Insights on the Marriott Timeshare Spinoff

This past week, Marriott International completed its spinoff of its timeshare business, reinforcing the company’s message that it seeks to be fully focused on its core lodging management and franchise business. In a change that has taken nearly a year to complete, the new company, Marriott Vacations WorldWide Corp.,  (Marriott timeshare) is now an independent public company.

Arne Sorenson, Marriott International President and COO, told CNBC that timeshare is a great business and one that Marriott Vacations WorldWide has been in for roughly a quarter of a century, doing a great job.

Sorenson  also cited the ideas that (1.) timeshare is capital intensive and focused on developing real estate interests and (2) that it is solely focused on leisure, as the reasons timeshare is very different from the rest of Marriott’s business.

Referring to the timeshare business as a distraction to the company’s stock holders, Sorenson explained Marriott felt that both interests—its hotel business and its Marriott timeshare business—would be better served as separate corporations. He also noted that Marriott  intends to maintain a platform that will permit its loyalty programs to function and reward its patrons across both companies.

As a final step in the spinoff, equity shares of the new company, Marriott Vacations WorldWide Corporation, which as of this past Monday are now trading on the New York Stock Exchange as VAC, have been distributed tax-free to Marriott International shareholders.