Marriott Switches to Points

Marriott Vacation Club Destinations program represents new era for one of timeshare’s iconic developers; new program embodies flexibility and efficiency

By Matt McDaniel, editor

In 1984, Marriott became the first branded hospitality company by nearly a decade to enter the timeshare industry with the acquisition of American Resorts and its premier Marriott’s Monarch at Sea Pines resort on Hilton Head Island. And on June 21, 2010, Marriott Vacation Club made perhaps the company’s biggest announcement ever, publicizing the launch of the points-based Marriott Vacation Club Destinations program in North America and the Caribbean. After more than 25 years as an industry leader, Marriott Vacation Club made a move that, while described by some industrywatchers as inevitable, is nevertheless bold: a switch from a traditional weeks-based system to points.

“After a quarter century of providing unforgettable vacations, we are excited to announce the most significant program innovation in our history: a new product offering that is easy to use and will provide our owners unparalleled flexibility,” said Lee Cunningham, executive vice president and chief operating officer for Marriott Vacation Club, North America and the Caribbean, in a prepared statement. “Over the years, we have successfully evolved our product offering based on owner feedback, and the Marriott Vacation Club Destinations program reflects a tradition of owner involvement and was designed specifically for both current and future owners.” [member]

In an interview for this article, Ed Kinney, vice president of corporate affairs and brand awareness for Marriott Vacation Club agreed with Cunningham and added that the evolutionary process was quite intensive. “The most significant investment into converting this has been the restructure of the information technology side of the business,” Kinney says. “It also has been the most complex part of the whole program: to manage inventory and to accommodate the different variations and variables of what the owners have choices to do.” Kinney notes that the challenge for the points-based programs in the past (for companies such as Disney, Hilton, and others) was that the predictability of peoples’ usage varied year over year, which typically translated into a requirement for additional inventory when compared with a traditional weeks-based system. “Today’s computer technology is able to be somewhat predictive and understand how to best utilize inventory without having to overbuild to accommodate the variations,” he says.

“That’s been one of the biggest things to overcome, which we’ve taken the steps of deferring former years of upgrades to our computer system knowing that we were going to be going down this path and then doing it all at one time.” Kinney says the financial cost of such a revamp is a great but necessary part of providing a seamless transition and ongoing experience for Marriott Vacation Club owners. Another area of expansion has been at the Marriott Vacation Club call centers. “Certainly, at the servicecenter level we’re going to be, for the next year-and- a-half probably, constantly doing the education and conversions, and helping people with the new program,” Kinney explains. He says that while increased staffing is necessary to properly educate and service the existing 400,000 owner families along with the new owners coming in, advances on the technology side have simplified programs and automated certain processes, creating “a tremendous amount” of efficiencies. “But we still like to have that personal one-on-one contact with owners,” Kinney says, “and we’ve beefed up to accommodate that.”

The education of owners – both existing and new – is a huge undertaking. While Marriott Vacation Club impressively maintains owner satisfaction in the low- 90s percentile, there is still a need for reassurance as the new program rolls out. “We want to make sure people don’t react and think, ‘Oh my gosh, now what do I have to do?’ – because, essentially, they don’t have to do anything,” says Kinney. “It’s elective if current owners want to change their form of ownership to the new product form, so that simplifies that. People won’t feel like it’s disrupting what they’ve gotten used to over the years. But moving forward, the only product that we are selling is the new points-based system.”

Another key component of the change was streamlining the fees process. “Efficiency is really important,” he says. “In the past, we’ve had some owners say, ‘It seems like I’m paying a fee here, I’m paying a fee there’ – at some point, it’s not only complicated, but you feel like you’re getting picked at left and right from a financial standpoint.” The new program charges a single fee for what before was potentially several, such as the Interval International annual fee, the Interval International exchange fee, the Marriott Vacation Club internal exchange fee, the Marriott Rewards redemption fee. “In the past, if you elected to do a lock-off or a split week, you were charged an administrative fee that was nominal, but it was still a fee,” says Kinney. “Everything is now consolidated into one. The consumer is seeing a bundled product, which is what they wanted.”

Kinney also points out the variety available to owners. The product now includes the Explorer Collection with a variety of travel packages such as the Ocean Explorer, the Active Explorer, the Epic Explorer and the City Explorer, that offer unique experiences that people desire but don’t want to repeat every year. Kinney says that formerly it was difficult to provide such options, but “the new program has that integrated in, and we’ve partnered with different cruise providers and groups that offer the exotic excursions to bring in that element, even to the level of guided tours at various destinations.”

A Challenging Change?
So how do you fundamentally change a product that you’ve already registered in numerous states and municipalities around the United States and beyond? “I would certainly say it is complicated to make sure that all the legal aspects are in place to protect the consumers; all those points were covered from a regulatory and registration standpoint,” Kinney says. “How we have always originally registered our properties has been broad enough so if we did have changes to the program we could do that without any issues, and that is done in a variety of different ways.” Kinney explains that Marriott Vacation Club has exhibited such foresight in other areas as well: “If we wanted to change the way we do exchanges, for example, we are registered as our own internal exchange company should we want to go down that way – we’ve never done that, but we have contingencies within the scope of how we legally register the properties that allow for it.”

But while the program has the flexibility for change, the underlying product is still ownership deeded in in a trust in perpetuity. But it’s not like Marriott Vacation Club is groping in the dark as they embark on an entirely new path. The company essentially had a trial period though its parallel program in the Asia Pacific region, where Marriott Vacation Club’s program has always been points based. “We’ve been operating over there for several years,” Kinney notes. “That allowed us to understand customers’ patterns of usage and desires. Though culturally it was somewhat different, it kept us from just jumping into the North American program completely cold.”

At the present time there are no special offers to convert to the new program, no rebates on enrollment fees, no major advertising campaign aimed at convincing weeks owners that they needed to switch over. “Initially, it’s just going to be an education process; we’re going to help people understand what the program is so they can see if it fits their needs, and then take it from there. Again, it’s elective; we anticipate – based on customer feedback while the program was being shaped – that’s there’s going to be an immediate group of people who are going to want to convert, and others who are going to be unsure of what the whole program entails until we have a chance to explain it to them,” says Kinney. “So, that’s what our owner-services group is going to be doing over the near term: education, education, education. We’ll then allow the owners to choose what they want to do once they understand all the changes relevant to what they currently own,” he says.

“The bottom line is that we’ve entered a whole new era in being able to provide product that we think is going to serve the owners and ourselves moving forward for generations, and ultimately we think it’s going to be a much stronger  offering for owners to utilize,” Kinney says. “And from a business standpoint, we think it’s going to be an offering that people will gravitate toward more so because of its flexibility, which hopefully will increase business and provide us new owners. Having a program that is based around flexibility and efficiency from an operational standpoint should make our revenues better too, because we don’t have redundancy of programs and/or programs that aren’t as efficient as they could be.”

Marriott Vacation Club
Marriott Vacation Club is a worldwide leader in vacation ownership with a program highly regarded for its quality and unique flexibility. In 1984, Marriott became the first branded hospitality company to enter the timeshare industry, adding its signature quality, service and hospitality expertise. After more than 25 years of innovation and evolution, the Marriott Vacation Club Destinations program was introduced in 2010 offering unmatched experiences and unparalleled flexibility through the use of vacation club points. For more information, please visit www.marriottvacationclub.com.

Marriott Vacation Club Destinations
Fact Sheet

The Marriott Vacation Club Destinations program allows owners to redeem vacation club points to travel within any of four vacation collections:

Marriott Vacation Club Collection – Enjoy reservation access among more than 50 luxurious Marriott Vacation Club resorts, including: ease of any day check-in, varied lengths of stay, wide array of accommodation sizes, and more choice of travel season at resorts in North America and the Caribbean.

Marriott Collection – Choose from over 3,000 hotels and experience new destinations through trade for Marriott Rewards points.

Explorer Collection – Journey to new lands or cruise the seas in luxury with exchange for memorable and exceptional travel packages: Ocean Explorer, a constantly changing selection of ocean-bound offerings on top cruise lines; Active Explorer, dynamic adventures in inspiring natural settings, from hiking and mountain biking, to rafting and off road excursions; City Explorer, an exciting portfolio of cosmopolitan Marriott hotel locations, from San Francisco to New Orleans, integrating signature cultural immersions; and Epic Explorer; guided tours to far-flung international wonders, from the Great Wall of China and the jungles of Costa Rica, to the African safari and beyond.

World Traveler Collection – Access a global system of over 2,500 resorts in more than 75 countries through Interval International.

Annually, Marriott Vacation Club Destinations owners will receive an allocation of vacation club points to redeem for customized getaway experiences. They will also have the ability to bank, borrow, or purchase additional vacation club points each year. In addition, the new program provides owners the services of a personal vacation ownership advisor to assist in travel arrangements within any one of the four collections. While the Marriott Vacation Club Destinations program in North America and the Caribbean will offer this enhanced opportunity exclusively to new customers going forward, current owners will maintain the full rights and privileges of their ownership. At the same time, existing owners will have the choice to enroll in this new program. Weeks owners may choose to enroll in the Marriott Vacation Club Destinations program and once enrolled, may elect to use the vacation club points option any usage year. Existing owners can be assured that the rights and privileges of their week(s) ownership will be maintained and they will be able to continue to enjoy vacations for generations to come. [/member]

Wyndham Vacation Resorts Asia Pacific