusting room prices, timeshare fees primarily reflect resort operational costs and should increase at a much lower rate. I hope everyone can keep this in mind when quoting the current cost of a hotel room compared to 4 years ago.

Correct, they are different animals. Timeshares follow more condos both in terms of risk and fee requirements. That's why fees were required during covid, natural disasters, etc. That's not to say there is no relationship, there is big picture. As a consumer though one of the data points is whether a timeshare saves money and/or provides sufficient extra value to justify the up front costs, fees and long term commitment/risk over hotels and condo rentals.

 

[danill]

Hopefully, the message regarding unreasonable increases in Maintenance Fees is being heard at corporate level. I did attend a sales presentation a couple weeks ago. On the follow-up survey, one of the boxes that could be checked as a reason for not buying was high maintenance fees, which I was happy to check. I also pounded on this problem with the sales rep, whose response was that I should buy more so I could make high-demand reservations and rent them out (with his help) to offset my other maintenance fees.

 

[RunCat]

Hopefully, the message regarding unreasonable increases in Maintenance Fees is being heard at corporate level.

Inflation and extra costs are hitting everywhere. My property taxes this year, in CO, are 220% of what I paid in 2020. Inflation over the past 3 years has been 20%. Costs for insurance et al, are being reported as going up, in CA, 20+% this year. Minimum wage pressures are pushing up costs as well. Even though I do not like the increases in MFs, I can see why they are happening.
The better question is why are we seeing the increases in point purchase prices. The buildings are built and have been capitalized. Those costs have not changed. I guess it is all about the $$.

 

[JIMinNC]

One common myth appears to be the relationship between hotel room prices and timeshare maintenance fees.

Many hotels carry significant loans (55-65% of the property value), leading to substantial interest expenses. Recent rate hikes translate to significant additional interest costs (e.g., $4.8 million per year more on a $200 million property), impacting overall expenses. This is a huge annual cost increase for a property with a pre-pandemic budget of say 15 million dollars. In contrast, timeshare resorts operate debt-free, shielding them from rising interest rate pressures.

Additionally, during and after Covid, the hotels occupancy rate dipped and has still not fully recovered due to the slow recovery of business travel (70-80% pre-pandemic levels), creating a revenue crunch. To maintain profitability, hotels have been forced to hike room rates, focusing on maximizing per-rented-room income. Timeshare owners pay regardless: whether you use your unit or not, maintenance fees are paid, offering cost stability per unit amidst occupancy fluctuations.

In summary, hotel room price inflation and timeshare maintenance fee inflation operate under different dynamics. While hotels react to occupancy troubles and rising interest rates by adjusting room prices, timeshare fees primarily reflect resort operational costs and should increase at a much lower rate. I hope everyone can keep this in mind when quoting the current cost of a hotel room compared to 4 years ago.

You're of course correct that cost/pricing structures of hotels and the costs of timeshares are different in many ways, but they are also similar in many ways. The key point is both are experiencing similar cost pressures, albeit pressures that are different in some respects. Both are experiencing higher labor costs, supply chain costs, insurance costs, property taxes (due to rising property values), etc.

I would argue, however, that with the dynamic pricing most hotels use now, if occupancy is still lower now, that should result in some downward pressure on nightly rates rather than the opposite as you suggest. While it's true that management might try to raise prices to some degree to compensate for lower occupancy, those higher rates could also reduce demand further, so there is a market-based limit to how much they practically can compensate for lower occupancy by raising nightly rates.

So, yes, timeshares maintenance fees can logically be expected to rise less than hotel rates might, but I think that is exactly what we are seeing over the last few years. Timeshare maintenance fees are going up, but hotel rates are rising even faster - at least that is my personal experience.

 

[ljmiii]

One common myth appears to be the relationship between hotel room prices and timeshare maintenance fees....I hope everyone can keep this in mind when quoting the current cost of a hotel room compared to 4 years ago.

Why? As a traveler, it is the only comparison that matters.

 

[pedro47]

I feel Marriott’s maybe focusing on the new Marriott’s Bonvoy Apartments/ Condo concept with their new money. Maybe, MVC is becoming less appealing to upper management, stockholder's and investors.

 

[Hindsite]

I feel Marriott’s maybe focusing on the new Marriott’s Bonvoy Apartments/ Condo concept with their new money. Maybe, MVC is becoming less appealing to upper management, stockholder's and investors.

They don't share upper management, they are two separate listed companies. Indeed there may be influence from MAR to VAC through shareholdings and common analysist and investors, but the business plans for each organisation should stand alone.