Marriott to spin off timeshare division

[chalee94]

Marriott International Inc. is spinning off its timeshare business, a one-time booming profit generator for hotel companies that petered out during the recession.

might be a bellwether for DVC owners. keep an eye on how things go with this... if DVC turns into a drag on the disney corp., we could certainly be next...

 

[Chuck S]

Since the current Marriott stockholders will receive shares, one has to wonder why the division is being separated. It sounds almost as if the economy has hit Marriott pretty hard, and they may be considering taking the timeshare development arm into bankruptcy at some point in the future if things don't improve.

It would be more like DVD being spun off from Disney. This would enable DVD to go into bankruptcy seperately from Disney, but I don't think DVD is currently in an awful financial postition. Marriott has lots of unsold properties, and while DVD also has not fully sold AKV, BLT or Aulani, the WDW properties should generate enough income from cash rentals to offset potential problems...unless there is a sudden, huge rash of individual owners suddenly defaulting where DVD needs to repo those previously sold ownerships. Given DVC still has an active resale market most owners in a financial bind would be better off sellng on the resale market, rather than allowing DVD to repo.

 

[ChiSoxKeith]

Whew. $1.5 billion in unsold assets. Sounds like Marriott built out too far too fast.

 

[lugnut33]

It will all come around full circle when Marriott buys DVC.

 

[LIFERBABE]

My good friend owns starwood and just traded into the Hilton in Cabo. Hilton has been buying out owners and reclaiming the timeshare units for hotel use. No new sales. So, Marriott is not the only one.

I believe it is in all our best interest for DVC sales to remain strong.

 

[RescueRanger]

My good friend owns starwood and just traded into the Hilton in Cabo. Hilton has been buying out owners and reclaiming the timeshare units for hotel use. No new sales. So, Marriott is not the only one.

I believe it is in all our best interest for DVC sales to remain strong.

I totally agree. In fact, I have had made the same argument in some of the other "EVIL DISNEY EMPIRE has devalued my DVC" threads. Once again, what do they think their DVC membership would be worth if DVC sold their operations to another timeshare company?

 

[lugnut33]

You don't think somebody like Marriott would love to purchase the DVC properties at WDW and turn them into Hotels some day?

I can hear it now, "Hello, welcome to the Disney Marriott Beach Club Villas, how may I help you?"

 

[littlestar]

The Marriott family will maintain a 21 percent ownership in both companies.

 

[Sammie]

Since the current Marriott stockholders will receive shares, one has to wonder why the division is being separated. It sounds almost as if the economy has hit Marriott pretty hard, and they may be considering taking the timeshare development arm into bankruptcy at some point in the future if things don't improve.

It would be more like DVD being spun off from Disney. This would enable DVD to go into bankruptcy seperately from Disney, but I don't think DVD is currently in an awful financial postition. Marriott has lots of unsold properties, and while DVD also has not fully sold AKV, BLT or Aulani, the WDW properties should generate enough income from cash rentals to offset potential problems...unless there is a sudden, huge rash of individual owners suddenly defaulting where DVD needs to repo those previously sold ownerships. Given DVC still has an active resale market most owners in a financial bind would be better off sellng on the resale market, rather than allowing DVD to repo.

First off, before I get misunderstood, I am not against renting, as I know it is part of our contractual rights, however, doesn't renting prohibit sales and decrease income generated from cash rentals by Disney.

As long as guests can get DVC villas by renting from members for much less than paying cash from DRC, and as long as guests can rent for less than owning, doesn't large scale renting hurt DVC in the long run?

 

[Chuck S]

First off, before I get misunderstood, I am not against renting, as I know it is part of our contractual rights, however, doesn't renting prohibit sales and decrease income generated from cash rentals by Disney.

As long as guests can get DVC villas by renting from members for much less than paying cash from DRC, and as long as guests can rent for less than owning, doesn't large scale renting hurt DVC in the long run?

It depends upon what you call "large scale." As you noted, renting is part of our contractual rights, and I'm not sure Disney can forbid it under FL timeshare law.

In prior years, renters were often the source of new purchases...in fact, I had extra points and gave a 2 bedroom stay at OKW to friends last year, and they are now looking into buying.

Given the current economy, it is likely true that DVC Owners renting their pionts had put a dent into the cash income rental for Disney...but I'd also consider that many of those looking for bargain rentals from owners would never pay Disney prices for renting a DVC room, many would stay in the Disney value resorts, which don't seem to be hurting for guests.

So I guess it depends upon the scale of renting. 10% to 15% of the the DVC reservations were rented from owners, probably not a lot of impact. If 40%+ were rental reservations, it probably would not be too good for Disney because it would siphon customers from Disney cash rooms.

 

[Chuck S]

You don't think somebody like Marriott would love to purchase the DVC properties at WDW and turn them into Hotels some day?

I can hear it now, "Hello, welcome to the Disney Marriott Beach Club Villas, how may I help you?"

Even if Marriott took over management of DVC, the properties would still revert to Disney when the timeshare leases end. Now, if Marriott were to secure a management contract for all Disney onsite hotels, when the timeshare contracts expire, the DVC properties would likely be rolled into that management agreement. The question is, in the current economy, would Marriott or any other management company, have sufficient funds to pay the royalties for the name and location that Disney would require? I would guess...probably not, unless Disney also was in very desperate need of funds.

 

[LIFERBABE]

From reading the articles, Marriott is not interested in timeshares and stockholders want them to focus on the hotel operations, so if DVC were sold it would probably be to a timeshare focused company, which would not be good imo. Marriott would be stellar in comparison, if that dreaded day would ever come.

And I agree, that DVD is losing money to rentals, but it is in our deeds to rent, so they have turned their focus to perks/benefits not in our deeds. I definitely believe that resales will lose alot more perks until DVD accomplishes their profit targets.

Look at Celebration, 1 day the water tower said Disney, the next day they took their name off the tower, kept their low-cost, long term lease space and abandoned ship.

 

[chalee94]

The Marriott family will maintain a 21 percent ownership in both companies.

just a clarification: i think every current owner of marriott corp will own the same percentage of the new MVCI when it is spun off. the thing to watch is whether the marriotts start looking for the door after the spin off date.

one theory is that the MVCI spinoff will have some value while marriott corp will climb higher without the real estate holdings of the timeshare group putting a drag on earnings...so the value of the 2 stocks will be higher than the value of the current combined entity. it could work out well. the marriott timeshares i have stayed at were top notch and those employees are likely staying in place.

the other theory is that the lower credit rating of MVCI (after it is detached from the marriott parent company) will increase costs and hurt the timeshare side by increasing fees further...causing more defaults. to maintain the long term viability of timeshares, the management groups need to keep maintenance costs below rental values...hope they keep their eye on the ball...