What percent does the management company charge your resort owners?

I'm trying to identify the range of a reasonable management fee that is charged to the HOA of your resort. Our resort is looking at changing management companies so I want to get a sense of what we should see for bids. this particular ownership is a small owner run resort.

I believe many developers charge 15% of total revenue coming in. I personally think that is high.

You might also want to consider hired management, where instead of contracting with a management company, the HOA hires its own staff directly. In that case, you pay 0%. That is what all of the resorts I currently own at, on the OBX in NC, in the UK, and in SA do. It works well.

Carolinian said:

You might also want to consider hired management, where instead of contracting with a management company, the HOA hires its own staff directly. In that case, you pay 0%. That is what all of the resorts I currently own at, on the OBX in NC, in the UK, and in SA do. It works well.

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Then who does HR resonsibilities of hiring, performance mgmt, etc? What about the "office" backshop that is required? Is this seperate from the actual resort site mgr? What about reservations? You could be looking at a staff of 15 people to be responsible for.

I'm having trouble seeing how this looks as when you think of a business, the board is not involved operationlly. They have a mgmt team that looks after the daily operations while the board provides guidance.

The HOA president is responsible for hiring and firing and direction of the staff. When it came to the manager and assistant manager, the president always did those interviews and made those decisions. For others that was generally delegated. For maintenance staff, it was generally delegated to the board member who was liasion to the maintenance committee (made up of owners). For cleaners, it was generally delegated to the manager.

As to reservations, on exchanges the exchange companies would send down requests for verification when a week was deposited and an inbound report when an exchange was confirmed. That was easy to handle on the resort end. The resort did not handle rentals in house. Owners that wanted to rent generally used a local timeshare specialist rental / resale brokerage and they did verifications and inbound reports almost like an exchange company, which also was easy to handle on the resort end. Several months before start date of each week, the manager sent out a ''coming down letter'' as it was called, asking them to return a form saying whether they would be coming themselves, sending guests of renters, asking for names of guests or renters, or deposited for exchange. Probably 80% of owners responded.

As to raises for staff or bonuses, those had to be approved by the full board.

djyamyam said:

Then who does HR resonsibilities of hiring, performance mgmt, etc? What about the "office" backshop that is required? Is this seperate from the actual resort site mgr? What about reservations? You could be looking at a staff of 15 people to be responsible for.

I'm having trouble seeing how this looks as when you think of a business, the board is not involved operationlly. They have a mgmt team that looks after the daily operations while the board provides guidance.

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I hear what you're saying but I already have a full time job. I run a team of 20 people and I know what that means. I prefer to get paid for that kind of work, not gratus.

What you propose requires all board members living right near the resort, which is not really feasible when the resort location is in a remote setting.

You could also hire a general manager that reports to the board and the GM be responsible for all of the operations of the resort. I think one of the resorts I own does it this way and the maintenance fee is very reasonable and a lot lower than any of the big name resorts.

Robert D said:

You could also hire a general manager that reports to the board and the GM be responsible for all of the operations of the resort. I think one of the resorts I own does it this way and the maintenance fee is very reasonable and a lot lower than any of the big name resorts.

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That's exactly what self management is. The key is hiring a competent manager, and the burden on board members is not that bad. The difference for the resort budget is that the manager gets a salary and generally a bonus but not a flat percentage of all receipts like a management company.

Find the right group.

djyamyam said:

I'm trying to identify the range of a reasonable management fee that is charged to the HOA of your resort. Our resort is looking at changing management companies so I want to get a sense of what we should see for bids. this particular ownership is a small owner run resort.

I believe many developers charge 15% of total revenue coming in. I personally think that is high.

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Negotiate a rate, shouldn't be a percentage, for the services required. Many good independent management companies, not tied with developers, can handle small to mid and even large timeshare resorts very efficiently.

At our resort we were paying close to $1 million (!!!!) in management fees in 1999. We got into it big time extracting ourselves from an unfair contract set up by the developer and eventually signed on an independent management for a little over $300K annual. Since then we have actually reduced costs and now pay around $275K total for all management services. We bid things, ride them closely, get regular reports to the Board and act as very hands on oversight to our independent (NOT hired by the Mgmt Co) Resort manager. I think you'd be hard pressed to find a Board more on top of what it takes to run a nearly 8 Million dollar per year business for nearly 10,000 individual owner accounts.

While self management may appear to be an option in most cases the time and effort needed simply isn't going to be there for most timeshare operations.

Look to the 25+ independents out there and find one that can do it for your resort. Elect a strong BOD and let them makie the management earn their keep.

Interesting that 275,000 is about 3.5% of 8 million. That's a good deal. I was going to say that professional rental or co-op apartment management companies tend to charge 3-6% of gross revenue. The standard used to be 6% but the economy and competition has driven the norm down to probably 4-5%.