Starwood to spin off vacation ownership

From the release:

As part of the planned spin-off, the new company will:

Benefit from additional anticipated inventory at Westin Los Cabos, Westin Cancun, Westin Puerto Vallarta, Sheraton Kauai, and Sheraton Steamboat – owned properties Starwood expects to transfer to the new entity for future timeshare development.

Full details at:
https://starwood.q4web.com/files/do...Vacation-Ownership-Business-2-10-14-Final.pdf

That's the four new resorts that someone had mentioned to them in an owner update post on here recently.

This is VERY interesting news.

"Continue to expand its existing developments within its current portfolio of best-in-class destinations, which includes owned land providing future growth capacity."

Could be a reference to Westin St. John's remaining hotel units, as well as WKORV-NN.

"Benefit from additional anticipated inventory at Westin Los Cabos, Westin Cancun, Westin Puerto Vallarta, Sheraton Kauai, and Sheraton Steamboat – owned properties Starwood expects to transfer to the new entity for future timeshare development."

Looks like official confirmation that new resorts will be joining the network. I guess the salesman wasn't lying?

Sounds like Starwood is just copying Marriott.

Marriott did the exact same thing several years ago in spinning off the Marriott Vacation Club into its own independent company using the same 'asset light' business strategy.

They promise a long term relationship with Westin and Sheraton for the flags (ie, branding).

Wonder what will happen to Harborside? My bet is that the HOA will decide to convert it to Marriott's timeshare company (VAC) since Marriott is the hotel for the rest of Atlantis. Maybe not in the first year, but probably after Marriott has a better handle on how Atlantis is going and after SVO gets its own act together. Totally speculation on my part.

I wonder how this will change SPG benefits (Gold and Plat) that are in the benefits of SVN?

clsmit said:

They promise a long term relationship with Westin and Sheraton for the flags (ie, branding).

Wonder what will happen to Harborside? My bet is that the HOA will decide to convert it to Marriott's timeshare company (VAC) since Marriott is the hotel for the rest of Atlantis. Maybe not in the first year, but probably after Marriott has a better handle on how Atlantis is going and after SVO gets its own act together. Totally speculation on my part.

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That would suck. This would lower the value of SVN.

Excellent! This seems to indicate SVN will finally add additional locations, which we all have wanted for years. Hopefully they will also look outside of the four locations mentioned in this release, as well.


Sent from my iPad

okwiater said:

Looks like official confirmation that new resorts will be joining the network. I guess the salesman wasn't lying?

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Perhaps not, though still the best advice is to never believe anything sales says without it being in writing. After all, would you really make a purchase decision based on what they say?


Sent from my iPad

Ken555 said:

Perhaps not, though still the best advice is to never believe anything sales says without it being in writing. After all, would you really make a purchase decision based on what they say?


Sent from my iPad

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HOT is a publicly traded company. It's about revenue and profits, and NOT "owner benefits" and creating higher value. I wouldn't be at all surprised to see a major SVN devaluation somehow. That's why I believe to own where I want to go, and do go!

cubigbird said:

HOT is a publicly traded company. It's about revenue and profits, and NOT "owner benefits" and creating higher value. I wouldn't be at all surprised to see a major SVN devaluation somehow. That's why I believe to own where I want to go, and do go!

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I agree 100% that there's going to be some change in the club and we just don't know the details yet. But, I highly doubt they will change the ability to reserve other resorts in any significant manner as that would only impact their sales of new locations to existing owners...who are their best repeat customer.

As a separate company I think they will be forced to expand the sales opportunities more than they have done over the last decade. I'd really enjoy visiting other locations outside of Mexico, Hawaii and Colorado.


Sent from my iPad

Bummer if you don't own SVN. It is always nice to use starpoints to getting into the villas at STJ.

clsmit said:

Wonder what will happen to Harborside? My bet is that the HOA will decide to convert it to Marriott's timeshare company (VAC) since Marriott is the hotel for the rest of Atlantis. Maybe not in the first year, but probably after Marriott has a better handle on how Atlantis is going and after SVO gets its own act together. Totally speculation on my part.

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This would be difficult. As with all the SVO properties, Starwood largely controls the HOA Board. I don't think Harborside is going anywhere anytime soon...

gblotter said:

Sounds like Starwood is just copying Marriott.

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Not surprising given the MVC spinoff seems to have been successful from Wall Street's perspective.

gblotter said:

Marriott did the exact same thing several years ago in spinning off the Marriott Vacation Club into its own independent company using the same 'asset light' business strategy.

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I'd argue that neither of these is/has been a true asset light strategy. They are all currently developing owned properties. Marriott has yet to add any inventory from properties it doesn't own and develop prior to managing. Same sounds true for the SVO spinoff, as the release references "owned land" and "owned properties" to be transferred.

The only one who seems to be successfully pursuing a true asset light strategy has been Hilton, with several added/announced properties owned and developed by third parties and just to be managed by HGVC.

The only ones going asset light are the legacy hotel companies. (Perhaps that's what you meant in your post...in which case I am realizing you are right on identifying the impetus for the spin-off). I just find it curious HGVC seems to have been able to pursue asset light alongside the rest of the Hilton family while MVC and SVO have seemed to keep the old model.

Glad to see new resorts will come on line, but since half that list already has a destination available, (Kauai, Steamboat, Cancun) I am a little disappointed. Cabo and PV should be nice, but how long will it take to get these new resorts in the system?

Not exactly surprising news.

Glad to see new resorts being added. I'll be interested to see if they sell them as deeds (Can Mexican resorts be deeded? It may have to be RTU) or the points program like they had at WSJ-CV.

An expansion of Sheraton Steamboat would be nice.

LisaRex said:

Not exactly surprising news.

Glad to see new resorts being added. I'll be interested to see if they sell them as deeds (Can Mexican resorts be deeded? It may have to be RTU) or the points program like they had at WSJ-CV.

An expansion of Sheraton Steamboat would be nice.

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Total speculation, but I would expect all future properties to be in the points program.

DeniseM said:

Total speculation, but I would expect all future properties to be in the points program.

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I agree with your assessment and they are following Marriott to the letter.

DeniseM said:

Total speculation, but I would expect all future properties to be in the points program.

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The writing is clearly on the wall. Flex points program announced, then shortly after a spinoff with development of existing hotels announced. I agree, I see it going completely that points only direction. It's going to make our fixed week deeds more valuable as we won't have to fight the supply and demand game for reservations. We will already have a leg up.

This is interesting news. I do hope, like others, that they expand to some new locations in addition to those mentioned. It will be interesting to see how this develops.

Mike

LisaRex said:

I'll be interested to see if they sell them as deeds (Can Mexican resorts be deeded? It may have to be RTU) or the points program like they had at WSJ-CV.

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Assuming the way WLR was set up is how they would have to do the other Mexican properties, it's not deeded. A Mexican company holds the deeds, a US company owns all of the shares of the Mexican company, and you hold equity membership certificates in the US company with RTU (mapped to seasonal unit weeks).

Something (probably the certificates) expires after 50? years and can/will be automatically renewed for another 50? years.

Restructuring the way the certificates map to RTU could easily allow for a points vs. unit weeks based system.

cubigbird said:

The writing is clearly on the wall. Flex points program announced, then shortly after a spinoff with development of existing hotels announced. I agree, I see it going completely that points only direction. It's going to make our fixed week deeds more valuable as we won't have to fight the supply and demand game for reservations. We will already have a leg up.

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Maybe. The question will be whether and how "our" inventory as weeks owners is made available to us and not to points owners.

The initial question will be whether points owners may reserve at the twelve month mark or at the eight month mark. If the former (which I suspect), will there be two inventory pools (a la Marriott)? If so, will Starwood nevertheless "poach" the most desired inventory through exchanges of "comparable weeks" (which may or not be comparable) by controlling inventory fed into Interval.

I am more than a bit suspicious given how Marriott has changed things since starting its Destinations Club. Desirable weeks are far less available for early exchanges compared to before. Many of us believe they are held back for points owners.

But I must remain cautiously optimistic, at least at the outset, as I own four StarOption weeks. I will hedge my bets by purchasing shares of the spin-off company.

"The only one who seems to be successfully pursuing a true asset light strategy has been Hilton, with several added/announced properties owned and developed by third parties and just to be managed by HGVC."

I believe it was WYN (actually WVO for WVR & Worldmark) that started it a few years ago HGVC followed the example.

Ian

There should be a special post stamp for speculation.

They still have to deal with the SVO CCRs for the HOAs (as per contract between Owner and SVO) - regardless of how they deal with agreement between SVO and SVN which can be modified w/o HOA approval. They can even dissolve SVN - this is why there is another 'Vacation Club' (currently defunct) mentioned in our CCRs.

Letter from Starwood

Here's the letter from Starwood
Dear Owner,

As a valued Owner, we wanted to personally reach out to you and share some exciting news. Earlier today, Starwood Vacation Ownership’s parent company, Starwood Hotels & Resorts Worldwide, Inc. (Starwood) announced its plan to spin off its vacation ownership business into a separate publicly traded company. Creating two separate companies will allow SVO opportunities to grow, while continuing to provide outstanding vacation experiences, and Starwood to continue to participate through its franchise and managed hotel business model. To view today’s press release click here. For a list of questions and answers, click here, or visit starwoodvacationnetwork.com/news.

All of the benefits and features of ownership you have come to expect will continue through this transition. We will continue to provide you with the same valuable benefits, award winning Westin and Sheraton branded experiences and access to the industry-leading Starwood Preferred Guest® program that you’ve come to know and expect from us. As a new standalone company, we will be even more focused on developing resorts in new destinations and creating program enhancements to make your vacations even more memorable.

As an owner, you will continue enjoying your timeshare resorts as you always have. Current reservation guidelines and fees, exchange rules, reservation rights, and exchange privileges through Starwood Vacation Network, Interval International, and other current exchange options will all remain the same. In addition, you will continue to enjoy privileged access in the SPG Program. As part of the transaction, SVO will benefit from additional anticipated inventory at Westin Los Cabos, Westin Cancun, Westin Puerto Vallarta, Sheraton Kauai, and Sheraton Steamboat – owned properties Starwood expects to transfer to the new entity for future timeshare development. You can continue to access these hotel properties through the SPG program.

Thank you for your continued dedication and loyalty. This is just the start to a very exciting journey and we couldn’t be happier to embark on it together!

Best Regards,
Steve Williams
Stephen G. Williams
Chief Operating Officer
Starwood Vacation Ownership