[2017] Just Joined Marriott Vacation Club - Was it a good choice?

[bazzap]

Several of the benefits you note here are triggered by having 7,000 points.
It is extraordinary if they are promoting these as being available with 4,000 points.

Here's a quick rundown of falsehoods I was told at the presentation. I initially let these slide as accidental, but given the volume of them and the fact that they all tend to the same direction, maybe that was generous...

- at 4,000 points you get special access to Ritz-Carlton that <4,000 pt members dont get
- at 4,000 points you get access to luxury homes (even went into the fact that there are 30 homes on St Thomas and 55 on St John)
- you get a 13 month booking window (forgot to mention this only applies to 7 night stays, which we specifically said we didn't want to be locked into)
- that the value of point has risen from $10-ish to $13-ish since 2010 and is projected to keep rising (a partial truth, but doesn't account for steep discounts)
- that the economic booking value of a point is about $2.00 (again, in some rare cases perhaps, but this is an overly rosy picture)
- that all owners get the same deal because MVCI wants to make sure that nobody feels they got a worse deal than the person staying in the next room, so resale vs. direct is not much different
- that a hybrid package has major drawbacks and "doesnt make sense for you, you're points people, bro" to quote the MVCI sales manager that i intially inquired with about the hybrid and was turned down

...I get this is probably a really tough industry to be a salesperson in, but the sales culture of the TS industry is rotten.

 

[Marathoner]

...I get this is probably a really tough industry to be a salesperson in, but the sales culture of the TS industry is rotten.

I agree with you entirely on this statement. And the most damning thing is that your statement applies to one of the most high-end sales group in the TS industry. Because most people are not interested in doing the level of research necessary to educate themselves properly to purchase TS, I think the recommendation of mainstream media of "stay far away from TS" is actually the right one. But this forum has been talking about how the TS industry is dysfunctional and "eating its own young" for years and the major TS companies are still growing and very little has changed except to make the product more expensive (e.g. MVC points)!

 

[Saintsfanfl]

The struggle MVCI will have on ROFR on points is eventually there will be too many resale transactions for them to keep exercising at a certain level. This has already happened and the reason the threshold keeps dropping. They make a fortune exercising at a low level and reselling but taking them all creates too much inventory and the sales cannot keep up.

Can MVCI simply raise the junk fees to keep the resales in check? The problem with that is it then prevents owners from getting out and leads to defaults, foreclosures, and too much inventory. It was different with weeks because the HOA and other owners got stuck instead of MVCI.

 

[Saintsfanfl]

And also told that we were likely to get ROFR'd by Marriott 6-7 times simply because we had recently been on a presentation.

I'm not sure this is actually true. I was under the impression that the two departments are not linked and do not cross reference. That statement is likely an attempt to keep you from going resale. Someone else will have to confirm on points but I know with weeks it is very disconnected.

 

[GregT]

The struggle MVCI will have on ROFR on points is eventually there will be too many resale transactions for them to keep exercising at a certain level. This has already happened and the reason the threshold keeps dropping. They make a fortune exercising at a low level and reselling but taking them all creates too much inventory and the sales cannot keep up.

Additionally, they have a fair amount of inventory coming into the system from MVC New York/San Diego/Miami/Big Island and all of those Trust Points will need to be. And Marriott is (hopefully?) looking for new locations too.

So I think this is also a factor in the declining point pricing clearing ROFR that we are seeing right now -- Marriott still gets the junk fees and doesn't ROFR because it doesn't need the inventory to sell.

Best,

Greg

 

[davidvel]

The quote your mentioning about Maui and Park City was a hypothetical quote by another poster, saying that IF I HAD SAID THAT, then it would have been clear I was disillusioned. I never said anything about those places. I expect that nobody nowhere is guaranteed anything unless you own a fixed week, fixed unit, or own a vacation condo outright.

What is your first proposed vacation?

 

[BigMac]

Additionally, they have a fair amount of inventory coming into the system from MVC New York/San Diego/Miami/Big Island and all of those Trust Points will need to be. And Marriott is (hopefully?) looking for new locations too.

So I think this is also a factor in the declining point pricing clearing ROFR that we are seeing right now -- Marriott still gets the junk fees and doesn't ROFR because it doesn't need the inventory to sell.

Best,

Greg

Listened to MVC's fourth quarter results - they mentioned that they are opening a new resort in Bali before the end of the year.

 

[JIMinNC]

I think the genuinely disturbing issue is why developer point prices continue to rise while the rofr price of points (which is a measurement of MVCs own assessment of the value of points) continues to fall.

This to me is they key issue which makes MVC as a sales organisation indefensible. They are *knowingly* generating a false trend and training their staff to use that deliberately manipulated trend to people who come into presentations. This continued divergence is where the ethical line has been crossed for me and I believe the MVC sales organisation are 'bad hombres' (to misquote something I heard somewhere).....

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How can it be a "false trend"? They own the product, they can raise prices however they want to. The reason resale prices drop is because the resale market for all timeshare is small, disorganized, and illiquid. In reality, resale timeshare and developer timeshare are two separate markets, with two separate supply and demand equations. The reason for this is most people who attend developer presentations are not truly aware of the resale market. There is little visibility for resale marketplaces. So, resale prices are driven by the supply and demand of resale weeks/points amongst the minority of consumers who are aware of the resale timeshare marketplaces. Developer prices are driven by the supply and demand for developer product. The developers only really impact resale prices to the extent that developers opt to exercise their ROFR rights. That does serve to put a floor under prices to an extent.

Developers raise prices because of the law of supply and demand within the developer market. They raise prices and people still buy. If they raised prices and people quit buying, they would stop. Their sales techniques may artificially increase demand beyond what it would typically be organically, but they are still successfully increasing demand for their product. But all companies try to increase demand for their product. That's what advertising is - attempts to build a brand to increase demand above the level that its world be otherwise without that marketing. Have you seen Marriott Vacations Worldwide's stock lately? In October it was trading around $60/share. Now, it's knocking on the door of $100/share. Their latest quarterly earning announced on Thursday were the best ever for the company. Their CEO said:

"I am extraordinarily pleased with how we finished 2016. In the fourth quarter, contract sales grew nearly 15 percent, driving $95 million of Adjusted EBITDA, our strongest quarter as a public company," said Stephen P. Weisz, president and chief executive officer. "We continue to execute our growth strategy as our same store marketing initiatives continue to build a strong tour pipeline, and we opened our sixth new sales center for 2016 at our Miami Beach location in the last week of December. Subsequent to the end of the year, we opened our additional New York sales location, adding to our momentum and giving us confidence that we will achieve 2017 contract sales growth of 9 to 15 percent, net income of $139 million to $148 million, and Adjusted EBITDA of $276 million to $291 million for the full year."

I almost bought a few hundred shares back in October. But I didn't...If I had, I could maybe have let Marriott Vacations Worldwide buy my next points package for me....

 

[bazzap]

Listened to MVC's fourth quarter results - they mentioned that they are opening a new resort in Bali before the end of the year.

Yes, it is a conversion of an existing Marriott resort so hopefully will be open this Autumn (or Fall as you like to call it)

 

[GoldenVIKE]

What is your first proposed vacation?

Likely a wide variety of locations, room sizes, and seasons (although typically October-April most of the time) as our family grows up etc. Urban, mountain, beach, domestic/foreign, etc. Our anticipated variety is a big reason we went MVCI points vs. weeks or another system w/ fewer options.

 

[GoldenVIKE]

Listened to MVC's fourth quarter results - they mentioned that they are opening a new resort in Bali before the end of the year.

I was told at presentation that while the existing Starwood (whatever it's called) TS system is going to remain separate, a number of legacy-Starwood hotels may be converted to MVCI properties.

 

[SueDonJ]

I was told at presentation that while the existing Starwood (whatever it's called) TS system is going to remain separate, a number of legacy-Starwood hotels may be converted to MVCI properties.

I expect this to happen. Since the DC inception the model for MVW has been to contract with outside developers to refurb existing hotel inventory, at some point acquiring it and conveying it to the DC Trust as Pulse-branded intervals. While they're not limited to deal only with Marriott-branded hotel properties, it appears that's their preference and now the formerly-Starwood hotels fit that bill.

(FYI, Starwood's timeshare business was renamed Vistana Signature Experiences and was spun off prior to Marriott acquiring Starwood's hotel business.)

 

[catharsis]

How can it be a "false trend"? They own the product, they can raise prices however they want to.

Developer prices are driven by the supply and demand for developer product. The developers only really impact resale prices to the extent that developers opt to exercise their ROFR rights. That does serve to put a floor under prices to an extent.

Developers raise prices because of the law of supply and demand within the developer market. They raise prices and people still buy. If they raised prices and people quit buying, they would stop.


Have you seen Marriott Vacations Worldwide's stock lately? In October it was trading around $60/share. Now, it's knocking on the door of $100/share.

I almost bought a few hundred shares back in October. But I didn't...If I had, I could maybe have let Marriott Vacations Worldwide buy my next points package for me....

I rarely disagree with Jim's posts but....

1. That do not own the product. There is something called a trust? That are "one* seller of an item (ab)using a dominant market position to extract economic rent... It's textbook!

2. Resale points and developer points are *identical* (assuming junk fees paid)

This means that assertions about illiquidity etc. aren't justified... There are a lot of points for sale out there and they are all identical = liquid (I would agree re weeks but not points)

3. The 'trend' is false because the price is definitely *not* set by supply and demand as you suggest but by marketing pressure. The increase in price has nothing to do with demand and everything to do with demand creation. Specifically there is no supply decrease nor any reason for the spontaneous demand graph shift you suggest has occured to force prices upwards . Supply and demand is NOT how prices work in monopoly situations as every economics undergrad knows ... Nor are there two markets and two sets of S&D graphs... Rather we have "price discrimination" in the textbook sense.

(NB how can you suggest 'they can set the price' and then use 'supply and demand' in the same paragraph? -they are contradictory!)

4. The stock performance does not mean they are ethical or even obeying the law .. it just means the stock price has gone up (due to increased demand which has occurred because if rational expectations of a stock price increase -sound familiar?)

5. I wish I had bought at 60 also! ... (So would any sensible person. Doesn't speak to any of the other points though)

Sent from my Pixel XL using Tapatalk

 

[JIMinNC]

I rarely disagree with Jim's posts but....

1. That do not own the product. There is something called a trust? That are "one* seller of an item (ab)using a dominant market position to extract economic rent... It's textbook!

2. Resale points and developer points are *identical* (assuming junk fees paid)

This means that assertions about illiquidity etc. aren't justified... There are a lot of points for sale out there and they are all identical = liquid (I would agree re weeks but not points)

3. The 'trend' is false because the price is definitely *not* set by supply and demand as you suggest but by marketing pressure. The increase in price has nothing to do with demand and everything to do with demand creation. Specifically there is no supply decrease nor any reason for the spontaneous demand graph shift you suggest has occured to force prices upwards . Supply and demand is NOT how prices work in monopoly situations as every economics undergrad knows ... Nor are there two markets and two sets of S&D graphs... Rather we have "price discrimination" in the textbook sense.

(NB how can you suggest 'they can set the price' and then use 'supply and demand' in the same paragraph? -they are contradictory!)

4. The stock performance does not mean they are ethical or even obeying the law .. it just means the stock price has gone up (due to increased demand which has occurred because if rational expectations of a stock price increase -sound familiar?)

5. I wish I had bought at 60 also! ... (So would any sensible person. Doesn't speak to any of the other points though)

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My thoughts...

1.) I agree I misspoke when I said they "own" the product. What I meant to say was they control the inventory/supply and set the price based on what price they think the market will bear (that's why supply/demand still matters).

2.) While resale points and developer points are identical in product features, the marketplaces for each are definitely not the same. Unlike traditional real estate, the resale and developer markets for timeshare aren't connected. A Realtor can find you a new house from a builder/developer (sharing the commission with the builder's agent) or a resale house (sharing the commission with the seller's agent). In timeshare, only the developer can sell "new". Plus, everyone knows about the market for resale homes because of the market visibility provided by the Multiple Listing Service and Realtors. There is no such animal for timeshare weeks or points. While TUGgers know where to go for resale weeks or points, 99% of the rest of the population does not. The resale and developer markets for timeshare are two totally separate marketplaces that come together only in very rare instances (like MVC Hybrid Bundles). The timeshare resale market is somewhat illiquid because there is not a ready-made marketplace that any rational potential buyer knows about. Yes, you can sell your week or your points, but there are many, many people that would be potential buyers of your week or points, but they don't even know you have your points for sale. If there were more potential buyers who knew about the resale market, demand for resale weeks would rise, as would prices. That's how the weak resale marketplace helps to restrict the supply of timeshare weeks known to the average buyer, thus helping to keep developer prices high.

3.) I could argue that ALL marketing is demand creation of one type or another. Companies advertise and sell their products to create demand. Companies create products all the time because they can, and then create a market for it. No one knew there was a market for the iPhone until Steve Jobs invented it and created a market for it. When many new products are invented, there is no demand for that product. If they meet a need and are priced right for the marketplace (as the iPhone was), they will be successful. When Apple invented the iPhone they set the price at a price they thought the market would bear. All companies set their price - including MVC - based on what they think the market will bear. If they suddenly increased the price of DC points to $20/point, I'm fairly confident demand would fall off the table. They are not a monopoly. They have to compete with Hilton, Vistana, Hyatt, etc. so those competitive forces and supply/demand still apply (it's just in timeshare the supply is restricted because of the lack of visibility to resales, and the demand is pushed/inflated by developer sales tactics). Looked at another way, if the average potential timeshare buyer had full visibility and transparency into the resale market, they would know there are many weeks and many DC Points out there for sale at a fraction of the price that a developer charges. That would have the effect of increasing the supply of available weeks and points that the buyer is aware of. So, if supply goes up due to increased visibility of resale, the price of developer weeks/points would go down and demand for resale weeks/points would go up, as would resale prices. If the resale and developer marketplaces were equally visible to the average buyer (as they are in traditional real estate) both resale and developer prices would settle somewhere near an equilibrium. But because of the lack of visibility and organization of a robust timeshare resale market, for most buyers, the market is limited to the product sold by developers, so they can set their prices somewhat independently because they control the supply (since the typical buyer isn't aware of resale).

4.) Obviously I agree with this point. I'm not defending the sales model for timeshare. It's based on selling someone something without them having full knowledge of the alternatives, and the whole focus is to get them to buy "today" to avoid them having the opportunity to research alternatives. Most people don't take advantage of the rescission period to do their due diligence either. So, I agree that the prices developers can charge are inflated by the sales techniques they use. I'm not sure I would go as far as to call them illegal, and I'm not even sure unethical is correct either. Certainly, some sales reps, in their drive to make a sale cross the line into unethical behavior and the sales model does tend to invite that behavior, but I don't think the sales model itself is necessarily unethical at its core.

5.) My point about the stock price was simply that the company is doing well. Even though they keep increasing the prices, they have yet to reach a price point where buyers balk and demand starts to fall. In the end, that is the ultimate yardstick. Are people buying? And for good or bad, it appears they are.

 

[Saintsfanfl]

I don't think the difference between houses and timeshares is market visibility. Anyone seeking out a timeshare resale need only to type in a simple search and they will find plenty. The difference is everyone needs a place to live but nobody "needs" a timeshare. Nobody looks at the market because they aren't shopping. It takes a timeshare presentation for someone to be convinced that they need this thing. And then if resale is brought up they are lied to in order to stear them away.

 

[catharsis]

My thoughts...

1.) I agree I misspoke when I said they "own" the product. What I meant to say was they control the inventory/supply and set the price based on what price they think the market will bear (that's why supply/demand still matters).

2.) While resale points and developer points are identical in product features, the marketplaces for each are definitely not the same. Unlike traditional real estate, the resale and developer markets for timeshare aren't connected. A Realtor can find you a new house from a builder/developer (sharing the commission with the builder's agent) or a resale house (sharing the commission with the seller's agent). In timeshare, only the developer can sell "new". Plus, everyone knows about the market for resale homes because of the market visibility provided by the Multiple Listing Service and Realtors. There is no such animal for timeshare weeks or points. While TUGgers know where to go for resale weeks or points, 99% of the rest of the population does not. The resale and developer markets for timeshare are two totally separate marketplaces that come together only in very rare instances (like MVC Hybrid Bundles). The timeshare resale market is somewhat illiquid because there is not a ready-made marketplace that any rational potential buyer knows about. Yes, you can sell your week or your points, but there are many, many people that would be potential buyers of your week or points, but they don't even know you have your points for sale. If there were more potential buyers who knew about the resale market, demand for resale weeks would rise, as would prices. That's how the weak resale marketplace helps to restrict the supply of timeshare weeks known to the average buyer, thus helping to keep developer prices high.

3.) I could argue that ALL marketing is demand creation of one type or another. Companies advertise and sell their products to create demand. Companies create products all the time because they can, and then create a market for it. No one knew there was a market for the iPhone until Steve Jobs invented it and created a market for it. When many new products are invented, there is no demand for that product. If they meet a need and are priced right for the marketplace (as the iPhone was), they will be successful. When Apple invented the iPhone they set the price at a price they thought the market would bear. All companies set their price - including MVC - based on what they think the market will bear. If they suddenly increased the price of DC points to $20/point, I'm fairly confident demand would fall off the table. They are not a monopoly. They have to compete with Hilton, Vistana, Hyatt, etc. so those competitive forces and supply/demand still apply (it's just in timeshare the supply is restricted because of the lack of visibility to resales, and the demand is pushed/inflated by developer sales tactics). Looked at another way, if the average potential timeshare buyer had full visibility and transparency into the resale market, they would know there are many weeks and many DC Points out there for sale at a fraction of the price that a developer charges. That would have the effect of increasing the supply of available weeks and points that the buyer is aware of. So, if supply goes up due to increased visibility of resale, the price of developer weeks/points would go down and demand for resale weeks/points would go up, as would resale prices. If the resale and developer marketplaces were equally visible to the average buyer (as they are in traditional real estate) both resale and developer prices would settle somewhere near an equilibrium. But because of the lack of visibility and organization of a robust timeshare resale market, for most buyers, the market is limited to the product sold by developers, so they can set their prices somewhat independently because they control the supply (since the typical buyer isn't aware of resale).

4.) Obviously I agree with this point. I'm not defending the sales model for timeshare. It's based on selling someone something without them having full knowledge of the alternatives, and the whole focus is to get them to buy "today" to avoid them having the opportunity to research alternatives. Most people don't take advantage of the rescission period to do their due diligence either. So, I agree that the prices developers can charge are inflated by the sales techniques they use. I'm not sure I would go as far as to call them illegal, and I'm not even sure unethical is correct either. Certainly, some sales reps, in their drive to make a sale cross the line into unethical behavior and the sales model does tend to invite that behavior, but I don't think the sales model itself is necessarily unethical at its core.

5.) My point about the stock price was simply that the company is doing well. Even though they keep increasing the prices, they have yet to reach a price point where buyers balk and demand starts to fall. In the end, that is the ultimate yardstick. Are people buying? And for good or bad, it appears they are.

It is my assertion that the primary motivation and plan behind regular quarterly price increases is not to make more money (directly) from sales, but rather to create/re-inforce the impression that points are an asset which is appreciating. All MVW personnel mention price increases as appreciation so it is reasonable to assume it may be part of corporate sales training.

The reason I believe this is unethical is that this strategy is followed despite MVW having full guaranteed 100% up-to-the-second visibility into the actual value of these points obtained through their ROFR waiver process meaning that it is impossible for a trade to legally be completed in these points wihout Marriott knowing about it.

In my opinion, Marriott are raising prices to create an impression of asset appreciation while being fully aware that the real value of the points continues to depreciate over time.

 

[Saintsfanfl]

I don't think knowledge of the resale market would increase the prices all that much. Maybe a little but not much. The fact remains that most timeshare units are worthless. Even ones that have value take a special kind of person for it to be a wise purchase, even resale.

Hundreds of people that I know understand that I do timeshares. Some have been to presentations. I have booked vacations for some of them. Not a single one of them has any interest in buying a resale timeshare. I even have two people that have a free week credit with me and they never use it because they don't plan more than two weeks out.

The only person that I personally know outside of tug that owns a timeshare of is an uncle that turned me onto Marriott.

These people have the knowledge of the resale market from me but still zero interest. There is something about paying money up front for the right to pay more money later for the right to do something you aren't 100% sure you will want to do or when. It works for me but none of them.

P.S. Close friend called me up yesterday and wanted a week for spring break in a few weeks at prime location. I'm like, "How about we plan for 2018".

P.S.S. I lied. I have another close friend that owns a timeshare. They bought it in gatlinburg after a presentation almost 15 years about. They financed it and have faithfully made every payment and annual fee. They have never once used or exchanged the timeshare.

 

[BocaBoy]

I don't think the difference between houses and timeshares is market visibility. Anyone seeking out a timeshare resale need only to type in a simple search and they will find plenty. The difference is everyone needs a place to live but nobody "needs" a timeshare. Nobody looks at the market because they aren't shopping. It takes a timeshare presentation for someone to be convinced that they need this thing. And then if resale is brought up they are lied to in order to stear them away.

Both are correct in my opinion:

1) Market visibility in my opinion is clearly a major factor--again, do not assume most people are like TUG members. I am very knowledgeable and even for me the timeshare resale market is not highly visible. Sure, you can look at EBay or Redweek, but these sources are very limited when compared to any MLS. And there are no volume information readily available out there as far as I know. How many times do we see postings even here on TUG where the poster is asking about market prices, and how many times is there a disagreement over the answer among those responding?

2) It is also true that everyone needs a place to live and they do not need a timeshare, so there are fewer people who look for timeshares on their own without a presentation to convince them.

On balance, I believe the lack of market visibility is the bigger factor but both are important.

 

[BocaBoy]

I don't think knowledge of the resale market would increase the prices all that much. Maybe a little but not much. The fact remains that most timeshare units are worthless. Even ones that have value take a special kind of person for it to be a wise purchase, even resale.

One major reason that resale prices are so low is that people are not aware that they can be purchased at low levels of cost. With more market knowledge there is no question in my mind that Jim is right and prices would settle closer to some equilibrium level.

 

[Saintsfanfl]

Both are correct in my opinion:

1) Market visibility in my opinion is clearly a major factor--again, do not assume most people are like TUG members. I am very knowledgeable and even for me the timeshare resale market is not highly visible. Sure, you can look at EBay or Redweek, but these sources are very limited when compared to any MLS. And there are no volume information readily available out there as far as I know. How many times do we see postings even here on TUG where the poster is asking about market prices, and how many times is there a disagreement over the answer among those responding?

2) It is also true that everyone needs a place to live and they do not need a timeshare, so there are fewer people who look for timeshares on their own without a presentation to convince them.

On balance, I believe the lack of market visibility is the bigger factor but both are important.

That's a good point. I use to spend a lot of time searching. These days I have a few brokers that feed me resales so I barely look. I stopped looking at eBay and other sites. Sad to say I barely look at the marketplace. I probably miss out on opportunities but now it's not nearly as time consuming.

I still think that most resale buyers are people that either already own or have a good level of timeshare knowledge. It's just not a high enough number of people to make a dent in the resale byproduct of the full freight market.

The only thing I see helping is if they would take back units at a price that can keep a floor in the market but the problem is they are way too greedy.

 

[BocaBoy]

The only person that I personally know outside of tug that owns a timeshare of is an uncle that turned me onto Marriott.

P.S.S. I lied. I have another close friend that owns a timeshare. They bought it in gatlinburg after a presentation almost 15 years about. They financed it and have faithfully made every payment and annual fee. They have never once used or exchanged the timeshare.

I have actually been amazed at how many people I personally know who own timeshares. Dozens of non-TUGGERs actually, and I never ask people so it only includes those who have mentioned it in casual conversation. I suspect you also know timeshare owners but don't know they own timeshares. And this makes sense when you see statistics like MVCI alone has 400,000 owners. Clearly most of them have no connection at all to TUG. In reality, TUG is just a drop in the bucket and cannot move the market much by its volume.

 

[BocaBoy]

I still think that most resale buyers are people that either already own or have a good level of timeshare knowledge. It's just not a high enough number of people to make a dent in the resale byproduct of the full freight market.....The only thing I see helping is if they would take back units at a price that can keep a floor in the market but the problem is they are way too greedy.

I agree with this 100%.

 

[JIMinNC]

Here's the full text of what Marriott Vacations Worldwide says in the Form 10-K about the resale market. They are required by law to enumerate the risk factors that could undermine their business. The 10-K lists 43 of these different "Risk Factors" and they are basically every possible thing that could negatively impact their business, regardless of how unlikely that event might be. If you read these things it makes every company sound like their whole business model is built on quicksand, but the idea is to give investors and idea of what the worst case risks are. Despite the hyperbole that is common in these risk factor statements, I think it is an accurate portrayal of the relationship between the developer market and the resale market.

The sale of vacation ownership interests in the secondary market by existing owners could cause our sales revenues and profits to decline.

Existing owners have offered, and are expected to continue to offer, their vacation ownership interests for sale on the secondary market. The prices at which these interests are sold are typically less than the prices at which we would sell the interests. As a result, these sales create additional pricing pressure on our sale of vacation ownership products, which could cause our sales revenues and profits to decline. In addition, if the secondary market for vacation ownership interests becomes more organized and liquid than it currently is, the resulting availability of vacation ownership interests (particularly where the vacation ownership interests are available for sale at lower prices than the prices at which we would sell them) could adversely affect our sales and our sales revenues. Further, unlawful or deceptive third-party vacation ownership interest resale schemes involving interests in our resorts could damage our reputation and brand value and adversely impact our sales revenues.

Development of a viable secondary market may also cause the volume of vacation ownership interests inventory that we are able to repurchase to decline, which could adversely impact our development margin, as we utilize this lower cost inventory source to supplement our inventory needs and help manage our cost of vacation ownership products.

 

[Saintsfanfl]

One major reason that resale prices are so low is that people are not aware that they can be purchased at low levels of cost. With more market knowledge there is no question in my mind that Jim is right and prices would settle closer to some equilibrium level.

If there was a resale market that everyone in the world knew about and it was organized and trustworthy, I think it would lead to a downfall in developer presentations rather than a huge increase in resale prices. If everyone attending a presentation knew the truth, most wouldn't buy. Even the OP probably wouldn't have completed his purchase if it wasn't for the junk fees. Developers would either get out of the business or they would see if they could find a way to put restrictions on resales. Marriott has their junk fees. Westgate threatens with worthless restricted windows. Not sure where it would lead but it would be a good thing. I don't think resale restrictions should be legal, including the junk fees. I'm guessing they covered their bases and they can do it legally but it doesn't seem right. Perhaps they saw the writing on the wall regarding this subject and that's why they switched to a points system and a trust.

 

[Ty1on]

funny that they don't mention that they may exercise ROFR at their discretion to mitigate this risk.