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Re: Marriott Going to Point Syst (by Erman C.):

FYI. Here's one of the better articles on the spin off.

Sounds like Marriott International, their hotel business, was being pressured to return to their core business so it could achieve greater value and a stronger ability to borrow for expansion and growth. The spin off company will be a timeshare development focused company under the brand names Marriott and Ritz-Carlton only. Since Marriott International is THE world expert in hotel/resort management I suspect they will continue to provide this service (paid for by maintenace fees) for all their existing timeshare properties. The practical difference is now the timeshare development and sales activities will have to stand on it's own. This will mean growth and expansion opportunity will be directly linked to sales performance and as we all know as of 20 Jun 2010 that will depend on the new Destination Points system.

One note is Marriott International has done this type of thing before when they decided to focus on their hotel/resort management side there-by fanchising/transferring ownership of most of their existing hotel/resort properties to investor groups but retaining full operations and management.

Marriott International will still develop new hotel/resort properties, but now without the burden of the slower timeshare side. The new timeshare spin off will have to fund it's own development efforts based on it's own performance and credit worthiness.

BTW it should be noted as deeded owners we are the investor group(s) that own all the existing Marriott Timeshare properties and pay Marriott International to service and manage our properties. As owners we should become more active in how our board of directors (for each property) represents our interests. We should be advocating/demanding priority, transparency and ease of exchange for Marriott owners (internal exchange). Then promoting full occupancy of Marriott properties via outside exchange and rentals to control growth of maintenance fees.

One suggestion I would make is since Interval International and RCI are easily pressured by timeshare developers, we as owners need to band together and make our own demands on how we want them to manage our units/properties. If they don't or can't respond then, it might be time to use Redweek/DAE or another start-up that we control to keep it in the "Marriott Timeshare Deeded Owners" family first. Remember the days of internal exchange for $39 or $49?

Marriott timeshares are and will continue to be the best brand in resorts by far (all Marriotts are Premier/five-star). We as owners have been blended with all other brands (most not so good) as the exchange process has been moved to subcontractors II and RCI vs Marriott. Our exclusivity has been watered down to the point we spend too much time competing with non-Marriott owners for exchanges. With our own Marriott controlled exchange system (or subsystem) we could do Marriott internal exchanges for a longer period (perhaps 90 days) before depositing in II/RCI and allowing non-Marriott owners access to our inventory.

Just some early morning thoughts. I'd welcome other ideas, but for now it's time for a cup of coffee.

Erman

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Marriott Shares Climb After Timeshare Spinoff Planned February 15, 2011, 4:39 PM EST By Nadja Brandt

(Updates with closing share price in second paragraph.)

Feb. 15 (Bloomberg) -- Marriott International Inc., owner of the JW Marriott and Ritz-Carlton brands, rose in New York trading after saying it would spin off its timeshare operations.

The company’s shares climbed 1.1 percent to $41.46 at 4:15 p.m. in New York Stock Exchange composite trading. They earlier rose to $42.78, the highest intraday price since October 2007. The stock has gained 54 percent in the past year.

The spinoff will allow investors to choose between Marriott’s hotel management and property development businesses. It will likely give the hotel company a higher valuation after separating from the slower-growth timeshare business, according to Joseph Greff, an analyst at JPMorgan Chase & Co.

“Marriott’s lodging fee business needs little capital investment, while timeshare needs some level of investment, so this spin could be accretive to free cash flow,” Greff wrote in a research note yesterday. “Our initial take on the spinoff is that this is likely going to be well received by investors.”

The company has pursued an asset-light strategy, divesting most of its hotel real estate and concentrating on operating properties rather than building and owning them. The timeshare business, hurt by a slump in demand during the recession, is focused more on development, said Patrick Scholes, a New York- based analyst with FBR Capital Markets.

‘Investor Pressure’

“There has been investor pressure for many years to sell that business,” he said. “If you want to grow the timeshare business, you have to invest heavily in real estate and development and build things from the ground up. Marriott shareholders aren’t keen on that.”

Stock in the timeshare business, which had revenue of about $1.5 billion last year, will be distributed to Marriott shareholders as a tax-free dividend by the end of this year, the Bethesda, Maryland-based company said yesterday in a statement. The spinoff is likely to trade on the New York Stock Exchange, Marriott said.

The timeshare business, which Marriott started in 1984, has been slow to recover from a decline in consumer spending. In the fourth quarter, Marriott’s timeshare sales fell to $201 million from $203 million a year earlier.

“This had nothing to do with how the timeshare business has been impacted,” Arne Sorenson, Marriott’s president and chief operating officer, said of the planned spinoff in a telephone interview. “It obviously has been impacted by the downturn. Compared to the recession earlier this decade, it was hit harder this time. It’s more about that investors prefer one or the other.”

Separate Boards

Marriott and the new company will have separate boards. J.W. Marriott Jr. will remain chairman and CEO of Marriott International. Stephen Weisz, president of the timeshare business, will become CEO of the new company. William Shaw, who recently announced his retirement as Marriott’s vice chairman, will become chairman of the timeshare company.

After the special dividend, the Marriott family probably will hold about 21 percent of the common stock of each company. The new company is unlikely to pay a quarterly cash dividend or be investment grade “in the near term,” Marriott said.

The timeshare unit accounts for about 13 percent of Marriott’s total revenue. Marriott will continue to receive franchise fees from the timeshare company’s use of the Marriott and Ritz-Carlton brands, the hotelier said.

“The timeshare business is a very capital intensive real estate business,” Scholes said. “The rest is a global management and franchise business with minimal capital expenditures and minimal ownership.”

Marriott yesterday also reported fourth-quarter earnings that beat analysts’ estimates. Net income climbed to $173 million, or 46 cents a share, from $106 million, or 28 cents, a year earlier, the company said. Adjusted earnings, which exclude an $84 million impairment for revenue-management software and other costs, totaled 39 cents a share, more than the 37-cent average estimate in a Bloomberg survey of five analysts.

Revenue climbed to $3.64 billion in the fourth quarter from $3.38 billion a year earlier.

--Editors: Daniel Taub, Christine Maurus