Marriott Vacations Worldwide (VAC) purchase of Interval Leisure Group (ILG) discussion!

[SunandFun83]

Hey Marathoner,

People are speculating that every property gets assigned Destination Point value. I think we go back to 2011 and the push to "Enroll your Weeks" If you own Vistana, Hyatt, other II properties or points will you have to "Enroll your weeks" and buy destination points to play. The big money is to sell more points and enroll weeks.

I think VAC may be legally bound to let Hyatt and Vistana owners keep their rights inside their own systems. But, if you own Hyatt will you have to pay to enroll your weeks and add points if you want to play in the Marriott system? FYI, Hyatt is trying to role out a point system with a cost to enroll. Hyatt also has a big advantage for II exchanges, a Hyatt diamond week is 2,200 points and a 2br exchange only costs 1,300 points.

 

[Roger830]

• Higher costs per vacation night
• More limited availability at our own MVC resorts
• Lower appreciation/benefuts for ownership levels
• More 'black box' regarding how inventory is allocated
• Total chaos regarding villa assignment priorities
• Less appreciation by corporate for 'loyal' owners
• Higher staff turnover
• Less 'family' feeling at the resorts

That sounds like Wyndham today.

 

[SueDonJ]

Why is the Hyatt system not as equally affected?

As you can imagine it's been a bit confusing for the mods/admin today with so many new posts/threads all over the site. It took some time to review existing speculative threads that were started prior to today's announcement, and then determine how/where any acquisition discussions should remain open. At the time she posted I don't think Denise meant that Hyatt wasn't equally affected, but instead she simply didn't mention Hyatt when explaining why threads in any forums that aren't impacted were being closed.

There is an open, ongoing thread in the Hyatt Residence Club forum that began with speculation but has relatively few posts in it, so it's remaining intact as both pre-announcement speculation and post-announcement discussion. (If the speculation thread in that forum had turned into a monster like the one in the Marriott forum had, it too would have been closed and a new thread dealing with the announced acquisition would be opened.)

There are now three TUG forums with open, ongoing threads related to this acquisition. Hopefully that's enough for all owners/members who will be impacted to easily find the discussion related to their individual ownerships.

Marriott Vacations Worldwide, Marriott Vacations Worldwide (VAC) purchase of Interval Leisure Group (ILG) discussion!
Vistana Signature Experiences, Marriott Vacations Worldwide to Acquire ILG to Create a Leading Global Provider of Premier Vacation
Hyatt Residence Club, Marriott and ILG

 

[DeniseM]

Hi Sue - You are correct - I hadn't seen the Hyatt thread when I first posted.

 

[bizaro86]

Yes, lets speculate for the fun of it and to predict the future of timeshares.

I believe we can all agree on the mission statement of the new Marriott Corporation: Maximize Revenue Growth. Every other consideration is immaterial in a capitalistic environment.

Now, here are my 4 principles to support their mission statement:
1. Leverage the ILG acquisition to continue and expand their main cash cow product, the DC point
2. Keep and support the revenue growth capability of their legacy products such as II exchange fees, sale of Hyatt Maui weeks, income from their existing property management business, etc
3. Identify cost synergies, merge back office and support activities, consolidate technology, and reduce headcount of the combined entity
4. While a very distant after-thought: keep the legacy customers from becoming dissatisfied with their legacy purchase. They are the best fodder for the sales of DC points, after all

So, we must get rid of any expectation of some of the ideas in previous posts which do not support these principles. These silly ideas include free exchanges between timeshare systems, reduction of any fees, convenience of exchanges between systems for the legacy customer (unless they are willing to pay), etc.

So, what could the future look like? well, in the short-term, very little will change. Internal management and employees will be jockeying to come out on top of the combined firm, merger and rationalization of similar business groups will need to occur, the combined firm will need to hire strategy consultants to develop a new go-forward strategy, etc.

However, in the long-term, there are some things that would be interesting that support the 4 principles:
1. Every property across Marriott, VSE, and Hyatt will have DC points assigned to them
2. Both a one-time and an annual enrollment fee will be created to allow existing VSE/Hyatt owners to convert their week to DC points
3. Buying into DC points will allow everyone in the legacy system to reserve days in the other legacy systems, with the requisite reservation fees
4. Retain the legacy exchange systems but keep raising legacy exchange fees to help Marriott meet its quarterly Wall Street revenue estimates
5. Using ROFR, place the specific legacy VSE and Hyatt weeks into the DC Trust which enables Marriott salespeople to more effectively sell DC points. These properties include Hyatt Key West and Colorado ski weeks (Aspen, Beaver Creek, Breck)
6. Slowly decommission legacy websites and support staff. Consolidate into the strategic website (II) and support groups.
7. Maintenance fees will increase at a faster rate for VSE and Hyatt properties so that they fit into the 5yr/10yr renovation cycles which Marriott property management favors. After all, the DC point owner are already conditioned to have "Marriott" standards when they reserve into a VSE or Hyatt property.

So, I expect that we will see some legacy buyers happy with the merger and some unhappy. All will pay more and, to be fair, offered more as a result of the merger.

I agree with the part about profit maximizing
Which is why I really doubt that they'll put Hyatt/Westin/Sheraton inventory in the trust directly. Why give all those existing DC point members something for free. Instead, it would be way more profitable (especially in the short term) to offer DC+ where you can book all the other brands with your points. And you can convert your regular old DC points to the new and improved DC+ simply by buying 1500 trust points. But you need to buy now, because with the new functionality prices are going up next month.

 

[dioxide45]

Obviously everything at this point is speculation, but are Vistana owners the ones with the most to lose? Sure they can get access to some great properties, but what will it cost? It would make sense that Marriott will try to make the DC program the surviving system. The skim gives them some additional profit in addition to the ability to upsell. Marriott did a great job selling developer points to current owners, even legacy resale owners "topped" up their points, well, just because. Their problem will be trying to entice existing VSN members to get in on the DC program. Vistana's StarOption chart is easy and doesn't discriminate like the DC point chart does. Would a Platinum Plus owner in Palm Desert be able to still book Hawaii in the summer in the DC program? They can do that now.

The biggest hurdle that VAC will have to overcome is the fragmented system that Vistana has created. Weeks, multiple trusts (even in the same resort). Lack of ROFR at most of their properties. it will be hard for VAC to create a cohesive system. I think it would be in their best interest to create a single DC system. They now have a new owner base that they can sell points to, but if they alienate the existing Vistana owners, they may not be willing to buy. It will be interesting to see how this all plays out.

 

[vikingsholm]

Lots of cynicism and cautions here about how we're going to get hosed, it will take forever to devise a workable merged system, blah blah blah.

Sorry, I'm not buying into that.

I started as a real skeptic of the DC system. As a Marriott Lake Tahoe Grand Residence legacy quarter share weeks owner, they took awhile longer to figure out how to incorporate us into the DC system, because we own a specific unit for each of 13 weeks per year (one per month). But they did it, and it worked.

At first, I thought the skim would be a real rip off from what I'd read on TUG, and I didn't understand that buying into the system didn't commit me to enrolling weeks, but just offered another option, fully flexible every year. Now, I mix use of our weeks, occupying our favored weeks, renting out some weeks, trading in 5 different exchange systems, and electing weeks for points stays of 1 day to 2 weeks or more at Marriott and Ritz timeshares all over. It is extremely flexible, and they let us buy into the DC system with our 13 legacy weeks at the standard multi week rate. It has really enhanced our overall use of our Marriott timeshares. I barely notice the skim, and get pretty much what I want with sufficient lead time.

I think they really want to make this work well, and become the premier high end timeshare system with satisfied customers. I also believe they will find a way to make it easy to use, minimizing multiple system confusions, and overcome any legal or logistical issues that some think may make it difficult to incorporate the new systems. These will all be a part of Marriott now, regardless of their branding. Marriott knows how to manage, and I'm relieved that they are the lead on this and not ILG, or Diamond taking over.

Sure, they want to make money, but I think they'll have a whole new market of eager customers once those potential buyers find out what will be available through this system. I think Marriott will do it faster than many here seem to imagine - they've been through it before. They incorporated Ritz and Grand Residences relatively smoothly, with different levels of access for Ritz based on number of points owned, and I see the same with Vistana and Hyatt. They've probably been thinking about it for quite awhile already.

 

[nuwermj]

The biggest hurdle that VAC will have to overcome is the fragmented system that Vistana has created. Weeks, multiple trusts (even in the same resort). ... it will be hard for VAC to create a cohesive system.

Diamond Resorts has a fragmented system which they market as a single system.

 

[JIMinNC]

Here's my take on the speculation...

MVW is paying a premium for ILG that they will need to recoup (VAC stock was down almost 9% or $11.82 to $122.61 today). The $75 million in projected general and administrative and operational savings only represents about 10% of the combined companies' EBITDA, so they will need to find a way to leverage the expanded customer base to sell more product and boost the top line revenue. If all you do is keep selling to your existing network and selling the same benefits, you aren't leveraging you broader base of prospects. As soon as they practically can develop the capability, I think VAC will want to be able to sell the ability for current MVC DC points users to use their points at Sheraton, Westin, and Hyatt vacation ownership properties. They will also want to be able to sell access to MVC's broader network to VSN and HRC owners, to make it easier to sell those points/properties. Whether they will ever be able to consolidate into one true unified system I think is doubtful, given the different and complex structures of the programs.

So, they need to develop an exchange mechanism that will allow this cross-club access. They could develop another exchange company on top of the current MVC Exchange Company, VSN, and HRC networks. Given that the most senior management of the combined company is the VAC management, however, it would not surprise me to see them try to utilize the MVC Exchange Company to facilitate the cross-system exchanges. To do that, they would just need to assign each week in VSN and HRC a DC point value (skim and all). "Internal" bookings between the existing VSN/HRC resorts could continue as they do today within those systems, but to participate in the MVC Exchange, VSN/HRC owners would need to enroll their weeks, just as pre-2010 MVC weeks owners were incentivized to do at the beginning of the DC. Depending on how badly they want this inventory available in the MVC Exchange, they might offer a fee-based enrollment option to VSN/HRC owners just as they did at the outset of the DC. This would potentially get a lot of inventory into the system quicker than if they required a big points buy to enroll. The problem with this approach is that the VSN/HRC owners would have to "pay up" to get access to the MVC locations through the Exchange, but existing MVC DC users would not have to "pay up" to get access to enrolled VSN/HRC inventory. That would be an inequity - and a missed revenue opportunity for VAC. As a result, that may make some sort of a "Super Exchange" that sits on top of the existing programs more likely, one that all owners have to pay to access, either through a fee or an additional developer purchase that "supercharges" their existing DC Points/StarOptions, etc. (to recycle an old DC sales phrase). This may result in less real cross-system availability, but as long as that capability exists in principal, it would allow the combined sales teams to sell the "sizzle", even though there would be very little steak there.

It would also not surprise me if access to a Super-Exchange were restricted to the higher tier owners in the various systems to incentivize people to buy up.

The sheer complexity and fragmented nature of the VSN system will make this integration very difficult. I'm not that familiar with the Hyatt program, so I'm not sure how well that program will blend, but trying to blend VSN and MVC into some sort of a reasonably simple Super-Exchange looks to be the integration project from Hell.

 

[dioxide45]

This one is way out there, but perhaps VAC could offer up enrollment to Vistana owners using a 30 StarOptions to 1 DC point. This would make an SVV 2BR Platinum season worth about 2700 DC points. On par with the Marriott properties in Orlando. Of course, a Hawaii OF owner only gets about 5700 DC points, not good. Give existing Vistana owners the ability to enroll in DC and convert their StarOptions to DC Points. This is probably the easiest sell. The harder sell would be to assign a set amount of DC points based on the actual week, season, resort and view you own. There will be winners and losers in that type of program.

For resale voluntary owners, they could use the week, season, resort and view to determine the DC point value. Or not offer enrollment at all. Though if they want it to all mesh well and have ripe owner base to sell new DC points to, offering enrollment is a good way to get there. VAC did a great job selling DC points, even to resale weeks owners.

 

[steve1000]

As an owner in each of Marriott, VSE, and Hyatt (as well as some other systems) it has been interesting and sometimes challenging learning the rules and the ins and outs of each system. My weeks are a mix of developer-purchases and resale weeks. I am quite curious how the systems will ultimately be integrated. Not sure how it will all come together but I expect that VAC will come out best - may be an opportune time to buy some VAC stock.

 

[mjm1]

We attended a MVC sales presentation today.

The salesperson discussed the acquisition and focused on MVC owners gaining access to Vistana and Hyatt properties through the DC program. He also indicated that he was sharing his opinion and he was speculating. When I mentioned the idea of offering enrollment of currently owned units in those systems into MVC he said he didn’t think that would happen. Rather, they would focus on ROFR to add properties to the DC program. I told him that would limit what they would make available to all owners, so it would make more sense to offer enrollment similar to how they allowed legacy owners to enroll their weeks. He did submit that is a possibility. His view is that the only way Vistana and Hyatt owners will gain access to MVC properties is through buying DC points or through II exchanges.

His main focus was to sell us more DC points and indicated that the cost will only go up. He indicated that Vistana and Hyatt are selling an equivalent level of points at approximately $18 per point whereas MVC is selling them at $13.96, not taking into account discounts at higher point purchase levels. So, he surmised that MVC points will continue to rise in cost to match Vistana and Hyatt levels. Again, speculation. Certainly an effort to pursuade potential purchasers to buy points now rather than wait as the price increases.

Obviously, nobody knows exactly how things will develop, but they are very enthusiastic about where things are headed. I’m sure they see this as a huge opportunity for increased sales opportunities.

Best regards.

Mike

 

[steve1000]

Interesting. We are attending a sales presentation tomorrow - will see if its the same spin.

 

[jhac007]

As an owner in each of Marriott, VSE, and Hyatt (as well as some other systems) it has been interesting and sometimes challenging learning the rules and the ins and outs of each system. My weeks are a mix of developer-purchases and resale weeks. I am quite curious how the systems will ultimately be integrated. Not sure how it will all come together but I expect that VAC will come out best - may be an opportune time to buy some VAC stock.

Do you have the good feeling that with your diverse portfolio you are in an excellent position to be a big winner in the acquisition? I would tend to think already owning Marriott, VSE and Hyatt is to your advantage no matter what VAC evolves into!

 

[suzannesimon]

Kudos to Marriott - the timeshare division has gone from being an anchor in 2009 to being a formidable enterprise in 2019. This will no longer be the DC that we are all accustomed to, this is a much bigger organization now and attention will be elsewhere.

It does suggest some type of cross pollination across the systems because of the Mexico and Caribbean properties.

Interesting to see and congrats again to Marriott - a stunning transformation.

Best,

Greg

PS- we should be prepared for the sales pitch - “if you want access to the Starwood properties, you need to use Trust Points”. Irrespective of whether it’s true, I expect to hear it.

The salespeople at both Westin and Marriott have been inferring for that last couple years that Marriott and Starwood have merged. Unless you call them on it, they will let you believe they were talking about timeshares. It will be interesting to hear the spin they put on this, long before anything is finalized.

 

[Quilter]

Yes, lets speculate for the fun of it and to predict the future of timeshares.

I believe we can all agree on the mission statement of the new Marriott Corporation: Maximize Revenue Growth. Every other consideration is immaterial in a capitalistic environment.

. . .

So, I expect that we will see some legacy buyers happy with the merger and some unhappy. All will pay more and, to be fair, offered more as a result of the merger.

From the very first post:

Compelling Strategic and Financial Benefits

. . .

• Diversifies revenues and expands margins with significant contribution from recurring and fee-based revenue streams: The Company will benefit from premier exchange networks, which provide incremental, high-margin, recurring, fee-based revenue streams. ILG's Interval International, Vistana Signature Network, Hyatt Residence Club and Trading Places International exchange networks will comprise nearly two million members and over 3,200 resorts.

 

[suzannesimon]

If you have any interest in Cancun, the Westin Lagunamar is outstanding. We also spent time at the JW Marriott in Cancun (including Club 91 access) and while we do enjoy the JW Marriott property, and it has some nice features, overall we think WLR is better. In my opinion WLR is one of the best planned and best laid out properties anywhere.

I have a week at Westin Lagunamar and it is my favorite timeshare. Some of the other Vistana properties - Harborside and Kierland Villas, possibly others, have 2 full 1-bedroom lockoffs which are better than the studio-1 bedroom layout. One downside though is that Vistana doesn't have ovens which I wish they did so I could make a turkey at Thanksgiving.

 

[controller1]

One downside though is that Vistana doesn't have ovens which I wish they did so I could make a turkey at Thanksgiving.

Perhaps the units you discussed but your statement, as a blanket statement, is incorrect. Westin Ka’anapali has ovens while Westin Ka’anapali North does not. The newest resort, Westin Nanea, has ovens. Also, it is my understanding that in the next update to the North property ovens will be installed as that has been a major owner complaint.

 

[Quilter]

Well here's my first reaction. . .Make friends.

Hello to all my Vistana and Hyatt friends. Want to come over for a cuppa?

If getting into these new options means buying points I'm planning to stay with the MVC properties that are near and dear to my heart.

The sales department's mission is to make you think you NEED to buy. At this stage I'm not feeling compelled to buy anything and I'm confident I'll be able to vacation just fine without doing so.

 

[controller1]

Well here's my first reaction. . .Make friends.

Hello to all my Vistana and Hyatt friends. Want to come over for a cuppa?

If getting into these new options means buying points I'm planning to stay with the MVC properties that are near and dear to my heart.

The sales department's mission is to make you think you NEED to buy. At this stage I'm not feeling compelled to buy anything and I'm confident I'll be able to vacation just fine without doing so.

I agree! I bought Vistana because they have the resorts in the locations I desired. At the time of each purchase, I was fully aware I would not have access to other developers’ properties. I can’t imagine spending any significant amount of money to now facilitate that.

 

[Superchief]

Superchief, you may be right. Will you be selling your interests now? Just curious. Cheers.

I recently retired and had planned to start using most of my weeks and points (all MVC) to travel more now that I have time. Therefore I don't currently plan to sell my interests in the short term. However, I'm more concerned that reasons that I had acquired my MVC portfolio will diminish as program changes are made by this new monopoly. Similar to Marriott Hotels, the value of my 'points' will likely decline substantially over the next several years and I will not be able to afford to keep my portfolio to enjoy travel now that I have the time to do it.

My current plan is to make the most of my travel opportunities over the next 3 year with the expectation that MVC timeshare experiences will diminish in the future. I plan to use most of my MR Points for the same reason.

 

[Old Hickory]

My wife texted me to ask how this will impact us...I texted back... about 50 new properties to check out.

You guys (TUGGer's) figure out how to best use our new system and properties. And I'll wait for your instructions.

Cheers!

 

[iqmavin]

So many unknowns at this time regarding the acquisition of ILG. We own in both worlds and love the quality of the Vistana properties (I don’t care what they call it the quality of the units are better than some Marriotts. We love Kierland, Palm Desert and Kanapali. We’ve got some decissions to make regardless of the acquisition.

Just completed one of the least stressful presentations at Marriott in Marbella. Our sales Associate, Clifford, was pleasant straight forward and made us what we felt was one of the best offers we’ve ever scene by a developer. As urgent Marriott owners we we offered the following:
1) Membership in Destination Club at the executive level. (We opted not to join when the program was first implemented) Our current property has a value of 4950 points.
2) Two bedroom property here in silver week with a value of 2225 points.
3) maintenance fee was about $1300/year.
4) Regular price: $21990: $09.9/point; current owner discount price: $14235: 06.4/point;Special promotional price: $12,200: 05.5/point.
5) 10% down due within 15 days.
6) One year financing at 5%

This seems like a very good deal. I’m not sure I can buy after market points at that price point.

Anyone have any insights into what after market points sell for?

What’s the real value of Executive membership?

Also wondering if it’s a good idea to switch to destination club now whether we purchase or not?

We also own two weeks in VST, Palm Desert (53,600) and St John (196,000). So we are points rich in that regard.

Any thoughts appreciated.

 

[iqmavin]

Oops I had decimal point in wrong spot on points cost.....should be dollars not cents.

 

[Pathways]

Just completed one of the least stressful presentations at Marriott in Marbella. Our sales Associate, Clifford, was pleasant straight forward and made us what we felt was one of the best offers we’ve ever scene by a developer. As urgent Marriott owners we we offered the following:
1) Membership in Destination Club at the executive level. (We opted not to join when the program was first implemented) Our current property has a value of 4950 points.
2) Two bedroom property here in silver week with a value of 2225 points.
3) maintenance fee was about $1300/year.
4) Regular price: $21990: $09.9/point; current owner discount price: $14235: 06.4/point;Special promotional price: $12,200: 05.5/point.
5) 10% down due within 15 days.
6) One year financing at 5%

I take it the property you are bringing in to DC is pre 2010? (plus the Marbella silver)