The idea of conjoining losses to increase future profits is beginning to gain steam among timeshare companies in 2021. After dismal profits last year, stakeholders are pushing hard for a bounce back. Some have even begun buying up online real estate to increase their market share. The story we published on Wyndham adopting the Travel + Leisure brand name is the latest example. This week, Marriott and Welk Resorts announced a pending acquisition that also puts the remainder of the industry on notice.
Merger Helps Marriott Compete with Wyndham.
Ulike Wyndham’s transaction, the agreement between Marriott Vacations Worldwide (MVW) and Welk Hospitality Group is not a simple marketing ploy. For roughly $430 million, Marriott is set to fully acquire property management contracts and the entire portfolio of Welk’s programs and resorts. Once the pending acquisition closes (some time before July 2021), Marriott will take over an estimated 1.4 million in common shares. After being locally owned for more than 57 years, the Welk name is moving on.
The move comes a few years after Marriott’s acquisition of ILG for $4.7 billion and appears to be for similar motives. Steve Weisz (Marriott’s president & CEO) said then that they were looking to save at least $75 million a year by eliminating overlapping expenses. But it wasn’t his only intention. “While we are pleased with cost-saving opportunities, what we are most excited about are the clear and actionable opportunities to drive top line growth,” Weisz said at a news conference in May of 2018. Nonetheless, this is another step in that direction.
Marriott Eager to Increase High End Resorts.
Similar to the ILG acquisition, MVW plans on rebranding certain Welk properties as Hyatt Residence Club resorts. Doing so adds to the number of “upper scale” locations (now 24) that are available across the country. Aside from expanding their inventory for future vacation owners (or prospects), the acquisition gives Marriott and Welk Resorts more opportunities to upgrade their current members.
While the process of combining these prominent brands will be extensive, both parties are extremely eager to get the ball rolling. President and CEO of Welk Resorts, Jon Fredricks had this to say: “It is bittersweet after 57 wonderful years of memories and accomplishments to be welcoming a new owner for Welk Resorts. We are confident in MVW and its shared commitment to excellence. Our board and family recognized that its vision, resources and globally-recognized brand ensure the best long-term future for our valued team members and owners.”
CEO of Marriott Pays Homage to History of Welk Resort.
Despite the privilege of carrying on his late grandfather’s (Lawrence Welk) legacy, Fredricks couldn’t turn down Marriott’s offer. Weisz is clearly happy he didn’t. “We appreciate that Welk Resorts’ leadership has entrusted [us] to build on the solid foundation laid by generations of the Welk family and the company’s team members. We have been in the vacation ownership industry for decades and have deep respect for the strength of the Welk name, operation and legacy,” he said in a statement.
Not All Family Dealings Were Included in the Marriott and Welk Resorts Deal.
Since the first Welk resort opened in San Diego in 1964, the family has been very much involved. While Jon has overseen the operation since 1999, Lawrence Welk’s son is chairman of the board. Larry Welk was also an integral part of the organization’s vacation ownership business. He currently manages a real estate company under the family brand that was not included in the deal between Marriott and Welk Resorts.
Some of the things Welk Resorts has been known for are engaging activities and unique accommodations for guests as well as programs worth supporting by the community. Employees often participate in company charities and philanthropic support. Lisa Parker, another grandchild of the late founder, is the president of one of these programs. The Lawrence Welk Family Foundation has been serving families in need since 2000 and was also not included in the acquisition.
At the same time, the company has also had its fair share of controversy. They’ve already dealt with a number of accusations in 2020. Even layoffs haven’t boded well. In all, the Welk Hospitality Group is mostly owned by family members and employees own 12% by means of stock ownership plans. More details of the acquisition will become available when the merge between Marriott and Welk Resorts is finalized.