Marriott Vacations Worldwide 3Q 2019 Earnings Call

[JIMinNC]

Marriott Vacations Worldwide released the 3Q 2019 earnings yesterday afternoon and held the analyst conference call this morning. Not much new of interest for TUGgers, but here are a few bullets. In all cases these are my words summarizing what was said rather than specific quotes. The only exception is the next-to-last bullet on the asset sales. That was copied directly from the earnings news release.

• 3Q earnings of $1.97/share missed earnings per share estimates slightly (about a nickel I think), but top line revenue beat slightly. Net result is at noon Eastern Time the stock is up about 1.5% to around $116/share. The stock did hit a new 52-week high in intraday trading today.
• Overall Contract Sales were up 5% year-over-year for the 3Q. Sales would have been up 6.5% except for the impact of Hurricane Dorian, which closed sales centers in Florida and South Carolina.
• Sales at the legacy ILG sales centers were up double digits at 11% as they are continuing to see results from expanding MVC best practices to the acquired ILG sales centers.
• Legacy ILG still has lower VPG (Volume per Guest, a measure of closing percentage and average sale $$) than legacy MVC, so there is room to grow that as best practices continue to yield results. They are eliminating less efficient off-premise lead generation channels that were used by ILG.
• Don't expect to see the VPG from legacy Vistana to ever be as high as MVC. They feel the Westin VPG can grow to be as good or even higher than MVC given where the Westin locations are and the demographics of the Westin product. Sheraton VPG, however, will probably always be lower due to where the locations are and the lower customer demographics that Sheraton attracts. This will probably prevent the legacy Vistana VPG from ever matching legacy MVC.
• In response to a question from an analyst, they said they have seen no evidence of softness in the consumer, despite the few signals of weakness that have been seen in some other parts of the economy. From their perspective they still see a very strong consumer who is positive about the economy and is spending money. No signs of a slowdown.
• The traditional timeshare exchange business at II is basically flat (he said that RCI is much the same - flat), so finding alternative sources of revenue, such as the deal between II and Planet Fitness, will be key to expanding the revenue potential beyond timeshare exchange into the broader travel marketplace. Expect to see other announcements of similar partnerships.
• As a result of the ILG Acquisition, the company performed a comprehensive review of its Vacation Ownership property and equipment including undeveloped parcels, future phases of existing resorts, operating hotels, and other non-core assets, to determine the best strategic direction with respect to these assets. As a result of the review, the company currently expects proceeds from future asset dispositions to be between $160 million and $220 million.
• Some asset sales are already "in process."

 

[davidvel]

I understand why, but it always strikes me that corporations always are looking to expand, despite having a robust revenue and income model in place.

In doing so they often pursue "innovative" ways to grow, which can torpedo their core business and bring it down with expense, debt, and customer dis-satisfaction.

A bit of killing the golden goose or not leaving well enough alone.

 

[CalGalTraveler]

"The traditional timeshare exchange business at II is basically flat (he said that RCI is much the same - flat), so finding alternative sources of revenue, such as the deal between II and Planet Fitness, will be key to expanding the revenue potential beyond timeshare exchange into the broader travel marketplace. Expect to see other announcements of similar partnerships."

Does this mean that there will be fewer getaway offers, and exchange inventory availability for owners? What is the Planet Fitness offer? Do they need to buy an II membership?

 

[rthib]

"The traditional timeshare exchange business at II is basically flat (he said that RCI is much the same - flat), so finding alternative sources of revenue, such as the deal between II and Planet Fitness, will be key to expanding the revenue potential beyond timeshare exchange into the broader travel marketplace. Expect to see other announcements of similar partnerships."

Does this mean that there will be fewer getaway offers, and exchange inventory availability for owners? What is the Planet Fitness offer? Do they need to buy an II membership?

Thread here about it. They get access to some getaways.
https://tugbbs.com/forums/index.php...s-get-access-to-leisure-time-passport.293026/

 

[CalGalTraveler]

So for $240 a year it sounds like Planet Fitness members get same access to getaways as MVC timeshare owners that paid thousands to get into the system? Wyndham has several sites like this as well.

I wonder if there is a price and inventory availability differential between this system and what owners see? Even if so, I doubt that it would make up for the difference in investment.

IMHO...They have created another reason not to buy timeshares...why own when you can simply sign up with Planet Fitness and buy getaways for about the cost of MF with no obligation? This is a clear devaluation of ownership and ruins the notion that this is a club.

Next time I have a presentation, I will use this as my reason to not buy and see what they say.

 

[JohnB3]

I expect the biggest impact will likely be to the Getaways, A/C's and choose two II offerings as a result of expanding access to groups like Planet Fitness. If MVW can generate more income by selling mini memberships without T/S ownership by exploiting excess inventory you would expect them to do that I think.

 

[Steve Fatula]

I understand why, but it always strikes me that corporations always are looking to expand, despite having a robust revenue and income model in place.

In doing so they often pursue "innovative" ways to grow, which can torpedo their core business and bring it down with expense, debt, and customer dis-satisfaction.

A bit of killing the golden goose or not leaving well enough alone.

Well, if done well, then it can be profitable. Sadly, many are not expanded well or venture into a wildly different market. It comes down to how good management is. Amazon certainly did some good expansion with AWS. Of course, they were building upon services they used in their core business, so, sometimes, it gels. Apple has done well with some of their service offerings as well. But for every decent success, there are more failures, I agree.

 

[StevenTing]

With regard to II, I think it’s a nothing burger. II is for those that don’t use their weeks. I wonder from MVC perspective, how many weeks go unused/unpurchased each year. I think they’re just trying to reduce the number of “expired” weeks and to see if they can generate a little more revenue.

I’ve only used II twice early in my timeshare ownership but have used my weeks ever since then. If you bought weeks for the purpose of trading, then this affects you a lot more.

 

[SteelerGal]

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