I think they have a lot to lose from discontinuing SVN. If that happens, there is really no reason for owners to keep Starwood as a management company. You can have someone else run the reorts, have a large reduction in MFs, and trade through II without management controlling deposits. I am not sure what percentage of owners at SDO are developer buyers, but if most are resale buyers by now it really doesn't make sense to keep Starwood as the management company with no SVN access. In addition, is SVN goes away, it is also likely that owners at the most desireable resorts in the network (and the highest MFs) will opt to not join II at all - that can still end up in a large reduction in revenue.
Danny,
I should begin by stating the obvious. Starwood will most likely retain SVN for the time being. My speculation was just that. I ventured it in recognition of a simple fact. SVN could disappear tomorrow.
You make some sweeping statements.
No reason to keep Starwood if no SVN? Really? Try to get rid of them.
If SVN goes away, owners will have no incentive to join I.I.?
I don't even know how to respond to that.
In my view, I think the whole mandatory/voluntary is making them miss out on huge revenue opportunities, especially since they are not developing new resorts so they don't need to "convince people that buying resale is a bad idea". At most resorts (except mandatory), every developer buyer selling their unit to a resale buyer is a loss of SVN fees in perpetuity to Starwood. Stawood can do much better by expanding SVN and upsell non-svn owners to turn their unit into a mandatory one. By this I don't mean a one time fee of $600 valid until the next resale - but charge thousands of dollars and keep the unit in SVN forever. They can easily charge a SDO Platinum 2BR owner $5000 or more for the privilege - just compare resale prices of a platinum WKV to resale prices of a platinum SDO... and the main difference between the two is SVN access. Similarly, they can charge thousands of SVR owners $1000-$5000 for the privilege etc... Not only do they get the front end revenue, but also perpetual SVN fees. This, in my view, is the cure to the malady - obviously along with reducing MFs so their brand doesn't dilute to nothingness and people actually want to buy into SVN...
I know all about it.
I, jerseygirl, and others have been speculating that Starwood would open SVN membership to all for a couple of years now. For exactly the reasons you mention. Thus far, we have been wrong. But, still makes a lot of sense to me, taken in isolation. Glad to know you read what is posted here. Feeding it back as original thought is a bit much though.
The rest of it... how it affects resale values is meaningless to Starwood. How the secondary marketplace perceives SVN value is also meaningless.
SVN is nothing special. In fact, its a just another variation on a point system designed to rake value from owners.
Ask yourself, how would the market react if SVN was dissolved tomorrow? Mandatory resorts are not inherently more valuable.
You can fall for the baloney. I choose to pass.
I mean, how has Marriott survived without some such gimmick?
And, heaven help them, the owners belong to I.I. to get their trades.
Who would have thunk it? Is such a thing possible?
I also think Starwood is sharp as a tack. They certainly don't need us to point out how they can make money from their system. Have just a touch of humility. These are world-class wealth creators, and we are babes still trying to figure out how we are being fleeced, for heaven sake.
We don't even know what we don't know about their motives and methods.
If SVN disappeared tomorrow Starwood would not suffer one dollar.
But first, they would have to create a substitute mechanism to control exchange inventory.
That has now been accomplished.
Not a single item you describe as reason to maintain SVN cannot be addressed a different (and better) way. All Starwood needs to do is dictate it.
The reasons it would disappear is to insulate Starwood from whatever negative it might bring. The network operator is a separate and distinct business entity for a reason.
So long as SVN serves its purpose to Starwood, it will remain.
Have you ever considered why there is even such a thing as mandatory and voluntary? There were business reasons for it initially. It was not a freak accident. Because it is convoluted, one can easily ascribe thorny issues to its creation. Something like making sausage. Best to not know what went into it.
But, times, circumstances, and business imperatives change.
The difference between you and I, best I can tell, is that you think you have it figured out. I do the best I can to grope along with the imperfect information I have. From there, I make educated guesses.
I'm wrong as often as right. But, very little comes as a surprise.
Reminds me of a brilliant mathematician I know. A university professor who grapples with incomprehensible problems and equations. He long ago tired of suffering those of his colleagues in academia who would listen to his thesis and quickly respond with "I disagree".
He would say "How can you disagree? I just now presented it to you. I have been thinking about the problem for 10 years. You heard it 10 minutes ago. Please consider the problem for a year, so you will at least have the benefit of 10% of my thought before you disagree."
