Marriott 2022 annual report: Should timeshare owners be concerned?

Marriott Vacations Worldwide have released their 2022 annual report. ECC's analysis team distils four key takeaways for owners to consider.

144 page report

The Marriott Vacations Worldwide (MVW) annual report for 2022 is a lengthy document.

Granted, a company with an annual revenue of $4.633 billion dollars, an owner base of 700,000 families and 120 branded resorts (with a further 3200 affiliate resorts) needs to go into a lot of detail. But at 144 pages long and with much of the content in list form or verbose legalese, it is a challenging missive to wade through. It would be easy for the casual reader to miss important details buried in the volume of text.

ECC's experts have drilled down to the following four key aspects for owners to prioritise focus on.

Litigation and compensation payments

MVW have paid out a staggering $9 million dollars in compensation in 2022, and this may only be the start. The report notes that "During 2022 and 2021, the litigation charges relate primarily to our business in Europe".

The report goes on to explain that: "A series of Spanish court rulings that, since 2015, have voided certain timeshare contracts has increased our exposure to litigation that may materially adversely affect our business and financial condition. These rulings voided certain timeshare contracts entered into after January 1999 related to certain resorts in Spain if a resort’s timeshare structure did not meet requirements prescribed by Spanish timeshare laws enacted in 1998."

Marriott appears to be acknowledging that they have been issuing illegal membership contracts for many years, and they are bracing themselves for the potential consequences. Those consequences could include courts continuing to financially compensate people with said illegal contracts. The compensation may escalate to such a degree, the report confirms, that it could possibly even affect the ability of MVW (as well as other timeshare companies) to conduct business in Spain in the future.

The report acknowledges that: "the increased ability for owners of Spanish timeshares to void their contracts has negatively impacted other developers with resorts in Spain."

The positive aspect to all this is that MVW, unlike less reputable companies, does appear to be 'stepping up' and facing their responsibilities towards clients with illegal contracts. Indeed they have already established the beginnings of a track record in settling outstanding judgments in a timely manner.

MVW is an entirely separate company from Marriott the hotel chain

Many Marriott Vacations Worldwide owners joined because of the credibility of the Marriott brands. However, this report makes clear that the names of Marriott International and Hyatt are only used as part of licensing agreements.

If these agreements are breached, then "the applicable licensor may be entitled to terminate the license agreement and our rights to use its brands in connection with our businesses. In addition, if any of our properties does not meet applicable brand standards, the applicable licensor can terminate our right to use its trademarks at the subject properties."

MVW timeshare owners could, in that event (or several other named scenarios), find that their home resorts were no longer associated with these famous brands. The credibility of these brand associations, they could argue, justified a good chunk of the price they paid to join. Many people may not have joined at all without the strength of the Marriott and Hyatt brands underpinning their memberships.

The report lists this possibility as a risk to the MVW vacation ownership business.

Availability concerns?

"Our points-based product forms expose us to an increased risk of temporary inventory depletion" is listed as another potential problem under the section entitled 'Risks.'

This concern will come as no surprise to points-based timeshare owners in general, for whom availability is regularly cited as an issue with their product.

The report refers to the fact that MVW relies on third party providers for accommodation. If they fail to provide this accommodation for any reason then it represents a threat to MVW points system inventory availability.

This can in turn (the report admits) affect the ability of MVW as a whole to operate as a business.

Exclusivity and rental

The report mentions the fact that $509 million of its total revenue is generated by renting unsold/unused inventory. This is concerning for 2 reasons.

Firstly, if people can rent these properties without paying to become members, then what would be the advantage to the expensive commitment of joining MWV?

Secondly, does this then suggest that availability can never improve for owners, because the unsold portion of the inventory is always reserved for rental?

If so, then any owner wanting a particular week designated as rental would be unable to book it, even if it was not currently reserved by anyone else.

They would only be able to choose from the specific weeks predesignated as available to points owners.

"If this is indeed the case, you could potentially have a situation whereby an owner is told that their preferred week is not available," confirms Andrew Cooper, CEO of European Consumer Claims (ECC), "and yet they would be able to book it by paying extra via the rental program."

More information?

If you would like to discuss the Marriott Vacations Worldwide report in more detail, or have concerns about a membership with any other timeshare company, get in touch with our team at ECC.