MVC Timeshare Future in 15 Years

[Bunk]

We are legacy owners who enrolled in the Destination Club. We are eligible for 2,775 Destination Points a year. The most valuable parts of the Destination Club are: (i) the ability to stay for less than one week (ii) Cheaper costs when we travel offseason; and (iii) the ability to rent points on the open market, which means we never have to buy anything else, but just rent when we need points for a particular trip.

At this time, Marriott is not controlling what we pay to rent points. I think that the more Destination Club packages MVC sells, the more Destination Club Points will go on the market to be rented, so hopefully that will continue to keep the rental costs reasonable.

My concern is that MVC will do something to make it more difficult for Destination Club points to be rented on the open market. That would seriously impact my use and enjoyment of the Destination Club.

I have one other concern. When I attend owner updates/sales presentation, ultimately the discussion gets around to another "enhancement" that will not be easily available to me unless i pay more money to MVC. I'm getting older and more crotchety so when we get to that point, I usually silently chant the "serenity now" chant from Seinfeld to drown out the salesman. But I do get concerned that the business model, as constantly described to me in my updates/presentation by MVC salesmen, appears to be based in large part on the need to "churn" accounts by getting people to first buy into the system and then pointing out to them the shortfalls in what they already purchased.

With respect to bundling, the question I have is whether that will lower costs. If it doesn't, then it is no benefit to us.

 

[GregT]

I think MVC will be fine, we will have more Pulse locations, a few new geographic locations (like Mexico) and expansion internationally. Asset light will be the rage as investors provide the hard assets that Marriott monetizes. I do believe Trust Points will become more important when booking Trust Inventory.

But what will the other vacation alternatives be? I don't think we should think about MVC in isolation.

$1,000/night hotel rooms?
Frequent flier awards even harder to find?
Regulatory oversight on VRBO, discouraging this business?

Independent of how the timeshare world evolves, it's vacation alternatives will evolve too, and I think timeshares will remain a viable alternative for all of us.

Best,

Greg

 

[vacationtime1]

Marriott is creating its own currency -- which it calls "Destination Points" -- that they will try to get all of us to use for all of our vacations. That includes not only timeshare vacations, but hotels (Pulse brand), cruises, and whatever else they want to sell.

Once we are roped into using their currency, product choices will be limited to those Marriott sells or brokers, discounts go away, and actual prices charged become fuzzy. Fuzzy because they will push to ignore the upfront costs (buying the points) and focus on the MF's only.

At $0.53/point (the cost of MF's), much of this is cheap. When one amortizes in the upfront cost ($11 - $13/point), not so much.

So my answer to the question of where Marriott will be in fifteen years is a conglomerate selling vacation and travel using an internal and not very fungible currency.

 

[Fairwinds]

I bought into the weeks program in the late 90s. The program has only improved over the years with more / nicer resorts and now the points option. It may be a bridge too far but I would like to see the explorer type programs become reasonable options. If reasonably priced this would provide good options for us and seems to be untapped potential for the "asset lite" business model.

 

[nuwermj]

The resorts will always need HOAs (in CA at least) based upon the underlying structure of ownership.

Take a look at Club Intrawest (now Embarc Resorts). They have a pure points system (trust fund based) and nine resorts. There are no HOAs. The deed for the entire resort is in the trust fund (including their Palm Springs location). Welk Resorts is building two new resorts and they are planning that the entire resort is placed into the trust fund.

 

[Fasttr]

It may be a bridge too far but I would like to see the explorer type programs become reasonable options. If reasonably priced this would provide good options for us and seems to be untapped potential for the "asset lite" business model.

I would also like to see more reasonably priced Explorer options. Whenever you compare the DC point value of Explorer options to what you could book the same thing for using cash, you are paying a pretty steep premium for the benefit of being able to use your DC points. Some examples that make it really easy to do the comparison are the MVC Travel Insurance and the Destination Options like in HHI where you can get a restaurant group gift certificate or a gift certificate for the local outlet mall.

In the example of the MVC Travel Insurance, you can buy it for $169 or 700 DC points. So that's a cash equivalent value of $0.24 per point. For a Trust point owner paying $0.53 per point in MF's (without even considering an allocated fractional value associated with their up front costs), that's a 121% price premium you are paying to use your points to buy the travel insurance.

In the example of the $100 Gift certificates for dining or shopping in HHI, they charge 325 DC points. So that's a cash equivalent value of $0.31 per point. This is a 71% price premium you are paying to use your points to buy the gift certificate.

I have not spent any time doing the same analysis on the cruises, house rentals, African safari's, etc, but I would bet the heavy premium likely holds true.

I get that there needs to be "some" premium, as MVC needs to be compensated for cultivating/maintaining the relationship with the 3rd party, managing the Exchange program, etc, etc, but 70-120% premiums seem to be gouging a bit.

I have purchased the HHI gift certificate in the past when I had a straggling 325 points remaining that had no other use and could not be banked, so it was better than losing them, but I find it hard to justify using the bulk of my DC points for anything other than MVC villas at this point. I just don't see the value in the Explorer Collection options.

I supposed if I had access to a huge pile of points and I got them via the Legacy approach and was paying closer to $0.30-$0.35 a point in MF's that it would be easier to justify some of the Explorer options, but that's just not the case for me. But in reality, MVC has to price things with that in mind, because its likely that most who are choosing these options are in fact Chairman level Legacy owners paying much less in MF's/point, and so the "exchange" needs to make sense for MVC to offer that to those folks.

Perhaps at some point in the next 15 years, MVC will charge one DC point quantity if using Legacy Points to book an Explorer Collection option, and a lesser quantity of DC points if using Trust Points to book it....hmmmmm.

 

[Luvtoride]

And there is still plenty of competition to spend the $$$ for those highly sought places and accommodations and time periods when everyone else wants to vacation as well. A lot more Non TS owners to compete against.

 

[Saintsfanfl]

When you have an owner base of 500 owners chasing 125 good weeks/dates within a 6 hour driving circle, you have a 1 in 4 chance to be happy in year 1. When you have 5000 people chasing the same 125 good weeks/dates within a 6 hour driving circle, you have ONLY a 1 in 40 chance to obtained your desired vacation in year 5.

And in the US, the majority of us live in major population centers .... 1500 mile drive to a empty vacation unit in a low season (low for a reason, like bad weather or schools are in season) .... will have unhappy owners who spent $25K to $100+K for a vacation stay (oh, and annual MFs over $1000-1500).

What was desired an alternative to a vacation house to use when your family wants relax ... is NOW smoke and mirrors.

So as one of my very good friends has been saying for years, each year he takes his dollars and decides where he is vacationing ... dollars are best. No ongoing MFs, no $100K investment, no bad views, no noisy neighbors ... he gets what he is willing to pay to go to WHERE he wants this year.

This is true and why most any floating system is really a scam for most timeshare owners. To make the sale they are promised to get the reservation they want, or be able to easily exchange for it. In reality it is not possible. The point system was a way to make that uber desirable week so expensive that most people won't have bought enough points for it.

Hotel owners can be fluid and compensate the offseason by lowering the staff level and they don't provide the full services anyway. Timeshares can't do that because every week is already paid for so the services have to be there ready and waiting.

What if a timeshare only ran during peak and fringe? In other words don't those dog weeks and then shut down during the low demand offseason.

 

[davidvel]

Take a look at Club Intrawest (now Embarc Resorts). They have a pure points system (trust fund based) and nine resorts. There are no HOAs. The deed for the entire resort is in the trust fund (including their Palm Springs location). Welk Resorts is building two new resorts and they are planning that the entire resort is placed into the trust fund.

I don't doubt this. But, we are talking about Marriott here, and I was referencing the legacy resorts.

 

[Wally3433]

Timeshares have gone from very simple to understand and use (same week, same unit each year) to very complicated. I just sat through a presentation today in Aruba. I found it interesting how the two people we met with struggled with the sales process. I have tried to explain the DC points program to friends, and you can just see their eyes glazing over in confusion.

I think the DC points program will crumble with the next recession.

 

[JIMinNC]

Timeshares have gone from very simple to understand and use (same week, same unit each year) to very complicated. I just sat through a presentation today in Aruba. I found it interesting how the two people we met with struggled with the sales process. I have tried to explain the DC points program to friends, and you can just see their eyes glazing over in confusion.

I think the DC points program will crumble with the next recession.

The complexity in the DC points system primarily revolves around the way it overlays and functions alongside the old weeks-based system. I've received the same glazed-over look that you described when trying to explain the way both programs function together. But if you look at the DC system by itself, it's really fairly simple. You buy a package of points and then "spend" those points on lodging accommodations - no "week" needed. High demand locations with the best view cost more points per night than off-season nights with no view. That's exactly how people have booked hotel rooms for decades - better views in high season cost more $$$ than off-season - DC just uses points as the "currency" instead of cash. And with DC points, there's no need to think of everything in terms of "weeks", it's really a night-based system just like hotels. Ten months out anyone can book any night you want, subject to availability, but if you want to book seven nights or more, you can do that at 12 or 13 months out. Higher point owners can book any night they want at 13 months. It's really quite simple if you divorce yourself from the old way of weeks-based thinking. Given that most new buyers are points-only, the percentage of owners who have to worry about the complex interaction between weeks and DC points will continue to decline. So, if you don't think of the DC in terms of traditional, old-fashioned timeshare, and look at it as a standalone entity, it is actually quite straightforward.

And as far as the impact of the next recession, any discretionary purchase like a timeshare will suffer during a downturn, but I could make the case that the DC system will be more resilient than the old model. Marriott's "asset light" development model shifts a significant portion of the development risk to external third parties, making it easier to ride out the soft spots in the economy. When people get more cautious with their discretionary purchases, sales for DC points can just focus on selling smaller point packages. In the old weeks world, those unsold weeks were like an albatross around the developers' necks. The smallest thing you could sell was a week. With asset light points, it offers a much more flexible model for the developer to ride out a rough spot in the economy. Remember, DC points were born in the depths of the Great Recession, at least in part, as a way to give Marriott a more flexible sales model that can adapt to tougher times.

 

[bizaro86]

I think Marriott will start selling some version of fixed weeks at any new resorts they develop internally (ie Cancun).

DVC does this as an overlay, where you buy a certain number of points and then have the right to use a specific week in exchange for those points. I expect they will do this and charge a premium as a way to finance new locations.

 

[SueDonJ]

I think Marriott will start selling some version of fixed weeks at any new resorts they develop internally (ie Cancun).

DVC does this as an overlay, where you buy a certain number of points and then have the right to use a specific week in exchange for those points. I expect they will do this and charge a premium as a way to finance new locations.

I think we've seen the last of MVW buying land and developing new resorts from the ground up. Instead they'll continue contracting with third-parties who will finance and develop projects (Pulse and/or complete resorts) then sell the completed inventory to MVW. So development of land they're already holding could happen but not in the same way it used to happen.

IMO direct sales of Weeks won't be coming back, and I agree with you that it won't come as a surprise if they eventually follow DVC's model with Points premiums for fixed intervals. As I understand it you buy 20% more Points than however many it takes to book the desired interval at the time of purchase, which guarantees annual usage of same and protects against any future Points reallocations affecting that interval? But in any given use year you can elect to use your Points elsewhere based on the Points Charts in effect for the use year? If I were in the market for Points I'd definitely consider that option.

As mentioned elsewhere in the thread, I also expect that eventually MVW will restrict the number of transfers allowed in/out of owner accounts and the number of reservations to which owners can attach guest names. But not until owner rentals impact MVW's bottom line to a pre-determined extent, which I don't think we're near yet. We're getting there, though, because the internet is certainly contributing to owner rentals being much more prevalent now than when Weeks were the only game in town.

 

[pspercy]

In fifteen years my interest in time share might be very limited
I'd like to see one in Alaska. People say that that's too seasonal but here's a
suggestion http://www.alyeskaresort.com/hotel it's open year round and is a very pleasant place too.

 

[bizaro86]

In fifteen years my interest in time share might be very limited
I'd like to see one in Alaska. People say that that's too seasonal but here's a
suggestion http://www.alyeskaresort.com/hotel it's open year round and is a very pleasant place too.

World mark has an agreement for a couple of units there, but they are very expensive.