Marriott Vacations Worldwide Investor Day Presentation-October 4

[DannyTS]

What you’re getting from resale is actually what the original bought. He bought a week with the ability to occupy it, rent it or exchange it. It is very clear on the documents that all of the other goodies are “extras”. So Marriott has not taken anything away from you. They can change all of the “benefits” any time they want.

Not the case for resale DC points or for weeks bought from the developer after 2010 that are already enrolled. Those original owners bought with all the features.

 

[Dean]

Not the case for resale DC points or for weeks bought from the developer after 2010 that are already enrolled. Those original owners bought with all the features.

They are getting what they bought and what's contractual which they either knew or should have known at the time of the purchase. And they do have all the options, at least they have so far off and on, even if the cost is more. And they are getting what was contractual for the seller as well even if they have different options that one who bought earlier. I'd know you're really tied to this concept of "fair" but my definition is more in line with the contractual obligations.

 

[csalter2]

Not the case for resale DC points or for weeks bought from the developer after 2010 that are already enrolled. Those original owners bought with all the features.

DannyTS, there have always been limitations on resale weeks even prior to June, 2010 but those limitations were not as pronounced. If one bought a resale week prior to June, 2010, all they were really missing out on were the option to convert to the then Marriott Rewards Points now known as Bonvoy points. Those who bought resale weeks prior to June, 2010 are fortunate because they can have the option of enrolling those weeks at no additional cost into the DC program. For them that is a great deal particularly if they have.a week that elects to a high number of DC points. However, resale weeks bought after June, 2010 cannot be enrolled into the Destinations Club or DC program unless they buy into it via a points purchase. The resale owner has a choice. He can buy what the original owner bought contractually which was a week as I stated in my earlier post which was a week to occupy, trade through Interval or rent. That is the only what they bought and that’s all they can sell to a new owner. So from a weeks perspective that is all an owner can sell to a potential buyer of his week.

A resale points buyer can have access to all of the benefits of the DC points system, but they pay an additional $3.00 per point for every point that they purchase from the previous owner plus the previous owner’s price. That $3.00 per point gives the new points owner all of the privileges and status that Marriott DC points provides without limitation. However, one must know that in that contract, Marriott has total control over those benefits and can add or subtract benefits at anytime.

The bottom line, you get what you paid for.

 

[CalGalTraveler]

The difference between MVC and Hilton is that MVC made enrolling optional because they charged a higher price. Hilton opted for mandatory enrollment upon purchase for developer and resale for a nominal (but ever increasing) fee.

 

[csalter2]

The difference between MVC and Hilton is that MVC made enrolling optional because they charged a higher price. Hilton opted for mandatory enrollment upon purchase for developer and resale for a nominal (but ever increasing) fee.

What was the nominal fee for Hilton?

 

[CalGalTraveler]

The latest is $409. It started at $299 I believe.

 

[SteelerGal]

The latest is $409. It started at $299 I believe.

Still a great deal considering.

 

[CalGalTraveler]

@SteelerGal I agree. The HGVC system is very fluid and works because everyone is enrolled automatically. If MVC/Vistana do the same with a mass enrollment with a low fee, network effects will kick in and it will benefit all.

What the HGVC system doesn't have is the ability to rent points. You can only rent out your home week. I would love to have the option to rent MVC points and would consider purchasing another property if we could easily rent out points in years we don't need them or our priorities change instead of being a landlord.

 

[csalter2]

@SteelerGal I agree. The HGVC system is very fluid and works because everyone is enrolled automatically. If MVC/Vistana do the same with a mass enrollment with a low fee, network effects will kick in and it will benefit all.

What the HGVC system doesn't have is the ability to rent points. You can only rent out your home week. I would love to have the option to rent MVC points and would consider purchasing another property if we could easily rent out points in years we don't need them or our priorities change instead of being a landlord.

You cannot compare the HGVC system to MVC. You’re comparing apples to oranges. Hilton starts their system with points. Marriott started with weeks and then transitioned to points.

Even with that I prefer Marriott’s system to Hilton’s because they have more locations.

 

[DannyTS]

@SteelerGal I agree. The HGVC system is very fluid and works because everyone is enrolled automatically. If MVC/Vistana do the same with a mass enrollment with a low fee, network effects will kick in and it will benefit all.

What the HGVC system doesn't have is the ability to rent points. You can only rent out your home week. I would love to have the option to rent MVC points and would consider purchasing another property if we could easily rent out points in years we don't need them or our priorities change instead of being a landlord.

don't jinx it

 

[CalGalTraveler]

You cannot compare the HGVC system to MVC. You’re comparing apples to oranges. Hilton starts their system with points. Marriott started with weeks and then transitioned to points.

Even with that I prefer Marriott’s system to Hilton’s because they have more locations.

Nope. HGVC is a weeks system with fixed points attached to each deed. No different than an enrolled MVC week (which is the point of this discussion.) It does not offer a trust points system like DC so that's where they differ.

HGVC acts much like a points system because every deed is automatically enrolled in their points program when purchased for a nominal fee. Most HGVC users never use their deeded home week, that's why it is often mistaken for a points only system. This network effect makes the system highly fluid and easier to book desirable properties because everyone participates. If I want to book an Oceanfront at Hilton Hawaiian Village in Waikiki, I could with sufficient points and early res.

MVC and Vistana have historically put restrictions on enrollment which makes the trading systems sticky and limited. These systems lose desirable properties in their trading system every year because owners age out and sell to resale which is not automatically enrolled back into the system. The best units command a premium and resale owners who plan to mostly use so won't pay to enroll. II is considered "good enough."

MVC and Vistana mistakenly believe they are penalizing resale but ultimately they devalue the network for dev owners and enrollees because hundreds (if not thousands) of VOIs exit the trading network via resale every year and cannot (e.g. voluntary Vistana) or will not enroll.

 

[Old Hickory]

Also new Costa Rica location officially announced with 24 2BR units.

I may have missed this in the 4 pages, but, was there an opening set for Costa Rica?

 

[TXTortoise]

I may have missed this in the 4 pages, but, was there an opening set for Costa Rica?

Yes

https://tugbbs.com/forums/index.php?threads/new-costa-rica-club-in-the-future.293339/

 

[bazzap]

Just sometime in 2021

 

[amycurl]

there are numerous technology, legal, and product hurdles

*peers into her crystal ball*
I can predict that those hurdles will take longer than they think they will, and will not be cleared easily.

 

[dioxide45]

*peers into her crystal ball*
I can predict that those hurdles will take longer than they think they will, and will not be cleared easily.

The legal hurdles are how to neuter with those pesky Vistana mandatory VOIs.

 

[LeslieDet]

News on Future Product Form.

Will be two phases:
1) Link usage between MVC, Westin, Vistana, Sheraton using a common points currency. Lots of legal and technology hurdles, but targeting announcement for mid-late 2020.
2) Will move to selling a single points-based product for all brands. No time frame disclosed. Lots of legal and technology hurdles.

Also new Costa Rica location officially announced with 24 2BR units.

More later.

You might recall that we had a discussion 2 months ago regarding my comments that there was going to be some sort of currency exchange developed such that MVCI DP owners and Vistana Flex Option owners would be able to ultimately use their ownership to cross-book resorts. I recall being told that I was inaccurate (or tossing out BS) about both the Flex Options being sold as well as an exchange rate being developed.

It is good to see that there is going to be some concept to allow point owners to access the trust inventory of the sister entities using some sort of currency exchange rate. I agree it will be complicated. I am skeptical that there will be yet another new point system developed for sale to owners that allows direct access to all resorts among the sister timeshare brands. It seems much more feasible to have that universal point system being developed that exchanges X value for DPs and Y value for Flex Options (Vistana points), and then the "converted" points are used to book in across the board.

 

[DannyTS]

The legal hurdles are how to neuter with those pesky Vistana mandatory VOIs.

IMO the number of resale owners at the mandatory resorts does not justify the legal and PR effort to neuter those Options. This is probably more the obsession of few Vistana sales reps.

 

[kozykritter]

So, after going through this again, my interpretation is Phase One will be some sort of linkage, in the form of a "common points currency" of some sort, that will facilitate cross-booking between the Marriott, Westin, and Sheraton vacation clubs, but each "club" will continue to sell their individual programs to some degree. I think the term "linkage" is key - the programs will be linked through some common currency that is TBD, but not truly consolidated.

Then, at some undetermined point after 2020, they will develop a truly consolidated points product for the entire company.

Myself and many other VSE (and Marriott) owners are likely reading this and hoping they can move to this common points currency without extra cost to their ownership. That seems unlikely because as the Marriott Vacation Club sales rep put it to me this week, "Marriott doesn't give access for free. We didn't do it when we created the points system for our members in 2009, so why would we do it now?". Given how much of this presentation was on revenue growth and profit, his statement seems likely correct.

 

[dansimms]

Whatever benefit level you are at, they will want to incentivize you to the next one up.

 

[Pocky87]

To me, they can do whatever they want for the merger...but I’m more concerned over the relationship with Bonvoy and the membership tier. I supposed there are quite a number of members who purchased or topped up at least to a Select or Chairman level just to have their bonvoy account matched to Platinum and Titanium respectively as part of the benefits.

Hope they don’t remove the ongoing benefit... but so far it seem that the benefit got better each year... no?

 

[Ralph Sir Edward]

DannyTS, there have always been limitations on resale weeks even prior to June, 2010 but those limitations were not as pronounced. If one bought a resale week prior to June, 2010, all they were really missing out on were the option to convert to the then Marriott Rewards Points now known as Bonvoy points. Those who bought resale weeks prior to June, 2010 are fortunate because they can have the option of enrolling those weeks at no additional cost into the DC program. For them that is a great deal particularly if they have.a week that elects to a high number of DC points. However, resale weeks bought after June, 2010 cannot be enrolled into the Destinations Club or DC program unless they buy into it via a points purchase. The resale owner has a choice. He can buy what the original owner bought contractually which was a week as I stated in my earlier post which was a week to occupy, trade through Interval or rent. That is the only what they bought and that’s all they can sell to a new owner. So from a weeks perspective that is all an owner can sell to a potential buyer of his week.

A resale points buyer can have access to all of the benefits of the DC points system, but they pay an additional $3.00 per point for every point that they purchase from the previous owner plus the previous owner’s price. That $3.00 per point gives the new points owner all of the privileges and status that Marriott DC points provides without limitation. However, one must know that in that contract, Marriott has total control over those benefits and can add or subtract benefits at anytime.

The bottom line, you get what you paid for.

they brag that 90% of the owners are happy so it must mean something to them. I also have to point out that the earnings that come from selling VOIs are diminishing in importance (28% in 2018 vs 42% in 2017) so clearly keeping the existing owners happy is paramount. I expect that trend to continue and the sales force to diminish its influence in the future.




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I think you are starting to see the impact of the $3 a point transfer fee to the Marriott profit mix.

Every DC transfer puts $3 a point into the Marriott profit bottom line. That's between 20 to 25 percent of the cost of a retail sale.

Consider - The rule of thumb for new time shares sales is that 50% of the retail price goes to sale/marketing. At circa $12 dollars a point (rack rate around $14, but there aren't any incentives included, which occurs in many sales), that means $6 to $7 dollars a point profit to Marriott. Which means 40 to 50% percent of the actualizable profit of a new sale is paid to Marriott for each transfer - with no overhead! (All the actual transfer overhead costs are covered by other fees.) Versus 0 dollars for a week transfer.

This has to have an effect on the bottom line, increasing the fee share of the profit and reducing the sales portion. . .

 

[DannyTS]

Marriott Vacations Worldwide Corporation Disposes of Excess Parcels


ORLANDO, Fla., Dec. 19, 2019 /PRNewswire/ -- Marriott Vacations Worldwide (NYSE: VAC) announced today that it has closed the sale of excess parcels in Cancun, Mexico and Avon, Colorado for more than $60 million as part of its strategic decision to reduce holdings in markets where it has excess supply.

"This is the first step in our strategy to dispose of $160 million to $220 million of non-strategic assets, which we announced during our recent investor day," said John Geller, executive vice president and chief financial and administrative officer.

The Company expects to report a gain from the sales, which will be excluded from its 2019 Adjusted EBITDA, and cash proceeds will be excluded from its Adjusted Free Cash Flow.

 

[dioxide45]

Marriott Vacations Worldwide Corporation Disposes of Excess Parcels


ORLANDO, Fla., Dec. 19, 2019 /PRNewswire/ -- Marriott Vacations Worldwide (NYSE: VAC) announced today that it has closed the sale of excess parcels in Cancun, Mexico and Avon, Colorado for more than $60 million as part of its strategic decision to reduce holdings in markets where it has excess supply.

"This is the first step in our strategy to dispose of $160 million to $220 million of non-strategic assets, which we announced during our recent investor day," said John Geller, executive vice president and chief financial and administrative officer.

The Company expects to report a gain from the sales, which will be excluded from its 2019 Adjusted EBITDA, and cash proceeds will be excluded from its Adjusted Free Cash Flow.

Interesting. THey have been trying to sell that land in Cancun for nearly a decade. A MVCI resort there would have been great, but I expect they are planning to make the two Westin resorts available to MVCI owners in some way through their combined program.

 

[bizaro86]

I think you are starting to see the impact of the $3 a point transfer fee to the Marriott profit mix.

Every DC transfer puts $3 a point into the Marriott profit bottom line. That's between 20 to 25 percent of the cost of a retail sale.

Consider - The rule of thumb for new time shares sales is that 50% of the retail price goes to sale/marketing. At circa $12 dollars a point (rack rate around $14, but there aren't any incentives included, which occurs in many sales), that means $6 to $7 dollars a point profit to Marriott. Which means 40 to 50% percent of the actualizable profit of a new sale is paid to Marriott for each transfer - with no overhead! (All the actual transfer overhead costs are covered by other fees.) Versus 0 dollars for a week transfer.

This has to have an effect on the bottom line, increasing the fee share of the profit and reducing the sales portion. . .

It's actually better than that. Last year VAC sold $990 MM of timeshare. They spent $513 MM on sales and marketing, and $260 MM buying the inventory.

So of a hypothetical $12 point purchase, $3.15 was the cost of the points, and $6.22 was the cost of sales/marketing. That leaves $2.63 in profit. So a resale of existing trust points is probably more profitable for VAC than selling new ones. The sales people don't feel that way, because on a resale $0 goes to them, but VAC shareholders shouldnt care - they get paid either way.

Of course, new point sales potentially allow for new developments (generating new high margin management fees) but upfront it doesn't matter.