Originally Posted by
GetawaysRus
I agree with camachinist. I also bought in 2004, and I purchased directly from Marriott.
In the early years of my ownership, trading for points was attractive. My annual maintenance fee was in the range of $750 and I could get 110K MR points every other year by paying a fee (in the range of $85-100, if I remember). You can also buy Marriott points:
https://buy.points.com/PointsPartner...EN&product=BUY
Notice that 50K points purchased costs $625. So a married couple could buy 100K points per year for $1250.
In other words, 110K points for my $750 maintenance fee + the fee for trading our usage for points looked OK. And you could get reasonable value for those points before Marriott devalued MR points by raising hotel categories.
Maintenance fees rise each year. Now my annual MF is over $1000 per year (and rising). I no longer trade timeshare usage for MR points because I no longer feel that it is a good value. I own a 2BR lockoff timeshare, and I now feel that I get better value by using the 2 timeshare weeks that this will get me.
If you had looked at it from a net-present-value perspective, you would have probably come to a different initial conclusion--even without taking into account Marriott points devaluation. $750 for $110k is the YEARLY value. But what happens when you take the initial investment and discount that appropriately over the years? In fact, I can do that math easily:
Let's assume a discount factor of 3% per annum and no devaluation of Marriott points or inflation of yearly maintenance--a VERY conservative estimate.
I am going to pretend that you paid $10,000 also initially.
If the price for $110k points is kept steady at $1250 and fees are $750 for the MVC property, we know that the incremental savings of the MVC property is $500 yearly. Of course, we have to discount that $500 incremental cash flow.
Over a 10-year horizon, if there is no resale value on the property, the NPV of the project is roughly -$5750. That is a large loss. That also means you would have to sell the property for $5750 to break even on your investment. I can start adding in variables like growth of the fees, but it will just make things worse.
If I use the Gordon Growth Model to calculate the value of the property to perpetuity (this should give us what the sale price SHOULD be...that is, what you should buy it for) with increases in fees of 3%, NO MARRIOTT POINTS DEVALUATIONS, and a required rate of return (cost of capital) of ANYTHING, you will find that the property is ALWAYS under water. That is, it has NO VALUE AT ALL. This is because the incremental cash flow (how many points you need to pay more if buying the points vs. buying the property and exchanging for points) is decreasing.