Under a plan announced Monday, Marriott International will spin off its timeshare business to its existing shareholders. The deal, which is expected to happen by the end of the year, has the potential to create one of the world's largest standalone timeshare businesses, with around 71 properties, 33,000 rooms, 400,000 owners and $1.5 billion in unsold assets. On Monday, Marriott reported that its timeshare business had $1.2 billion in revenue in 2010, roughly 10 percent of the company's total revenue.
In a YouTube post, Bill Marriott called the deal a "win-win" that would:
•allow faster growth in the timeshare operations under both the Marriott and Ritz-Carlton names;
•result in no changes in the branding or quality of the properties, services, usage options, use of Marriott Rewards points, or access to Marriott International’s hotels;
•be led by Stephen Weisz and William Shaw as CEO and Chairman, respectively. Weisz has been president of Marriott’s timeshare business since 1997 and is a 39-year Marriott veteran. Shaw had been vice chairman of the company.
The Marriott family will maintain a 21 percent ownership in both companies. The deal will reportedly not require shareholder approval, but is subject to some basic conditions, including the receipt of normal and customary regulatory approvals, the execution of inter-company agreements, receipt of a favorable ruling from the Internal Revenue Service, arrangement of adequate financing facilities, and final approval by Marriott International’s board of directors.
Analysts are already considering how Marriott's action will play out. Wall Street Journal reporters Alexander Berzon and Kris Hudson quoted Robert LaFleur of Hudson Securities as saying:
"Once you have this [spinoff] on a standalone basis, the world will tell us what a timeshare company is worth. We don't have a pure timeshare company of this scale."
Rob Webb of Baker Hostetler had this to say:
"This is a shrewd move by Marriott to jump-start the recovery of a major business unit that is temporarily diminished. I have no doubt that it will succeed and that [Marriott's timeshare division] will hold its leadership role in the greater hospitality industry. "
In general, the shared ownership industry has been in transition as a result of the current economic climate. The transition includes the high profile acquisition of ILX Resorts to be combined with Diamond Resorts International and the acqusition of Silverleaf Resorts by Cerberus Capital Management.