Marriott suspends timeshare developments

Marriott International, operator of the Marriott and Ritz-Carlton hotel chains, plans to suspend investment in new timeshare projects.

At the company’s earnings conference call last week, Chief Financial Officer Carl Berquist said: “We believe that based on the demand trends that we’re seeing right now, that we have adequate inventory to meet those demand trends”.

Marriott has been a pioneer in developing the timeshare and fractional business model, particularly in the US and Caribbean, but has struggled in recent years and announced plans to scale back investment last September.

The company recently reduced prices for its fractional and luxury products to help cash-flow but is still is a strong believer in the fractional concept over the longer term. “As consumer confidence comes back over the next year or two and their disposable income comes back, then there’s no reason to believe that timeshare won’t continue to create the demand [to sell the unsold fractional units on their books] ”.

No return to peak sales

However, Marriott executives acknowledged that timeshares are unlikely to return to their peak, when they accounted for almost 30 percent of the company’s profits. Even in a “strong consumer environment,” company president Arne M. Sorenson said, the likelihood of timeshares contributing that type of revenue to the company is “very, very slight, and it will end up being a smaller part of our business than it was at the peak.”

Further coverage from Seeking Alpha, IPJ and Fractional Life