Why VC points are both equal and separate.

[FractionalTraveler]

Puck, no problem seeing July and August. See inventory below:

https://gsmqkq.bay.livefilestore.co...xdcRBxUMUZzNtktXmMn7VT9tq/Newport2.png?psid=1

Looks like the trust can pull it. Were you not able to see all this inventory?

I am assuming you have the required points to play the game?

 

[gblotter]

If a Trust owned property is rented, the rental income (net of expense) should benefit the Trust, and serve to offset operating expenses and/or MF of the Trust. The trustees have a fiduciary responsibility to act for the benefit of the trust.

Marriott can't simply pocket that rent.

Of course Marriott can simply pocket the rent.

Marriott is the actual owner of much of the Trust inventory (unsold Trust points). Marriott is free to rent and pocket the profit from that unsold inventory. In doing so, Marriott's only obligation is to substitute an equivalent amount of inventory (as measured by the points valuation) for the prime week that they claimed and rented. The gotcha for owners is which weeks Marriott claims for itself, and which weeks are substituted.

So far as I can tell, there is nothing in the legal docs that prevents Marriott from scooping up the best weeks for itself. And there is nothing that prohibits Marriott from substituting near-worthless off-season weeks if they want (so long as the total points valuation is the same).

There is ample anecdotal evidence that Marriott is doing exactly that kind of substitution.
One example is cited here: http://www.tugbbs.com/forums/showthread.php?t=168111
Another example here: http://tugbbs.com/forums/showthread.php?t=162068
Another example here: http://tugbbs.com/forums/showthread.php?t=166674

Marriott Vacations Worldwide isn't a non-profit corporation. They have shareholders who expect them to generate a profit. Their fiduciary responsibility would actually prohibit them from returning rental income profit to the trust to reduce maintenance fees - that would be robbing the shareholders.

 

[gblotter]

So is it correct to say that for Newport Coast, being an enrolled owner or trust owner gives you access to this property which would otherwise be unavailable or difficult to get?

Summer reservations via points at Newport are available only because Marriott owns more unsold weeks at NCV than they could ever hope to rent.

You won't find the same prime week availability at other resorts that are lightly represented in the trust. Marriott will claim those prime weeks for itself and substitute less-prime weeks from the Trust instead.

Furthermore, summer availability at NCV for points reservations just illustrates my point that when Marriott owns a week, it will claim the best for itself. Even when Marriott controls more prime weeks than it can possibly rent out, those weeks are not being made available for legacy owner reservations. In this example, the prime summer weeks at NCV are being diverted to the Trust so that Marriott can at least benefit from the skim when points reservations are made.

Marriott's manipulations of the inventory seem so clear when you ask yourself the question: What behavior will maximize the profit to Marriott?

 

[windje2000]

Of course Marriott can simply pocket the rent.

Marriott is the actual owner of much of the Trust inventory (unsold Trust points). Marriott is free to rent and pocket the profit from that unsold inventory. In doing so, Marriott's only obligation is to substitute an equivalent amount of inventory (as measured by the points valuation) for the prime week that they claimed and rented. The gotcha for owners is which weeks Marriott claims for itself, and which weeks are substituted.

So far as I can tell, there is nothing in the legal docs that prevents Marriott from scooping up the best weeks for itself. And there is nothing that prohibits Marriott from substituting near-worthless off-season weeks if they want (so long as the total points valuation is the same).

There is ample anecdotal evidence that Marriott is doing exactly that kind of substitution.
One example is cited here: http://www.tugbbs.com/forums/showthread.php?t=168111
Another example here: http://tugbbs.com/forums/showthread.php?t=162068
Another example here: http://tugbbs.com/forums/showthread.php?t=166674

Marriott Vacations Worldwide isn't a non-profit corporation. They have shareholders who expect them to generate a profit. Their fiduciary responsibility would actually prohibit them from returning rental income profit to the trust to reduce maintenance fees - that would be robbing the shareholders.

The point I was making was that they shouldn't pocket the rent on what they don't own.

To the extent that Marriott owns unsold points, it would benefit proportionally from rental income accruing to the trust.

I wouldn't want to be an employee/ trustee defending against potential claims of employer self dealing as I would have a fiduciary responsibility to the trust that would make me personally liable, notwithstanding indemnification and E&O insurance.

Fiduciary responsibility to stockholders? Screwing around with the trust assets would open the corp to legal action. That action would be a breach of duty to the stockholders.

 

[gblotter]

Screwing around with the trust assets would open the corp to legal action.

If the legal docs don't prohibit Marriott from making such substitutions (and I don't think they do), then Marriott isn't screwing around with trust assets. Marriott is simply using a system that was designed for its advantage.

Can anyone point me to a section in the legal docs that says Marriott must claim a proportional share of all available inventory for the weeks it owns (instead of claiming the best weeks for itself)? I don't think that legal requirement exists, and I don't think the evidence shows that Marriott is following that method in practice.

 

[gblotter]

The point I was making was that they shouldn't pocket the rent on what they don't own.

Agreed.

But Marriott does own a large chunk of the trust inventory. And Marriott controls the process of allocating weeks. And Marriott controls the process of making Marriott-to-Marriott exchanges in the DC.

When a legacy week is deposited into the DC for exchange, Marriott can claim whatever prime week they want from that resort (within season and view category) and rent it out for profit (so long as they substitute an equivalent amount of Marriott-owned trust inventory based on the points valuation). There is no requirement that Marriott must make that prime week available for owner reservations or DC exchanges.

I am simply trying to highlight Marriott's motivation for what some deem confusing behavior in how the DC satisfies exchange requests (settling IOUs, swapping inventory, etc). As I said before, the behavior doesn't seem so confusing when you ask yourself the question: What will maximize the profit to Marriott?

Marriott wrote the docs to benefit itself. Marriott controls the process. No surprise then that Marriott is the winner in claiming prime weeks for itself. All perfectly legal.

 

[windje2000]

Agreed.

But Marriott does own a large chunk of the trust inventory. And Marriott controls the process of allocating weeks. And Marriott controls the process of making Marriott-to-Marriott exchanges in the DC.

When a legacy week is deposited into the DC for exchange, Marriott can claim whatever prime week they want from that resort (within season and view category) and rent it out for profit (so long as they substitute an equivalent amount of Marriott-owned trust inventory based on the points valuation). There is no requirement that Marriott must make that prime week available for owner reservations or DC exchanges.

I am simply trying to highlight Marriott's motivation for what some deem confusing behavior in how the DC satisfies exchange requests (settling IOUs, swapping inventory, etc). As I said before, the behavior doesn't seem so confusing when you ask yourself the question: What will maximize the profit to Marriott?

Marriott wrote the docs to benefit itself. Marriott controls the process. No surprise then that Marriott is the winner in claiming prime weeks for itself. All perfectly legal.

I think we do agree. The open question in my mind is whether or not Marriott's property rights change once they contribute the weeks they own in exchange for the points which they subsequently resell. They have subjected themselves to trust law.

If they have accorded themselves a bundle of rights which differs from the rest of the trust points owners, they have really created two classes of points. I don't think I've seen any reference to that.

If the trust owns property for the benefit of all points owners and there's only one class of points, I could see someone making the argument for requiring Marriott to share the benefits of renting the properties owned by the trust equally among all trust beneficiaries.

{Edited to add - That would, of course, include Marriott getting its equal share. Its superior rights and manager/developer status would actually bolster an argument for that requirement.}

Interesting stuff to kick around.

 

[gblotter]

I think we do agree. The open question in my mind is whether or not Marriott's property rights change once they contribute the weeks they own in exchange for the points which they subsequently resell. They have subjected themselves to trust law.

If they have accorded themselves a bundle of rights which differs from the rest of the trust points owners, they have really created two classes of points. I don't think I've seen any reference to that.

If the trust owns property for the benefit of all points owners and there's only one class of points, I could see someone making the argument for requiring Marriott to share the benefits of renting the properties owned by the trust equally among all trust beneficiaries.

{Edited to add - That would, of course, include Marriott getting its equal share. Its superior rights and manager/developer status would actually bolster an argument for that requirement.}

Interesting stuff to kick around.

I also doubt there are multiple classes of trust points (although there are indeed multiple classes of owners - Normal, Premier, Premier Plus - with different privileges).

I was more referring to how Marriott may manage the processes it controls (weeks allocation, DC exchanges, etc) for its own benefit. Otherwise, I have no explanation for some the anecdotal reports of inventory manipulation listed earlier in this thread.

It seems that you have a fair amount of expertise and understanding of trust law. I concede that I do not have this expertise, so I cannot say that my claims about Marriott's behavior would pass legal muster. I do not doubt, however, that Marriott has very smart lawyers.

 

[windje2000]

I also doubt there are multiple classes of trust points (although there are indeed multiple classes of owners - Normal, Premier, Premier Plus - with different privileges).

I was more referring to how Marriott may manage the processes it controIls (weeks allocation, DC exchanges, etc) for its own benefit. Otherwise, I have no explanation for some the anecdotal reports of inventory manipulation listed earlier in this thread.

It seems that you have a fair amount of expertise and understanding of trust law. I concede that I do not have this expertise, so I cannot say that my claims about Marriott's behavior would pass legal muster.

Full disclosure - not a lawyer, but spent enough time around lawyers over the years that I've developed some sensitivities to potential issues particularly regarding the appearance of impropriety.

My view is that they will do whatever they feel confident they can get away with. Including everything you mentioned and then some.

 

[gblotter]

As I re-read my posts in this thread, they have quite a negative tone (not totally intended that way).

In fact, I may indeed choose to enroll my legacy weeks in DC this week during a sales presentation at Maui Ocean Club.
So, you see, so I am not completely negative about the DC program.
I'm just trying to be realistic about my expectations for how it all works and the inherent advantages for Marriott
(including how legacy week owners who elect for points are lending their weeks without compensation).

Even with my stated suspicions about how Marriott may manipulate the inventory and processes for its own benefit, I believe I have established an advantageous ownership position for myself.

* I own at resorts where I want to vacation.
* My resorts are mostly sold-out with relatively few weeks owned by the trust/Marriott (oops - that is not true of Ko'Olina).
* Thanks to recent resale purchases at very attractive prices, I now own multiple weeks which allows me to make 13-month reservations.

With this, I think I am well-insulated against any inventory manipulations and well-positioned to get the reservations I want.

Enough tug time for me - the beautiful Maui Ocean Club pool beckons.

 

[fluke]

High demand weeks

I think that high demand weeks are much more likely to find their way to the DC than they ever were likely to find their way to II. Because high demand weeks/views were not readily compensated (at least in an obviously visible manner). Now at least with DC you can get multiple lesser desirable weeks/views or specifically get a similiar view (ie guaranteed Oceanfront for Oceanfront).

Now everyone may feel differently about this but I have spoken to at least 2 individuals with fixed weeks that are relieved by the fact they feel they have a viable option for exchannging their weeks for something in the range of their fixed oceanfront units.

 

[dioxide45]

I think that high demand weeks are much more likely to find their way to the DC than they ever were likely to find their way to II. Because high demand weeks/views were not readily compensated (at least in an obviously visible manner). Now at least with DC you can get multiple lesser desirable weeks/views or specifically get a similiar view (ie guaranteed Oceanfront for Oceanfront).

Now everyone may feel differently about this but I have spoken to at least 2 individuals with fixed weeks that are relieved by the fact they feel they have a viable option for exchannging their weeks for something in the range of their fixed oceanfront units.

I agree, prime week owners are now more likely to venture out and exchange through DC than just use their home resort year after year. Through II they didn't believe they were fairly compensated for the value of their week, especially if they didn't own lock offs. Those weeks will find their way to DC now and not many trust owners will have enough points to get that high point value inventory, so it will be there for the legacy owners with lots of legacy points to work with.

 

[gblotter]

I agree, prime week owners are now more likely to venture out and exchange through DC than just use their home resort year after year. Through II they didn't believe they were fairly compensated for the value of their week, especially if they didn't own lock offs. Those weeks will find their way to DC now and not many trust owners will have enough points to get that high point value inventory, so it will be there for the legacy owners with lots of legacy points to work with.

Perhaps.

Or perhaps, after legacy week owners have converted to DC points, Marriott will claim the prime weeks for profitable rentals and substitute less-desirable inventory from the Trust (with equivalent point valuations).

There is no assurance how Marriott will choose to manage inventory that is under its control.