There has been some recent news of an interesting merger in the timeshare world.
ILG inc serves around two million members through various networks and has encountered pressure from investor FrontFour Capital Group, which has been urging a sale to cash in at a time when US stock valuations are high and global travel demand is at a significant high.
Marriott Vacations Worldwide Corp will purchase timeshare operator ILG Inc for US$4.7 billion, the companies shared on Monday. They are seizing the opportunity to merge operations and brands spun out of Starwood and Marriott hotels.
The amalgamated company will have 108 properties and seven upscale brands including ILG’s Hyatt, Westin and Sheraton vacation ownership brands. This gives a much better platform to actively compete with Hilton Grand Vacations Inc and Bluegreen Vacations Corp.
Unsurprisingly ILG’s stock has risen by about 5 percent on the news of the deal, while Marriott Vacations — paying US$14.75 in cash and 0.165 of its own shares for each ILG share — slid 9.2 percent.
Oppenheimer analyst Ian Zaffino has said that “With the combination of the hotel groups — Starwood and Marriott — it only makes sense for the timeshares that operate those brands to merge,” He also added that “timeshare growth is solid.”
This is proven by ARDA’s recent report that shows a signified continued growth in the area of sales. Because of the several years of steady growth, the industry has seen an increase in sales and occupancy rates of vacation ownership units also increased in kind. With 5,400 vacation ownership resorts spread among more than 120 countries, the increase in timeshare sales and occupancy rates are accompanied by a growth in diverse products and experiences.
Hotel chain Marriott International Inc bought Starwood Hotels & Resorts Worldwide Inc about two years ago in a US$12 billion deal, months after Starwood spun off its timeshare business and merged it with ILG. Marriott spun off its timeshare business in 2011.
Marriott Vacations’ deal for ILG comes as the timeshare industry seeks to continue to improve occupancy rates and shed its image of locking customers into complex contracts, with questionable sales tactics. There is the hope that timeshare will become a more popular holiday option for many holiday goers, who are looking to enjoy the benefits of the hard work and salaries.
The merger is expected to add to Marriott’s earnings and save at least US$75 million in costs.
Marriott Vacations Chief Executive Officer Stephen Weisz has said on a conference call with analysts. “We see potential growth from the enhanced marketing capabilities across the expanded portfolio and owner and guest network that we will have post-closing,”
According to Reuters’ calculations, the deal price represents a nearly 19 percent premium to ILG’s closing price on April 13, the day before Reuters reported that the two companies were in advanced talks for a deal. JPMorgan was Marriott’s exclusive financial adviser, while Goldman Sachs and Moelis & Co advised ILG.
It has also been suggested that Marriott’s board of directors will be expanded to include two members of ILG’s board.
Posted on: May 7, 2018
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 0203 519 3808 or email: info@TimeshareConsumerAssociation.org.uk