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Back Again, Still Confused About the Point of Points

Quilter

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OP has owned for 15 years, and hence should enroll in the points system.

"4000 points at $13.74 ($54960). With points reselling at a meager $4, the potential capital loss will be $38960, capitalized over 15 years - I suspect most folks don't last that long) = $2597 per year."

Is that where you found out the OP has owned for 15 years?

Oh no, now I'm obsessively looking through the post to find out how you know that. . . I gotta go play in another thread box and let you guys have all the fun you want with this thread.
 

VacationForever

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"4000 points at $13.74 ($54960). With points reselling at a meager $4, the potential capital loss will be $38960, capitalized over 15 years - I suspect most folks don't last that long) = $2597 per year."

Is that where you found out the OP has owned for 15 years?

Oh no, now I'm obsessively looking through the post to find out how you know that. . . I gotta go play in another thread box and let you guys have all the fun you want with this thread.
Third paragraph from OP's post:

"So, honesty requires, off the top, a charge for that $15000 loss we will realize for the initial up-front "investment" with Marriott. We won't ever see that money again. So, arbitrarily, I'm writing it off over 30 years, as we've already enjoyed the EOY for fifteen). Call it $500 per year."
 

JIMinNC

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OP brings up a number of good questions...but only because they are intermingled is the picture for points so bleak.

Q: Why would anyone buy points direct at almost $14/pt when they could buy at around $7/pt? A: Because they don't know any better.

Q: Why would anyone buy points at $7/pt? A: Because it makes sense to them practically and financially.

On the financial side the major factor for us was that the price of suites in major cities and high end beach front properties has gone through the roof...a trend that seems to be accelerating rather than leveling off. My family just stayed in Boston in a very nice 1BR during Easter break for $150/nt instead of $400-$600. I have a getaway planned with my wife later this month - $158/nt for a 1BR at the Mayflower when they (and every other good hotel in the area) were asking $400-$500 for a normal hotel room. Next Easter we'll be in SF in a Ritz Carlton 2BR 2.5BA for $300/nt in a 2BR. The 'cash stay' Ritz Carlton doesn't offer 2BRs...a 1BR 1BA goes for $1,049/nt and the larger 1BR 1.5BA for $1,549/nt (during Pres week...Easter 2019 can't be booked yet).

As for beach properties, when I first started going to Honolulu I loved the Pink Palace and the Moana Surfrider. But then the prices went crazy...so we bought at Hilton Hawaiian Village. And then bought a 2nd week to bring the grandparents after I paid cash the first time they came with us (ouch!) and I realized it would take only 5 trips to recoup my initial investment. Meanwhile, the Royal Hawaiian is asking $1116 to $2423/nt for a 1BR suite during Pres week 2019...which to me is simply unthinkable. Not that HHV is Marriott...but later this year we are staying in a 2BR penthouse at Ko'Olina for $288/nt vs $964/nt cash for a random mountain view 2BR.

Practically, the convenience and flexibility can't be beat. That I can just book our stay and not worry about a II trade or Redweek rental fitting into our vacation plans is priceless. And there just aren't a lot of timeshares in the world I want to stay for a whole week that we don't already own.

In short, it is absolutely true that you are losing $3/pt right off the bat (unless that $7/pt is a hybrid week purchase with a more complex calculation). But then you are saving a lot of money with each stay. Moving forward you are balancing the return on the value of your points, the lost investment opportunity, the increases in maintenance fees vs room rates, and the savings in the price of suites/villas as you vacation. I expect to break even in about 10 years and show a 'profit' thereafter.

This is a great summary and pretty much matches how I feel as well. For places where we want to go on a regular, recurring schedule, deeded weeks are the only way to go for us. But to go to a variety of places, Points are the only timeshare product that can compete with or beat cash bookings from the major hospitality chains we prefer to use. Both traditional cash bookings and Points offer the flexibility and options we desire. Traditional timeshare exchanging or booking from sites like Redweek are just too rigid and inflexible for us.

Having said that, we still struggle with justifying the high acquisition cost for the Points product, and will never pay more than the $7/point or so range, if we ever add to our total.
 

VacationForever

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Having said that, we still struggle with justifying the high acquisition cost for the Points product, and will never pay more than the $7/point or so range, if we ever add to our total.

We were fortunate to end up with $5.74 per point (3 weeks and 3K points) and they were all post June 2010 purchases, and got us to what we believe is a sweet spot to make discounted reservation at 60 days. We are also planning to chain a reservation at different locations with 5 nights or so at each location in 2020. We will be relying on points for most reservations except for Hawaii. So far II exchange at Hawaii locations seems to be the most cost effective option. We avoid peak season and we are pretty flexible.
 
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turkel

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I absolutely agree with you but I think MVC Destination Points are for the more affluent Tuggers who value flexibility, views, choice and saving time. Unless you are buying to use a week, weeks and exchanging for whatever you get through Interval is more cost effective.

Although I do agree there are probably quite a few affluent Tuggers who value the destination points program, not everyone that buys points is affluent.

Some are just foolish with their money and have no financial sense....I may be related to such a person.

A person may drive an expensive luxury car and spend, spend, spend but what is their bottom line? Debt,debt,debt?
 

Wally3433

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OP needs to adjust the math for two things:
$7 per point cost, because that's what you would actually pay.
Redweek cost vs. nightly cash rate, because you would be stupid to not rent a week vs. paying Marriott directly.

Then, I would agree with the argument.
 

rthib

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Another point of points.
Crappy weather for friends so they can't get back home.
Need one night on HHI.
Choice was move to hotel, pay $$$ or do a quick points reservation for one night and extend vacation.
One of the reasons we are adding a few resale points to our enrolled weeks.

I see the point of adding a few resale points to enrolled weeks.
 

Old Hickory

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You and I are both agreeing. A timeshare should not be a money pit. But all vacations are money pits. You never know when you are getting the absolute best deal. My point was just that when folks start doing a billion calculations to justify their decisions, I smell a rat, as the saying goes. LOL Maybe my post came across as extreme but let's live a little and if we overspend by $500 over 20 years, oh well...

Seriously. I might never leave the house if I looked at the total cost of doing so. :)
 

VacationForever

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OP needs to adjust the math for two things:
$7 per point cost, because that's what you would actually pay.
Redweek cost vs. nightly cash rate, because you would be stupid to not rent a week vs. paying Marriott directly.

Then, I would agree with the argument.
Yes, many of us may be stupid because we don't rent through Redweek and instead use our timeshare or pay Marriott directly. Private rentals can go wrong and when it does, the renter is going to feel even more stupid.
 
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JIMinNC

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OP needs to adjust the math for two things:
$7 per point cost, because that's what you would actually pay.
Redweek cost vs. nightly cash rate, because you would be stupid to not rent a week vs. paying Marriott directly.

Then, I would agree with the argument.

Redweek cost is irrelevant for people (like us) who would never use a Redweek rental. We never use Redweek prices for comparison because we are not willing to make a person-to-person reservation for several thousand $$. We may be stupid, but we are not willing to pre-pay a stranger we connected with on the internet several thousand dollars for a reservation we can't cancel or change. Whenever we book for cash, we only book on the major corporate sites like marriott.com, hilton.com, etc. So for us, the Marriott cash rates are the most relevant metric.
 

TravelTime

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Redweek cost is irrelevant for people (like us) who would never use a Redweek rental. We never use Redweek prices for comparison because we are not willing to make a person-to-person reservation for several thousand $$. We may be stupid, but we are not willing to pre-pay a stranger we connected with on the internet several thousand dollars for a reservation we can't cancel or change. Whenever we book for cash, we only book on the major corporate sites like marriott.com, hilton.com, etc. So for us, the Marriott cash rates are the most relevant metric.

I agree with JIMinNC. When I rent for cash (as well as use timeshares), I prefer using a system that allows me to get all or most of my money back (and points) within 30 days or less of booking because plans change. I like to plan 12 to 13 months in advance but I also like the option to change my plans without major penalties. Not that long ago, I booked through AirBnB and I changed my mind the following week. I lost 50%. Another example is I booked through ICE Rewards and changed my mind when I found out exchangers are limited in the services they can use at this particular Mexican resort, so fortunately I had paid the $99 cancelation fee so I can get most of my money back (although ICE is a pain in the you know where and they are hassling me about canceling). I rebooked the vacation somewhere else in the same area (since we already bought airfare with insurance) using MR points + cash and I can cancel up to 3 days before arrival. Since our life changes a lot, we need and value that flexibility. In 2016, we booked a condo through VRBO a year in advance. If we had canceled, we would have lost over $1000 (out of $3400 for a week). By the time the vacation came around, I no longer wanted to go but we did since we would have lost too much money. The location was great just 50 feet from the beach but the quality of the studio condo itself turned out to be 3.5 stars at most.
 
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OldPantry

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I like OP's financial analysis a lot. Few owners really consider the capital cost and the capital depreciation, which as OP shows, is the biggest single cost item. To pay $40,000 for a TS and to then say that the cost of the TS is only the annual fee is to ignore the $40,000.

However, the rental cost of a TS for comparison purposes is not the retail price charged by Marriott. When you rent from Marriott, you may rent any number of nights starting any day of the week and may cancel at pretty much any time. When you own a TS, you get exactly seven days starting Fri/Sat/Sun once a year and you cannot change dates easily once reserved. The better price comparison is renting a TS week on Redweek or TUG Marketplace; a two bedroom island view at Ko Olina rents for about $3,500. Of course, that makes the economics of ownership even worse.

You're absolutely right; few people pay full retail. As you point out, snagging a rental on Redweek is a great way to go if you have a bit of time for the process. No up-front capital investment, no loss of principal, no maintenance fee. Not the cheapest way (a resale week can still sneak in well under the $500 in your example), but a nice compromise between very high-cost points flexibility and the grind of II trading when your reserved week won't do. I chose to highlight reserving directly with Marriott because that is the ultimate in flexibility, the exact thing folks always emphasize about points. If that turns out to be cheaper than points, then ... why not just do that? I do know that most points owners have paid less for their position than Marriott now charges. Which is why I invited some of them to do the kind of analysis I have done for my own weeks positions. There seems to be a consensus that points are expensive; I'm curious about just how expensive for various other owners. Maybe someone has actually found a bargain.
 

Swice

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I think the answer of "value" differs with different people, situations and "when" originally bought.

Thankfully we had the resources to buy two units (Myrtle Beach and eventually Lakeshore Reserve Deluxe) before the points system debuted. At work, everyone considers me "cheap." I prefer to call myself "thrifty." We are not known for wasting money.

In the first few years, we traded Myrtle Beach every year and got fantastic trades and bonus weeks from interval with few restrictions. So we essentially got two weeks for the price of one for many years. Later we added Lakeshore (I swore I would never buy a timeshare in Orlando) because the deluxe model trades as two one bedrooms (not a one bedroom and a studio). That scheme worked wonderfully for a long time-- our one bedrooms were easily pulling two bedrooms in two bedroom only resorts.

As we all know, the game is always changing. The interval bonus weeks have become basically worthless to us. The one bedrooms from Lakeshore are not pulling nearly as much and Interval has added an "upgrade" fee even when I'm downgrading season on the demand scale.

I've converted to points a few times -- giving me flexibility to add nights to "WEEK" vacations or to allow for short stays.

I would say without blinking an eye that our timeshares have been worth it for us. We were fortunate enough to buy when our children were very small. The truth is we have stayed at much nicer places than we would have been willing to pay cash for over the years. We have enjoyed, and been spoiled by, the extra space and kitchens (even if you only do breakfast and snacks-- a major reduction of hassle and expense). The timeshares have encouraged us to visit places we probably would not have gone to (France, Scotland, etc). We never would have gone to Atlantic City for a week and explored Cape May and the New Jersey coast if we had not traded into the Marriott there. We probably would have visited San Antonio for a few nights, but a full week there allowed us to explore other outlying areas! All of this adds up to the vacation "opportunity cost" when doing a full analysis.

Generally speaking, I think timeshares "can" be worth it if one is committed to learning the system (otherwise they are the ripoffs we've heard others talk about).

I do think buying in now for the first time with Marriott points makes the economics more difficult. I'm not sure I would encourage a friend to buy from scratch now. I can see supplementing weeks with points under some situations in order to use (but not for the reasons of inheritance or gaining Marriott status (which is changing!).

Looking at the money is important, but "some" flexibility, usage, frequency is hard to pin down to an exact figure.
 

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I absolutely hate when people get all OCD about their timeshares. A timeshare is not an investment. You are posting here for reassurance but you need to live with uncertainty. You should only buy a timeshare if you love the location and want to visit it again and again or if you are willing to gamble with an exchange company. You can easily rent though TUG, Redweek, VRBO and other websites for just a little above maintenance fees so there is no need to buy. It seems like all the time, I see a post like this from a nervous timeshare potential buyer. Just figure out your goals and make a decision. If you can't afford to lose money or pay timeshare maintenance fee for many years, then a timeshare is not for you.


OCD. Hmm. It's startling that you "hate" my post. You could simply ignore it. It should be clear that I'm not a nervous potential buyer, and that I have figured out my goals and made my decisions. You just don't like me talking about it. Odd. I spend quite a bit of time analyzing all of my investments. To me, the timeshares are one piece of the larger picture, and that picture is fairly important to me. We live on our investments now. I like knowing which have worked out, and which have not. I'm not losing any sleep; just want to make sure my next set of choices are better than some of the earlier duds.
 
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My initial perspective when I read the OP’s post was that he/she is worrying about a subject they don’t need to. Move your brain to other, more pleasant or pertinent subjects.

My conclusions are based on a possible faulty assumption that OP’s weeks were purchased prior to June ‘10. I looked through his post a couple times but can’t find any reference to when he purchased.

If this is the case he can enroll and never have to purchase more points. Rent points, yes. Purchase, no. He can play the full system and never have to spend a moment thinking about how others purchase points.

If he’s as old as his screen name implies the purchase of points is a real waste unless they have young family who want to absorb the gift without having to come up with the initial investment.

Nothing I have is eligible for points enrollment. I'm and outsider looking in. And yes, I am OLD! And, no, I am not worried at all (about timeshare, at least, maybe about the world a bit). I do have kids, and wonder whether they will be grateful when I "gift" them our weeks.
 

OldPantry

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One thing I would not consider in an analysis of the upfront money to buy a timeshare is that an average person would actually invest that money and get a decent return on investment. The average person would probably spend that money on something else. It is like saying a house is an investment. Basically, a house is a forced saving plan for most people. If they did not have the house, they would not save and have nothing at retirement. I am sure a few of us are savers and invest our money wisely but to use that in a general analysis seems faulty to me.

You seems to be saying that the "average person" would blow the money anyway. I have to argue about that. Folks who can afford timeshares are, by and large, exactly the folks who invest. The amounts of money needed to buy 5000 or 6000 Marriott points are large enough that the "average person" would not regard it as mad money to be spent on this or that. One other thing. While describing the purchase of a house as forced investment makes sense, I'm not sure it's relevant to the points "investment", which is a very poor way to save money.
 
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Kudos to the OP for saying out loud what is very difficult to say when you are in the Marriott system.

I’ve read here for years and have read many justification why people should by timeshares. Have never heard anyone say you might as well buy a timeshare because you will blow the $40,000 anyway. huh? Ever hear of the millionaire next door? I know quite a few.

There is no validity to any financial analysis that inputs rack rate lodging prices into the evaluation.
 

TravelTime

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The truth is we have stayed at much nicer places than we would have been willing to pay cash for over the years. We have enjoyed, and been spoiled by, the extra space and kitchens (even if you only do breakfast and snacks-- a major reduction of hassle and expense).
Looking at the money is important, but "some" flexibility, usage, frequency is hard to pin down to an exact figure.

I agree a lot with this!
 

TravelTime

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OCD. Hmm. It's startling that you "hate" my post. You could simply ignore it. It should be clear that I'm not a nervous potential buyer, and that I have figured out my goals and made my decisions. You just don't like me talking about it. Odd. I spend quite a bit of time analyzing all of my investments. To me, the timeshares are one piece of the larger picture, and that picture is fairly important to me. We live on our investments now. I like knowing which have worked out, and which have not. I'm not losing any sleep; just want to make sure my next set of choices are better than some of the earlier duds.

You did not read my later posts. I was just being extreme and kidding. I agree money is important. I also do analysis. But at some point I give up because one never knows what the ultimate best deal is or where the market will go. I mentioned I agreed with most of your analysis. The "OCD" part was just teasing. You did a very good analysis. I do not hate your post. It has driven a lot of good conversation! So that means it is a provocative post. Thank you for posting!
 

TravelTime

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You seems to be saying that the "average person" would blow the money anyway. I have to argue about that. Folks who can afford timeshares are, by and large, exactly the folks who invest. The amounts of money needed to buy 5000 or 6000 Marriott points are large enough that the "average person" would not regard it as mad money to be spent on this or that. One other thing. While describing the purchase of a house as forced investment makes sense, I'm not sure it's relevant to the points "investment", which is a very poor way to save money.

I hate to say this, as it may seem insensitive, but I believe Main Street greed was as responsible as Wall Street greed, for the housing crash and Great Recession in 2008-2009. (I worked in the housing industry in 2004-2005 before quitting due to all the greed I saw on all ends.) People are not savers by nature. I think us Tuggers are probably more cost conscious and probably save more and read our contracts and over-analyze before making a decision compared to the vast majority of Americans. From what I have gathered, many (if not most) people take out loans from the developers to buy overpriced timeshares - and they are perfectly happy. If it weren't for them, there would be no timeshare resale market. I only mentioned housing as a forced saving plan - not to compare it to timeshares - but to say that most Americans would have close to zero net worth if they did not have a home as a forced savings plan. Timeshares are definitely not a savings plan, I agree. Timeshares are more akin to buying a car - it depreciates the moment you leave the sales office but the amount owed goes up with the loan.
 

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Seriously. I might never leave the house if I looked at the total cost of doing so. :)

That's one of the conclusions I've come to as well. My wife and I value the flexibility that trading our weeks for points + using the points we purchased gives us in moving around the system.
 

JIMinNC

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There is no validity to any financial analysis that inputs rack rate lodging prices into the evaluation.

Why?

Any financial analysis should consider the actual tradeoffs versus theoretical. While off-price, person-to-person, VRBO, etc are cheaper than what you call "rack rates", these alternative channels are totally irrelevant for any person who doesn't/won't use those alternative channels. Any realistic financial analysis should compare relevant options for each individual/situation against each other.

It's like comparing the cost of flying versus driving - someone who doesn't book discount airlines like Spirit, Allegiant, Frontier, or Southwest should never compare the cost of those airlines against driving. They should compare the cost of flying on the airlines they would actually fly.

If I'm not willing to book lodging on VRBO, Redweek, etc. any financial analysis that uses those as a metric is useless for me. As I'm sure you can tell from some of the other responses, there are also many other folks who feel the same way and only book on mainstream corporate hotel/lodging booking sites and avoid the P2P marketplaces.

The VRBO/Redweek compare may be relevant for YOU. But as we've said many times, one size does not fit all.

And it has nothing to do with being afraid to say anything "out loud" when you are in the Marriott system. Most TUGgers are willing to criticize and complain about many things in the Marriott system when it doesn't work for us. I do find it interesting that you seem to be unable to see how others might have a different view than you, or find that things that don't happen to work for you actually work for them.
 

ljmiii

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There is no validity to any financial analysis that inputs rack rate lodging prices into the evaluation.
I might have missed something but I didn't see anyone using rack rates. Certainly all the prices I quoted weren't rack rates but rather were the actual price to book a room with discounts applied - MR, AAA, and (cough) AARP as applicable.
 

VacationForever

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Why?

Any financial analysis should consider the actual tradeoffs versus theoretical. While off-price, person-to-person, VRBO, etc are cheaper than what you call "rack rates", these alternative channels are totally irrelevant for any person who doesn't/won't use those alternative channels. Any realistic financial analysis should compare relevant options for each individual/situation against each other.

It's like comparing the cost of flying versus driving - someone who doesn't book discount airlines like Spirit, Allegiant, Frontier, or Southwest should never compare the cost of those airlines against driving. They should compare the cost of flying on the airlines they would actually fly.

If I'm not willing to book lodging on VRBO, Redweek, etc. any financial analysis that uses those as a metric is useless for me. As I'm sure you can tell from some of the other responses, there are also many other folks who feel the same way and only book on mainstream corporate hotel/lodging booking sites and avoid the P2P marketplaces.

The VRBO/Redweek compare may be relevant for YOU. But as we've said many times, one size does not fit all.

And it has nothing to do with being afraid to say anything "out loud" when you are in the Marriott system. Most TUGgers are willing to criticize and complain about many things in the Marriott system when it doesn't work for us. I do find it interesting that you seem to be unable to see how others might have a different view than you, or find that things that don't happen to work for you actually work for them.

Very well said. We only book our stay with mainstream corporate hotel/lodging booking sites and absolutely refuse to use P2P marketplaces and private rentals. Corporate prices is the true cost comparison for us. We just won't book with a 3rd party. The issues with 3rd party booking can vary from showing up without a reservation because we got scammed, or in the worst case scenario, dead like that family who booked their condo stay in Mexico through Homeaway.
 
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Old Hickory

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I think the answer of "value" differs with different people...


This entire post... +1. And I would say that for us, we cannot place a value on our life's experiences. Would I have ever experienced B, if we had not visited A. Outer Banks/Williamsburg. Portsmouth, Portland, and Cape Cod/Boston. Bonneville Salt Flats/Park City. Everglades National Park/Marco Island. That's just a few.
 
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