I just got an e-mail that Marriott Vacation Club is buying ILG, who owns the Vistana, Sheraton, Westin, and Hyatt timeshare networks, Interval International, and several other travel companies. What does this mean for me and other timeshare owners within these companies?
Great question, with answers to come over the next six to 12 months. RedWeek interviewed Marriott and other industry execs to address this question and analyze the impact of the ILG acquisition. Here are our findings, and they go way beyond just Marriott, Westin, Sheraton, Hyatt, and Interval.
Consolidation Changing Timeshare Landscape and Options for Owners
Background: The timeshare industry has been in a very major flux since 2008, when the US recession forced companies to cut back on spending. Financing dried up for building new resorts; thousands if not millions of travelers stayed home; timeshare sales stagnated (along with all other travel-related spending). Meanwhile, Internet companies invaded the travel market while online travel agencies (Expedia, TripAdvisor, etc.) started providing instant, or near instant, online reservations for hotels, timeshares, travel packages, and vacation homes.
The travel world changed, forevermore, and it is still changing as a result of the economic pullback of 2008. One obvious sign: big companies with profitable resorts and sound business infrastructure bought smaller resort chains; mid-level timeshare chains with financial issues sold themselves to the highest bidder; legacy resorts started failing as older owners dropped out, strapped by increasing delinquencies that the resorts could not overcome.
What remains, to this day, is the continued escalation of consolidation. Big outfits are getting richer, while smaller resorts struggle to adapt to the changing economic environment. It's the Pac-Man theory of Darwin's "survival of the fittest" law as applied to timeshare.
Where the Marriott Acquisition of ILG Fits Into This
With more than 400,000 timeshare owners and a very reliable brand reputation, Marriott Vacation Club was already one of the world's leading timeshare companies, second only to Wyndham Worldwide in the number of owners. The $4.7 billion acquisition of ILG's shares, due to close by the end of the year, adds 250,000 more owners to the Marriott network as it assimilates the owners, assets, and 40 resorts held by the Westin, Sheraton, and Hyatt timeshare chains, Interval's vast exchange network, the VRI management company, the Aston hotel chain (primarily in Hawaii), and other companies. The implications for owners are huge, but still to be determined since nothing will be announced until after the acquisition is finalized. But at the very least, current Marriott owners can expect greater access to the Westin, Sheraton, and Hyatt resorts. Owners at those clubs, meanwhile, can anticipate greater and easier access to all of MVC's resorts and travel packages.
"When we combine with ILG, we will have seven upper-upscale and luxury brands with over 100 vacation ownership properties around the world," said MVC CEO Steve Weisz during a recent quarterly conference call with Wall Street analysts. "Together, we will have access to 100 million members in the Marriott Rewards, Starwood Preferred Guest, and Ritz-Carlton Rewards loyalty program for our six Marriott vacation ownership brands and access to almost 10 million members in the World of Hyatt loyalty program to fuel the growth of the Hyatt Vacation Ownership business."
Those are big numbers by any stretch of the imagination and they may catapult Marriott Vacation Club into the #1 position in vacation ownership (next to Wyndham). As Wyndham owners may already know, Wyndham Worldwide is spinning off its hotel and timeshare divisions into two separate public companies, with closing due by the end of June. The new Wyndham timeshare company, called Wyndham Destinations, will become a joint alliance with RCI, the world's largest exchange company, and include all of Wyndham's resort management services.
And Then There Were Two...
When the dust settles on these major business moves, Wyndham and Marriott appear set to dominate the US timeshare landscape while other companies, including Disney, Diamond, Bluegreen, and others pursue their own expansion plans. Private equity company Apollo Global Management, meanwhile, is already pursuing plans to take Diamond Resorts public after buying the company for $2.2 billion two years ago. So, at the least, more changes are afoot in the industry.
For the short term, Marriott's purchase of ILG should have no impact on Marriott owners or members of the affected ILG clubs, Marriott officials said.
"Until we have a chance to consolidate the programs, nothing will change," said Ed Kinney, MVC's vice president of communications. "I have had calls from owners of both clubs (Marriott and Vistana) who want to know if their cruises or vacations are impacted. Nothing is going to interrupt owners' vacations."
During the next six months, Kinney added, Marriott will be reviewing the best way to integrate the companies to ensure a smooth transition for a future program that, he said, "provides the best services, infrastructure, and products" for owners, employees, and shareholders.
For all concerned, the acquisition is being portrayed as a "win-win" for the companies and their customers. But as timeshare owner forums will attest, speculation among owners is already rampant with questions about what might lie ahead — including the impacts on maintenance fees, sales programs, and travel options.
One change seems clear — and it is based upon the very recent history of the Marriott hotel chain's year-ago purchase of the Starwood hotel network and rewards program. It has taken Marriott a full year to resolve the transition issues and announce a new integrated program. It goes into effect August 1. Timeshare owners should expect a similar measured rollout and implementation of MVC's new timeshare program. In the meantime, we will keep RedWeek readers posted on all major developments that impact their use and enjoyment of timeshares.
What do you think about this latest merger? Tell us in the comments below.
