Marriott Timeshare Commentary + Q&A



Steve Weisz:  President Marriott Vacation Club International

  • Marriott has 53 timeshare properties
    • Hilton is the second largest competitor with 38 properties, HOT has 24
  • Have 88.5% owner satisfaction this year
  • 2009 contract sales ($543MM):
    • 45% from existing owners
    • Higher than normal driven by steep discounts to incent sales
    • 21% from owner referrals
    • 34% from new customers
      • Normally closer to 50%
  • Have 350,000 timeshare owners
  • What’s the incremental benefit of the new point program?
    • Can check in on day of the week for any amount of time at any resort at any size unit
    • Can use points towards the “explorer collection” – adventure travel (safaris/ cruises)
    • Can use points towards the “world collection” – international travel
  • Benefits to MAR:
    • Will have just in time inventory development
    • Will only sell completed inventory and therefore less deferred revenues
    • Lower unsold maintenance fees
    • Less capex spend
  • 29,000 owners have enrolled 58,000 weeks over the last 4 months
    • Enrolling highly demanded weeks (52% platinum, 26% gold)
    • 51% of owners who tour have converted
    • Purchased $13,600 of points on average
  • Projecting $995MM of contract sales by 2013 (12% CAGR)
    • $192-202MM timeshare segment results
      • $55-60MM of base management fees
      • $255-265MM of timeshare sales and services revenue, net
      • $76-79MM of G&A
      • $42-44MM of interest expense
  • In 2011, they may sell some bulk land that was previously earmarked for fractional and residential
  • Roughly 42% of purchasers used financing in 2010, expect 45% financing through 2013
  • Cumulative Timeshare EBITDA from 2011-2013: $655-690MM
    • Development profit: $330-350MM
    • Financing profit: $265-275MM
    • Services profit: $60-65MM
    • G&A: $220-230MM
    • Timeshare segment results: $435-460MM
    • D&A: $85-90MM
    • Interest expense: $135-140 MM
  • FCF of $625-675MM:
    • EBITDA +
    • Inventory: $85-105MM
    • Less financing activity: $150-160MM
    • Other: $35-40MM
  • Have $1.5BN of timeshare inventory projected at YE 2010 and expect $1.26 BN of inventory by 2013


  • They aren’t many qualified franchisers in China – so they will continue to manage the Courtyard. In India, they will also mostly go managed but would consider franchising with the right owners.
  • Bulk fractional inventory sales in 2011? What’s currently on the books?
    • Ritz’s inventory is about $300MM
  • Target of mid teens return over time – but aren’t there yet
  • Believe that the synergy btw timeshare and hotel business is that timeshare owners are better MAR customers and a lot of their timeshare resorts are co-located
  • Sales and marketing costs as a % of sales has gotten a lot higher over the last few years for timeshare – i.e. lower closing rates (around 10%) and under the new program, it's 14% but albeit at a lower dollar amount since people can buy in smaller intervals
  • Have 35 development people internationally, will ramp that up fairly significantly over the next few years
  • Economics of AC deal - no comment (no real estate ownership- will be a JV company that will manage and franchise hotels)

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more