Marriott Timeshare Spinning Timeshare Division into Separate Company
Tuesday, February 15, 2011
In a transaction that will not require the voting approval of its stockholders, Marriott International has announced plans to spin off Marriott timeshare, establishing it as a new, publically traded company. The move allows Marriott International to become primarily a franchise management company, while creating Marriott timeshare as a real estate development and asset company.
With the change, Marriott International will focus its attention on its core lodging management and franchise business, while receiving franchise fees from the timeshare company’s use of the Marriott brand and the Ritz-Carlton brand. The strategy allows Marriott to continue on its present path of reducing the load of its real property assets by divesting most of its hotel real estate and concentrating on operations instead of ownership. Many of Marriott’s investors have campaigned for this move for years, preferring to see Marriott as a fee-based hotel management business rather than an owner-operator.
Stephen P. Weisz, Marriott timeshare’s president since 1997, will become chief executive of the new company, and J. W. Marriott Jr will remain as chairman of the board and chief executive officer of Marriott International. Each company will then have separate boards of directors.
Currently, Marriott timeshare has 71 properties, over 400,000 Marriott timeshare owners, and roughly 10,000 employees. In 2010, Marriott timeshare accounted for $1.2 billion in revenue, or approximately 10 percent of Marriott International’s total revenue. the fourth quarter of 2010, saw Marriott’s timeshare sales fall to $201 million from $203 million for the same period in 2009.
The Marriott family will personally maintain approximately a 21 percent ownership of both companies. Marriott International is not revising its fourth-quarter dividend as a result of this transaction. They will use a special tax-free dividend to pay current shareholders later this year.