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[2010] Marriott is Destroying Value of Existing Deeds

Lawlar

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Those of us who bought directly from Marriott were sold on the idea that a deeded interest in a resort conveyed a special ownership interest in the resort that could be handed down for generations. My sales rep talked at length about how real estate appreciates over time. She emphasized that MOC would soon be sold out and Marriott would maintain a sales force at MOC that would act as a broker for owners who wanted to sell their units. Needless to say, the presentation was full of implications that we would be able to sell through Marriott at a profit.

Now the whole system has changed so the concept of a deed is going to seem like an anachronism to those who receive Marriott’s new sales pitch (“you don’t have to be limited to one resort with the old out-of-date deed system, out new points system gives you ownership rights in all of the properties – why limit yourself”).

So obviously Marriott isn’t going to be offering to help us sell our deeded unit, if and when we want to sell. They will have salespeople at MOC selling and promoting points, with no interest in the old system.

So those who own deeded interests are being abandoned. Why would anyone want to buy a deed from us when Marriott is telling them that it is better to buy points (points that will depreciate).

Which leaves me with a question: since this new program has a dramatic effect on each resort (supposedly owned by the timeshare owners), how come each resort wasn’t given the opportunity to vote on whether it wanted to participate in the new point program – or continue to have the resort operate as it was originally established.

And how come when I look at my original paperwork from Marriott, which describes who can reserve a week and under what priority (it only talks about unit owners and it only distinguishes between those who own one week vs. those who own multiple weeks), it doesn’t mention that Marriott can create an entirely new system, for its own benefit, and sell points that will give these new customers the right to reserve weeks at MOC, even though they have no direct ownership interest in MOC.

I already felt taken by Marriott (think MFs and the difficulty of reserving a desirable week), now I feel completely betrayed. Marriott is only interested in its own profits and it seems to believe that the best way to make the big profits is to treat is customers like suckers.
 

camachinist

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What would you do if you owned a condo and the management company the HOA hired wasn't meeting your expectations and the HOA was sitting on their hands? You'd rally owners to take over the HOA and then boot out the management. Where I own, I'd have no problem with that. The location, neighbors and potential for alternatives stand on their own. We don't need Marriott for anything other than their reservation/exchange system and that IT could be contracted out. It's happened before. :)
 

Dave M

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Which leaves me with a question: since this new program has a dramatic effect on each resort (supposedly owned by the timeshare owners), how come each resort wasn’t given the opportunity to vote on whether it wanted to participate in the new point program – or continue to have the resort operate as it was originally established.
Two reasons:
(1) The individual resorts don't have the authority to control weeks that Marriott has in its possession. That's what we are talking about - unsold weeks, weeks that owners trade to Marriott for Marriott Rewards points and weeks that legacy owners such as us decide to trade to Marriott for ne Club points (for those owners that decide to enroll.
(2) The resorts will operate as in the past. The changes are at the Marriott administration level. The only difference at the resorts is that, because there might well be more short stays, there may be additional expense for check-in activity, housekeeping and perhaps a few other items. Those additional costs are built into the high MFs to be charged to points purchasers so that Marriot can reimburse resorts for those additional costs.

And how come when I look at my original paperwork from Marriott, which describes who can reserve a week and under what priority (it only talks about unit owners and it only distinguishes between those who own one week vs. those who own multiple weeks), it doesn’t mention that Marriott can create an entirely new system, for its own benefit, and sell points that will give these new customers the right to reserve weeks at MOC, even though they have no direct ownership interest in MOC.
As I stated above, there is nothing in those documents that prevents Marriott from ovelaying a system for how it will use its own weeks.

Feel free to ignore the new program and use your week as you have in the past.
 

Lawlar

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What is Fair?

Dave: we are talking from totally different perspectives. You are focused on whether Marriott has the legal right to do what it is doing. Their lawyers are cagey, so they can probably do as they like.

My point is that Marriott’s new program, and the sales promotions that will spring from it, affects the perceived value of owning a deeded interest in a resort. Marriott sold the deeded interest concept as something special. Now it will be selling a new concept it will represent as having greater value, thereby decreasing the value/desirability of the existing deeded interests we own.

If we focus on fairness and ethics, or just courtesy, it would have been better if Marriott asked its present owners if they wanted their resort to be subject to this new program.
 

DanCali

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Dave: we are talking from totally different perspectives. You are focused on whether Marriott has the legal right to do what it is doing. Their lawyers are cagey, so they can probably do as they like.

My point is that Marriott’s new program, and the sales promotions that will spring from it, affects the perceived value of owning a deeded interest in a resort. Marriott sold the deeded interest concept as something special. Now it will be selling a new concept it will represent as having greater value, thereby decreasing the value/desirability of the existing deeded interests we own.

If we focus on fairness and ethics, or just courtesy, it would have been better if Marriott asked its present owners if they wanted their resort to be subject to this new program.

As some people here are quick to point out many times, Marriott has no obligation to maintain resale values. I vehemently oppose this point of view, because they purposely devalue timeshares (by changing rules) to enrich themselves. But the reality is what it is...

I figure if they devalue my VOI by $5K and I educate owners and every year convince 4-6 of them to do the smart financial thing and rescind (1-2 per week of vacation) then we're even. I lost $5K, Marriott loses $200K (year after year)... If there were hundreds of us talking to owners at the various resorts' pools Marriott may re-prioritize its obligations towards owners.
 

SueDonJ

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As some people here are quick to point out many times, Marriott has no obligation to maintain resale values. I vehemently oppose this point of view, because they purposely devalue timeshares (by changing rules) to enrich themselves. But the reality is what it is...

I figure if they devalue my VOI by $5K and I educate owners and every year convince 4-6 of them to do the smart financial thing and rescind (1-2 per week of vacation) then we're even. I lost $5K, Marriott loses $200K (year after year)... If there were hundreds of us talking to owners at the various resorts' pools Marriott may re-prioritize its obligations towards owners.

Oh my goodness. No disrespect or attitude intended at all, Dan, but if I felt as strongly as you do about Marriott having no credibility because of this, I'd do whatever it takes to walk away. The thought of committing my time at a Marriott timeshare - where I'm supposed to be vacationing, recharging and rejuvenating and simply enjoying life - to convince other people NOT to do what I'm doing, is exhausting!
 

RedDogSD

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I don't see your Maui Ocean Club deeds losing any more value any time soon. You have too nice of a commodity. Anyone buying points is buying the HOPE that they can get into what you are GUARANTEED to get into. Not to mention, since Hawaii is nice ALL YEAR, you don't really have to worry about the whole world trying to get your weeks. At my resort, if I don't book February or March, then I might as well just use AC's or getaways since I can do either to get into my resort cheaper during those months. The only months that are expensive and cannot be had cheaper are Feb or March. For your resort, there is no real low season. You have a very special property and I would not worry so much. IMHO.
 

DanCali

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Oh my goodness. No disrespect or attitude intended at all, Dan, but if I felt as strongly as you do about Marriott having no credibility because of this, I'd do whatever it takes to walk away. The thought of committing my time at a Marriott timeshare - where I'm supposed to be vacationing, recharging and rejuvenating and simply enjoying life - to convince other people NOT to do what I'm doing, is exhausting!

Actually I'd be convincing them to do what I did... buy resale and never buy from Marriott. If fact, when you tell someone that there is a resale market and that they can buy something for 30% or retail prices, they are pretty grateful - especially when they realize they would lose 70% of their investment upfront. That gratitude can be quite rewarding!

It amazes me how retail buyers can watch the value of their purchase go down 90%+ and simply accept it as Marriott right to devalue their purchase.
 

SueDonJ

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Actually I'd be convincing them to do what I did... buy resale and never buy from Marriott. If fact, when you tell someone that there is a resale market and that they can buy something for 30% or retail prices, they are pretty grateful - especially when they realize they would lose 70% of their investment upfront. That gratitude can be quite rewarding!

It amazes me how retail buyers can watch the value of their purchase go down 90%+ and simply accept it as Marriott right to devalue their purchase.

But I think you're forgetting that for some people the object isn't to get the cheapest timeshare possible, it's to get the particular vacation experience at whatever price point is out there. In some cases that means buying from the developer because the particular inventory isn't available any other way.

Especially now with Weeks being further devalued and not eligible for Points enrollment upon resale, and Points being the only commodity for future developments and resale costs/usage of those seriously devalued in the new system, going forward "buy resale" will not always be the perfect option that you make it out to be. It's true that the resale market will have the best prices for the Weeks already established, but resale buyers of those weeks will have to be satisfied with home resort usage. Marriott-direct will be the best option in the future for buyers who want flexibility.

As far as devaluation expectations, we've been all through and around and under and over it. Let's not do it again. :D
 

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Actually I'd be convincing them to do what I did... buy resale and never buy from Marriott. If fact, when you tell someone that there is a resale market and that they can buy something for 30% or retail prices, they are pretty grateful - especially when they realize they would lose 70% of their investment upfront. That gratitude can be quite rewarding!

It amazes me how retail buyers can watch the value of their purchase go down 90%+ and simply accept it as Marriott right to devalue their purchase.

But if Marriott is not financially viable and they can't sell new interests, then they are not the only ones that lose. You do too, as there will no longer be any incentive for Marriott to operate and maintain the resort(s) that you love. Resale is a grand thing, but as with any market, someone had to buy it first.

I agree that if you feel that strongly a better solution would be to sell your week for whatever you can and move on. Or if you have excess energy to expend, then try to make a difference in a more positive way. Rally owners together in a way that at least has a change of having a beneficial outcome for someone, anyone. Raising hell poolside and making all the other owners miserable too and trying to financially ruin Marriott will yield no good outcome.
 

DanCali

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...Marriott-direct will be the best option in the future for buyers who want flexibility.

This "flexibility" comes at a great price that is very hard to justify in my opinion.

Here is my analysis of buying directly from Marriott. It's a losing proposition... (my opinion of course).

I believe most would prefer to buy a week where they want to go at a more reasonable cost - they just need to know the option is there.
 

SueDonJ

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This "flexibility" comes at a great price that is very hard to justify in my opinion.

Here is my analysis of buying directly from Marriott. It's a losing proposition... (my opinion of course).

I believe most would prefer to buy a week where they want to go at a more reasonable cost - they just need to know the option is there.

Not saying you're wrong, Dan, or that I'm right. And the more options a person has, the better. I'm just trying to point out that buying developer-direct is not ALWAYS a poor choice, it appears especially so going forward, and that IMO spreading anti-Marriott sentiment all over a Marriott resort doesn't sound like a fun vacation. I wouldn't do it, and I wouldn't listen to it from someone who did.
 

BocaBum99

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Not saying you're wrong, Dan, or that I'm right. And the more options a person has, the better. I'm just trying to point out that buying developer-direct is not ALWAYS a poor choice, it appears especially so going forward, and that IMO spreading anti-Marriott sentiment all over a Marriott resort doesn't sound like a fun vacation. I wouldn't do it, and I wouldn't listen to it from someone who did.

Easy to say for you since your $MF/Point is so low. After that, everything else is free.
 

DanCali

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Not saying you're wrong, Dan, or that I'm right. And the more options a person has, the better. I'm just trying to point out that buying developer-direct is not ALWAYS a poor choice, it appears especially so going forward, and that IMO spreading anti-Marriott sentiment all over a Marriott resort doesn't sound like a fun vacation. I wouldn't do it, and I wouldn't listen to it from someone who did.

Up until two weeks ago I was a fan. I was telling people on the Starwood board they should buy Marriotts. Never in my worst scenario did I imagine they would come up with such a terrible and owner unfriendly points program. I might not even care as much and just keep using how I planned to use when I bought, but the fact that they are purposely devaluing deeded weeks by disallowing future buyers entry into points is pure value destruction. You may not care, even though you paid much more than I did. But I do care.

Marriott should realize that every action has a reaction and their biggest fans are not necessarily fans for life...

As far as listening to anyone - it's a free country. Listen to whoever you want. But, in my opinion, if you are going to listen to a Marriott salesperson, save yourself the 90-120 minutes and just flush the $10K-$40K down the toilet... At least there are no MFs associated with that.
 
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SueDonJ

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Up until two weeks ago I was a fan. I was telling people on the Starwood board they should buy Marriotts. Never in my worst scenario did I imagine they would come up with such a terrible and owner unfriendly points program. I might not even care as much and just keep using how I planned to use when I bought, but the fact that they are purposely devaluing deeded weeks by disallowing future buyers entry into points is pure value destruction. You may not care, even though you paid much more than I did. But I do care.

Marriott should realize that every action has a reaction and their biggest fans are not necessarily fans for life...

And that's fine, Marriott probably expected that they would lose some repeat business from existing customers. Nothing wrong with you deciding for yourself that Marriott is no longer a company with which you'll do business. Let them know in no uncertain terms that they've lost your enchantment with what they can offer you.

But this crusade at the resorts, that I don't understand! What do you care what other people have bought, or will buy, or whether or not they understand all the ramifications of how Marriott's new system will affect them? You sound like you're saying that folks need saving (either from their own foolish money decisions or from Marriott, can't figure out which.) Well, it's possible that some people who've made different choices from you have made the right choice for them.

Really, it's not a big deal. Nobody can stop you if you're determined to badmouth Marriott every chance you get. I just can't imagine wanting to hear it while I'm vacationing. And as Whirl says, the plan could end up backfiring.
 

SueDonJ

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Easy to say for you since your $MF/Point is so low. After that, everything else is free.

This puzzles me but maybe you're right and perspective has something to do with it. But honestly, like I said, if I was that unhappy with Marriott I'd do whatever it took to walk away. And if that's not the choice made, why increase all the negativity by taking it on vacation and spreading it to others? That's not productive at all, seems to be at odds with the purpose of vacationing.
 

windje2000

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As I stated above, there is nothing in those documents that prevents Marriott from ovelaying a system for how it will use its own weeks.

True - but did you anticipate having a trust established by the development company (MVCI) as a long term multiple unit owner? Or did you expect MVCI to sell out the inventory and move on. That's what I expected

The ability to exchange is an intangible asset that accompanied the deed. For many it was the sizzle that came with (and sold) the steak. Impairing the ability to exchange impairs the value of that intangible and the value of the property with which it is associated.

The depth and breadth of any market is determined by the number of participants. MVCI moving to create a separate class of market participants acting in unison through a trust changes the breadth and depth of the existing market for exchanges. Can that have a positive effect on my ability to exchange? I don't think so. It can only have a negative effect. The 800 pound gorillas negatively affect all other market participants.

Moreover, MVCI has the unique ability by virtue of its having the resort management contracts to control the reservation books. They'll now have an even greater incentive to place themselves at the head of the reservation line.

And there's no way you'll know whether or not they did engage in that kind of self dealing because there's no ability to audit them. There is no transparency in the relationships and transactions between MVCI, II, the trust and the two classes of owners.

Is it reasonable to expect that MVCI will act in its own best interests? I think so. It has now put itself in direct competition for weeks with the 'legacy' owners. That is unprecedented.

It was to be expected MVCI might have some unsold weeks during the roll out of new resorts and would temporarily be 'owners.'

I did not expect this.
 

rsackett

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This puzzles me but maybe you're right and perspective has something to do with it. But honestly, like I said, if I was that unhappy with Marriott I'd do whatever it took to walk away. And if that's not the choice made, why increase all the negativity by taking it on vacation and spreading it to others? That's not productive at all, seems to be at odds with the purpose of vacationing.


I think part of the difference is how the "Resort" is viewed. I understand that you feel the resorts are Marriott's, I think Dan feels that the resorts belong to the owners and the owners hire Marriott to manage the resorts. I am sure Dan likes the resorts he owns, but currently dislikes the management company the owners hired to run the resort.

Marriott charges owners a good amount to have the Marriott name on the front of the resort. The Marriott name brings many good things with it. I think most owners feel the price for having the Marriott name on the resort is worth it. However, I am sure that some people are starting to wonder if that is still as true as it was a few weeks ago.

Ray
 

DanCali

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But if Marriott is not financially viable and they can't sell new interests, then they are not the only ones that lose. You do too, as there will no longer be any incentive for Marriott to operate and maintain the resort(s) that you love. Resale is a grand thing, but as with any market, someone had to buy it first.

I agree that if you feel that strongly a better solution would be to sell your week for whatever you can and move on. Or if you have excess energy to expend, then try to make a difference in a more positive way. Rally owners together in a way that at least has a change of having a beneficial outcome for someone, anyone. Raising hell poolside and making all the other owners miserable too and trying to financially ruin Marriott will yield no good outcome.

MVCI can go away or Marriott can file for Chapter 11 and our resorts will be just fine. I'm sure Hilton, Hyatt, or Starwood will be glad compete for and pick up management duties at all of them. At least we'd get a points system with no skimming and hidden lockoff fees...

I think part of the difference is how the "Resort" is viewed. I understand that you feel the resorts are Marriott's, I think Dan feels that the resorts belong to the owners and the owners hire Marriott to manage the resorts. I am sure Dan likes the resorts he owns, but currently dislikes the management company the owners hired to run the resort.

Marriott charges owners a good amount to have the Marriott name on the front of the resort. The Marriott name brings many good things with it. I think most owners feel the price for having the Marriott name on the resort is worth it. However, I am sure that some people are starting to wonder if that is still as true as it was a few weeks ago.

This about sums it up...
 
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pianodinosaur

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I recently purchased Marriott Mountain Valley Lodge 1 bedroom Gold season for $34.01 with the owner paying this years MFs and all closing costs and transfer fees. I do not think I am allowed to participate in the points program as a resale owner, but then again, my MF/point ratio is very high and it would not be a good move for me even I were able to participate. Thanks again to BocaBum99 for doing the creative mathematics.
 

lovearuba

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Promises are being broken

The whole vacation concept sold by Marriott is being changed. I wonder how many folks would have bought if they knew Marriott would change the rules so drastically. Its just not right no matter how you look at it and hopefully Marriott is reading this blog and their own blog. If that doesnt convince them that they've hurt customer relations than nothing will.
 

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Those of us who bought directly from Marriott were sold on the idea that a deeded interest in a resort conveyed a special ownership interest in the resort that could be handed down for generations. My sales rep talked at length about how real estate appreciates over time. She emphasized that MOC would soon be sold out and Marriott would maintain a sales force at MOC that would act as a broker for owners who wanted to sell their units. Needless to say, the presentation was full of implications that we would be able to sell through Marriott at a profit.

Now the whole system has changed so the concept of a deed is going to seem like an anachronism to those who receive Marriott’s new sales pitch (“you don’t have to be limited to one resort with the old out-of-date deed system, out new points system gives you ownership rights in all of the properties – why limit yourself”).

So obviously Marriott isn’t going to be offering to help us sell our deeded unit, if and when we want to sell. They will have salespeople at MOC selling and promoting points, with no interest in the old system.

So those who own deeded interests are being abandoned. Why would anyone want to buy a deed from us when Marriott is telling them that it is better to buy points (points that will depreciate).

Which leaves me with a question: since this new program has a dramatic effect on each resort (supposedly owned by the timeshare owners), how come each resort wasn’t given the opportunity to vote on whether it wanted to participate in the new point program – or continue to have the resort operate as it was originally established.

And how come when I look at my original paperwork from Marriott, which describes who can reserve a week and under what priority (it only talks about unit owners and it only distinguishes between those who own one week vs. those who own multiple weeks), it doesn’t mention that Marriott can create an entirely new system, for its own benefit, and sell points that will give these new customers the right to reserve weeks at MOC, even though they have no direct ownership interest in MOC.

I already felt taken by Marriott (think MFs and the difficulty of reserving a desirable week), now I feel completely betrayed. Marriott is only interested in its own profits and it seems to believe that the best way to make the big profits is to treat is customers like suckers.

If Marriott is convinced that a deeded system is out of date, as you are claiming, I wonder why it is that their new system is also deeded?
 

hotcoffee

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Those of us who bought directly from Marriott were sold on the idea that a deeded interest in a resort conveyed a special ownership interest in the resort that could be handed down for generations. My sales rep talked at length about how real estate appreciates over time. She emphasized that MOC would soon be sold out and Marriott would maintain a sales force at MOC that would act as a broker for owners who wanted to sell their units. Needless to say, the presentation was full of implications that we would be able to sell through Marriott at a profit.
. . .


There is something I don't understand about your complaint. The arrival of the points program has nothing to do with the problem this first paragraph describes. You sales person lied to you about appreciation. When I first began complemplating the purchase of a timeshare, I quickly found out that the resale value will plummet badly as soon as I sign on the dotted line. The points program did not cause this. It's been that way. The economy has also caused resale values to tank badly. Understandingly, if Marriott takes no action to help owners recover at least some value, resale values will drop even lower. In fact, it could even get difficult to even give a Marriott timeshare away. Why would someone want to saddle themselves with maintenance fees if they perceive that there will be some disadvantages to buying?

However, it is likely that Marriott will do some things that will help stop the free fall of resale values. For one, they will probably start using ROFR more now (assuming you are selling a desireable week at a desireable location). For another, they will probably be more willing to buy back some desireable weeks (especially in sold out resorts) to pad their inventory. Moreover, there is no evidence that they intend to halt their existing resale program. I think owning at the MOC will protect you from seeing your timeshare from falling too far in resale value. In your case, the economy is probably going to hurt you way more than the points program will.
 
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DanCali

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However, it is likely that Marriott will do some things that will help stop the free fall of resale values.

If this is so then why did they prohibit future resales into the program? This provision will be responsible for any drops in resale value over the next 6-12 months, not the economy (which is in the gutter and is not likely to get better anytime soon).

Had they said if you enroll your week a future buyer can get into points gratis, I'd agree with you - we'd see a nice appreciation to our weeks if we enrolled and we'd be happy paying them $2K, probably even with the skim factor. But guess what? - they had other plans for us...
 

hotcoffee

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If this is so then why did they prohibit future resales into the program? This provision will be responsible for any drops in resale value over the next 6-12 months, not the economy (which is in the gutter and is not likely to get better anytime soon).

Had they said if you enroll your week a future buyer can get into points gratis, I'd agree with you - we'd see a nice appreciation to our weeks if we enrolled and we'd be happy paying them $2K, probably even with the skim factor. But guess what? - they had other plans for us...

Probably because there is a strong element in Marriott that sides with some of those who post in this forum that resale owners should be punished for buying resale. I think the grandfathering of existing resale owners was a compromise of sorts. The second of the three reps I spoke with when I first began questioning Marriott about the new program was one such person. I could tell from her tone of voice that she was hostile to me because of my resale week. At one point when I pressed her about resale values, she lost it completely. She told me frankly that I should not expect Marriott to reward me for paying so much less than people who purchased from Marriott. The tone of her voice said more than the words she used, and those said a lot of themselves. I think if it were up to that faction, we would be placed under even worse restrictions.

Even so, it would not surprise me if Marriott eventually provided some kind of perhaps yearly open season for resale buyers to enroll. It is in their benefit to do so. But those who advocate that will face some opposition.
 
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