Marriott to spin off timeshare unit

[DVCNews]

Marriott International Inc. intends to spin off its timeshare business into a separate company.

Original Article

[dwelty]

Makes sense, why drag down quarterly results for the entire company due to lagging timeshare sales. I wonder if Disney will follow suit?

[Werner Weiss]

I own Marriott weeks in addition to DVC points.

I don't expect Disney to spin off DVC, even though Marriott is spinning off their timeshare business and reports say that Wyndham might do the same.

After Marriott International spins off Marriott Vacation Club International (MVCI), the remaining Marriott business will involve hotel management, franchising, branding, marketing, and a huge frequent quest loyalty program. (Marriott exited from hotel ownership many years ago.) Wall Street likes "pure play" companies. The main goal of the spinoff is to increase overall shareholder equity. This is a case where the value (market cap) of the sum of the parts is expected to be more than if Marriott had been left whole.

Here's a summary posted at CityBiz Real Estate: Analyst: Marriott's Timeshare Spin-Off Perk for Shareholders

Nobody wants the Marriott Vacation Club of 2012 and beyond to look any different than it does today to current and prospective owners — not the new spinoff company and not Marriott International — and certainly nobody wants the spinoff to fail.

MVCI has been run as separate division within Marriott International. Now it will be "more separate," with its own shareholders, directors, and executive management that does not answer to Marriott International.

The spinoff, if properly managed, has the opportunity to thrive when consumer confidence improves. Except in recent years, Marriott's timeshare business was a profitable part of Marriott International. Ideally, cut lose from the parent company, the spinoff will be more nimble and better positioned to work with non-Marriott entities if there are business opportunities. I think we will see new locations developed in partnership with developers who have access to capital.

Disney, on the other hand, is a media company with a huge Parks & Resorts business sector. Disney's timeshare business is a small part of the overall Parks & Resorts sector. Spinning it off would not result in Disney becoming the sort of "pure play" that Walt Street likes.

In the early days of the Eisner-Wells regime, there were plans underway to sell off the entire on-site Disney hotel business at Walt Disney World to Marriott. In those days, Disney's only hotels at WDW were the Contemporary, Golf Resort, and Polynesian. Marriott would have taken those over and built new hotels. Of course, Disney decided to keep their resorts and develop new resorts themselves instead.

Perhaps, one of these days, Disney will decide that they have too much capital tied up in those hotels and sell them off. If that happens, the DVC resorts are likely to be part of the deal. But that hasn't happened so far, and it may never happen.

I wouldn't expect a spinoff of just DVC.

[DisneyGeek]

I hope DVC remains under the Disney umbrella; the name was a selling factor to me! However, the location of my home resorts at the parks was more important, and only time will tell what really happens. Now as for Marriott, it does seem to make sense to split off for them since it can become a "pure play" as WW put it...