I believe Marriott will aggressively acquire weeks into Points Trust

tlwmkw · Jul 8, 2010

I believe that Fletch said they had approx five years worth of inventory going in to the points program. I don't thing they will start to exercise ROFR anytime soon if that is the case. Yes, they may eventually do so if they are selling lots of points but I can't see any reason for them to do so anytime soon. Plus with the points program people can buy smaller chunks- therefore it may take longer to sell than if they were selling weeks.

I bet they will eventually allow any re-sale weeks to join the points program. After all they said that re-sales would never be able to trade for MRP's and with this new program they now can- if they want this program to be a success they will have to make it work as quickly as possible to please new points owners.

tlwmkw

BocaBum99 · Jul 8, 2010

windje2000 said:
I can't reconcile 42 Million points in the Trust( = $420 Million @ $10/pt) and $2 Billion of unsold inventory.

What am I missing?

I actually don't know what the inventory number is. What you are seeing is 2 different numbers reported by 2 different people, neither of whom has the exact number either. Only a real or re-stated data point.

My point remains the same. Once Marriott works down its current inventory, I believe that they will aggressively exercise ROFR and allow equity trade ins to fill the current void in the current Trust in meeting supply and demand of internal exchangers. The only question is how far out that will be. Is it 2 years or 5 years? Time will tell.

In the intervening period, there will be some ROFR of the highest demand weeks due to the fact that these units don't always go on the market and the Trust needs it.

Don't see why Marriott won't allow equity trade ins right away since they won't be taking on new maintenance fees and they will be selling points now while diversifying the Trust base.

windje2000 · Jul 8, 2010

BocaBum99 said:
I actually don't know what the inventory number is. What you are seeing is 2 different numbers reported by 2 different people, neither of whom has the exact number either. Only a real or re-stated data point.

My point remains the same. Once Marriott works down its current inventory, I believe that they will aggressively exercise ROFR and allow equity trade ins to fill the current void in the current Trust in meeting supply and demand of internal exchangers. The only question is how far out that will be. Is it 2 years or 5 years? Time will tell.

In the intervening period, there will be some ROFR of the highest demand weeks due to the fact that these units don't always go on the market and the Trust needs it.

Don't see why Marriott won't allow equity trade ins right away since they won't be taking on new maintenance fees and they will be selling points now while diversifying the Trust base.

Agree with your observation - The numbers are clearly very different. I think dioxide's 42MM points estimate is from the documents and probably closer to reality than the $2B in gossip.

An accurate estimate of that number together with estimates of quarterly sales portends the timing of the next steps in their plans.

josh1231 · Jul 8, 2010

BocaBum99 said:
I actually don't know what the inventory number is. What you are seeing is 2 different numbers reported by 2 different people, neither of whom has the exact number either. Only a real or re-stated data point.

My point remains the same. Once Marriott works down its current inventory, I believe that they will aggressively exercise ROFR and allow equity trade ins to fill the current void in the current Trust in meeting supply and demand of internal exchangers. The only question is how far out that will be. Is it 2 years or 5 years? Time will tell.

In the intervening period, there will be some ROFR of the highest demand weeks due to the fact that these units don't always go on the market and the Trust needs it.

Don't see why Marriott won't allow equity trade ins right away since they won't be taking on new maintenance fees and they will be selling points now while diversifying the Trust base.

I would assume the 42 million points they are referring to would be for the properties they have in the points trust, and the $2 billion would be those as well, plus the vast array of weeks they did not use for the points trust.

windje2000 · Jul 8, 2010

josh1231 said:
I would assume the 42 million points they are referring to would be for the properties they have in the points trust, and the $2 billion would be those as well, plus the vast array of weeks they did not use for the points trust.

Do you have hard information (documents) on the amount of unsold inventory contributed to the trust versus the amount retained by the corporation?

josh1231 · Jul 8, 2010

windje2000 said:
Do you have hard information (documents) on the amount of unsold inventory contributed to the trust versus the amount retained by the corporation?

In a previous post in this discussion, Dioxide lists a link to trust documents. If you look at the new property property in Kauai, from what I am reading they put 13 units into the trust, for 3.5 Million points. That is a rather large property, so I am assuming it has more than 13 unsold units. If I'm reading the numbers correctly, this would mean a good deal of inventory not in the trust.

josh1231 · Jul 8, 2010

BocaBum99 said:
This is a direct quote from my original post:

If Marriott does have $2B worth of inventory left to sell, that is 3 years of inventory when selling at the same rate as 1Q10 of $173M.

That acquisition program could start as soon as 2 years from now.

I was confused because in the first part of your post you seem to be stating this is going to be an immediate event, however in the lower part of your post you do say that when the points run out.

So to that end, I will agree with you that it is possible that in the next 3 years Marriott would start to Exercise ROFR, though I would hardly consider it to be a sure thing.

hotcoffee · Jul 8, 2010

BocaBum99 said:
I actually don't know what the inventory number is. What you are seeing is 2 different numbers reported by 2 different people, neither of whom has the exact number either. Only a real or re-stated data point.

My point remains the same. Once Marriott works down its current inventory, I believe that they will aggressively exercise ROFR and allow equity trade ins to fill the current void in the current Trust in meeting supply and demand of internal exchangers. The only question is how far out that will be. Is it 2 years or 5 years? Time will tell.

In the intervening period, there will be some ROFR of the highest demand weeks due to the fact that these units don't always go on the market and the Trust needs it.

Don't see why Marriott won't allow equity trade ins right away since they won't be taking on new maintenance fees and they will be selling points now while diversifying the Trust base.

Just doing some simple math, as of February, 2010, it appears that 11,975 weeks were unsold from 11 resorts; and barring any more sales, that number (probably less) could have been used to initialize the inventory. One can assume that they probably have been able to acquire some additional weeks since then. So, they are not hurting for inventory. But, I still think they will probably acquire weeks at resorts that they currently have little or none.

The advantage for points exchangers is the inventory can be used to satisfy II searches as well as those internal exchanges not needing II searches. Interestingly, about 2,771 of those weeks were in Hawaii. Those will be particularly useful for satisfying II searches, which could conceivably also make Hawaii easier to trade into for non-points exchangers.

JMAESD84 · Jul 8, 2010

I believe that Marriott will only selectively ROFR inventory from a resale market that they hope to destroy.

Once the resale market has bottomed out they will have an ample source of inventory "to flip" through reacquisition and resale as points.

Over many years Marriott will reacquire control over the many properties that they developed and sold off. With that control they can ensure that the "current costs to owners" will continue to meet their bottom line goals.

Marriott has very nice resorts but IMO they should not be owned, their use should be acquired by more cost effective methods.

marg05 · Jul 8, 2010

What is ROHR?

Could someone tell me what ROHR stands for?

Thanks, Margy

RedDogSD · Jul 8, 2010

ROFR, not ROHR.

Right of First Refusal. It means that if you sell your property to me for $500, that Marriott has the right to buy it at same price.

dioxide45 · Jul 8, 2010

BocaBum99 said:
So, what will Marriott do when they run out of inventory? Do you believe they will never run out?

When they get close to running out they will definitely start ROFR and equity exchanges. I think they may offer equity exchanges sooner rather than later. This way they get week for points inventory with no MF risk.

Marriott will buy back weeks to recycle in to points and it is very unlikely that they will start any new resorts in the next decade. I think they may finish a few that they may have obligations to do so (Marco being one).

Your title indicated an urgent need to start using ROFR, so I missed the comment further down that indicated later rather than sooner.

rpw · Jul 9, 2010

based on current evidence I have to assume you are wrong

BocaBum99 said:
I actually don't know what the inventory number is. What you are seeing is 2 different numbers reported by 2 different people, neither of whom has the exact number either. Only a real or re-stated data point.

My point remains the same. Once Marriott works down its current inventory, I believe that they will aggressively exercise ROFR and allow equity trade ins to fill the current void in the current Trust in meeting supply and demand of internal exchangers. The only question is how far out that will be. Is it 2 years or 5 years? Time will tell.

In the intervening period, there will be some ROFR of the highest demand weeks due to the fact that these units don't always go on the market and the Trust needs it.

Don't see why Marriott won't allow equity trade ins right away since they won't be taking on new maintenance fees and they will be selling points now while diversifying the Trust base.

I just had a Maui Ocean Club Villa Ocean View pass ROFR about 4 weeks ago. If Maui is their most popular resort and the Villas the most limited number of weeks, why would they let that pass?

BocaBum99 · Jul 9, 2010

rpw said:
I just had a Maui Ocean Club Villa Ocean View pass ROFR about 4 weeks ago. If Maui is their most popular resort and the Villas the most limited number of weeks, why would they let that pass?

They don't have the cash now. If you didn't have a job and the house you are renting comes up for sale $100k below market and lower than your current rent is the total cost of ownership, you still may not make that deal even though you want it.

One data point doesn't invalidate an argument for what the company is likely going to do in the future. I am talking about a qualitative change in behavior and describe the likely preconditions for when it will happen and why.

BocaBum99 · Jul 9, 2010

dioxide45 said:
When they get close to running out they will definitely start ROFR and equity exchanges. I think they may offer equity exchanges sooner rather than later. This way they get week for points inventory with no MF risk.

Marriott will buy back weeks to recycle in to points and it is very unlikely that they will start any new resorts in the next decade. I think they may finish a few that they may have obligations to do so (Marco being one).

Your title indicated an urgent need to start using ROFR, so I missed the comment further down that indicated later rather than sooner.

I agree. And, I should have been more clear in my title since others thought I meant what you thought as well.

josh1231 · Jul 9, 2010

BocaBum99 said:
I agree. And, I should have been more clear in my title since others thought I meant what you thought as well.

This may be the first time in the history of message boards, where a bunch of people who began by not agreeing on something, talked through it and actually understood where the others were coming from, and have come to a consensus. :whoopie:

BocaBum99 · Jul 9, 2010

josh1231 said:
This may be the first time in the history of message boards, where a bunch of people who began by not agreeing on something, talked through it and actually understood where the others were coming from, and have come to a consensus. :whoopie:

LOL. You may be right about the consensus. However, I think the whole debating process helps most people come to a better understanding of the truth of a situation. I know I find it to be true.

Sometimes it makes it less clear. Fortunately, if you use good rational logic, it isn't hard to separate the wheat from the chaff.

hotcoffee · Jul 9, 2010

rpw said:
I just had a Maui Ocean Club Villa Ocean View pass ROFR about 4 weeks ago. If Maui is their most popular resort and the Villas the most limited number of weeks, why would they let that pass?

They won't be ROFR'ing any MOC OV weeks any time soon. They have over 600 weeks of mostly OV in their inventory. Since the OFs and the GVs were sold out, it is conceiveable that might ROFR an OF week or so. They won't be ROFR'ing any Ko Olina either. They have a ton of those weeks. They might do an ROFR or two on Waiohai weeks if some steals show up. Where they seem to lack any inventory is in the Caribbean. Some of the posters who are more in the know as to why that might be true might care to comment on that. It seems like there should be some Frenchmen's Cove there. Isn't that still under construction?

BocaBum99 · Jul 9, 2010

hotcoffee said:
They won't be ROFR'ing any MOC OV weeks any time soon. They have over 600 weeks of mostly OV in their inventory. Since the OFs and the GVs were sold out, it is conceiveable that might ROFR an OF week or so. They won't be ROFR'ing any Ko Olina either. They have a ton of those weeks. They might do an ROFR or two on Waiohai weeks if some steals show up. Where they seem to lack any inventory is in the Caribbean. Some of the posters who are more in the know as to why that might be true might care to comment on that. It seems like there should be some Frenchmen's Cove there. Isn't that still under construction?

Where did you find this information? Is it published anywhere?

BocaBum99 · Jul 9, 2010

josh1231 said:
This may be the first time in the history of message boards, where a bunch of people who began by not agreeing on something, talked through it and actually understood where the others were coming from, and have come to a consensus. :whoopie:

One more thing. The only reason this doesn't happen more often is that one side usually takes a hardline position and won't acknowledge the other parties points and the debate continues forever with constant repetition of each sides talking points.

When all parties just want to learn the truth, it is much easier to get there amicably.

jlf58 · Jul 9, 2010

MVCI is more about profit and less about what makes sense. Don't expect to see ROFR anytime soon with all those points they already have. Do you really think they are worried about not having an summr Grande Ocean weeks LOL ? hell no, its all about the dream ...

taffy19 · Jul 9, 2010

BocaBum99 said:
Where did you find this information? Is it published anywhere?

Yes, it is. I posted it yesterday. Every unit is mentioned and all you do is look at a brochure with all the condo numbers on it and see what units they are. They are not oceanfront or island view as hotcoffee posted.

hotcoffee · Jul 9, 2010

BocaBum99 said:
Where did you find this information? Is it published anywhere?

If you are referring to the numbers of MOC and Ko Olina weeks, those are in the Public Offering statement they published and sent out to enrollees. If you are referring to the MOC OV in the inventory, my rep told me that MOC OF and GV were sold out. Therefore, by deduction what must be left is OV that got dumped into the Trust.

hotcoffee · Jul 9, 2010

Fletch said:
MVCI is more about profit and less about what makes sense. Don't expect to see ROFR anytime soon with all those points they already have. Do you really think they are worried about not having an summr Grande Ocean weeks LOL ? hell no, its all about the dream ...

When I found out how much Hawaii inventory they have, I have concluded that there will not be many ROFRs (unless they can pick up some real steals). My theory is that they will use some of that Hawaiian inventory for II exchanges. That is valuable inventory and will allow them to get nice exchanges for their points customers.

BocaBum99 · Jul 9, 2010

Fletch said:
MVCI is more about profit and less about what makes sense. Don't expect to see ROFR anytime soon with all those points they already have. Do you really think they are worried about not having an summr Grande Ocean weeks LOL ? hell no, its all about the dream ...

I believe that Resort Developers are very sales driven companies. The most powerful people in the companies are from sales and therefore, they tend to optimize to sales success at the detriment of other organizations such as owner services or inventory management. If that is what you mean by being profit driven, I would agree.

That said, there are organizations within these resort developers whose job it is to balance out inventory. Doing so helps the customer satisfaction numbers and reduces costs to the call centers post sales.

I believe Marriott has such organizations and they do the best they can to achieve as high satisfaction as possible while minimizing impact to sales. So, yes, I do think someone in MVCI cares about the inventory they hold.

I believe Marriott will aggressively acquire weeks into Points Trust

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