Marriott Points And Inflation?

GinaB · Nov 1, 2006

I am enjoing a week at Ocean Pointe and went through a sales presentation yesterday. The sales person really gave a thorough explanation about the value of owning 2 weeks (we own only 1 right now and was a resale) and using the points every other year. Here is where my #1 concern lies and I know you all can help me with it. If I purchase today a $24,500 gold Ocean Pointe, I would receive 100k points every other year. 100k points today in 2006 could barely get me 7 night stay in a category 4 hotel (105k point value).

Five years ago, what could the same 100k points bring a MVCI Owner? My point is, I know Mr. Marriott realizes inflation into his points and value, so although today they "tout" this great rewards program, but when I retire in 20 years, will these same 100k points even get me into a category 3 hotel? How often are they adjusting the point values?

So, if I buy today "strictly" based on points, I want to know what I get today is going to be the same as what I am able to get 10 years from now, or else where is the big deal about this point system ?

Ok, you smart tuggers...tell me what you think and know on this topic.

Thank you!

Dave M · Nov 1, 2006

Resale versus Marriott Purchase
A central but unasked question is whether you should buy from Marriott or take advantage of prices on the resale market that are typically 40%-50% less than Marriott's prices. The timeshare you get on the resale market will be the same as what you buy from Marriott and the only ownership benefit you lose with that resale week is the right to trade the use of your week for points every other year. As for your questions....

Annual Cost of Points
First, you won't "receive 100k points every other year." You'll get those points only if you pay your maintenance fees for that year, pay a special fee to get those points (currently $104) and give up your right to use your timeshare for that year. That's a tough value call to get points that most people value at around one cent each, even without considering the significant additional outlay to purchase from Marriott rather than on the resale market!

Can the points be worth more than a penny each? Absolutely. The best value for use of the points is the hotel & air "Travel Packages" that include seven nights at a Marriott and 50,000 to 120,000 airline frequent flyer miles. Which Marriotts you can stay at and how many FF miles you'll get depend on how many points you are willing to spend. The value per point depends on how much you would have otherwise spent for that vacation package.

Devaluation of Points
There hasn't been much change in the point values in recent years, with one significant exception - the aforementioned Travel Packages, which were devalued about five years ago. Back then, 200,000 points got you a seven-night stay at any Marriott and two coach plane tickets to almost anywhere in the world. Now the equivalent award would cost about 270,000 points.

However, for the most part, the changes Marriott has made to the point requirements for various awards every few years have been minor and sometimes (such as for cruise awards) even favorable for us.

Devaluation Example
Will Marriott devalue awards in future years? Definitely. Here is a ridiculous but dramatic example showing why:

Assume inflation in hotel room prices of 4% per year. Also, assume that a Marriott hotel room for a night has a current average cost eligible for Marriott Rewards points of about $150. At that 4% rate of inflation, the average cost 100 years from today would be $7,575 per night. ($150, compounded annually at 4% for 100 years = $7,575.)

Someone staying two nights at that average rate might earn 18 points per dollar spent (5 points on Marriott Premier Visa and 13 points - depending on elite status - for the stay). 18 points x $7,575 x two nights = 272,700 points earned for a two-night stay.

Thus, assuming Marriott doesn't ever devalue its program from where it is today, the person paying for a mere two nights at a Marriott would earn enough points for an air-hotel travel package that would include 120,000 FF miles and a 7-night stay in any Marriott hotel worldwide!

That's not what is intended. Thus, as inflation marches on, occasional devaluations are necessary to keep the earning and award equation in balance.

We don't like a points devaluation when it happens, but it makes sense for Marriott to do it.

winger · Nov 1, 2006

Dave M said:
...
We don't like a points devaluation when it happens, but it makes sense for Marriott to do it.

Well, all of the Marriott sales reps I have spoke to over time claims that Marriott tries very hard not to devalue its points (meaning 110k MRPs buys you the same 7 nites at a cat 6 hotel today as it will tomorrow); however, since they do not have a crystal ball - I keep close at hand an advice a TUG'er gave somewhere on this board, that is don't let your MRP acct balance go over 400k, basically don't accumulate huge amts of pts (like millions) expecting one huge world trip 20 yrs down the road. Use your points here and there to keep it around 400k'ish as a protection against inflation and also to enjoy yourself just a little, LIVE FOR TODAY,not just for tomorrow!

Dave M · Nov 1, 2006

winger said:
...Marriott tries very hard not to devalue its points (meaning 110k MRPs buys you the same 7 nites at a cat 6 hotel today as it will tomorrow)...

One way Marriott has devalued points each time it has made changes since "categories" were first introduced is by moving various hotels up a notch to a higher category. When that is done, it costs more points for an award stay at such a hotel.

CaliDave · Nov 1, 2006

Why doesn't Marriott increase the # of points they give you based on the same inflation?
Marriott is getting your week and renting it out for that inflation adjusted cost.

Dave M · Nov 1, 2006

That would be good for us, but not good for Marriott, Dave. Based on the discussions here and on Marriott's reports of the volume of sales, Marriott doesn't seem to have any problem making sales without offering us that inflation protection!

The points per week are written into the legal documents that attach to ownership.

m61376 · Nov 1, 2006

CaliDave said:
Why doesn't Marriott increase the # of points they give you based on the same inflation?
Marriott is getting your week and renting it out for that inflation adjusted cost.

The bottom line is...well, their bottom line. I think what we tend to lose sight of here is that people who read this board are the minority. Most perople who buy from Marriott really haven't studied and compared the developer's price to the resale market. Most are relaxed, on vacation, having a great time and want to continue the vacation experience; as such, they are prime targets for salesmanship, which focuses on continuing the vacation family legacy.

Pre-conconstruction sales aside (because I think they fall into a different category because the last few years Marriott's prices have increased so that the pre-construction pricing at some of the hot properties are ~ resale prices in a few years), Marriott's prices are substantially higher than the same units sold on the resale market, yet they are able to convince many people to buy from them. As long as people are willing to pay the inflated prices and accepting of locked in point exchange values, while point redemption amounts are subject to market changes and will increase over time due to inflation, Marriott has no incentive to change anything. Why should they? Market pricing is based on demand- as long as there is the demand and the weeks are selling out, they don't need to offer better incentives or point cost guarantees. If it reaches a point that more people flock to the resale market they may adjust their approach, but until the it is a seller's market.

jerseyfinn · Nov 1, 2006

It's not so much about factoring in inflation or a per point cost as it is about calculating the approximate aggregate cost to you to amass the MRP which you then turn around and redeem for a Travel Package -- in your case this would require two EOY cycles to get 200K MRP.

If your MF are $960 and you add the $104 transaction fee, you get a cost of $1064 for 100K MRP. The aggregate to get 200K MRP would be $2128.

Folks here debate what real "value" you receive for your travel package, but depending upon where and how wisely you use it, one can generate at least $3000 in relative travel value from a typical travel package redemption. Brian can weigh in on that part. It's important to have a redemption strategy which works.

Ideally, one wants to own a resort at which the MFs are lower to minimize the relative cost to acquire the points. IMO, Ocean Pointe is beginning to approach the threshold at which it may not be advantageous to to convert to MRP ( Platinum MF are now @ $1064 & Gold are $961 ).

Another important consideration to keep in mind are special assessment fees. This year, Ocean Pointe is assessing a $195 special assessment per week. This would effectively make total fees $1259 for a Platinum week, and $ 1156 for a Gold week. So if this year was a year in which you take MRP, you would have to factor in the special assessment.

This idea of course is applicable to any MVC resort.

Barry

pwrshift · Nov 1, 2006

Inflation is a fact of life. I drive from Toronto to Fort Lauderdale for my 4 weeks stay each winter and stay 3 nights on the road in Marriotts (of course) to get more points. Creature of habit I stay at the same places every year - Cincinnati, Atlanta, Orlando...and reverse it driving home.

I noticed rates seemed higher for 2007 ... compared it to what I paid at the same time last year in the same hotels and they totalled 40% more!

So, while the number of points you have may not buy as much next year as they will this year - I doubt that they will devalue as much as 40% a year.

So save for that magical once-in-a-lifetime trip one day and promise yourself you'll fly business class and stay in a Category 7 Marriott for at least two weeks and get the full enjoyment of this Marriott benefit to ownership. When you're ready, only buy the air&hotel packages with your points for maximum leverage. And study TUG ... and the 10,000 threads on points in the Marriott forum.

Brian

winger · Nov 2, 2006

pwrshift said:
Inflation is a fact of life. I drive from Toronto to Fort Lauderdale for my 4 weeks stay each winter and stay 3 nights on the road in Marriotts (of course) to get more points. Creature of habit I stay at the same places every year - Cincinnati, Atlanta, Orlando...and reverse it driving home.

I noticed rates seemed higher for 2007 ... compared it to what I paid at the same time last year in the same hotels and they totalled 40% more!

So, while the number of points you have may not buy as much next year as they will this year - I doubt that they will devalue as much as 40% a year.

So save for that magical once-in-a-lifetime trip one day and promise yourself you'll fly business class and stay in a Category 7 Marriott for at least two weeks and get the full enjoyment of this Marriott benefit to ownership. When you're ready, only buy the air&hotel packages with your points for maximum leverage. And study TUG ... and the 10,000 threads on points in the Marriott forum.

Brian

spoken from experience, I see !!! Hey, has anyone ever ventured how many MRPs is currently in your acct ?

Frisbeeace · Dec 15, 2007

CaliDave said:
Why doesn't Marriott increase the # of points they give you based on the same inflation?
Marriott is getting your week and renting it out for that inflation adjusted cost.

This is the key question that remains unanswered a year later and after 535 hotels experienced a category increase, the availability of Standard Rewards became drastically reduced at many properties and Stay Anytime Rewards premium went from 50% to 100% additional points.

In DaveM's devaluation example, a hotel would increase 50x its rate in 100 years so, clearly, if Marriott does not adjust accordingly, the Rewards program will collapse. But if they do, the trade-in option will dissappear much sooner as 110,000 will not even buy one night at a category 1 hotel. It's pretty obvious that Marriott will have to do recognize that it is equally fair and logical to adjust our revenue in terms of points as our properties have also experienced a significant increase in their rates. Currently, we give Marriott the use of a week that has more value every year but we receive points that are worth less and less as devaluation progresses.

VictorB · Dec 19, 2007

Newbie Clarifcation

Annual Cost of Points
First, you won't "receive 100k points every other year." You'll get those points only if you pay your maintenance fees for that year, pay a special fee to get those points (currently $104) and give up your right to use your timeshare for that year. That's a tough value call to get points that most people value at around one cent each, even without considering the significant additional outlay to purchase from Marriott rather than on the resale market!

I am new to this and have yet to close escrow, but I also understood that I would get the 100K points EOY (not conditional on giving up my TS]. I have the notes the sales person (yes I bought from the Developer BEFORE I knew better) took during our presentation, and he wrote in the MRP without the condition. I wonder if this would be considered a contractual agreement?

CMF · Dec 19, 2007

You can exchange your week for points every other year. You don't get points every other year.

Is it too late for you to rescind?

Charles

Dave M · Dec 19, 2007

Responding to your other question, the contract you signed clearly states that you agreed that you did not rely on any verbal or written statments other than those included in the contract and in any formal documents referenced by the contract.

thinze3 · Dec 19, 2007

Is Ko Olina a points every-other-use resort?

If so, he will only be able to turn in his weeks for points every four years as an EOY owner.

Lawlar · Dec 19, 2007

Fraud

Dave M said:
Responding to your other question, the contract you signed clearly states that you agreed that you did not rely on any verbal or written statments other than those included in the contract and in any formal documents referenced by the contract.

Sorry to keep disagreeing with you Dave [but your other answers were great].

A business cannot let its salespeople make fraudulent representations and then claim that the purchaser is at fault for not reading the fine print. Fraud is fraud.

Contract language that states that oral representations cannot be relied upon, when the business knows full well that its salepeople are committing fraud, is meaningless. Our courts will not let a business escape from its illegal activities simply because it puts disclaimers in its contracts.

If a business dosn't want to be liable for its salespersons’ fraudulent statements, then it should tell its salespersons to tell the truth.

When we ask a timeshare salesperson a question, we have a legal and moral right to rely upon the truthfulness of the answer. If the salesperson tells a lie then we have the right to sue for damages – and the salesperson’s employer is liable as well.

winger · Dec 19, 2007

Lawlar said:
Sorry to keep disagreeing with you Dave [but your other answers were great].

A business cannot let its salespeople make fraudulent representations and then claim that the purchaser is at fault for not reading the fine print. Fraud is fraud.

Contract language that states that oral representations cannot be relied upon, when the business knows full well that its salepeople are committing fraud, is meaningless. Our courts will not let a business escape from its illegal activities simply because it puts disclaimers in its contracts.

If a business dosn't want to be liable for its salespersons’ fraudulent statements, then it should tell its salespersons to tell the truth.

When we ask a timeshare salesperson a question, we have a legal and moral right to rely upon the truthfulness of the answer. If the salesperson tells a lie then we have the right to sue for damages – and the salesperson’s employer is liable as well.

In real estate business and/or notary business, there is some sort of insurance (I think called E&O, Errors and Omission) that protects the consumer and agent against honest (not purpose) misinformation from any party, including from the agent, seller, etc, which can be material in terms of damage to the buyer? I am not talking title insurance.

Is there a such a thing used by Marriott (and other companies selling TS) ?

Lawlar · Dec 19, 2007

Insurance

A business insurance policy will usually defend a company (its insured) from lawsuits when an employee commits fraud. But not if it the business intentionally engages in that fraud.

Unfortunaely, business insurance does nothing to help the customer that was defrauded.

I don't know of any insurance that would give any relief to a person who purchased a timeshare based on fraudulent representations.

Dean · Dec 19, 2007

Lawlar said:
Sorry to keep disagreeing with you Dave [but your other answers were great].

A business cannot let its salespeople make fraudulent representations and then claim that the purchaser is at fault for not reading the fine print. Fraud is fraud.

Contract language that states that oral representations cannot be relied upon, when the business knows full well that its salepeople are committing fraud, is meaningless. Our courts will not let a business escape from its illegal activities simply because it puts disclaimers in its contracts.

If a business dosn't want to be liable for its salespersons’ fraudulent statements, then it should tell its salespersons to tell the truth.

When we ask a timeshare salesperson a question, we have a legal and moral right to rely upon the truthfulness of the answer. If the salesperson tells a lie then we have the right to sue for damages – and the salesperson’s employer is liable as well.

Given that most states have as part of their legal structure that real estate contracts are only binding to the extent they are in writing and that one signs they understand this when they buy any timeshare I've ever heard of, it'd be hard to sue in this situation. You'd need absolute proof such as a signed statement from the other party documenting wrong information or multiple disinterested witnesses or a legally obtained recording of some sort. Notes of what one understood will not even get to first base. Even then you'd likely need reasonable proof that it was intentional and not simply miscommunication as I'm confident the above info is.

I think it's clear that certain timeshare companies train their sales staff to push the envelope in these areas and in some cases, likely encourage them to lie. Marriott is not one of them in my experience. Lawsuits are not the solution to these type of problems though it's good to have that option is dramatic cases, a thorough understanding of what one is laying out their hard earned money is the best protection.

Lawlar · Dec 19, 2007

Contracts and Fraud

Dean said:
Given that most states have as part of their legal structure that real estate contracts are only binding to the extent they are in writing and that one signs they understand this when they buy any timeshare I've ever heard of, it'd be hard to sue in this situation. You'd need absolute proof such as a signed statement from the other party documenting wrong information or multiple disinterested witnesses or a legally obtained recording of some sort. Notes of what one understood will not even get to first base. Even then you'd likely need reasonable proof that it was intentional and not simply miscommunication as I'm confident the above info is.

I think it's clear that certain timeshare companies train their sales staff to push the envelope in these areas and in some cases, likely encourage them to lie. Marriott is not one of them in my experience. Lawsuits are not the solution to these type of problems though it's good to have that option is dramatic cases, a thorough understanding of what one is laying out their hard earned money is the best protection.

I’m talking in the abstract here – so that we can discuss the topic without offending anyone (or company).

There are lawsuits filed all the time for fraud that arises out of real estate transactions. Just ask any realtor. For example, if the seller of a home makes a misrepresentation about the condition of the structure (for example, fails to disclose mold), then you can almost bet that there will be a lawsuit. The fact that there are written disclosure statements doesn’t always preclude the filing of a lawsuit.

We will most certainly see a lot of lawsuits filed as a result of the subprime mess, despite all of the exculpatory language in the loan documents.

I use to represent sales companies (many of them were very honest). I would write all kinds of disclosures in my clients’ contracts to the effect that the purchasers shouldn’t rely on anything except what was in the writings. (God forgive me!) And I’m sure that the use of such disclosures by sales companies (not my clients) often discouraged people from seeking redress when they discovered that they were misled.

However, the law is clear that if a salesperson commits fraud, a court or jury can award damages even if the only evidence is the testimony of the person who was defrauded. If that were not true then any crook could avoid justice by simply making certain that he had a clever lawyer who could draft a contract that fully exonerated him from his wrongful acts.

I’m not advocating that everyone sue somebody. But at the same time, I get a sense from some of the posts, that some people feel that a certain amount of “puffing” or white lies are to be expected and are acceptable. I think the timeshare industry would be better served if it pursued a high level of conduct (again, I’m not pointing at any one company or practice).

My recommendation, to anyone who purchased a timeshare as a result of fraud, is to rescind the contract (if it is still a timely option) and then complain to the Better Business Bureau. The BBB may be able to help the consumer get some relief. If the sales practice was particularly grievous and widespread, then more drastic remedies would be appropriate.

Dave M · Dec 19, 2007

You are probably correct - in theory. But there seems to be no evidence that any lawsuits on this issue have ever been filed and successfully pursued against Marriott. I spent considerable time searching on this issue some time ago when the topic came up.

Accordingly, from a practical standpoint, I'll stand by my earlier response on the topic.

Dean · Dec 20, 2007

Lawlar said:
I’m talking in the abstract here – so that we can discuss the topic without offending anyone (or company).

There are lawsuits filed all the time for fraud that arises out of real estate transactions. Just ask any realtor. For example, if the seller of a home makes a misrepresentation about the condition of the structure (for example, fails to disclose mold), then you can almost bet that there will be a lawsuit. The fact that there are written disclosure statements doesn’t always preclude the filing of a lawsuit.

We will most certainly see a lot of lawsuits filed as a result of the subprime mess, despite all of the exculpatory language in the loan documents.

I use to represent sales companies (many of them were very honest). I would write all kinds of disclosures in my clients’ contracts to the effect that the purchasers shouldn’t rely on anything except what was in the writings. (God forgive me!) And I’m sure that the use of such disclosures by sales companies (not my clients) often discouraged people from seeking redress when they discovered that they were misled.

However, the law is clear that if a salesperson commits fraud, a court or jury can award damages even if the only evidence is the testimony of the person who was defrauded. If that were not true then any crook could avoid justice by simply making certain that he had a clever lawyer who could draft a contract that fully exonerated him from his wrongful acts.

I’m not advocating that everyone sue somebody. But at the same time, I get a sense from some of the posts, that some people feel that a certain amount of “puffing” or white lies are to be expected and are acceptable. I think the timeshare industry would be better served if it pursued a high level of conduct (again, I’m not pointing at any one company or practice).

My recommendation, to anyone who purchased a timeshare as a result of fraud, is to rescind the contract (if it is still a timely option) and then complain to the Better Business Bureau. The BBB may be able to help the consumer get some relief. If the sales practice was particularly grievous and widespread, then more drastic remedies would be appropriate.

Frivolous suits are filled all the time and if one doesn't read and/or understand what is in front of them, they really don't have anyone else to blame. And it's true there are all types of ambulance chasers that give good lawyers a bad name. Certainly if a salesman is truly dishonest and lies, esp if condoned or encouraged by the company, it'd be good to be able to hold their feet to the fire. From a practical point of view, that's essentially impossible with timeshares without real proof or enough collaboration from multiple unrelated people to document it did happen and was purposeful and not simply a misunderstanding.

thinze3 · Dec 20, 2007

Newbie Clarifcation

CALL MARRIOTT AND EXPLAIN THE MISREPRESENTATION/MISINTERPRETATION!!!
CALL THE CLOSING COMPANY AND DO THE SAME!!!
IF YOU OUT BADLY ENOUGH, YOU'LL BE ABLE TO DO SO. IMO

VictorB said:
Annual Cost of Points............I am new to this and have yet to close escrow, but I also understood that I would get the 100K points EOY (not conditional on giving up my TS]. I have the notes the sales person (yes I bought from the Developer BEFORE I knew better) took during our presentation, and he wrote in the MRP without the condition. I wonder if this would be considered a contractual agreement?

jscboston · Oct 21, 2008

Marriott Points Devaluation

Dave M said:
Devaluation of Points
There hasn't been much change in the point values in recent years, with one significant exception - the aforementioned Travel Packages, which were devalued about five years ago. Back then, 200,000 points got you a seven-night stay at any Marriott and two coach plane tickets to almost anywhere in the world. Now the equivalent award would cost about 270,000 points.

However, for the most part, the changes Marriott has made to the point requirements for various awards every few years have been minor and sometimes (such as for cruise awards) even favorable for us.

Devaluation Example
Will Marriott devalue awards in future years? Definitely. Here is a ridiculous but dramatic example showing why:

Assume inflation in hotel room prices of 4% per year. Also, assume that a Marriott hotel room for a night has a current average cost eligible for Marriott Rewards points of about $150. At that 4% rate of inflation, the average cost 100 years from today would be $7,575 per night. ($150, compounded annually at 4% for 100 years = $7,575.)

Someone staying two nights at that average rate might earn 18 points per dollar spent (5 points on Marriott Premier Visa and 13 points - depending on elite status - for the stay). 18 points x $7,575 x two nights = 272,700 points earned for a two-night stay.

Thus, assuming Marriott doesn't ever devalue its program from where it is today, the person paying for a mere two nights at a Marriott would earn enough points for an air-hotel travel package that would include 120,000 FF miles and a 7-night stay in any Marriott hotel worldwide!

That's not what is intended. Thus, as inflation marches on, occasional devaluations are necessary to keep the earning and award equation in balance.

We don't like a points devaluation when it happens, but it makes sense for Marriott to do it.

There is one problem with the logic above. Marriott is a management company and does not own the hotels in its system. The owners of a hotel where points are earned pay (cash) to Marriott for the points that are issued to its guests. Marriott hangs on to that cash, invests it, and then pays a hotel owner (often a different owner than the owner of the hotel where the points were earned) cash for the points that were redeemed by frequent guests. So if a guest earned points today and used them in 100 years, Marriott had the use of that cash for the full 100 years and earned interest on it. As long as they are able to generate invstment earnings that are as high as the rate of hotel room rate inflation, they break even. Thus, point devaluation should never be 'required.' It is strictly a business decision based on supply and demand, competitive market conditions, etc.

Marriott Points And Inflation?

GinaB

Dave M

winger

Dave M

CaliDave

Dave M

m61376

Tug Review Crew

jerseyfinn

pwrshift

Tug Review Crew: Rookie

winger

Frisbeeace

VictorB

CMF

Dave M

thinze3

Tug Review Crew

Lawlar

winger

Lawlar

Dean

TUG Review Crew

Lawlar

Dave M

Dean

TUG Review Crew

thinze3

Tug Review Crew

jscboston