# MVC Trust Proposed 2016 Maintenance Fee



## JIMinNC (Sep 5, 2015)

I just received the meeting notice for the MVC Trust Owners Association Board Meeting with the proposed 2016 budget. Based on that, it looks like the proposed 2016 maintenance fee is $125.62 per beneficial interest (250 points) or $0.5025 per point compared to $0.4750 in 2015. (A $0.275 increase or 5.8%.) 

The proposed Destination Club dues are $185 for Owners and Select in 2016 compared to $175 for 2015. (A $10 or 5.7% increase.)

Dues for Executive and Presidential are proposed at $225 and Chairman at $250.


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## NYFLTRAVELER (Sep 5, 2015)

JIMinNC said:


> I just received the meeting notice for the MVC Trust Owners Association Board Meeting with the proposed 2016 budget. Based on that, it looks like the proposed 2016 maintenance fee is $125.62 per beneficial interest (250 points) or $0.5025 per point compared to $0.4750 in 2015. (A $0.275 increase or 5.8%.)
> 
> The proposed Destination Club dues are $185 for 2016 compared to $175 for 2015. (A $10 or 5.7% increase.)



Unless new resorts are rolled out (not merely a block of rooms in an existing hotel) I think it will soon get to the point where owners will start to push back.  I for one did not join MVCI DC program in order to obtain glorified hotel rooms. I bought into the program (resale) based on the array of resorts and the family-friendly amenities and accommodations at those resorts.


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## SueDonJ (Sep 5, 2015)

JIMinNC said:


> I just received the meeting notice for the MVC Trust Owners Association Board Meeting with the proposed 2016 budget. Based on that, it looks like the proposed 2016 maintenance fee is $125.62 per beneficial interest (250 points) or $0.5025 per point compared to $0.4750 in 2015. (A $0.275 increase or 5.8%.)
> 
> The proposed Destination Club dues are $185 for 2016 compared to $175 for 2015. (A $10 or 5.7% increase.)



I've been wondering how the Club Dues would shake out following the status tier changes back on April 30th.  Are you being advised of only your amount or the varying amounts for all Members?


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## BocaBoy (Sep 5, 2015)

JIMinNC said:


> I just received the meeting notice for the MVC Trust Owners Association Board Meeting with the proposed 2016 budget. Based on that, it looks like the proposed 2016 maintenance fee is $125.62 per beneficial interest (250 points) or $0.5025 per point compared to $0.4750 in 2015. (A $0.275 increase or 5.8%.)
> 
> The proposed Destination Club dues are $185 for 2016 compared to $175 for 2015. (A $10 or 5.7% increase.)



The MVCI maintenance fees remain totally out of control.  This is an essentially no inflation environment and now even energy costs are down, but these fees continue to increase dramatically every year.  DC trust maintenance fees will be up something like 25% in 6 years.  They did a much better job of controlling costs in the earlier days of higher inflation.

It does not have to be this way.  I have lived in a full service luxury high rise condo building (150 units) for the past 8 years, with a full time staff and nearly as many amenities (excluding food) as most MVCI resorts.  The building is almost 40 years old and we keep it in top condition. The roof, windows, elevators, etc., have all been replaced in the past 7 years.  And the maintenance fee?  Exactly 6.7% higher today than it was in 2007.


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## dioxide45 (Sep 5, 2015)

SueDonJ said:


> I've been wondering how the Club Dues would shake out following the status tier changes back on April 30th.  Are you being advised of only your amount or the varying amounts for all Members?



That would be good to know. Will they have more price tiers for each level or go the route of just two? My guess is that Select and below will be $185 and Executive and above will be $225 for Executive and above. A $10 increase across the board.


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## JIMinNC (Sep 5, 2015)

SueDonJ said:


> I've been wondering how the Club Dues would shake out following the status tier changes back on April 30th.  Are you being advised of only your amount or the varying amounts for all Members?



Forgot to include that - the membership dues are shown as follows:

Owner and Select: $185
Executive and Presidential: $225
Chairman: $250

I'll edit the top post to add that. Thanks for the reminder.


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## JIMinNC (Sep 5, 2015)

BocaBoy said:


> The MVCI maintenance fees remain totally out of control.  This is an essentially no inflation environment and now even energy costs are down, but these fees continue to increase dramatically every year.  DC trust maintenance fees will be up something like 25% in 6 years.  They did a much better job of controlling costs in the earlier days of higher inflation.
> 
> It does not have to be this way.  I have lived in a full service luxury high rise condo building (150 units) for the past 8 years, with a full time staff and nearly as many amenities (excluding food) as most MVCI resorts.  The building is almost 40 years old and we keep it in top condition. The roof, windows, elevators, etc., have all been replaced in the past 7 years.  And the maintenance fee?  Exactly 6.7% higher today than it was in 2007.



I guess it all depends upon your frame of reference...when I see just a 5% increase, I'm happy. When we were Diamond owners it was worse. In our last 6 years of Diamond Kaanapali Beach ownership we had two years with about 10% increases and one year with a 19% increase. Compared to that 5% looks great.

One thing your condo unit doesn't have to worry about is stock price. Marriott has  to keep the boys on Wall Street happy who expect earnings to increase well ahead of inflation every quarter. If it doesn't and their bonuses suffer, they punish you.

Also, not every category of inflation is the same and I suspect that overall travel costs lead food, clothing, housing, energy (which is negative inflation), the largest categories in overall inflation.


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## dioxide45 (Sep 5, 2015)

JIMinNC said:


> Forgot to include that - the membership dues are shown as follows:
> 
> Owner and Select: $185
> Executive and Presidential: $225
> ...



That is a pretty stiff increase for Chairman's Club owners. $35 increase, or just over 16%.


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## GregT (Sep 5, 2015)

JIMinNC said:


> I just received the meeting notice for the MVC Trust Owners Association Board Meeting with the proposed 2016 budget. Based on that, it looks like the proposed 2016 maintenance fee is $125.62 per beneficial interest (250 points) or $0.5025 per point compared to $0.4750 in 2015. (A $0.275 increase or 5.8%.)
> 
> The proposed Destination Club dues are $185 for Owners and Select in 2016 compared to $175 for 2015. (A $10 or 5.7% increase.)
> 
> Dues for Executive and Presidential are proposed at $225 and Chairman at $250.



Wow, that's a big number for the Trust Point MFs.  I'm really sorry to see this -- it has never been economical, but it is rapidly becoming ridiculous.  Wasn't it $0.45 two years ago?

The addition of the Ritz Carlton properties have to be putting upward pressure on the MFs, but that can't be all of it.  The new points properties that Starwood is rolling out are equally expensive from a points perspective.  Very strange and very far from the original thesis for timeshares that they are prepaid (and economical) vacation alternatives.

Interesting.  Thanks for posting this.

Best,

Greg


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## GregT (Sep 5, 2015)

dioxide45 said:


> That is a pretty stiff increase for Chairman's Club owners. $35 increase, or just over 16%.



It's also interesting because in combination with the new promotion, I suspect there will be many brand new enrolled owners who are instantly Chairman's Club.

The annual dues don't really move the needle -- this financial model is still heavily dependent on point sales -- but it's nice to have recurring revenue.

Best,

Greg


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## JIMinNC (Sep 5, 2015)

GregT said:


> Very strange and very far from the original thesis for timeshares that they are prepaid (and economical) vacation alternatives.



Maybe not. According to this article from CNBC, hotel rates are projected to climb by 5.4% annually this year, very similar to the last two years MVC increases. If that proves to be true, then the overall economic comparison between timeshares and hotels won't change much. See link below:

CNBC hotel inflation article

I also looked at some data from the US Travel Association, and from 2013 to 2014 hotel rates went up 4.5% when the general inflation rate in the economy was just a little over 1.5%


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## GregT (Sep 5, 2015)

JIMinNC said:


> Maybe not. According to this article from CNBC, hotel rates are projected to climb by 5.4% annually this year, very similar to the last two years MVC increases. If that proves to be true, then the overall economic comparison between timeshares and hotels won't change much. See link below:
> 
> CNBC hotel inflation article
> 
> I also looked at some data from the US Travel Association, and from 2013 to 2014 hotel rates went up 4.5% when the general inflation rate in the economy was just a little over 1.5%



Understood, but I guess I was thinking more that timeshares are intended to be a more economical vacation option than hotels -- not merely keep pace with them.

Wow -- at $0.50 per point, it's really hard to find the intrinsic value at that ever-escalating price.

I believe (and this comment only diminishes my ownership) that Marriott needs to find ways to ascribe value to Trust Point ownership, like new properties need Trust Points, etc.  Or different Luxury Collection options to owners of Trust Points.

Interesting stuff.

Best,

Greg


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## VacationForever (Sep 6, 2015)

Makes owning weeks of location where you want to go much more compelling.


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## JIMinNC (Sep 6, 2015)

GregT said:


> Understood, but I guess I was thinking more that timeshares are intended to be a more economical vacation option than hotels -- not merely keep pace with them.
> 
> Wow -- at $0.50 per point, it's really hard to find the intrinsic value at that ever-escalating price.
> 
> ...



Yes, I can certainly see where $0.50/point looks super expensive to you guys with lots of enrolled weeks and a cost per point in the $0.25-$0.35 range. But to someone like me who first entered the system when Trust points were $0.45, frankly $0.50 doesn't feel that much different to me. If the numbers worked a year ago at $0.45, they probably still work next year at $0.50. In fact, since our single enrolled week is a low point value week, the Trust points are actually our cheapest points. Because of that, starting in 2017, we're going to experiment with trading that week through II and trying for an up-trade, rather than electing points as we did in 2015/2016. We'll likely use point rentals to replace the points foregone by not electing.

Even at $0.50/point the 650 points we used for 4 days next spring at Harbour Point during Heritage PGA week are only $325 vs. over $1500 to rent those same 4 days on Marriott.com. Even the $3725 "cost" of our 2BR OF week next summer at MOC is a decent deal compared to Marriott.com where even 1BR OF units rent for $700-$800 or so per night in summer. I've never even seen a 2BR OF online there.


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## Ralph Sir Edward (Sep 6, 2015)

GregT said:


> Understood, but I guess I was thinking more that timeshares are intended to be a more economical vacation option than hotels -- not merely keep pace with them.
> 
> Wow -- at $0.50 per point, it's really hard to find the intrinsic value at that ever-escalating price.
> 
> ...



I wonder when the resale transfer fee (currently at $2 a point, I believe) will be raised. That's the real elephant in the tent...


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## suzannesimon (Sep 6, 2015)

I'm very happy I have enrolled weeks vs Trust points (even though I never use them).   The same amount of trust points would be costing over $2,000 more in fees.


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## BocaBoy (Sep 6, 2015)

I think people miss the point when they compare maintenance fee increases to travel costs, including hotel room rates.  The real comparison should be to luxury condo fees because that is what they are.  They are the costs to maintain the property.  Of course timeshares will cost more than a residential condo, but here we are talking about percentage increases in these fees.


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## BocaBoy (Sep 6, 2015)

JIMinNC said:


> Forgot to include that - the membership dues are shown as follows:
> 
> Owner and Select: $185
> Executive and Presidential: $225
> Chairman: $250



I hope they are planning some real enhancements for Chairman's Club, because right now you don't get much at all for the extra $25 over Presidential.


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## BocaBoy (Sep 6, 2015)

JIMinNC said:


> One thing your condo unit doesn't have to worry about is stock price. Marriott has  to keep the boys on Wall Street happy who expect earnings to increase well ahead of inflation every quarter. If it doesn't and their bonuses suffer, they punish you.



But stock price should not affect maintenance fees at all.  The Association Boards set them. (I do realize Marriott controls many of these Boards.) And Marriott itself pays the fees on many many units.  The maintenance fees are spent to maintain the property.


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## Ralph Sir Edward (Sep 6, 2015)

BocaBoy said:


> But stock price should not affect maintenance fees at all.  The Association Boards set them. (I do realize Marriott controls many of these Boards.) And Marriott itself pays the fees on many many units.  The maintenance fees are spent to maintain the property.



But Vacation Club point fees aren't actually maintenance fees.  A MVC point owner owns no property to pay MF on. They are paying a fee for access to a slice of the pool of timeshares owned by the MVC. The MVC is a middle man. Do you expect them to work for no profit...

(Note: there are pluses and minuses to this construct. YMMV,,,)


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## suzannesimon (Sep 6, 2015)

I haven't seen any budgets but for those of us who own coastal US timeshares, hold onto your hats because FEMA has greatly increased the areas requiring Federal Insurance and have increased the premiums.  My Delaware condo board said that the flood insurance will be increasing 18 percent a year until the Flood Insurance program is solvent again due to Katrina and Sandy.  My guess is that is having an impact on our fees.


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## ilene13 (Sep 6, 2015)

As someone who is Chairman's Club I personally have a problem with a $250 a year fee as opposed to $185 or $225.  I get nothing special from the membership.  I enrolled my weeks strictly for the possibility of having flexibility.  I have to have a separate II account for my non Marriott weeks and in my Marriott weeks none of my units are lock offs.  I'd like to know what I am getting for the extra 25/65 dollars!


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## mjm1 (Sep 6, 2015)

I too am disappointed that the MF's are increasing this much given the current rate of inflation. We love our timeshares, but with retirement not that far in the future and a fixed income, we will have to reconsider what we keep in our portfolio. Even if we keep working, this level of increases makes owning more challenging.

It will be interesting to see how much our traditional weeks increase too.

Mike


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## krj9999 (Sep 6, 2015)

Well, the proposed MF increase for Willow Ridge is 8.3% (reserve fee up 10%; operating up 7.2%).  So I'm not surprised by 5.8% for the Trust.

Regarding inflation, there may be deflation in fuel prices, some airfare and some technology products, but everywhere else for the most part, I see higher prices for products and services locally.


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## bogey21 (Sep 6, 2015)

The simple truth is that those who own are at Marriott's mercy which is driven by VAC's desire for profits.  Bottom line is you can either sell or enjoy.  The choice is yours.  I made my choice years ago and sold but I do understand why some choose to hold and enjoy.

George


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## JIMinNC (Sep 6, 2015)

BocaBoy said:


> I think people miss the point when they compare maintenance fee increases to travel costs, including hotel room rates. The real comparison should be to luxury condo fees because that is what they are. They are the costs to maintain the property. Of course timeshares will cost more than a residential condo, but here we are talking about percentage increases in this fees.





BocaBoy said:


> But stock price should not affect maintenance fees at all.  The Association Boards set them. (I do realize Marriott controls many of these Boards.) And Marriott itself pays the fees on many many units.  The maintenance fees are spent to maintain the property.





Ralph Sir Edward said:


> But Vacation Club point fees aren't actually maintenance fees.  A MVC point owner owns no property to pay MF on. They are paying a fee for access to a slice of the pool of timeshares owned by the MVC. The MVC is a middle man. Do you expect them to work for no profit...
> 
> (Note: there are pluses and minuses to this construct. YMMV,,,)



When you drill into the numbers of the proposed budget, it becomes a little more interesting...

I'm focusing only on the expense side here since the revenue just recoups the expenses. Shown below per beneficial interest:


*Component Expenses (1)* 
2015: $111.808                  
2016: $114.866             
Change: +2.7%

*Direct Expenses (2) * 
2015:     $0                           
2016: $2.134              
Change: N/A

*Trust Association Admin* 
2015: $21.252                    
2016:  $25.95           
Change: +22.11%

_(1) Component Expenses includes the assessments paid by the Association to the owners associations which govern the resorts in which the Trust owns timeshare interests.

(2) Direct expenses are expenses billed directly to the Association, or to the Management Company on behalf of the Association, with respect to the operation and management of Trust Property located at Marriott Vacation Club at the Mayflower._

So what this shows is the actual assessments paid by the Trust Owners Association to the resorts (Component Expenses) were only up 2.7% (this is the part most closely comparable to condo fees). The big increase was due to the first time addition of the direct expenses of the Mayflower units and a whopping 22% jump in Trust Administration.

So drilling deeper into the Trust Admin expenses to see what is driving that increase, the biggest percentage jumps in the subcategories of Trust Admin are:

*Bad debt expense: +29.9%
Component servies: +53.87% (3)
Credit Card Fees: +32.8%
Exchange Company Dues: +21.6% (4)
Management Fee: +16.6%
Property Taxes: +22.8%
*
_(3) Component services includes the incremental costs of services provided in connection with Beneficiaries' nightly use of Accommodations which are not otherwise included in Component Expenses or Direct Expenses. These services may include but are not limited to, housekeeping, engineering, loss prevention, and front desk services necessitated by nightly use of Accommodations.

(4) This increase is directly reflected in the increase in the Club dues, and does not impact the maintenance fee itself _

So excluding the Exchange company dues (which doesn't directly impact the $0.5025 maintenance fee), Trust Admin Expenses were $10,680,979 in the 2015 budget and are $13,816,107 in the proposed 2016 budget. *So the increase in Trust Admin Expense that directly impacts the Maintenance fee was $3,135,128, or 29.4% from 2015 to 2016.* The largest $$$ contributions to the increase were:

*Bad debts: +$833,039
Credit Card Fees: +$590,545
Property Taxes: +$515,776
Management Fee: +$512,370
Component Services: +$408,635
*

*These four categories account for $2.86 million of the $3.14 million increase in Trust Admin expenses, or 91% of the aggregate rise. So these are the primary categories that are driving the 5.8% increase in the Trust maintenance fee.*


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## JIMinNC (Sep 6, 2015)

To summarize the above for those that don't like lots of numbers, the bottom line is the Trust expenses reimbursed to the individual resort owners associations only is increasing a modest 2.7% from 2015 to 2016. The larger increase in maintenance fees are being driven by other factors unique to the Trust:

1) A small expense increase from the addition of the Mayflower units to the Trust;

2) A 22% rise in Trust Administration costs driven by increased bad debt expense,  credit card fees, property taxes, the management fee, and the cost of nightly use of timeshare units (extra housekeeping, etc)


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## GregT (Sep 6, 2015)

JIMinNC said:


> To summarize the above for those that don't like lots of numbers, the bottom line is the Trust expenses reimbursed to the individual resort owners associations only is increasing a modest 2.7% from 2015 to 2016. The larger increase in maintenance fees are being driven by other factors unique to the Trust:
> 
> 1) A small expense increase from the addition of the Mayflower units to the Trust;
> 
> 2) A 22% rise in Trust Administration costs driven by increased bad debt expense,  credit card fees, property taxes, the management fee, and the cost of nightly use of timeshare units (extra housekeeping, etc)



Jim, that was a nice analysis -- thanks very much for the data!

Best,

Greg


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## davidvel (Sep 6, 2015)

JIMinNC said:


> To summarize the above for those that don't like lots of numbers, the bottom line is the Trust expenses reimbursed to the individual resort owners associations only is increasing a modest 2.7% from 2015 to 2016. The larger increase in maintenance fees are being driven by other factors unique to the Trust:
> 
> 1) A small expense increase from the addition of the Mayflower units to the Trust;
> 
> 2) A 22% rise in Trust Administration costs driven by increased bad debt expense,  credit card fees, property taxes, the management fee, and the cost of nightly use of timeshare units (extra housekeeping, etc)


And this seems to dispel the rumor/fear that the DC Club's flexibility (ie. nightly vs. 1 week stay) costs would be borne by the HOAs and weeks owners. Good to know.


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## bazzap (Sep 6, 2015)

davidvel said:


> And this seems to dispel the rumor/fear that the DC Club's flexibility (ie. nightly vs. 1 week stay) costs would be borne by the HOAs and weeks owners. Good to know.


"Costs would be borne by the HOAs and weeks owners"
I would say that is most definitely NOT very good news!

*** Just rereading this, I have probably been rather hasty and not picked up that this suggests 
       my fear may have actually been dispelled - I hope so anyway? ***


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## JIMinNC (Sep 6, 2015)

bazzap said:


> *** Just rereading this, I have probably been rather hasty and not picked up that this suggests my fear may have actually been dispelled - I hope so anyway? ***



Yes, no need to fear. It appears the Trust incurs the extra costs for the nightly stays, *not* the HOAs. That is what "Component Services" are in the Trust Association budget - the extra costs of supporting nightly stays.


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## Ralph Sir Edward (Sep 6, 2015)

JIMinNC said:


> When you drill into the numbers of the proposed budget, it becomes a little more interesting...
> 
> I'm focusing only on the expense side here since the revenue just recoups the expenses. Shown below per beneficial interest:
> 
> ...



Thanks, Jim. This explains to em how to project the impact of the next recession on VAC...


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## dioxide45 (Sep 6, 2015)

ilene13 said:


> As someone who is Chairman's Club I personally have a problem with a $250 a year fee as opposed to $185 or $225.  I get nothing special from the membership.  I enrolled my weeks strictly for the possibility of having flexibility.  I have to have a separate II account for my non Marriott weeks and in my Marriott weeks none of my units are lock offs.  I'd like to know what I am getting for the extra 25/65 dollars!



For $65 you are getting the ability to book 1+ nights 13 months out and an extra 5% off with the owners discount. Those paying the $185 don't have those privileges. For $25 you get an extra half year on banked points.


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## dioxide45 (Sep 6, 2015)

GregT said:


> It's also interesting because in combination with the new promotion, I suspect there will be many brand new enrolled owners who are instantly Chairman's Club.
> 
> The annual dues don't really move the needle -- this financial model is still heavily dependent on point sales -- but it's nice to have recurring revenue.
> 
> ...



If 5% of the owners are Chairman's, that means that about 20,000 owners are at that level. By charging them $25 more than what they would have charged them last year, they are pulling in an extra half a million dollars. Not much to move the needle, but those dollars add up fast.


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## BocaBoy (Sep 6, 2015)

Ralph Sir Edward said:


> But *Vacation Club point fees aren't actually maintenance fees.  A MVC point owner owns no property to pay MF on*. They are paying a fee for access to a slice of the pool of timeshares owned by the MVC. The MVC is a middle man. Do you expect them to work for no profit.



I think you misunderstand the nature of trust ownership.  Trust point owners do in fact own a small piece of each resort.  It is true that MVCI acts as a middleman but that does not change the nature of the ownership.

It is also true that Trust maintenance fees include items over and above the individual resort fees.  But here we are talking about increases in those fees, not the absolute level.


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## BocaBoy (Sep 6, 2015)

dioxide45 said:


> For $65 you are getting the ability to book 1+ nights 13 months out and an extra 5% off with the owners discount. Those paying the $185 don't have those privileges. For $25 you get an extra half year on banked points.



At the higher elite levels, you also get the opportunity to exchange your weeks for more points and potentially save a lot more money on things like exchange fees.  These two items probably provide the greatest justification for the higher fees.


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## dansimms (Sep 6, 2015)

*Seems pretty reasonable*

Considering that most Chairman, derive most of their points from their Legacy weeks, this seems to be a modest increase in the total picture.  I have 2500 Trust Points and over 10,000 points through Legacy, so my combined average will still be in the low 40 cent range with the typical bump I expect to get in the Legacy resorts I own. Hopefully my grand total won't average over 50 cents for another couple of years.  The entire system seems to be well maintained, so I continue to be pleased.  I am still making payments, so when they are done in the next 3 years, these type of increases will easily be overshadowed by not having to make thousands of dollars of mortgage payments per year.


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## BocaBoy (Sep 6, 2015)

krj9999 said:


> Regarding inflation, there may be deflation in fuel prices, some airfare and some technology products, but *everywhere else for the most part, I see higher prices* for products and services locally.



That is certainly not what I have seen as a Board member of our condominium association.  In recent years our biggest challenge has been energy cost, and this year our overall expenses are WAY down because of the current cheaper energy.  Nothing else in the budget has shown much inflation.  For next year the big budget decision will be whether to reduce our expense budget, not how much to increase it.


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## l0410z (Sep 6, 2015)

The 2016 MF fee for DC points should be the normalization of all of the 2016  MF of underlying units within the resorts that are in the trust.    It also has whatever overhead there might be associated with the DC Program.  

I would think inherent in the DC program is an added conversion fee  within MF when moving weeks into the trust.  This is based on the assumption that many  of the units moved into the trust were the unsold non prime time units.  These units have fewer DC point value associated with them yet the MF fees are the same as the prime units at the same resorts not moved into the trust.   The cost of this is spread across all DC point owners.   This evens out as more and more prime units get moved in the trust with ROFR acquisitions.  If every unit was moved under the trust the fee goes away.


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## dioxide45 (Sep 6, 2015)

JIMinNC said:


> When you drill into the numbers of the proposed budget, it becomes a little more interesting...
> 
> I'm focusing only on the expense side here since the revenue just recoups the expenses. Shown below per beneficial interest:
> 
> ...



Interesting analysis. Overall it seems then that HOA MFs are only up about 2.7%. The new Direct Expense must be the fee that they are paying to The Mayflower to cover housekeeping and other costs related to the property ownership there.

I do find it odd that trust administration fees are up so much. Why is it costing them so much more in 2016 to administer the trust than it did in 2015? Also, why are Component Serveries up so much if HOA fees only went up about 2.7%? The numbers don't seem to add up.


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## JIMinNC (Sep 6, 2015)

dioxide45 said:


> Interesting analysis. Overall it seems then that HOA MFs are only up about 2.7%. The new Direct Expense must be the fee that they are paying to The Mayflower to cover housekeeping and other costs related to the property ownership there.
> 
> I do find it odd that trust administration fees are up so much. Why is it costing them so much more in 2016 to administer the trust than it did in 2015? Also, why are Component Serveries up so much if HOA fees only went up about 2.7%? The numbers don't seem to add up.



Remember these are budget numbers, not actuals, so it is based on expectations. The comparisons are budget to budget not actual to budget so we are comparing apples to apples.

As I said above, over 90% of the increase comes from increased budget numbers for Bad debts, credit card fees, Property taxes, the management fee, and component services. Not sure why they are allocating so much more to bad debt. The credit card fees are sort of an uncontrollable expense, I presume, as are property taxes. The management fee is certainly controllable by Marriott.

I theorize that they are allocating so much more for component services maybe because they are expecting more less-than-a-week stays. That is what component services is - the Trust is paying for the extra costs the individual resorts incur due to people breaking weeks and staying just a few nights.


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## dioxide45 (Sep 6, 2015)

JIMinNC said:


> I theorize that they are allocating so much more for component services maybe because they are expecting more less-than-a-week stays. That is what component services is - the Trust is paying for the extra costs the individual reports incur due to people breaking weeks and staying just a few nights.



This makes sense, with more people now able to book 1+ nights 13 months out it is to be expected that there may be a lot more short stays on points.


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## tschwa2 (Sep 6, 2015)

As much as owners complained about the skim, I don't think the skim is covering the "component fees" for legacy owners and trust owners may have to suck up the extra expenses.  Remember that MVCI loses the $80 lock off fee for every enrolled owner who locks off each year.  

And I am certainly not surprised about the 20+% increase in the exchange company services (II).  It seems like those enrolled owners who still exchange with II are making 2-3 times the retrades they would have made had it not been for the "free" M to M trades and retrades. 

I would still love to know how much II gets for each corporate II account and then if MIVC pays II a token amount for each exchange or if their is a flat rate charged per account based on the average number of internal exchange.  

In a way I don't care because I just sold back my final Marriott week (although I may be opening to buying again in the future) but would not be surprised if Marriott started charging a Guest Cert fee either just to non enrolled owners (claiming the annual fee covers these) or to everyone.  I would imagine it would start fairly nominal at around $20 but would climb to hopefully not more than $59.


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## dioxide45 (Sep 6, 2015)

tschwa2 said:


> As much as owners complained about the skim, I don't think the skim is covering the "component fees" for legacy owners and trust owners may have to suck up the extra expenses.  Remember that MVCI loses the $80 lock off fee for every enrolled owner who locks off each year.



I think there are several components to the extra fees that the HOA incurs because of short stays. Perhaps the trust is only covering the expenses that are as a result of trust based stays. I suspect that the weeks based owners are covering the costs for enrolled points short stays. That is why we saw huge increases in this line item on the HOA financial statements.


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## JIMinNC (Sep 7, 2015)

tschwa2 said:


> And I am certainly not surprised about the 20+% increase in the exchange company services (II).  It seems like those enrolled owners who still exchange with II are making 2-3 times the retrades they would have made had it not been for the "free" M to M trades and retrades.



I do not think the "Exchange Company Dues" line item in the budget refers to just II - although II fees are certainly a portion of those fees. The total line item "Exchange Company Dues" ties dollar-of-dollar to the Destination Club Dues of $185/$225/$250. So it must cover not only II fees when DC members trade through II, but the fees for internal booking/trading within the Destination Club as well.


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## JIMinNC (Sep 7, 2015)

dioxide45 said:


> The new Direct Expense must be the fee that they are paying to The Mayflower to cover housekeeping and other costs related to the property ownership there.



Yes. The sub-accounts under "Direct Expenses" are:

Site Administration
Front Desk
Housekeeping
Insurance
Maintenance
Management Fee
On-Site Operations Fee
Property/Other Tax
Recovery of Start Up Costs
Reserves
Security/Loss Prevention
Utilities

According to the notes, all are 100% attributable to The Mayflower.


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## JIMinNC (Sep 7, 2015)

I just saw one other key fact in the notes that explain the "Property Tax" number in the Trust Association Admin Expenses. I had wondered why property taxes were included in the Trust Admin expenses instead of being part of the Component Expenses paid to the resort HOAs.

"The real estate taxes are for the Newport Coast, Timber Lodge, Desert Springs 1, Desert Springs 2, Shadow Ridge 1, Shadow Ridge 2, Frenchman's Cove, St Thomas Suites, and GRC Tahoe Accommodations because the Component Expenses for California and the US Virgin Islands properties do not include the real estate taxes. The Association will pay these property taxes to the appropriate taxing authority for the jurisdiction in which the California and US Virgin Islands Accommodations are located."

So all other property taxes for the other MVC resorts are included in Component Expenses, just not California and the US Virgin Islands, which the Trust pays directly.


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## l0410z (Sep 7, 2015)

It makes sense that the membership fee for all tier levels increase and higher levels increase faster. 

 The higher tier levels seem to be mainly acheived through legacy week participation in the DC program.  Week ownership will only increase its contribution to higher levels with the current post 6/10 program.   The 1 + night flexibility benefit hence participation increases  at higher tiers.  As noted above the cost of this is contained with the component services of the DC MF.  So the biggest contributor of its usage is from week ownership yet the week MF goes to the resort.  This puts the cost burden  for this in the pure  DC Program MF.  The only way to recoup this is from membership fees.


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## bazzap (Sep 7, 2015)

l0410z said:


> It makes sense that the membership fee for all tier levels increase and higher levels increase faster.
> 
> The higher tier levels seem to be mainly acheived through legacy week participation in the DC program.  Week ownership will only increase its contribution to higher levels with the current post 6/10 program.   The 1 + night flexibility benefit hence participation increases  at higher tiers.  As noted above the cost of this is contained with the component services of the DC MF.  So the biggest contributor of its usage is from week ownership yet the week MF goes to the resort.  This puts the cost burden  for this in the pure  DC Program MF.  The only way to recoup this is from membership fees.


This makes absolutely no sense at all to me!
Higher levels already pay higher fees, why on earth should we also face higher increases on those higher fees?
What next?
We have gone from 3 levels to 6 levels, will it be 12 levels next with associated even higher fees and even higher increases?


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## JIMinNC (Sep 7, 2015)

l0410z said:


> The 1 + night flexibility benefit hence participation increases  at higher tiers.  As noted above the cost of this is contained with the component services of the DC MF.  So the biggest contributor of its usage is from week ownership yet the week MF goes to the resort.  This puts the cost burden  for this in the pure  DC Program MF.  The only way to recoup this is from membership fees.



I want to make sure you are not confusing the two different expense line items - "Component Expenses" and "Component Services"...

"Component Expenses" make up a whopping $0.46/point of the $0.5025/point proposed 2016 DC Trust MF ($114.866 per beneficial interest divided by 250 points per BI for Component Expenses). These are the payments from the Trust to the individual HOAs for the resort MF for the weeks owned by the Trust. The total dollar amount paid by the Trust to the resort HOAs is projected to be $147 million in 2016.

Under Trust Association Admin expenses, there is another expense line item - "Component Services". This line item is the additional expenses that the Trust pays to the HOAs to compensate them for the extra housekeeping, maintenance, front desk time, etc that results from the 1+ night option. For 2016 this is projected to be a little over $1 million, so it represents only about $.003 of the 2016 Trust MF. This is the category that is increasing by over 50% from 2015, presumably to cover the increased usage of the 1+ option due to the new tiers expanding access to that benefit.

What this means is the extra cost of the 1+ night option is covered in the Trust Admin Expenses, and does *not* have to be covered by the $185/$225/$250 Club Membership Dues.


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## l0410z (Sep 7, 2015)

JIMinNC said:


> Under Trust Association Admin expenses, there is another expense line item - "Component Services". This line item is the additional expenses that the Trust pays to the HOAs to compensate them for the extra housekeeping, maintenance, front desk time, etc that results from the 1+ night option. For 2016 this is projected to be a little over $1 million, so it represents only about $.003 of the 2016 Trust MF. This is the category that is increasing by over 50% from 2015, presumably to cover the increased usage of the 1+ option due to the new tiers expanding access to that benefit.
> 
> What this means is the extra cost of the 1+ night option is covered in the Trust Admin Expenses, and does *not* have to be covered by the $185/$225/$250 Club Membership Dues.



I was not confused but I also did  not realize the amount paid to the HOA for 1 + was so little.   The fact is the week owners who can trade for legacy points and take advantage of th 1 + do not pay any of that cost because the cost is covered in the MF of DC points only.  I would guess few people got to the higher tiers by pure DC point purchases.  If you owned 3500 DC points with no legacy weeks, would you want to cover the cost of legacy week owners who use it for 1+. I would think most people would find covering the cost of a benefit of someone else unfair.  I do not own DC points so it is not unfair to me but because it doesn't impact me doesn't make it fair.   I was just suggesting that the fees can be used to offset that cost paid right now by DC point MF's only.  The fee is shared  by all. 

I pay the 175 fee (soon to be 185) for my legacy week for the right to trade for DC points.  I have never traded for points  but that right has a value to me and a cost. I pay it.  When I stop seeing the value I won't pay it.      I know this may not be a popular thought but I see nothing wrong with charging higher fees for better privileges.


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## dioxide45 (Sep 7, 2015)

l0410z said:


> The fact is the week owners who can trade for legacy points and take advantage of th 1 + do not pay any of that cost because the cost is covered in the MF of DC points only.



I don't know if this is really the case. I think the HOAs are also paying a pretty hefty price for 1+ nights from enrolled owners electing points. All of the resorts saw pretty steep increases in costs for housekeeping and front desk charges on their annual financial statements. So I think the HOAs (weeks owners) are paying the price for those that elect DC points and use short stays. Now, it does mean that all weeks owners are paying the fee for only those that are actually using points. Not really fare I suppose, but it is the way it is.


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## BocaBoy (Sep 7, 2015)

There have been a lot of recent changes and added benefits in the DC program.  Just to be clear, I can see where that could cause some significant increases in the annual DC membership fees (assuming that these hefty increases don't continue to escalate year after year).

However, the same rationale does not apply to the resort maintenance fees.  Those are totally out of control and I see the HOA Boards behaving like we currently have the inflation of the 1970's.


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## l0410z (Sep 7, 2015)

dioxide45 said:


> I don't know if this is really the case. I think the HOAs are also paying a pretty hefty price for 1+ nights from enrolled owners electing points. All of the resorts saw pretty steep increases in costs for housekeeping and front desk charges on their annual financial statements. So I think the HOAs (weeks owners) are paying the price for those that elect DC points and use short stays. Now, it does mean that all weeks owners are paying the fee for only those that are actually using points. Not really fare I suppose, but it is the way it is.



I am going to send an email to my HOA and ask about the impact of the 1 + on the MF.


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## Ralph Sir Edward (Sep 8, 2015)

BocaBoy said:


> I think you misunderstand the nature of trust ownership.  Trust point owners do in fact own a small piece of each resort.  It is true that MVCI acts as a middleman but that does not change the nature of the ownership.
> 
> It is also true that Trust maintenance fees include items over and above the individual resort fees.  But here we are talking about increases in those fees, not the absolute level.



Certainly that is the way it is sold. If you actually own a piece of each resort, do you get a deed for each little piece? All real estate ownership is deeded in the US.

My view is MVC owns the weeks and then re-slices the pool into access points. the result is you have access to any of the resorts in the pool, within the limits of the Club agreement, but I could be wrong. 

Could anybody point out the relevant terms and conditions of the MVC incorporation papers and the sales agreements for points?


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## JIMinNC (Sep 8, 2015)

Ralph Sir Edward said:


> Certainly that is the way it is sold. If you actually own a piece of each resort, do you get a deed for each little piece? All real estate ownership is deeded in the US.
> 
> My view is MVC owns the weeks and then re-slices the pool into access points. the result is you have access to any of the resorts in the pool, within the limits of the Club agreement, but I could be wrong.
> 
> Could anybody point out the relevant terms and conditions of the MVC incorporation papers and the sales agreements for points?



From the "Multisite Public Offering Statement":


> 1. c.   *Legal Structure of the Multisite Timeshare Plan.*
> Developer either has or will transfer title (or will cause a third party to transfer title) to certain Submission Property to the Trustee to be committed to the Trust as Trust Property. The Trustee will hold legal and equitable title to the Trust Property for the use and benefit of the Beneficiaries of the Trust in accordance with the Trust Agreement and Sections 721.08(2)(c)3. and 4., _Florida Statutes_...
> 
> ...Owners of interests will be the Beneficiaries of the Trust and will receive, at closing, a deed conveying an interest in the Trust. Each interest constitutes a Florida timeshare estate under Chapter 721, _Florida Statutes_, and thereby is considered a Florida real property interest...
> ...



In the Trust Agreement, I also found this language:



> (c) No Legal or Equitable Title.
> The interest of a Beneficiary under this Trust Agreement shall consist of the rights set forth in this trust Agreement. No Beneficiary shall have any right of partition as to any Trust Property or any Interest, other than as may be permitted by Developer. A Beneficiary shall not have any right, title, or interest in or to any portion of the legal and equitable title to the Trust Property...



So they way I read all this as a layman is that the Trust owns legal title to all of the Trust Property. Each owner is a Beneficiary of the Trust and owns an Interest in the entire body of Trust Property through the deed to the Trust, but we do not have legal ownership of the specific underlying Trust Properties. Because these Trust interests are considered a timeshare estate under Florida law, they are considered a real property interest and deeded as such. But, as the paragraph from the Trust Agreement says, the Beneficiaries do not have any direct rights or interests in the title of the actual Trust Property. Each Beneficial Interest is then assigned a point allocation for reservation purposes.


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## GregT (Sep 8, 2015)

Ralph Sir Edward said:


> Certainly that is the way it is sold. If you actually own a piece of each resort, do you get a deed for each little piece? All real estate ownership is deeded in the US.



Here is what a recorded deed for Trust Points looks like.  

Best,

Greg


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## Ralph Sir Edward (Sep 9, 2015)

GregT said:


> Here is what a recorded deed for Trust Points looks like.
> 
> Best,
> 
> Greg



Thanks, Greg and Jim.

My curiosity is how points will be "Viking Funeral-ed" if the economy got really bad again. How would the Trust function under stress of defaults, and what would the individual's legal responsibilities be in a default situation.

Intellectual curiosity only...


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## JIMinNC (Sep 9, 2015)

Ralph Sir Edward said:


> Thanks, Greg and Jim.
> 
> My curiosity is how points will be "Viking Funeral-ed" if the economy got really bad again. How would the Trust function under stress of defaults, and what would the individual's legal responsibilities be in a default situation.
> 
> Intellectual curiosity only...



Hmm...your comment on defaults made me go back and look at the Trust budget and compare it to the Barony Beach Club budget and I saw something very, very odd...

In the 2016 trust budget, bad debt expense was $3.1 million out of a total expense base of $183 million (1.7%) and in 2015, bad debts were $2.3 million out of total expenses of $141 million (1.6%).

But at Barony, in 2015, bad debts were only $61,000 out of $15,475,950 in expenses (0.39%). No 2016 budget yet for Barony, but in 2014 bad debt expense was higher than 2015, but still only 0.64% of total expenses.

Any idea why the Trust would have such a higher provision for bad debts? I assume in both cases this is for maintenance fee payments only and that MVW Corporate would cover bad debt expense for purchases gone south.


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## Ralph Sir Edward (Sep 9, 2015)

JIMinNC said:


> Hmm...your comment on defaults made me go back and look at the Trust budget and compare it to the Barony Beach Club budget and I saw something very, very odd...
> 
> In the 2016 trust budget, bad debt expense was $3.1 million out of a total expense base of $183 million (1.7%) and in 2015, bad debts were $2.3 million out of total expenses of $141 million (1.6%).
> 
> ...



I expect the trust has a higher level of new (debt-leveraged) purchases that Barony has. It's not like you can get a second mortgage on a used Timeshare....


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## NJDave (Sep 9, 2015)

ilene13 said:


> As someone who is Chairman's Club I personally have a problem with a $250 a year fee as opposed to $185 or $225.  I get nothing special from the membership.  I enrolled my weeks strictly for the possibility of having flexibility.  I have to have a separate II account for my non Marriott weeks and in my Marriott weeks none of my units are lock offs.  I'd like to know what I am getting for the extra 25/65 dollars!



A member with 2,000 points should have less activity than a member with 20,000 points.  The lower fee reflects the cost of the lower activity.

Someone at Chairman likely owns multiple weeks and thus has  a combination of multiple exchanges for Marriott reward points, Interval Marriott trades or Destination point reservations and pays no additional fees for those services (except for the $65 paid as membership).


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## JIMinNC (Sep 9, 2015)

Ralph Sir Edward said:


> I expect the trust has a higher level of new (debt-leveraged) purchases that Barony has. It's not like you can get a second mortgage on a used Timeshare....



My assumption is that the bad debts shown for both Barony and the Trust were not from purchase money, but are from defaults on maintenance fees only.

In their 2014 10-K, Marriott says their default rate on new purchases was 3.9%. But they also say they set aside a reserve for bad debts on the books of the MVW corporation to account for a certain non payment percentage. So any default on debt-based purchases would be accounted for on the corporate balance sheet, not on the revenue/expense statements for the various HOAs and the Trust Association, which is totally separate from MVW corporate.

The 10-K also says that in 2014, about 42% of customers financed their purchase, so for the $548 million in North American sales, that could mean about $230 million of new consumer debt assuming the purchase size is the same whether the customer pays by cash or credit. Based on that, the expectation of bad debt from purchases might be closer to $9 million than the $3 million shown on the Trust budget.

For those reasons, I think the bad debt numbers shown on the Trust budget and the Barony budget are for defaults on maintenance fees only, so I still don't understand why Trust owners would be so much more likely to not pay their MF than Barony owners.


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## Ralph Sir Edward (Sep 10, 2015)

JIMinNC said:


> My assumption is that the bad debts shown for both Barony and the Trust were not from purchase money, but are from defaults on maintenance fees only.
> 
> In their 2014 10-K, Marriott says their default rate on new purchases was 3.9%. But they also say they set aside a reserve for bad debts on the books of the MVW corporation to account for a certain non payment percentage. So any default on debt-based purchases would be accounted for on the corporate balance sheet, not on the revenue/expense statements for the various HOAs and the Trust Association, which is totally separate from MVW corporate.
> 
> ...



I think that goes back to the Vacation Club concept. You cannot evade your ownership of a directly owned timeshare easily. That's why the "Viking Funeral" concept was created.

However, my reading of the Vacation Club docs allow default without recourse, as the points owners do not own the underlying weeks directly. (Of course, this would have to be settled in a court of law, as the combined terms are rather weasel-worded). And, of course, IANAL...


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## JIMinNC (Sep 10, 2015)

Ralph Sir Edward said:


> I think that goes back to the Vacation Club concept. You cannot evade your ownership of a directly owned timeshare easily. That's why the "Viking Funeral" concept was created.
> 
> However, my reading of the Vacation Club docs allow default without recourse, as the points owners do not own the underlying weeks directly. (Of course, this would have to be settled in a court of law, as the combined terms are rather weasel-worded). And, of course, IANAL...



As I thought about it more, I think that the purchase debt may actually have an impact on the disparity between Trust and Barony bad debt expense as you first suggested, even though the actual bad debt expenses shown on the HOA and Trust budgets is related only to the maintenance fee.

If someone defaults on their purchase loan, they are also likely to default on their maintenance fees. So since long-sold out resorts like Barony likely have little purchase debt left, the only defaults they have to deal with are owners who can't/decide they won't continue to pay the $1190 maintenance fee. But in the Trust, there is still a lot of purchase debt outstanding, so there are probably more defaults and these folks also opt not to pay their maintenance fee - which serves to inflate the number of people defaulting on the MF compared to an established resort like Barony. Marriott Vacations Worldwide corporate incurs the bad debt cost for the purchase money, but then the Trust Association has to bear the bad debt expense of the associated maintenance fee.


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## SueDonJ (Sep 10, 2015)

Ralph Sir Edward said:


> I think that goes back to the Vacation Club concept. You cannot evade your ownership of a directly owned timeshare easily. That's why the "Viking Funeral" concept was created.
> 
> However, my reading of the Vacation Club docs allow default without recourse, as the points owners do not own the underlying weeks directly. (Of course, this would have to be settled in a court of law, as the combined terms are rather weasel-worded). And, of course, IANAL...



I don't understand this. If the only parameter that defines recourse for timeshares is whether you're dealing with a Weeks-based deeded system or a Points/Trust-based deeded system, how is it that non-Marriott timeshare companies who offer only a Points/Trust system haven't suffered from rampant defaults by Owners/Members if, as you say, they can suffer no consequence?  If that was the case Disney, for one, wouldn't still be in the timeshare business and they'd certainly not be as successful as they are and always have been.

MVW Points Owners don't own Weeks in the same way as Weeks Owners do, but they own deeded interests in the Trust which is composed of like Weeks (as well as fractional non-MVCI intervals.)  Owners/Members who default on Points purchases and MF's are subject to similar if not the same foreclosure proceedings as Weeks Owners who default, as far as I know.

MVW's Points/Trust-based timeshare system isn't at all the same thing as what's normally referred to on TUG as a "Viking Ship" because alongside the purchase of Points buyers enter into a contractual agreement with MVW to perform as stipulated.  Of course there's recourse for non-performance!


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## Russ14 (Sep 11, 2015)

Suzanne.....heard about the 18% increase in flood insurance on local public radio today.  Apparently the feds are no longer subsidizing however are limiting insurance companies to only 18% increases each year until they get where they need to be.  Example shared today was a home that went from $3000 a year increasing 18% each year to $40,000. Yes $40,000 a year!!   Some think some beach towns will be ghost towns in the next 5-10 years.  This will no doubt have an impact on maintenance fees moving forward.


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## suzannesimon (Sep 11, 2015)

They are limiting it to 18% increases per year so we don't all go jump off the bridge at the same time!  There may be a big sale on coastal properties within the next few years.


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## Fasttr (Sep 11, 2015)

suzannesimon said:


> They are limiting it to 18% increases per year so we don't all go jump off the bridge at the same time!  There may be a big sale on coastal properties within the next few years.



If we all jumped off the bridge at the same time, that would just raise the water levels and make things worse.


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## l0410z (Sep 16, 2015)

I wrote to the liaison for the HOA asking about the costs associated with the DC program 1+ stays and  what impact if any it has on MF's.   

"The Destination checkouts are tracked.  We get reimbursed the checkout/clean cost by the Destinations Trust for every additional checkout/clean."

Nothing new here.  I was curious and looking for a validation that it is not in my MF.


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## SueDonJ (Nov 4, 2015)

JIMinNC said:


> Forgot to include that - the membership dues are shown as follows:
> 
> Owner and Select: $185
> Executive and Presidential: $225
> ...



With Club Dues invoices currently being sent the Points FAQ has been updated to reflect these 2016 amounts.  Thanks, Jim!


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## JIMinNC (Nov 4, 2015)

SueDonJ said:


> With Club Dues invoices currently being sent the Points FAQ has been updated to reflect these 2016 amounts.  Thanks, Jim!



Shouldn't the FAQ also be updated to reflect the 2016 maintenance fee of $0.5025? It still lists the 2015 fee of $0.475.


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## SueDonJ (Nov 4, 2015)

JIMinNC said:


> Shouldn't the FAQ also be updated to reflect the 2016 maintenance fee of $0.5025? It still lists the 2015 fee of $0.475.



Yep, working on the MF thread now and will get to the FAQ.


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## DMSTWO (Nov 4, 2015)

*Interesting wrinkle*



BocaBoy said:


> But stock price should not affect maintenance fees at all.  The Association Boards set them. (I do realize Marriott controls many of these Boards.) And Marriott itself pays the fees on many many units.  The maintenance fees are spent to maintain the property.



I came upon this thread when it was already fairly mature, but I found the above quote on the first page.  For me it portrayed yet another underlying problem with the Destination Club format.

At the older resorts that are predominately held by legacy owners (mostly sold out) the Association Board eventually comes to be dominated by owners, not the developer/manager.  Owners then have a high level of say in MF increases, especially the reserves and elective costs.

I don't think this will ever happen with resorts dominated by the trust.  The managers of the Trust will always hold a significant and dominant majority of the seats on the board.  Sure they have a fiduciary responsibility to the owners of the trust, but one has to question their loyalties.  Is their loyalty really going to be in favor of the trust owners, or to their employer?


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## JIMinNC (Nov 4, 2015)

DMSTWO said:


> At the older resorts that are predominately held by legacy owners (mostly sold out) the Association Board eventually comes to be dominated by owners, not the developer/manager.



Is this true at most mature Marriott resorts? Do owners with no ties to Marriott control most of the boards?

I know in our previous ownership, Diamond Resorts, Diamond employees or those with close ties to Diamond held a majority of the seats on the board even though the resorts were long sold out and theoretically controlled by owners.

When I received the voting proxy for our Marriott Barony ownership earlier this year, I was surprised to see that none of the five candidates for the two open board seats had any obvious ties to Marriott. That was so different than my experience over the previous 16 years as a Diamond owner. In that program, there would be 20, 30, or more candidates for a couple of open positions, with two or three being Diamond employees. The winners would always be the Diamond employees.


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## suzannesimon (Nov 4, 2015)

As long as the developer/manager owns weeks, they can vote those weeks.  The key is to get the owners to vote their proxies when they receive them.  As the developer owns fewer and fewer weeks, the opportunity to get control of the board increases, but the owners have to vote.  You can be sure the developer is voting their ownership weeks.


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## SueDonJ (Nov 4, 2015)

suzannesimon said:


> As long as the developer/manager owns weeks, they can vote those weeks.  The key is to get the owners to vote their proxies when they receive them.  As the developer owns fewer and fewer weeks, the opportunity to get control of the board increases, but the owners have to vote.  You can be sure the developer is voting their ownership weeks.



Except Marriott can gain back sold Weeks through ROFR, foreclosures and buybacks, which Weeks can then be conveyed to the DC Trust at which point the DC Trustee can vote those Weeks.  I'd assume the Trustee's vote will/should be taken with consideration of the Trust's health and thus Marriott's health.

And Marriott is conveying all new developments and acquisitions to the Trust which will result in total Marriott influence from inception forward.


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## suzannesimon (Nov 4, 2015)

Absolutely Susan.  As time goes by, fewer and fewer weeks will be controlled by legacy owners unfortunately.


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## dansimms (Nov 4, 2015)

*DP Property Taxes*

I am pleasantly surprised at how low the tax portion of the fee is on the DPs.


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## JIMinNC (Nov 5, 2015)

dansimms said:


> I am pleasantly surprised at how low the tax portion of the fee is on the DPs.



Look back up at post #47 and it will explain why it is so low. The quoted verbiage below is from the Notes to the proposed 2016 budget for the DC Trust:



> "The real estate taxes are for the Newport Coast, Timber Lodge, Desert Springs 1, Desert Springs 2, Shadow Ridge 1, Shadow Ridge 2, Frenchman's Cove, St Thomas Suites, and GRC Tahoe Accommodations because the Component Expenses for California and the US Virgin Islands properties do not include the real estate taxes. The Association will pay these property taxes to the appropriate taxing authority for the jurisdiction in which the California and US Virgin Islands Accommodations are located."



So the Property Taxes for most of the properties in the Trust are bundled into the "Component Expenses" category of the budget which is part of the main part of the Trust maintenance fee. These Property Taxes are paid by the individual resorts to the local jurisdictions and do not appear to be broken out separately. 

So the Property Taxes shown on the annual DC Trust Owners MF billing is only for the taxes paid _directly by the Trust_ for the seven resorts noted above which require the Property Taxes to be paid directly to the local jurisdiction by each deeded owner - of which the Trust is one such deeded owner. On my billing, the Property taxes amount to $1.51 per beneficial interest. The Trust budget for 2016 had $1.78 per BI for the Property Taxes paid for those 7 resorts, but there was also a "Tax Surplus Return" of $0.27 under revenues which was explained by the Notes as follows: "The revenues in excess of Property Tax expenses for 2015 are being applied against Property Tax expenses for the 2016 fiscal year." So net out the $0.27 from the $1.78 and you get the same $1.51 shown on the 2016 fee billings.


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## SueDonJ (Nov 5, 2015)

suzannesimon said:


> Absolutely Susan.  As time goes by, fewer and fewer weeks will be controlled by legacy owners unfortunately.



Or fortunately, depending on your perspective.  

We bought into the Marriott system specifically, knowing full well that Marriott/MVW had majority influence and would insist on always having it.  That's okay with us - we want Marriott to maintain the brand standard at our resorts and we want access to the large portfolio of Marriott resorts as well as the various Marriott Rewards and Destination Club offerings.

It's impossible for 100% of the owners to be in agreement over resort management.  The few instances I've seen of minority owner groups trying to exert more influence over Marriott have been failures resulting in additional costs to all owners for legal fees as well as changes to Marriott's management style that hinder owner participation (remember when it was possible to email/telephone your board members directly?)  There's also history of resorts having severed relationships with Marriott as manager, with owners having voted them out or Marriott unilaterally making the decision in response to owner dissatisfaction.

I'm not saying that MVW is perfect or that MVW's primary concern is keeping MF's costs down for owners - obviously that's not the case.  But I am saying that I prefer majority influence over my resorts to be that of MVW and not of the owners whether collectively or individually.


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## suzannesimon (Nov 5, 2015)

I'm all about having Marriott quality.  It preserves a high standard.  The independents may have lower fees, but if you ever needed to rent one of your Marriotts, you'll be glad you can,  in most cases over your maintenance fees - not so much with a non-hotel brand.   I used to work as a Community Assn Manager and know what a nightmare it can be when you get a couple of bean-counters on a Board who don't want to spend money on anything.  My concern is more about a lack of weeks that will be available for weeks-exchanges in the future.  Over time many of them will go in the Trust.  The balance of power will then shift to Trust point ownership and the weeks owners might have fewer options.


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## suenmike32 (Nov 11, 2015)

Just received our "Chairman's Club Dues" bill from Marriott for 2016. It is now $250.00
I could be wrong...but I thought it was $215 last year.
Mike


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## Superchief (Nov 11, 2015)

suenmike32 said:


> Just received our "Chairman's Club Dues" bill from Marriott for 2016. It is now $250.00
> I could be wrong...but I thought it was $215 last year.
> Mike



You are correct. This represents a 16% increase. I hope this isn't a sign of things to come. The only new benefit that has value to me is the extended point banking option. With inflation less than 5%, there is no excuse for these exhorbitant cost increases.


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## dioxide45 (Nov 11, 2015)

Superchief said:


> You are correct. This represents a 16% increase. I hope this isn't a sign of things to come. The only new benefit that has value to me is the extended point banking option. With inflation less than 5%, there is no excuse for these exhorbitant cost increases.



I think it is because they now have broken the DC Annual Fee down in to three tiers. It does seem that the highest level, Chairman's Club, saw the biggest increase because their pricing tier is new this year and much higher than what they were paying last year. We must know by now that no new benefit provided comes free from MVCI.

*2015 Fees*
Owner - $175

Premier Owner - $215
Premier Plus Owner - $215

*2016 Fees*
Owner - $185
Select - $185

Executive - $225
Presidential - $225

Chairman's Club - $250


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## Ricci (Nov 11, 2015)

I just received the invoice for my Club Dues.    I find it interesting that when answering the question as to what they cover.....

"This annual fee replaces many of the ala carte fees otherwise payable for various reservation and usage options such as locking off, membership with Interval International and trading for Marriott Rewards points."

And in another statement....

"Payment of Club Dues covers your membership with Interval International, trading for Marriott Rewards points and a number of other transactions such as cancellation of an existing reservation."


I find it odd that they don't mention one of the best benefits....exchange fee for Marriott to Marriott trades.

I'm not saying they've changed the rules....just saying it should have been mentioned and is a huge oversight.


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## bazzap (Nov 11, 2015)

dioxide45 said:


> I think it is because they now have broken the DC Annual Fee down in to three tiers. It does seem that the highest level, Chairman's Club, saw the biggest increase because their pricing tier is new this year and much higher than what they were paying last year. We must know by now that no new benefit provided comes free from MVCI.
> 
> *2015 Fees*
> Owner - $175
> ...


I will just reconfirm, lest it be forgotten, that there are further tiers for International owners. So as European Owners, our 2016 DC Dues are $276.84 to include Spanish VAT.


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