Marriott To Spin Off Its Timeshare Division February 17, 2011
Posted by John Stephens in : Marriott Timeshares, News & Events, Ritz Carlton , trackbackBy now, you’ve probably heard about Marriott International’s plan to spin off its timeshare division, Marriott Vacation Club, into a separate business. If you pay any attention to industry news on the internet, it has been impossible to miss the subject and it blew up all over Twitter earlier in the week.
Ah, social media strikes again, although not quite with the flair of an Egyptian revolution.
Initial reports have been favorable of the move, with Marriott International’s share price up about 5% at the close of trading on the New York Stock Exchange following the announcement.
Under the new scenario, Marriott International will become more of a hotel management and franchise business, looking to get away from the type of capital-intensive business structure that timeshare presents. The new Marriott timeshare business will continue to operate under the Marriott and Ritz Carlton brands, presumably continuing the MVC brand for timeshare and fractionals to proceed under the Ritz Carlton name.
“Marriott Vacation Club owners and guests and The Ritz-Carlton Destination Club members should see no change in the branding or quality of their properties, services, usage options, use of Marriott Rewards points, or access to Marriott International’s hotels,” said Marriott International chairman and chief executive officer, J.W. Marriott, Jr. “The companies will continue to work together to provide outstanding vacation experiences, similar to the relationship between Marriott International and the franchisees of its hotel properties. After the split, both companies will remain dedicated to the highest standards of quality and value and the brand promise for which Marriott and Ritz-Carlton are well known and widely respected.”
In 2010, Marriott said its timeshare segment reported revenue of around $1.5 billion. At the end of last year, it operated 71 timeshare and fractional resorts with more than 400,000 owners and some 10,000 employees.
It also held $1.5 billion in unsold inventory, which brings me to the question that no one seems to have asked yet, although it is still early.
How does this affect the resale market?
This, obviously, is the question that is nearest and dearest to our hearts, especially following the release of our Buyer’s Choice Top 20 List earlier this week which revealed that 11 of the top 20 timeshare resorts most requested from buyers were Marriott timeshare resorts.
Some estimates have as many as 60,000 unsold Marriott weeks currently on the market and speculation has begun about how a stand-alone company can afford to support this kind of available inventory.
More to the point – will the company provide an exit strategy for owners, would resale companies be involved and what would such an option look like? The Marriott buy-back program has been unreliable at best in recent years, not that Marriott would want to promote such a program themselves.
For now, all we can do is wait and see if Marriott makes any changes to deal with low new sales volume and the thousands of resale transactions that take place with Marriott timeshare every year.
Fortunately, there are a number of Marriott timeshare weeks on our website at BuyaTimeshare.com and you can check them out by clicking here.
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