Ask RedWeek / February, 2015

Marriott timeshares - are points or weeks better?

I've met a lot of Marriott owners who really like their timeshares, so I am very interested in buying on the secondary market. But, I've also heard and read lots of complaints about the Destinations points program. What are the pros and cons of buying a legacy week from Marriott compared to buying into the points program?

If you're thinking about buying a Marriott Vacation Club legacy week timeshare or Destination Club points on the secondary market, there are several ways to do it, with varying benefits. If you haven't yet, check out our Marriott Vacation Club Buyer's Guide - which will give you an overview of the program and how to go about purchasing.

First, you must decide whether to purchase a legacy week or Destinations Club points. The differences in benefits and costs are very big. When you buy a legacy week, you buy the right to use that week or exchange it through Interval International. When you buy into the Destinations Points program, you buy access to all of the Marriott Vacation Club resorts in their internal network of 60-plus vacation destinations.

Buying a Legacy Week

  1. You can offer to buy a legacy week from an owner on RedWeek.com. Find the Marriott resort you're most interested in, and choose a week that will actually work for your travel plans. If the seller isn't already using a broker, there will be a bundle of paperwork for you both that must be submitted to Marriott for approval before the sale can proceed. RedWeek.com offers a full-service program to handle all of the paperwork, but the seller had to list that way initially.
  2. Work with one of many licensed timeshare real estate brokers who handle timeshares, paying an average commission of $1,500 or 15 percent of the selling price in commissions (usually paid by seller). The broker will find a seller and handle all of the paperwork. With options 1 and 2, you will also have to wait approximately 30 days after submitting the completed purchase contract to Marriott. During that time, Marriott will decide whether to approve the purchase, or buy-back the timeshare at the same price by exercising its Right of First Refusal (ROFR) on any timeshare resale. Marriott tends to buy back high-value, high-season, great-location timeshares, but there is no guarantee the company will want to buy the timeshare you're trying to purchase.
  3. Buy directly through Marriott's resale office, which lists timeshares for resale by owners, then charges 40 percent in commission to handle the transaction. The seller typically pays the commission, but keep in mind the high commission will likely be reflected in Marriott's price.

If all goes well, you'll be able to buy a Marriott legacy week at a huge bargain price compared to what the original owners paid. And you'll pay a modest $120 fee to Marriott for processing the ownership-changes paperwork (with #3, the $120 is included in the 40 percent sales commission). Once the purchase is complete, you'll have all the rights to use your week, just like the original owner. But, keep in mind, you won't be enrolled in the Destinations Points program, and can't convert your week to Marriott Reward points either (their rewards program for hotel stays, etc.). You should also be aware that you can't bank or borrow your newly bought week — you've got to use it, lose it, or exchange it through Interval International. With legacy weeks, it is best to buy a resort and week you actually want to use.

Buying Marriott Destination Club Points

The rules are very different for prospective buyers of Marriott Vacation Club Destinations points on the secondary market. The points program, which supplanted the legacy weeks program in 2010, is new enough that Marriott doesn't even have a formal buy-back program in place, yet, for owners who want to sell their points. Marriott recently adopted new policies, moreover, that make points-purchases much more expensive and, in effect, discourage points-purchases on the resale market.

Here are things to consider when buying Marriott Destinations Points on the secondary market.

RedWeek members have Destinations points offerings typically starting around $3/point. These are the same points Marriott sells at retail prices at resort presentations for more than $12.24 a point, and the prices creep up every quarter. With major first-day-only incentives, the price of buying points packages can dip to $9 a point. But as all timeshare owners know, the retail pricing scheme is much higher than anything one might find on the secondary market.

Marriott recently launched a resale department that specializes in bundling legacy weeks with points for prospective buyers who want to get into the Destination Club points program. Even with discounts and incentives thrown into the package, these deals are still expensive for the typical timeshare buyer.

Here are two recent examples of bundled combination packages offered by Marriott:

  1. Barony Beach Club, Hilton Head, South Carolina: buy a legacy Gold week and 3,500 Destination Club points. This translates into 6,725 annual points that can be used to reserve villas, per night or week, at any MVC resort. Marriott says the "normal (retail) price" for this combination is $82,314 ($12.24 per point). The bundled price is $47,100 ($7 per point), and includes an incentive of 275,000 Marriott Reward Points (good for hotel stays) or 4,000 additional club points. The annual maintenance fee is $2,815 plus annual Destination Club dues of $215 (this allows you to enroll the gold week into the points program so you can use the gold week's 3,225 points at other MVC resorts).
  2. Newport Coast Villas, Southern California: buy a legacy Platinum week (worth 3,475 Club points) and 3,500 Club points for a bundled price of $47,800 ($6.85 per point). "Normal" Marriott price is $85,374 ($12.24 per point). Maintenance fee is $2,518. Incentives include 20 percent off Club points and waiver of the $2,395 fee to enroll the Newport Coast week into the points program.

Buyers who opt to purchase points on the secondary market will still pay a bundle, financially speaking, to Marriott, for the price of entry to the Destination Club. No matter what you pay for points on the secondary market, Marriott will require buyers to pay the following fees to enroll their points into the Destination Club program:

  1. A $300 "education fee" for new buyers — supposed to be waived for existing Marriott members of the club, but we have some conflicting info about whether that is the case in practice. Please note: Marriott does not provide the education. Buyers pay this fee so they can educate themselves about the program online.
  2. A $3,000 minimum "initiation fee" to gain access to Marriott's internal exchange network. This fee is based on the following math: Marriott charges $500 for each "beneficial interest" in the points program; every beneficial interest is 250 Club points. Since Marriott's minimum points-purchase is 1,500 points, the initiation fee for buying points on the secondary market is a minimum of $500 X 6 beneficial interests, which equals $3,000. Buy more points on the secondary market, and the fee jumps by $500 per 250 Destination points. That amounts to $2 per point for initiation into the club.

The curious point about this fee is that the initiation cost used to be 80 cents per point. In July, with no public announcement and no notice to owners, MVC unilaterally hiked the resale fee to $2 per point. That hikes a purchase of, say, 3,500 points (the average selling package, according to Marriott) from $2,800 to $7,000 — just in fees paid to Marriott for the privilege of joining the club.

RedWeek.com interviewed several Marriott executives about this arbitrary fee hike. They said the increase was imposed to "build shareholder value" for Marriott stockholders and maintain "price integrity" for Marriott owners. They acknowledged that the new fee might discourage resales of Club points on the secondary market — while pushing the overall cost of buying on the secondary market closer to Marriott's retail pricing schedule.

"We think we're doing ourselves and our owners [a favor] by maintaining price integrity rather than allow people to dump points on the market," said Ed Kinney, Marriott's global vice president of corporate affairs and communications.

One realtor familiar with Marriott's program said he used to submit about 20 resale purchase contracts to Marriott per month. After Marriott raised the closing fees to $2 per point, the realtor's volume dropped to five contracts a month. At the same time, according to this realtor, Marriott increased its repurchase of Club points on the secondary market by exercising its ROFR on proposed purchases.

In the current market, he added, Marriott intercepts about 30 percent of the proposed purchases of legacy weeks, but up to 80 percent of the proposed purchases of Club points. "They want the points back to remove them from the resale market," he said.

Bottom line: the prices are much lower on the resale market, but buyers do face the strong prospect of losing the deal, at the last minute, as Marriott matches the offer price and puts the low-cost points back into the MVC retail inventory.

Legacy weeks are widely available, don't have all the transfer fees associated with points. If you like a specific Marriott resort, and intend to use the same week annually, you should strongly consider finding a legacy week.

Leave a comment

    3 Comments

  • Avatar for briank505
    briank505
    Aug 08, 2016 (1 year ago)

    We own a legacy week at the Maui Ocean Club. The points have created a situation in which we can't get weeks at our resort when we can travel with the kids in summer or on break. They want to charge me $2,500 to convert and keep up with the times. They compared it to an upgrade on a phone.

  • Avatar for frankn107
    frankn107
    Aug 02, 2017 (4 months ago)

    I currently own 26,000 Marriott Vacation Club destination points. My wife and I are interested in selling the points bur have found no way to effectively get this done. I was under the impression that MVC would buy the points back that would include a hefty brokerage fee that I would be willing to pay. But as I found out this is not the case. Do you have any advice?

  • Avatar for duncanw8
    duncanw8
    Aug 08, 2017 (4 months ago)

    @frankn107, I may be able to help you before you sell. The potential tax value from structuring the deal properly is worth more than the sale price. I don't want to ask you about your use history, cost basis, tax bracket and unrealized gains you might have in other investments in a public forum, but I don't see a way to do a private message here. You can reach me at jduncanwilliams@gmail.com and we can exchange contact info. I would be happy to help you quantify the value of a couple of strategies that might take some of the sting out of your loss.