Marriott International Plans to Sell Part of Fractional Ownership Inventory
Wednesday, October 7th, 2009
Marriott International, Incorporated has stated that it plans to cut back on prices and slow down development of its luxury timeshare division because of a significant reduction in demand. The company is planning to sell off a portion of its fractional ownership inventory in the oncoming years to better manage its costs. The company also plans to reduce the price of some of its residential units to stimulate sales.
The luxury timeshare market has experienced significant losses in the past year as fewer consumers invest in timeshare properties. Developers have halted or slowed down construction of many units because they have been unable to pre-sell the units at the record-setting pace of years past.
Reduced demand for timeshare property purchases and a significant dip in demand for timeshare rentals is limiting revenues for many major luxury property owners such as Marriott, Starwood resorts and the Hilton brand. These companies have been slowing down construction of pricey properties, and are working on ways to generate more interest in properties that may be finished near the second half of 2010.
Still, companies like Marriott are planning ahead by looking for new ways to stimulate sales. According to Joe Greff, a JPMorgan analyst, Marriott’s strategy of discounting prices may help to stimulate sales and sell of any outstanding inventory. (Source: http://news.yahoo.com/s/nm/20090923/bs_nm/us_marriott_outlook).
Marriott is attempting to increase profits for the remainder of the year by scaling back on many costs and slowing down the construction of any new luxury timeshare properties that had been scheduled to be complete in the upcoming months.
Still, Marriott reports that its revenue per available room for the third quarter was better than expected. However, Marriott and several other major hotel brands are still seeing significant drops in share prices. As of September 23, 2009, shares of Marriott were up by only 0.4 percent in the morning of New York Stock Exchange trading.
