Points System should increase “weeks” resale values.

Davecanputt · Jul 22, 2010

As a result of there not being any more “weeks” added to the potential resale pool, EVER, since that number has been capped with the unsold inventory going into the trust, it would seem that this could only have a positive impact on resale values of weeks in the future. This view does not appear to be the general sentiment of the board, however. Notwithstanding outside economic factors affecting values, what am I missing based upon the fact that the maximum number of weeks for resale now has a finite, determinable number?

Nickfromct · Jul 22, 2010

Davecanputt said:
As a result of there not being any more “weeks” added to the potential resale pool, EVER, since that number has been capped with the unsold inventory going into the trust, it would seem that this could only have a positive impact on resale values of weeks in the future. This view does not appear to be the general sentiment of the board, however. Notwithstanding outside economic factors affecting values, what am I missing based upon the fact that the maximum number of weeks for resale now has a finite, determinable number?

I would tend to agree with values possibly going up. My thought was that if someone really liked a particular resort, say NCV, and supply to II for NCV weeks dries up, would demand for those weeks on the resale market go up? I think if I couldn't trade into NCV, I would probably look to buy a resale.

jin · Jul 22, 2010

Davecanputt said:
As a result of there not being any more “weeks” added to the potential resale pool, EVER, since that number has been capped with the unsold inventory going into the trust, it would seem that this could only have a positive impact on resale values of weeks in the future. This view does not appear to be the general sentiment of the board, however. Notwithstanding outside economic factors affecting values, what am I missing based upon the fact that the maximum number of weeks for resale now has a finite, determinable number?

I agree with this. Also the very high price to buy points will likely give more people pause before buying, who may then very well do a little online research and find (just as most of us did) that resale is the only way to go. If you think about it, NOTHING has changed with the "OLD" system, and in time as weeks disappear into the points system, it becomes simple supply and demand..... Pete

LAX Mom · Jul 22, 2010

The reason I think resale values could drop is you now have Marriott promoting points as the latest & greatest thing. Many people will attend a timeshare while on vacation and be convinced they want to vacation the Marriott way. Sales reps will paint a very pretty picture of the new flexibility....cruises, trips to Europe, timeshares in Hawaii, ski weeks, Marriott hotels.

Sure some people will want a Newport Coast week to use, but only those who really understand the system and intend to use the week themselves. Others will be convinced they need Marriott points in they want to play the game.

DanCali · Jul 22, 2010

It is true that in terms of supply, the supply i now finite. However, this was already the case for many sold out resorts anyway, so nothing changes there. This will only affect the newer resorts.

On the demand side however, there is an ofsetting effect in terms on a possible drop in demand. Many resale buyers are people who attended a Marriott presentation, liked the concept, but discovered the resale market before they bought developer. But now, people will attend a points presentation and will find out they can only get resale deeded weeks on the resale market. Whether they buy those or just forget about Marriott is still unknown... on one hand a resale week for $5K-$15K is much better than $50K for points. On the other hand, a deeded week is not "the dream"...

On top of that, at some point you will have resale points. There will probably be a higher demand for those over deeded weeks giventhe "flexibility". Depending on where the price for resale point settles, and the penalties imposed by Marriott on resale points, deeded weeks prices could crash at that point. This is a grim picture, but imagine you could get resale points at $2.5/point... (assuming a 75% drop, like many Platinum weeks) - would you buy a deeded week then? On the other hand, if the price settled at $5/point or more, I think deeded week prices could remain relatively stable. Either way, I don't see them going up because of the effects I just mentioned, which will only get worse with time.

timeos2 · Jul 23, 2010

Davecanputt said:
As a result of there not being any more “weeks” added to the potential resale pool, EVER, since that number has been capped with the unsold inventory going into the trust, it would seem that this could only have a positive impact on resale values of weeks in the future. This view does not appear to be the general sentiment of the board, however. Notwithstanding outside economic factors affecting values, what am I missing based upon the fact that the maximum number of weeks for resale now has a finite, determinable number?

While one would think that to be the case in past conversions of this type the weeks did not gain in value and in fact in most cases declined. It is a combination of uncertainty and the slanted sales pitches that leave the uninformed with the impression that they are somehow "not as good" when in fact we know they technically should be the higher value. Thats the way it seems to go so I wouldn't plan on any appreciation on deeded weeks anytime soon if ever.

JMAESD84 · Jul 23, 2010

Davecanputt said:
As a result of there not being any more “weeks” added to the potential resale pool, EVER, since that number has been capped with the unsold inventory going into the trust, it would seem that this could only have a positive impact on resale values of weeks in the future. This view does not appear to be the general sentiment of the board, however. Notwithstanding outside economic factors affecting values, what am I missing based upon the fact that the maximum number of weeks for resale now has a finite, determinable number?

You're predicting that Marriott "weeks" timeshare resale prices are going up, because supply is capped and potentially decreasing over time.

I disagree with this theory.

The factors that cause resale price decline remain unabated and the increase in developer influence/control within the HOA is historically bad for price control and resale values.

Marriott also has an incentive to have lower priced inventory on the weeks resale market so that they can cherry pick inventory for the trust to convert and sell as points(when they decide they need to have particular weeks or more trust points to sell). Only they can turn the "old weeks inventory" into brand new trust points to sell. A very profitable business arrangement.

Davecanputt · Jul 23, 2010

timeos2 said:
While one would think that to be the case in past conversions of this type the weeks did not gain in value and in fact in most cases declined. It is a combination of uncertainty and the slanted sales pitches that leave the uninformed with the impression that they are somehow "not as good" when in fact we know they technically should be the higher value. Thats the way it seems to go so I wouldn't plan on any appreciation on deeded weeks anytime soon if ever.

The uninformed buyer sitting in a sales pitch will be the prime candidate for a points purchase, but the resale buyer will be somewhat more "informed" just by being in that market outside of a sales presentation. Before the rollout two months ago, no salesman ever told a potential buyer he or she should go to the resale market to save 50-90% over the developer price. That said, I am not waiting on an appreciation this week or next month or year necessarily, but think in the abstract this should be a natural occurrence.

Quilter · Jul 25, 2010

My Ocean Pointe platinum OF converts to 5375 points for a maintenance fee of $1,237.56 (2010). 5375 points would cost $49,450 with a maintenance fee of $2,150.

Even my gold Grande Ocean converts to 3850 points with a maintenance fee of $1,027.66 (2009). Those points would cost $35,420 with a maintenance fee of $1,540.

I would think that alone would make resale weeks attractive.

abdibile · Jul 25, 2010

Demand for "old" weeks will probably be lower, so I do not see reasale prices to skyrocket as there is now finite supply.

I had several requests on sales ads for some of my Marriott weeks asking "How many Marriott Points does this unit get? I like the flexibility and need xxx points to book Hawaii"... The Marriott pitch seems to work.

Asia2000 · Jul 25, 2010

Not that E-bay is the barometer, but I would say prices for the higher demand resorts have not been lowered since the rollout of points with the exception of a sale or two on E-bay.

I think most people who have the knowledge are on the hunt for good weeks and will pay the price that people were paying before the points rollout, of course with the hope of saving some money. The exception would be lower demand resorts and blue/gold/bronze seasons.

The values of resale weeks will rise or fall based on the success of being able to book what you want using the points program. Also, if Marriott makes a resale points purchaser repay the points enrollment fee ($1500) and only gives the purchaser a 60 day booking window, points will not resell and deeded weeks will rise in value. If Marriott does not follow their rules, I would say deeded week values will remain the same. If the points program introduces flexchanges or a real value proposition that currently does not exist, then I would think deeded week values will fall as long as Marriott does not follow their own rules (probably not likely).

BocaBoy · Jul 25, 2010

Private resale prices may only decline modestly, but the ability to sell at a better price through Marriott will take a BIG hit.

windje2000 · Jul 25, 2010

Quilter said:
My Ocean Pointe platinum OF converts to 5375 points for a maintenance fee of $1,237.56 (2010). 5375 points would cost $49,450 with a maintenance fee of $2,150.

Even my gold Grande Ocean converts to 3850 points with a maintenance fee of $1,027.66 (2009). Those points would cost $35,420 with a maintenance fee of $1,540.

I would think that alone would make resale weeks attractive.

Another yardstick is - how many points are required to reserve what you own? In other words, the point cost of occupancy rather than what they convert into.

californiagirl · Jul 25, 2010

I'm undecided as to whether the point system will cause a rise or fall in resalte prices. IMHO I think the biggest factor affecting all timeshares are the rising maintenance fee cost. I have been so tempted to bid on ebay properties...until I look at the maintenance fees. That puts a huge splash of cold water on my excitement. Then I ask myself, do I really want to be locked-in to paying this EVERY YEAR?

What is interesting for me is with all that has been going on with points, rise in fees etc., I have looked at the rental market more closely. (We have rented vacation homes before with positive experiences.) I look at the rentals and see expanded options: timeshares, condos and private homes that breakdown in price to not much more than only the maintenance fees for a like product.

Maybe for us the law of diminishing returns is coming into play. We are beginning to have an attitude of "been there, done that".:zzz: I want to feel the excitement of embarking on a new adventure, not ho hum we're doing the same thing this year or a variation of it. Don't get me wrong, I feel very fortunate to be able to vacation in this economic environment. But when we are paying thousands of dollars every year (in maintenance fees) the money is not there to travel to somewhere new. And the fees will only continue to rise.

The awareness of my discontent was initiated with the announcement of the points system. The professed "flexibility" of the points got me thinking about all the travel opportunities I am missing. I think a pandora's box has been opened and I don't think the lid will ever fit on tight again.

5infam · Jul 25, 2010

californiagirl said:
I'm undecided as to whether the point system will cause a rise or fall in resalte prices. IMHO I think the biggest factor affecting all timeshares are the rising maintenance fee cost. I have been so tempted to bid on ebay properties...until I look at the maintenance fees. That puts a huge splash of cold water on my excitement. Then I ask myself, do I really want to be locked-in to paying this EVERY YEAR?

What is interesting for me is with all that has been going on with points, rise in fees etc., I have looked at the rental market more closely. (We have rented vacation homes before with positive experiences.) I look at the rentals and see expanded options: timeshares, condos and private homes that breakdown in price to not much more than only the maintenance fees for a like product.

Maybe for us the law of diminishing returns is coming into play. We are beginning to have an attitude of "been there, done that".:zzz: I want to feel the excitement of embarking on a new adventure, not ho hum we're doing the same thing this year or a variation of it. Don't get me wrong, I feel very fortunate to be able to vacation in this economic environment. But when we are paying thousands of dollars every year (in maintenance fees) the money is not there to travel to somewhere new. And the fees will only continue to rise.

The awareness of my discontent was initiated with the announcement of the points system. The professed "flexibility" of the points got me thinking about all the travel opportunities I am missing. I think a pandora's box has been opened and I don't think the lid will ever fit on tight again.

Very good post Lisa - I am feeling the same way lately. I have been looking at the resales and want to pull the trigger, but the maintenance fees just don't seem worth it anymore. When I bought my unit resale, I did a calculation that compared rentals to the maintenance fee, and figured I would break even in about 8 to 10 years vs. renting. Well that was when I was paying $1,000 per year in maintenance, now it is above $1,500 - and rental prices have come way down. So if i recalculate at today's market, I don't get my money back for 25 years - big difference!!! Although, with resales being cheaper, I would not have spent as much to buy - but the point is the same.

I just traveled to Rome a few months back and rented an apartment in a perfect location for very cheap compared to hotel prices - and I got so much more. Maybe the market will swing back around again, but right now, rentals seem to make a lot of sense. So I go back and forth between the old reality where timeshares made some sense to me - and the current reality of where they don't make as much sense anymore. I hate when things are confusing :wall:

Quilter · Jul 25, 2010

windje2000 said:
Another yardstick is - how many points are required to reserve what you own? In other words, the point cost of occupancy rather than what they convert into.

You're right! While my OP oceanfront converts to 5375 points it would cost a new points person 5,900 points ($54,280 with a m/f of $2360) to go there during the weeks I normally reserve as an owner.

For the Grande Ocean week it would cost a points person 4,000 points ($36,800 with a m/f of $1,600) to go during gold season.

Points System should increase “weeks” resale values.

Davecanputt

Nickfromct

jin

LAX Mom

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DanCali

timeos2

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JMAESD84

Davecanputt

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abdibile

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5infam

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