# Higher Maintenance Fees means Higher Revenue for Diamond



## AmexBlack (Feb 19, 2014)

Diamonds main goal is to increase Maintenance Fees.  That means doing as many upgrades as possible, dwindling the HOA reserves, etc. 

http://finance.yahoo.com/news/diamond-resorts-international-inc-reports-213500605.html

Latest Earnings Release


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## artringwald (Feb 19, 2014)

Invest in DRI. When the stock goes up, sell some to pay the maintenance fee. 

Seriously though, using reserves to upgrade the property isn't necessarily a bad idea. However, gaining control of a HOA, then authorizing higher management fees paid to yourself sounds like an unethical conflict of interest.


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## dougp26364 (Feb 20, 2014)

Cash reserves are set aside for improvements and repairs. Without them resorts would require special assessments to pay for replacement furniture, paint, carpeting appliances et....

At issue is DRI's standards vs what owners of taken over timeshares are accustomed too. Generally speaking DRI has higher standards, spends more money than was originally budgeted and thus increases MF's.  Sunterra owners were the first to experience this but, let's face it, there was a reason Sunterra went bankrupt. 

DRI's signature is to buy failing timeshare systems. For the most part, what I've seen are systems who have let things go. When DRI takes them over, fees go up and repairs/upgrades begin the next year. Owners complain loudly at first, then die down after the improvements become noticeable. 

Then there are other issues. Look up The Point at Poipu if you want an example of a special assessment situation. 

My biggest issue with DRI is the management fees. They're some of the highest in the industry. Yes they've made vast improvements in the call center and web site but, our The Club Dues have gone from around $135/year to $315 this year. Then we can talk about resort management fees and it just doesn't get better. 

Then there's how little I see going into the csh reserves compared to comparable properties in similar locations. Specifically our Suites and Villas at Polo Towers units. Despite the fact that DRI's MF's are comparable to our Marriott Grand Chateau and higher than our HGVC ownership, DRI puts in considerably LESS to the cash reserve fund. Nearly $100 less. For me this remains one of my biggest concerns.


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## artringwald (Feb 20, 2014)

Here's and example for the Point at Poipu:

2007	2013	change
Management Fees	 $680,387 	 $2,155,887 	217%
Reserve Funding	 $1,151,983 	 $2,416,303 	110%

Please note that the management fees do not go to maintaining or improving the property. It is just what the DRI controlled HOA approves paying DRI for managing the property. In 6 years, they more than doubled! 

I don't argue with the increases in reserve funding, or the increase in the operating expenses. They're been a noticeable improvement in the property since DRI took over, but I can't understand why management fees should increase so much.


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## SMHarman (Feb 20, 2014)

artringwald said:


> Here's and example for the Point at Poipu:
> 
> 2007	2013	change
> Management Fees	 $680,387 	 $2,155,887 	217%
> ...



The devil is in the detail here, some of the management of the resort could be included in the management fee now (headcount moving from resort to DRI) but likely it is just cash flowing to DRI management and shareholders.


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## tidefan (Feb 23, 2014)

dougp26364 said:


> At issue is DRI's standards vs what owners of taken over timeshares are accustomed too. Generally speaking DRI has higher standards, spends more money than was originally budgeted and thus increases MF's.  Sunterra owners were the first to experience this but, let's face it, there was a reason Sunterra went bankrupt.
> 
> DRI's signature is to buy failing timeshare systems. For the most part, what I've seen are systems who have let things go. When DRI takes them over, fees go up and repairs/upgrades begin the next year. Owners complain loudly at first, then die down after the improvements become noticeable.



Doug, to me, the problem is that owners that are brought into the DRI universe like we were at Royal Palm in St Maarten have essentially no say in what happens with the property and what we are being charged in Maintenance fees.  You say that DRI "brings the property up to standards", well, Sunterra was already doing that when it was taken over.

It seems to me that existing owners are essentially held hostage to DRI when a takeover occurs.  It's "pay the much higher MF's or else", and there is no recourse short of selling (if one could) to get out of the system.


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## vacationhopeful (Feb 23, 2014)

I own at a former Sunterra resort (I do believe). Sunterra was doing its best to bandaid patch repairs. Owners got hit with a $1000+ SA by new management company, higher MFs, but much better reviews and owner pride. New management company NOT DRI, for us.


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## 1950bing (Feb 23, 2014)

how are they doing at collecting slackers NON paid maintenance fees ?


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## dougp26364 (Feb 23, 2014)

tidefan said:


> Doug, to me, the problem is that owners that are brought into the DRI universe like we were at Royal Palm in St Maarten have essentially no say in what happens with the property and what we are being charged in Maintenance fees.  You say that DRI "brings the property up to standards", well, Sunterra was already doing that when it was taken over.
> 
> It seems to me that existing owners are essentially held hostage to DRI when a takeover occurs.  It's "pay the much higher MF's or else", and there is no recourse short of selling (if one could) to get out of the system.



Let me rephrase one thing and correct you on another.

I should have said, bring resorts up to DRI standards. 

The correction invokes Sunterra. DRI purchased Sunterra via the bankruptcy court. Sunterra drove their business into the ground and went bankrupt, which is how  DRI became the new management company. If Sunterra had done a better job, it would still be Sunterra and Mr Cloobeck would likely have been running for the goveners off in Nevada. 

I've said this before, I'll say it again. With DRI, you'd better like where they're going because "owners" are just along for the ride. Owners really have no say in the matter. Thank Sunterra for setting up trust ownership that gives the management company all the control, the driving themselves into the ground and allowing another management company to buy the out of bankruptcy. Look at it this way, it could have been Westgate or Festiva that bought Sunterra.

FWIW, I have two resorts that were involved in bankruptcy proceedings. Both are with different management companies. Both have some new rules that weren't there when we originally became owners both have increased their MF's by significant amounts. Neither are managed by DRI.


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## Maple_Leaf (Feb 23, 2014)

*DD*



dougp26364 said:


> I've said this before, I'll say it again. With DRI, you'd better like where they're going because "owners" are just along for the ride. Owners really have no say in the matter.



That's the risk you run with DRI, they call all the shots.  As an owner at a DRI property you are really assuming they are the smartest guys in the room.

DRI has been trying to take us over for years at Royal Dunes.  They have a foot in the door with their Club from the old Sunterra days.  We've beaten them back year after year but, like all terrorists, they only have to win once.  We need to win every time.


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## dougp26364 (Feb 23, 2014)

Maple_Leaf said:


> That's the risk you run with DRI, they call all the shots.  As an owner at a DRI property you are really assuming they are the smartest guys in the room.
> 
> DRI has been trying to take us over for years at Royal Dunes.  They have a foot in the door with their Club from the old Sunterra days.  We've beaten them back year after year but, like all terrorists, they only have to win once.  We need to win every time.



So, how is this any different than MVCI, HGVC, DVC, Westgate, Hyatt, Starwood, Whyndham or any other developer? The vast majority of timeshares are NOT controlled by their owners but bay management company frequently controlled by the developer. 

What's different about DRI is how they've choose  to grow in the market today. DRI built only TWO timeshares, The Suites and The Villas at Polo Towers. They where the original developer for MVCI's Grand Chateau but, they sold the branding rights to MVCI. DRI remains a silent partner in that project (Hard Carbon I think is what the partnership was called). 

DRI saw the expense of building and decided to get out of the timeshare business, then Sunterra fell into bankruptcy and an opportunity presented itself. Sunterra's trust based ownership gives the management company virtually all the control, a PERFECT situation IF you can manage it. DRI had a lot of management experience and knew the right people to put in place. DRI doesn't build, they acquire. So your right, you'll have to beat the back every year but, if they really want that resort, they'll eventually get it. 

No matter what timeshare you own, if it's not independent, your just along for the ride.


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## csalter2 (Feb 23, 2014)

*Things Got Better*

All I know is that the properties that Sunterra owned got better under DRI. I like going to the resorts more now because they are being maintained better.  I hate the increase in the fees, particularly when they first took over. However, I like the refurbishments and the comfort of the units. I have seen change and so I don't complain too much except about the maintenance fees.  

I make my reservations online without problem and I am getting what I want during high demand times.  I can't wait until I retire so I can really enjoy going during non prime weeks. 

DRI is not perfect, but I own Marriott too and they do the same thing that DRI does.


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## pedro47 (Feb 24, 2014)

dougp26364 said:


> So, how is this any different than MVCI, HGVC, DVC, Westgate, Hyatt, Starwood, Whyndham or any other developer? The vast majority of timeshares are NOT controlled by their owners but bay management company frequently controlled by the developer.
> 
> What's different about DRI is how they've choose  to grow in the market today. DRI built only TWO timeshares, The Suites and The Villas at Polo Towers. They where the original developer for MVCI's Grand Chateau but, they sold the branding rights to MVCI. DRI remains a silent partner in that project (Hard Carbon I think is what the partnership was called).
> 
> ...



Doug, thanks for sharing this information.


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## SMHarman (Feb 24, 2014)

Maple_Leaf said:


> That's the risk you run with DRI, they call all the shots.  As an owner at a DRI property you are really assuming they are the smartest guys in the room.
> 
> DRI has been trying to take us over for years at Royal Dunes.  They have a foot in the door with their Club from the old Sunterra days.  We've beaten them back year after year but, like all terrorists, they only have to win once.  We need to win every time.





dougp26364 said:


> So, how is this any different than MVCI, HGVC, DVC, Westgate, Hyatt, Starwood, Whyndham or any other developer? The vast majority of timeshares are NOT controlled by their owners but bay management company frequently controlled by the developer.
> 
> [cut for berevity]
> 
> No matter what timeshare you own, if it's not independent, your just along for the ride.



I think most owners dont' realize how much it costs to actually run a resort, especially higher end ones with pools and gyms and other amenities.

I also think people often get more wasteful on vacation and think less about leaving the AC on all day to keep the room cool, or the TV or washing / drying towels each day, things you may not do at home but think 'hey i'm not paying the electric bill' so do on vacation.  Thing is, with a Timeshare you are paying the electric bill.  And the elevator maintainance bill and the money to heat the pool and run the pumps for the kids water features.

Then you look at the maintainance.  Your microwave breaks at home and you are not replacing it within 4 hours or all hell breaks loose (at least not in my household), you hold your resort to a higher standard and to meet that costs money.

Then wear and tear on 1000sqft with 4 people heading in and out of it all day every day, cleaning costs, how many have a cleaner come to their home?  Every week?  Twice a week?

Anyway, I guess what I am saying, DRI, Starwood, whoever is that while there might be some padding in the MF bills the HOA has to budget to put money in the refurb fund and then cover the ongoing operation costs, the surplus / deficit on the operation cost is rolled from year to year and if the refurb fund is managed correctly you won't get any special assessments.

DRI or any of the other companies can only charge their share.  If you look at most of these systems the place they can really up their income stream is on internal exchange fees or fees to bank or borrow points or fees for short stay housekeeping (some of which is likely going back to the HOA) etc.


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## dougp26364 (Feb 24, 2014)

SMHarman said:


> I think most owners dont' realize how much it costs to actually run a resort, especially higher end ones with pools and gyms and other amenities.
> 
> I also think people often get more wasteful on vacation and think less about leaving the AC on all day to keep the room cool, or the TV or washing / drying towels each day, things you may not do at home but think 'hey i'm not paying the electric bill' so do on vacation.  Thing is, with a Timeshare you are paying the electric bill.  And the elevator maintainance bill and the money to heat the pool and run the pumps for the kids water features.
> 
> ...



With any management company, I try to limit my complaints to a few categories:

1. Management fees: this has been an issue for me with DRI because theirs are pretty high IMHO

2. Maintenance: DRI has done an excellent job at the resorts we've been too. If something was lacking and they know it, they have typically had an apology card out and an explanation of what they're doing about it:

3. Ease of reservations: DRI has done very well in this category also. The online system generally works very well and, when we have had to call the agent has been polite and helpful

4. Club costs vs benefits: I'm not satisfied with this aspect of DRI. Expenses have gone up to fast, some benefits have been removed that were at times useful and others added that are only useful IMHO, to a minority of members. Despite the very high fees there are still all carte fees. It's to the point that I'm nearly ready to drop my membership in THE Club and just go back to exchanging through an exchange company. 

5. Staff friendliness and knowledge: to date DRI has excelled in this area. 

I find it ridiculous when I see complaints that can be said about the majority of timeshares, as if it's only DRI. Management fees are a source of income and they are only a portion of the MF's. ALL timeshares have management fees.


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## tidefan (Feb 24, 2014)

dougp26364 said:


> With any management company, I try to limit my complaints to a few categories:
> 
> 1. Management fees: this has been an issue for me with DRI because theirs are pretty high IMHO
> 
> ...



Doug, I guess I should preface by noting that Royal Palm and Flamingo were not originally Sunterra properties. However, your point holds true on maintenance fees in at least one respect..

Royal Palm was originally sold as 99-year fixed deeds. Not many points there. Thus, you have a much higher proportion of fixed week owners there. The interesting thing that has developed over the last few years is the there are a number of quarter, half, and whole year owners that, apparently, have original deeds that specify what their Maintenance fees can be per year and there is a cap on that number. I want to say that it is around $6,000 at this time. There are a number of articles about this as DRI tried to charge these owners fees by the week and I want to say that the whole year owners were getting bills in the $80,000 range, so, they have all sued (and I believe, won). At this point, I believe that those units are, essentially, out of the association.

But, I don't think that helps the other owners...


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## dougp26364 (Feb 25, 2014)

tidefan said:


> Doug, I guess I should preface by noting that Royal Palm and Flamingo were not originally Sunterra properties. However, your point holds true on maintenance fees in at least one respect..
> 
> Royal Palm was originally sold as 99-year fixed deeds. Not many points there. Thus, you have a much higher proportion of fixed week owners there. The interesting thing that has developed over the last few years is the there are a number of quarter, half, and whole year owners that, apparently, have original deeds that specify what their Maintenance fees can be per year and there is a cap on that number. I want to say that it is around $6,000 at this time. There are a number of articles about this as DRI tried to charge these owners fees by the week and I want to say that the whole year owners were getting bills in the $80,000 range, so, they have all sued (and I believe, won). At this point, I believe that those units are, essentially, out of the association.
> 
> ...



I believe that! I'd have to go back but, I believe in our original contract at Polo Towers it limited DRI to how much they could increase MF's per year. Somehow that wording was changed (my memory could be bad so I could be wrong. It just seems like a rant I had about DRI many years ago). There was also wording of a easment that prevented a building over 4 stories being built in front of Polo Towers. Several years ago a company bought that slim strip of land and had plans to build a high rise there. Word was that DRI was going to "buy out" the owners right to a view without their vote. 

Unfortunately, this is not specific to DRI. Other management companies that maintain control have a habit of changing rules to fit their needs. I know I've seem Starwood owners up in arms, Wyhndm owners have had issue, Festiva owners have posted complaints and of course there's everyones favorite.....Westgate. This issue is not DRI specific but, it's more noticable because DRI is more active aquiring distressed resorts and rehabilitating them to meet their standards.........at owners expense of course. DRI isn't a charity.


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