Marriott Vacations execs argue that vacation ownership will prove popular during inflationary times because the timeshare model lets you essentially lock in prices for future trips. The company's about to find out if that's true.
Timeshare operator Marriott Vacations Worldwide saw its profit and revenue surge thanks to the U.S. summer boom in post-pandemic tourism providing stronger positive effects than Hurricane Ian’s strike on Florida, which disrupted some resorts in September, and rising economic uncertainty.
In the third quarter, Marriott Vacations Worldwide ran at 90 percent occupancy, and tours were just 5 percent below its pre-pandemic flow. The company — whose brands include Marriott Vacation Club and Hyatt Residence Club — generated a net income of $109 million. It reported revenue of $1.23 billion, up 16 percent from a year earlier.
“Despite higher inflation, the volatility in the stock market, and rising interest rates, we generated $483 million in contract sales in the third quarter, up 27 percent from the prior year — with first-time buyers representing a third of our contract sales in the quarter,” said CEO Stephen Weisz on Tuesday during an earnings call.
The company raised its 2022 outlook following its better-than-expected results. Hurricane Ian may only dampen sales in the fourth quarter by between $10 million and $12 million. In a recent survey the company conducted, about 70 percent of vacation owners planned a trip within the next year.
The company’s executives argued that rising inflation only made the value proposition of its vacation ownership product more compelling in comparison because its costs are more predictable for owners.
On the negative side, some analysts puzzled over how to see the company’s direction because of a one-time accounting change. Exchange and membership metrics were below analyst expectations, for example.
During the third quarter, the company a unified sales program, Abound by Marriott Vacations, at the majority of its Marriott, Sheraton, and Westin sales centers. The program gives vacation owners direct access to more than 90 Marriott-branded resorts and thousands of unique vacation experiences using a common currency. The cross-selling may boost revenue.
Acquisitions may be in the works. Last year Marriott Vacations Worldwide took over Welk Resorts earlier for $485 million, and growth through deals may be in the cards next year.
The company said its debt was under control, with most of it fixed with an average 3.9 percent interest rate, and no corporate debt maturities until 2025.
Marriott Vacations is a different company from Marriott International, and it bought Hyatt’s timeshare business in 2018. The company’s president, John Geller, will become CEO of the timeshare giant on January 1, 2023, succeeding Stephen Weisz, who’s retiring.
Photo credit: A Marriott Vacation Club property. Source: Marriott Vactions. Marriott Vacations Worldwide