# How Does Starwood Make Money from MFs?



## komosatp (Oct 13, 2009)

I want to make sure I am understanding things correctly.

I review the budget HRA's various associations provide to me.  On that budget, there are very specific (though sometimes unclear) lines that describe where my MFs are/will be going....like housekeeping...reserves...taxes...and administration.

My understanding is that the only revenue that Starwood-Corporate earns out of this budget is the administration amount....meaning that's the amount we pay to Starwood to manage our resorts.  The rest is the amount our resort directly paid/will pay out for various services, repairs, etc.

Am I misunderstanding something?  Do they take a cut of all the other amounts?

Because if I am correctly understanding things, there's been quite a few posts on this board recently that show some posters fundamentally do not understand how there ownership works, and the real dollar amounts involved.  They seem to think that Starwood pockets most of our MFs.....or that the management fee is the biggest part of the budget.  At HRA, it's around 13% (actually less if you include the Atlantis access fee).

Furthermore, the board members that determine our MFs (though made up of SVO execs and their friends) have the fiduciary responsibility to look out for the best interests of owners.  Were they to pass along more money to SVO, just beacuse Starwood asked for it, they'd be subjecting themselves to personal liability for violating that trust.

Which is not to say they don't push the envelope.  Or have conflicts of interest. But outright _"robbing Peter to pay Paul "_ is not very likely....unless people are alleging criminal or civil fraud.


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## Fredm (Oct 13, 2009)

Typically, Starwood takes a 10% operations management fee. It may vary somewhat from resort to resort, but that is the OM fee I am aware of. 10% off the top.

In addition, Starwood personnel staff the resort. They are charged to the resort at an unknown rate, which may or may not be above the compensation cost.  

Supplies are contracted for. I don't know if this applies to Starwood, however some operations managers have agreements with their distributors, which returns a percentage to the management company.
In some cases the manager owns the distributor, and pricing is substantially above the competitive market price.

Selection of vendors, etc. are details which usually appear in the management contract approved by the BOD.


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## stevens397 (Oct 13, 2009)

There is an obvious conflict of interest here and in most of the hotel owned resorts.  Increase the MF and the developer cut increases.  Exercise better control and they end up making less.

I'm not accusing - but Starwood has much higher fees than Marriott and really, little incentive to change.


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## Robert D (Oct 13, 2009)

It seems to me that the large majority of the board should consist of owners, not Starwood employees.  Seems like the owners should control the board and if so, I think you'd see a lot of those fees and hidden mark ups disappear.


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## DanCali (Oct 13, 2009)

Robert D said:


> It seems to me that the large majority of the board should consist of owners, not Starwood employees.  Seems like the owners should control the board and if so, I think you'd see a lot of those fees and hidden mark ups disappear.



I agree - that would be similar to a condominium model... once the building is sold-out the developer leaves the board to the owners. Since Starwood manages the property it makes sense for them to have some representation to look after their interests, but not full control. Wishful thinking though - there are very good reasons why they retain full control and the truth might be even worse than we think... There is zero accountability to the increasing Mfs trend!


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## spuppy (Oct 14, 2009)

According to 2009 budget documents, the WKORV-N maintenance fees are $1,861.77.

Consider the following line items:
* Houskeeping is $471.90.
* Repairs and maintenance is $182.90.
* Administration is $204.40.
* Activities and security is $48.07
* Other/Fixed expenses $245.23

These 5 line-items add up to $1152.5, which constitutes 62% of the MF.  I would guess most of the above accounts for money starwood is paying itself to run and maintain the place.

In addition to the above, the budget lists insurance as $126.87.  If starwood self insures, then this is essentially money starwood pays itself as well.  

The replacement reserve is $191.92.  This is the amount starwood sets aside to maintain/improve the resort--money spent that helps keep the place nice so they can make more money selling future timeshares in the WKORV sales office and rent rooms at WKORV.

Given the above, I'm not so sure that some posters "fundamentally do not understand how there [sic] ownership works"...



komosatp said:


> I want to make sure I am understanding things correctly.
> 
> Because if I am correctly understanding things, there's been quite a few posts on this board recently that show some posters fundamentally do not understand how there ownership works, and the real dollar amounts involved.  They seem to think that Starwood pockets most of our MFs.....or that the management fee is the biggest part of the budget.


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## DanCali (Oct 14, 2009)

spuppy said:


> According to 2009 budget documents, the WKORV-N maintenance fees are $1,861.77.
> 
> Consider the following line items:
> * Houskeeping is $471.90.
> ...



It would be interesting to compare these and other line items to what it looked like 2 years ago when MFs were around $1500... For example if cleaning a 2BR condo twice a week (a small cleanup mid-week and a big cleanup when you leave) used to cost $400 in 2007 why is it $470 in 2009? I just made the $400 number up, but you get the drift. I'm sure it's pretty much the same housekeeping staff and the same supplies... And I wonder if cutting back on the robes and trash liners will *reduce* that line item next year? One would think that it should... 

It may also be interesting to compare the "housekeeping" cost to acomparable WMH 2BR. I doubt wages in Hawaii are much higher than in California to justify a meaningful difference (in fact minimum wage is higher in CA...). These costs should be similar at WKV, Riverfront, WSJ as well... about the same unit size and same Westin supplies. My gut feeling though is that they are proportional to MFs rather than the true cost of cleaning a 2BR condo.


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## Captron (Oct 14, 2009)

"""According to 2009 budget documents, the WKORV-N maintenance fees are $1,861.77.

Consider the following line items:
* Houskeeping is $471.90.
* Repairs and maintenance is $182.90.
* Administration is $204.40.
* Activities and security is $48.07
* Other/Fixed expenses $245.23"""

My interpretation with all conflict of interest and corporate nepetism included would be this:

Paid to subsidiary Starwood Housekeeping inc. $471. Labor/materials etc cost $400 ($71 profit to Starwood)
Paid to subsidiary Starwood Maint inc. $182.  cost $160. ($22 profit)

etc etc.

They make money off of each of these things by hiring another Starwood corporation subsidiary (often at above market rates) who buys their supplies from yet another Starwood subsidiary (and so on and so on). So the overall profit "Starwood" makes after all is said and done is much more than appears on the surface.

When I built my house the general contractor took all the subs bids and added at least 10% to make their profit. This is similar but more convoluted. It would be as if that company owned all the "sub contractors" and the lumber yards and the window and door companies and the title company and ...and ....and....

There is my conspiracy theory for the day!


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## LLW (Oct 14, 2009)

komosatp said:


> I want to make sure I am understanding things correctly.
> 
> I review the budget HRA's various associations provide to me.  On that budget, there are very specific (though sometimes unclear) lines that describe where my MFs are/will be going....like housekeeping...reserves...taxes...and administration.
> 
> ...





Fredm said:


> Typically, Starwood takes a 10% operations management fee. It may vary somewhat from resort to resort, but that is the OM fee I am aware of. 10% off the top.



I am not familiar with the Starwood numbers, but if they take 10% right off the top, we are usually talking about 10% of total budgeted expenditures. The bigger the budget, the bigger the 10%. MFs create revenues to pay for budgeted expenses. The bigger the budget (with all the marked up items in there), the larger the MFs. That's how Starwood benefits from big MFs - their 10% cut indirectly is 10% of total of MF and other revenues. In addition to the mark-ups and self-dealings described by other posters above. (Worldmark works about the same way but has other complications.)

Forgive the shop talk - I was an accountant and a budget manager.


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## komosatp (Oct 14, 2009)

Okay...so the theme I'm seeing is that SVO *might* take a cut/kickback above and beyond the management fee.

And the higher expenses are, the higher the charged management fee can be.

But does anybody know conclusively?  Is SVO's right to have a surcharge on all expenses buried somewhere deep in our purchase docs?

As a side note, much of the above does not apply to HRA because almost all services at HRA are subcontracted to Atlantis (Or Kerzner, Atlantis' owner).

Another side note: are the books of our associations audited?


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## komosatp (Oct 14, 2009)

spuppy said:


> The replacement reserve is $191.92.  This is the amount starwood sets aside to maintain/improve the resort--money spent that helps keep the place nice so they can make more money selling future timeshares in the WKORV sales office and rent rooms at WKORV.


I hope you were kidding with this statement.  Imagine the assessments you'd have to have if the resort did not have an appropriate reserve.  And imagine how poor the property would look if paint, carpets, furniture, etc., was not replaced at regular intervals over the course of the life of the resort.


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## Fredm (Oct 14, 2009)

*It is what it is*

Whatever the content of the various operation management contracts, they are not going to be changed without control of the BOD. That is the fact of the matter.

There is a straightforward provision for changing the resort operator in the Governing Documents. 50% plus 1 of all owners must vote to change. Not a majority of those voting, but a majority of *all owners*.
If successful, Starwood's name is removed from the resort and the owners can replace them with whomever they wish. Elect a new BOD and negotiate a new OM contract with a new management company.

Democratic, isn't it? Except, it is a daunting task. Don't expect the current manager to sit idly by while the organizing effort builds momentum. They will point out, well, all the things they bring to the party.

That's the bottom line. Complaining, to a certain extent may be good for the soul. But, at the end of the day it comes down to like it, leave it, or change it.

Anyone volunteer to lead the crusade? Timesharing is supposed to be fun. This does not sound like fun to me.


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## DanCali (Oct 14, 2009)

Fredm said:


> Whatever the content of the various operation management contracts, they are not going to be changed without control of the BOD. That is the fact of the matter.
> 
> There is a straightforward provision for changing the resort operator in the Governing Documents. 50% plus 1 of all owners must vote to change. Not a majority of those voting, but a majority of *all owners*.
> If successful, Starwood's name is removed from the resort and the owners can replace them with whomever they wish. Elect a new BOD and negotiate a new OM contract with a new management company.
> ...



I would not expect any crusaders on this one... a daunting task indeed. There are thousands of owners at each resort and I doubt *wood will share their email addresses or home addresses with anyone, let alone someone trying to kick *wood out!

If an effort like this were to ever come about (say at WKORV) it should come from the company taking over and should look something like "your MFs have been spiraling out of control over the last 5 years... we can do better.... this is our track record... give us a chance". However, I doubt there are companies out there who can take on *wood but if there were I bet that such an effort, even if unsuccessful, would contribute to a stabilization in MFs.

Yes, timesharing is supposed to be fun. But I also think getting these increasing bills is taking the fun out of it for many because I see literally dozens if not hundreds of WKORV/N units for sale - by far more than any other *wood property. I guess they are taking the "leave it" route...


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## LLW (Oct 14, 2009)

Fredm said:


> Whatever the content of the various operation management contracts, they are not going to be changed without control of the BOD. That is the fact of the matter.
> 
> There is a straightforward provision for changing the resort operator in the Governing Documents. 50% plus 1 of all owners must vote to change. Not a majority of those voting, but a majority of *all owners*.
> If successful, Starwood's name is removed from the resort and the owners can replace them with whomever they wish. Elect a new BOD and negotiate a new OM contract with a new management company.
> ...



At Worldmark, we have all 3 kinds of owners: some like it, some leave it, and some are working on changing it little by little. But the highest % of owners are those who don't get involved and are mostly ignorant of many of the happenings. After all, timesharing is supposed to be fun, and it _is_ for them. They are happier. And who is to judge?


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## LisaRex (Oct 14, 2009)

LLW said:


> At Worldmark, we have all 3 kinds of owners: some like it, some leave it, and some are working on changing it little by little. But the highest % of owners are those who don't get involved and are mostly ignorant of many of the happenings. After all, timesharing is supposed to be fun, and it _is_ for them. They are happier. And who is to judge?



I can guarantee you that if my MFs were still $1500, I'd do one heck of a lot less bitching about Starwood.  YMMV.


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## vacationtime1 (Oct 14, 2009)

DannyM said:


> I would not expect any crusaders on this one... a daunting task indeed. There are thousands of owners at each resort and I doubt *wood will share their email addresses or home addresses with anyone, let alone someone trying to kick *wood out!



It's worse than you think.  Starwood reserved "Special Rights" in the enabling documentation (found in the fine print in the exhibits towards the end of the disclosure documents).  Paragraph 17 of Starwood's "Special Rights" specifically provides that the HOA *must* give Starwood a list of owners upon request and *may not* give a list of owners to anyone else.

Starwood obviously doesn't want the type of owners' association many of us would like to have.  Whether these provisions are legal is another matter, but as others have said -- we bought these units for our vacations, not to have another job.


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## LLW (Oct 15, 2009)

LisaRex said:


> I can guarantee you that if my MFs were still $1500, I'd do one heck of a lot less bitching about Starwood.  YMMV.



I am in the wmowners group that's working on changes, because we love our timeshare. What I meant was I don't want to judge those who like things the way they are, or those who are ignorant of them.


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## ckg (Oct 15, 2009)

spuppy said:


> According to 2009 budget documents, the WKORV-N maintenance fees are $1,861.77.
> 
> Consider the following line items:
> * Houskeeping is $471.90.
> ...



Wow a little cynical here.  Just an alternative thought and maybe something else to consider but what about branding. I am sure a Sheraton SVO resort would need to buy the same soap, the same signage, the same room stationery, etc as any other Sheraton hotel.  I would assume that is all purchased from the same vendors or internally with the hotel side to keep consistent with branding standards.  That could be considered a form of nepotism but I think what a lot of threads ignore here is that this is a branded product not a stand alone condo resort without a flag.  I do not know what other branded timeshare's pay but I know Disney has the same soap/shampoo on their resort side and timeshare side and I would guess other branded timeshares do also.  So I am sure they buy from "themselves".  With that said since I don't own SVO and don't know what the yearly increase looks like at SVO (Disney at least at the resort I own is fairly consistent % increase year over year).


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## DeniseM (Oct 15, 2009)

ckg said:


> With that said since I don't own SVO and don't know what the yearly increase looks like at SVO (Disney at least at the resort I own is fairly consistent % increase year over year).



I've been an owner at WKORV since before they opened and the increases have averaged 10%+ per year...


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## clsmit (Oct 15, 2009)

*Board isn't always all Starwood People*

I'd like to dispell the perception that the Starwood Board is all run by SVO employees. When I sat in on the WKORV Board meeting in June, the Board had 5 or 6 people on it. Only one of them was a Starwood employee; the rest were owners. So the Board at WKORV, in theory, is representing the owners.

The issues with the ability for other owners to know and communicate with the Board, for the owners to actively participate in the selection of the slate of candidates for the Board, and for the Board to have enough information from SVO to make decisions in the best interest of the owners, are valid and remain.


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## Troopers (Oct 15, 2009)

vacationtime1 said:


> Starwood obviously doesn't want the type of owners' association many of us would like to have.  *Whether these provisions are legal is another matter*, but as others have said -- we bought these units for our vacations, not to have another job.



A relatively simple action is to contact the Attorney General's office and file a complaint with the Dept of Real Estate.


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## Fredm (Oct 15, 2009)

LLW said:


> At Worldmark, we have all 3 kinds of owners: some like it, some leave it, and some are working on changing it little by little. But the highest % of owners are those who don't get involved and are mostly ignorant of many of the happenings. After all, timesharing is supposed to be fun, and it _is_ for them. They are happier. And who is to judge?



Exactly! Most simply choose to enjoy what they have paid dearly for.


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## Troopers (Oct 15, 2009)

Here’s what I can’t figure out…

If SVO stacks the boards resulting in artificially high MF, *WHY WHY WHY* is the MFs at WKORV just slightly more than the comparable Marriott’s Maui Ocean Club?  Marriott’s does NOT stack the MOC’s board.  These two properties are very similar with respect to location, facilities, amenities and age.

Anyone with any theories?


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## Fredm (Oct 17, 2009)

Troopers said:


> Here’s what I can’t figure out…
> 
> If SVO stacks the boards resulting in artificially high MF, *WHY WHY WHY* is the MFs at WKORV just slightly more than the comparable Marriott’s Maui Ocean Club?  Marriott’s does NOT stack the MOC’s board.  These two properties are very similar with respect to location, facilities, amenities and age.
> 
> Anyone with any theories?



Troopers, you pose an excellent question.

It is easy to forget recent history. Those that lament the sharp annual increases (and they have been steep) do not adequately take Hawaii's economy into account. 

Everything except sugar must be transported thousands of miles to supply Hawaii. Energy costs have a magnified affect on prices in general. Not much more complicated than that.

Many assume that Marriott's fee's are "reasonable".
From that perspective, Starwood is not much out of line.
However, like Starwood, Marriott is a very large branded hospitality company. Both are tough business negotiators.
It is often said that Marriott cuts very hard deals with its hotel owners. Marriott insists on using their suppliers, at a higher costs than could otherwise be had. Hotel owners go along because they are, overall, better off with Marriott managing the property than someone else.

So, both Starwood and Marriott make more money than if operations were manages purely for cost effectiveness. 
The trade off is 'branding", and all that brings to the matter.

The question, then, is how many owners would be willing to substitute a "no brand" name for Starwood and its system of resorts for a modest ($150-200) reduction in annual fees? I suspect not many.

Now, I understand that $150-200 may actually double the standard 10% management fee everyone is aware of. But, the question still holds.


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## DanCali (Oct 17, 2009)

Fredm said:


> Troopers, you pose an excellent question.
> 
> It is easy to forget recent history. Those that lament the sharp annual increases (and they have been steep) do not adequately take Hawaii's economy into account.
> 
> ...




I've seen the island argument applied to HRA as well as a reason to justify the high maintenance fees. Let's suppose that argument holds.

I don't believe that people are lamenting the high maintenance fees per se. It is more the rate of increase and how we got here. For example, here is how MFs at for a 2BR LO phase I at HRA varied:

2002 $1,382
2003 $1,451
2004 $1,519
2005 $1,675
2006 $1,889
2007 $2,231
2008 $2,323
2009 $2,485

That's 80% in 7 years or a compounded rate of 8.75% per year. Over 2005 to 2009 that's 48% or a compounded rate of 10.4% per year. Keeping in mind that some of the numbers above include fixed costs (SVN fee etc), the actual increase in "maintenance" fees was even higher.

WKORV was on a similar trend - here are the fees for 2BR LO Dlx:

2005 $1,624 
2006 $1,813
2007 $1,954
2008 $2,204
2009 $2,460

That's 51% over 4 years, or a compounded rate of 10.9% per year. And we know the taxes next year won't help...

(I got these MF numbers from various posts on TUG and RedWeek - but they look about right to me from the posts I've seen)

The point I am getting at is can we really blame this on oil and energy prices? If so, I do recall oil prices above $130 a barrel last summer... On average, they have been about half that number for this entire year. I guess we should get a big break on MFs in the next years!  

The island argument is good if we want to justify why MFs at WKORV should be higher than WKV. I'll buy that... but it doesn't justify those MF hikes over time, especially when hotels, food, rental prices and pretty much any other good or service you can think of on Hawaii had relatively stable (or even declining) prices over those years.

Too often you hear stories like this... Developers start by building a nice resort with low MFs and once it sells out maintenance fees rise to the point where people want to give their timeshares away and nobody wants them. The link above is regarding NYC, so the "island" argument hardly holds (even though technically Manhattan is an island). 

Hawaii and the Bahamas were always islands - that hasn't changed. If it was feasible to run those resorts in 2005 with MFs around $1,600 for a 2BR LO/Dlx, I honestly don't see what has changed over the last 4 years to justify much of an increase, let alone the increases listed above. It can't possibly be energy prices... - those did go down significantly from their 2008 highs and nobody here is expecting lower MFs next year at any property.


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## LisaRex (Oct 17, 2009)

I think the most compelling question I have for Starwood is "Why do you work so hard to control the HOA board?"

Combine their stronghold on the HOA board with ever-increasing and out-of-sight MFs, and the recent SVR SAs where, among other things, they were charging owners $9,000 per apartment to have it painted....and the end result is suspicion that they are not acting as responsible financial stewards of my money.

Starwood bends over backward to make sure that they no one gets on the ballot that is not pre-approved by them.  If they didn't, I would be far less skeptical because I would be assured that someone is acting in MY interest.  I don't have that assurance now.  Hand picking the board is a clear conflict of interest, it goes against the spirit of an HOA, and it most definitely _raises the appearance _of impropriety.


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## Fredm (Oct 17, 2009)

DannyM said:


> > The island argument is good if we want to justify why MFs at WKORV should be higher than WKV. I'll buy that... but it doesn't justify those MF hikes over time, especially when hotels, food, rental prices and pretty much any other good or service you can think of on Hawaii had relatively stable (or even declining) prices over those years.
> >
> > Too often you hear stories like this... Developers start by building a nice resort with low MFs and once it sells out maintenance fees rise to the point where people want to give their timeshares away and nobody wants them. The link above is regarding NYC, so the "island" argument hardly holds (even though technically Manhattan is an island).
> >
> ...



Danny.

I am not defending Starwood's practice, or rationalizing annual fee increases.  I am defining it. 

In responding to Troppers question of why Marriott  Maui Ocean Club and KOR had very similar annual fees, I offered two thoughts.

First, both make about double the 10% OM fee.
Starwood is not alone in making money on goods and services.
That's one reason fees are similar.

Having said that I believe they are really raking in 20%, instead of 10%, the other factor is actual costs.

The fact of the matter is that energy costs have skyrocketed. 
Nowhere more so than Hawaii.

The price of a barrel of oil is not the measure. It is the cost of electricity. In my personal life, energy costs have increased almost 50% in the past 5 years. Not because I consume more energy, but because the electric utility charges me more. 
It may be intended to incentive conservation, but it costs me lots more.

Likewise for food. I have been shopping at the same Vons/Safeway and Albertsons markets for at least 12 years.
When oil went to $140/barrel, grocery prices went up 50-60% Prices have not come down much at all, while the price of oil has been cut in half.  Again, it's the cost of electricity up and down the chain of manufacture, packaging, distribution, and so on.

I am in a far better position to control my energy costs than a resort is. 
A real problem is that families on vacation are not as consciences about conserving energy.
Restaurants and food suppliers are even less able to do so. 

Hotel prices have nothing to do with it.
Timeshare owners do not have the luxury of renters. They must pay the full freight of ownership.
A hotel may have a occupancy break even cost of $40/night. If they charge $100 instead of 200 to increase occupancy, they are ahead of the game.

There is no doubt that these steep increases are causing owners to bail on their timeshares. Not good for the owner, market values, or anything for that matter.

But, once one accepts that Starwood is making 20% +/-, it is time to look elsewhere for the culprit.  Increased fees are primarily caused by higher energy prices, all the way up and down the chain.


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## DanCali (Oct 17, 2009)

Fredm said:


> Danny.
> 
> I am not defending Starwood's practice, or rationalizing annual fee increases.  I am defining it....



That makes sense. It would still be interesting to compare line items in the annual statements. While some things should go up based on reasons you stated, some are less likely to be affected.

For example, how much variation in housekeeping would one expect over time at the same resort, even with increasing energy costs? How much variation should there be in housekeeping costs in the same year across resorts (say WMH vs. WKORV)? 

I just can't help feeling that many of these MF increases are just costs fabricated by Starwood. It would be tempting for them to do that when they get a 20% cut off the top line... especially when don't have to provide detailed explanations to owners and set billing amounts on their own.


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## Westin5Star (Oct 17, 2009)

LisaRex said:


> SVR SAs where, among other things, they were charging owners $9,000 per apartment to have it painted....



WOW-I just built a 16,000 square foot house in SoCal with 10 bathrooms, 8 bedrooms, 2 offices, theatre room, playroom, craft room, 4 staircases, 2 kitchens, 2 laundry rooms, etc. and I only paid exactly $9000 to have the inside painted.  This included the materials and  labor for all baseboards, doors, ceilings, waynes coating, and bulit up crown moulding throughout!  So Starwood is paying contractors as much to paint a small 2 bedroom TS that is 10% of the size of my house the same cost that I paid my contractor.  I am glad that Starwood negotiated such a great deal since they were painting so many TSs;  I was only painting one house!

I would be very surprised if there wasn't relatives, friends, and kickbacks invovled with this painting contract.  The would be much less chance of this happening with an independent BOD that are all separate TS owners!


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## DeniseM (Oct 17, 2009)

Westin5Star said:


> WOW-I just built a 16,000 square foot house in SoCal with 10 bathrooms, 8 bedrooms, 2 offices, theatre room, playroom, craft room, 4 staircases, 2 kitchens, 2 laundry rooms, etc.




When do you start accepting reservations?


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## DavidnRobin (Oct 18, 2009)

me too...

how about this to add fuel?
WKORV is being renovated (w/o SA - so assume on reserves - hopefully...) - and all the old TVs, DVDs, consoles, couches, chairs, etc.) were being taken away by local people with trucks this morning - I hope as donations - but if auctioned/donation - does the HOA get that credit?
answer this - and it may reveal alot (good or bad)...

btw - we like the renovated WKORV villas (esp flat screen TVs - and those ugly TV consoles are gone) - and with existing reserves (I hope)...


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## aeroflygirl (Oct 18, 2009)

*Renovated Villas*



> Originally Posted by DavidnRobin
> btw - we like the renovated WKORV villas (esp flat screen TVs - and those ugly TV consoles are gone) - and with existing reserves (I hope)...



Any chance of getting some pictures of the renovated villas?


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## Fredm (Oct 18, 2009)

DannyM said:


> That makes sense. It would still be interesting to compare line items in the annual statements. While some things should go up based on reasons you stated, some are less likely to be affected.
> 
> For example, how much variation in housekeeping would one expect over time at the same resort, even with increasing energy costs? How much variation should there be in housekeeping costs in the same year across resorts (say WMH vs. WKORV)?
> 
> I just can't help feeling that many of these MF increases are just costs fabricated by Starwood. It would be tempting for them to do that when they get a 20% cut off the top line... especially when don't have to provide detailed explanations to owners and set billing amounts on their own.



It would be interesting to compare line items year to year at the same resort. Even across resorts for the same year. But, Hawaii is a different animal, IMO. Supplies are much more expensive in Hawaii. As is labor. Both may be governed by the same minimum wage laws, but I suspect that Hawaii pays more because of the cost of living. I might be wrong about that, but can't help but believe it is true. That's why it would be interesting to compare.

I don't believe Starwood is outright fabricating costs. That would be illegal. They may be many things, but stupid is not one of them.

Also, a minor clarification. I never said Starwood takes 20% off the top. They take 10% off the top. The remainder is my estimate of what is made from up-charges for goods and services, which might add another ~10% to the total.


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## LisaRex (Oct 18, 2009)

A "former poster" who now calls himself a "lurker," continues to send PMs to Tuggers instead of posting his thoughts publicly.  I've already received two emails from him.  His latest correspondence accuses me, in a roundabout way and complete with a smiley face, of posting "astounding misinformation" because all he had to do was CALL Starwood and they gave him the names and occupations of the HOA board at his four resorts.  And that information, I presume, satisfied him that the HOA boards were NOT hand-picked by Starwood. (I'm sure he'll come by and clarify if I've misrepresented his position here.) 

Here is the response I sent him: 

I didn't say that the Starwood board was comprised of ex-Starwood employees.  I said that the Starwood board was hand-picked by Starwood. Quite a difference. 

When one gentleman tried to run for the board,  he reported that he was told he had to pass a screening from the current board.  They never called.

I routinely receive correspondence from my "Board of Directors."  It neither lists a person's name, nor a way to communicate back to them.  The only means that I have to communicate with them is through the corporate website, MyStarCentral.  I have no doubt that they read every email that is sent.  

My HOA ballot _didn't list one person's name_, let alone their bio.  It just allowed me to check to approve everyone, only those who appear in person, or nobody.  Don't you find that to be disquieting? 

Just a few weeks ago, I received correspondence that said, "Dear Mission Hills Villa Owner."  that went on to state, verbatim, what had been sent to owners at other resorts.   Don't you find it terribly odd that an HOA board at WMH came to the exact same conclusion, and drafted the exact same letter, as their sister HOA board at SVR?   

Conclusion: Starwood CORPORATE drafted the letter, not the HOA, not just because the verbiage was identical to other resorts, but because *I don't own at Westin Mission Hills.*  How else would the WMH board get proprietary information such as my snail mail address, if they are not working through corporate? 

Misinformation, indeed.  

Yours truly,

Lisa


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## jarta (Oct 18, 2009)

And, here's what I sent Lisa that generated her response:

"Lisa,

"Starwood bends over backward to make sure that they no one gets on the ballot that is not pre-approved by them. If they didn't, I would be far less skeptical because I would be assured that someone is acting in MY interest. I don't have that assurance now. Hand picking the board is a clear conflict of interest, it goes against the spirit of an HOA, and it most definitely raises the appearance of impropriety."

When I saw your accusation, I wrote to Starwood's association services and asked who were the board members at the 4 resorts I own at.

Below is what Starwood sent me. All I needed to do is ask.

Cap Witzler (president at WKV), who I played golf with last October at Kierland, is the retired from the Collection Department of the IRS' Denver Office. He and his wife, Suzy, are active in supporting the arts in the Denver area. Suzy is the publisher of a plastics magazine.

Bishop Jack Iker (president of Bella) is the Episcopal Bishop of Fort Worth.

Bella probably has 1 Starwood employee on the board, Coffey who may be related to a Starwood VP. WKV may have none (I can't find anyone by Googling names + Starwood). Are you insinuating that their presidents, ex-IRS and a bishop, are corrupt?

Lagunamar is Starwood dominated because it is still under construction.

Harborside has Curtin, who is Starwood. Bruce Thompson is on the board of ARDA (I think, but unrelated to Starwood). Dixie Proctor is probably the co-founder of a nanotechnology company in Florida.

But perhaps facts don't matter on TUG. I have seen posted, time and again, that only Starwood employees are on the HOA boards.

"Thank you for contacting Association Management. 

The list below includes the names of the Board Members for the following Associations: 

HARBORSIDE II 

Dixie Proctor - Vice President 
Dale Curtin - Vice President 
Bruce Thomson - Secretary 

BELLA 

Bud Boberg - Vice President 
Michael Coffey - Vice President 
J. Douglas Drushal - Secretary 
Bishop Jack Iker - President 

KIERLAND 

JL "Cap" Witzler - President 
Cheryl Paar - Secretary 
Anthony DeNapoli - Vice President 
David Timm - Vice President 

CANCUN 

Thorp Thomas - Manager 
Teri Castleberry - President 
Shawn O'Brien - Vice President 
Jonathan Ho - Secretary"

The astounding misinformation posted on TUG about Starwood and the vehemence of the defense of the misinformation in the face offacts is why I am now a lurker."   ...   eom


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## DanCali (Oct 18, 2009)

Fredm said:


> I don't believe Starwood is outright fabricating costs. That would be illegal. They may be many things, but stupid is not one of them.



You are right. There is a fine line called "The Law" between _fabricated_ and _inflated_. For someone who pays the bill at the end of the day it probably doesn't make much difference though...


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## Fredm (Oct 18, 2009)

DannyM said:


> You are right. There is a fine line called "The Law" between _fabricated_ and _inflated_. For someone who pays the bill at the end of the day it probably doesn't make much difference though...



And, right you are, Danny. It  doesn't make much difference. Bottom line is the same. It does matter how we characterize the issue, however.

If we agree that Starwood inflates the cost of goods and services, which adds an additional 8-12% to annual fees, that covers it.
Recognizing that they are not alone (Marriott and all other branded OM's do it), they are guilty as charged. Let's hang 'em.

Annual increases that are a result of the actual cost of goods and services remain. Starwood has already been hung. 
It's the double and triple jeopardy that concerns me. It tends to cloud the issue, not clarify it. And THAT leads to more dissent than is good for the market of what is owned, compounding the very real problem caused by high and increasing fees.

I have said before that to a certain extent complaining may be good for the soul. But, let's not lose track of the underlying question. How many would rather_ potentially _save the couple of hundred a year Starwood makes from up-charging to be outside of their system? If it were even a realistic possibility.

I simply suggest that we not make matters worse than the facts themselves.


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## DavidnRobin (Oct 18, 2009)

aeroflygirl said:


> Any chance of getting some pictures of the renovated villas?



I will post photos once I get my life back in order - strange to be back home after 8 weeks away...

and jarta - once again you are missing the larger picture...


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## DeniseM (Oct 18, 2009)

LisaRex said:


> I didn't say that the Starwood board was comprised of ex-Starwood employees.  I said that the Starwood board was hand-picked by Starwood. Quite a difference.



Lisa - That is correct.  We have had TUG members who completed the application process to run for their BOD's and never received a response from Starwood.  Starwood HAND PICKS the people they will allow to run.  That seems totally democratic to me!  The management company that WORKS FOR US to manage the resorts that WE  OWN, hand picks their own bosses!  

I understand that they don't want every screwball who can fill out an application to run for the BOD, but there are other legitimate options.  For instance, why not have a petition option where an owner can provide a certain number of signatures from owners at the resort, and be nominated via petition?  Why?  Because then  Starwood would lose control of the election....

BTW- I have never seen anyone post that all BOD's members are Starwood employees, but I and others have posted that 1) the BOD's are controlled by Starwood and 2) many of the directors are Starwood employees.  I believe the majority of the directors at WKORV are still Starwood employees.

But I could be wrong, because I've never played golf with anyone from Starwood...  

BTW - If you are receiving undesired communications from anyone, and you ask them to stop, and they continue, please let me know.  I was receiving undesired communication, and it stopped when I asked.


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## DanCali (Oct 18, 2009)

Jarta - this seems odd. Are you sure the HOAs consist of 3 people + a secretary? Could it be that they only sent you non-Starwood employees?


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## jarta (Oct 18, 2009)

DannyM,   ...   Amazed, are you?  Doesn't jive with TUG orthodoxy, does it?

I guess the the WKV and Bella presidents, the Episcopal Bishop of Fort Worth and the ex-IRS guy, must be Starwood stooges who do whatever Starwood tells them to do.  Mere rubber stamps that let Starwood steal from owners?  Does anybody here even know who the people are that they are ignorantly slandering?

However, there are Starwood employees on the boards at 3 of the 4 resorts.  Lagunamar is controlled by Starwood employees.

And, BTW, DeniseM evidently doesn't play golf.  Sometimes when you show up as a single or a twosome in the pro shop, they just put you wherever you can fit in.  They didn't even ask if I was a TUG member when I was paired up at the SVOpen.  lol!

The responses to my post proved just how little facts matter here.  Back to lurking.      ...   eom


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## DanCali (Oct 18, 2009)

jarta said:


> DannyM,   ...   Amazed, are you?  Doesn't jive with TUG orthodoxy, does it?
> 
> The responses to my post proved just how little facts matter here.  Back to lurking.      ...   eom



I beg to differ on this. This is a forum where people post opinions and if they are wrong someone else will be quick to point it out.

If you have ever been to a Starwood sales presentation you know very well that what they do is mislead people with half truths and sometimes flat out lies. An organization that does that is capable of doing much more.

Here are some facts I hope we can agree on...

The reality is that MFs are set by Starwood and owners have no say in their level or rate of growth. Starwood provides little to no explanation why MFs increase at such a rapid pace at some resorts. This is not unique to Starwood, but this is the Starwood forum...

It is also a fact that if they get any cut from the top line (10%, 20% whatever) there is little incentive to try to keep MFs low. The financial incentive favors high MFs, especially at sold out resorts where they are no longer selling units.

Lastly, this is causing many owners - and not just TUGgers - to be dissatisfied with their ownership. Just take a look at how many WKORV, WKORVN, and HRA units are for sale relative to other resorts...


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## DavidnRobin (Oct 18, 2009)

the point is about SVO ability to control communication between Owners and therefore control HOA board membership....
(as said over and over...)

but keep up the company-line...


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## LisaRex (Oct 19, 2009)

I attended my husband's 25th high school reunion on Saturday night.  I was amused to see the campaign ads for for Student Council.  One of the guys running for President was the son of another guy I used to date, and he looked just like his father....

Then it dawned on me.   Perhaps the most damning evidence supporting the notion that Starwood controls the WKORV HOA boards is the fact that there is never a _contest._ 

My husband's high school, with a class size of maybe 300, had THREE students running for President. With over _15,000_ potential owners at WKORV-N, are we to believe that none of the positions is ever contested?  Really?  Even with MFs increasing by 10% each year?  Wow.  And how lucky and convenient it is that we have exactly one person running for exactly one position each year.  (And by "convenient" I mean "suspicious.")

Heck, last year WKORV-N HOA didn't even bother listing NAMES on the ballot.  How uncontested is that?


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## Troopers (Oct 19, 2009)

Fredm said:


> But, once one accepts that Starwood is making 20% +/-, it is time to look elsewhere for the culprit.  Increased fees are primarily caused by higher energy prices, all the way up and down the chain.



Interesting that you equate higher fees with higher energy prices.

I'm glad to see that the HOA was able to save on energy bills at WKORV.


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## LisaRex (Oct 19, 2009)

If it's energy costs then why aren't hotel rates escalating at the same rate? Surely they have to air condition the place, too.


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## Fredm (Oct 19, 2009)

Troopers said:


> Interesting that you equate higher fees with higher energy prices.
> 
> I'm glad to see that the HOA was able to save on energy bills at WKORV.



Yep. Hawaii commercial rates decreased. July 08 was 31.94 cents per kwh. - July 09, was 20.74 cents  per  kwh. 

But, rates have increased 18% in the past two months! plus a surcharge is now scheduled. So, that party is over.

Glad to know that KOR benefited from the temporary 30% drop.

Compare this to California during the same period.  7/08 was 14.47.  7/09 is 16.38.

However, as energy costs affects Hawaii's economy, energy prices for transportation have increased ~60% since 2001. And almost everything needs to be transported a very long distance.


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## Fredm (Oct 19, 2009)

LisaRex said:


> If it's energy costs then why aren't hotel rates escalating at the same rate? Surely they have to air condition the place, too.



Because hotel rates are much more fluid.

I am a bit dated on the stats, but an example will suffice.

Marriott had a room break even cost of $40/night. That is, it cost Marriott $40 for a guest to occupy a room for 1 night.  
In a good economy Marriott's room rates were, say, $185/night, and occupancy was high.

To increase occupancy in a soft economy, prices can fall to anything above the break even cost.  If it increases occupancy. So, it is not uncommon today for prices to be $100-120/night. Still well above the break even rate.

The cost of public area a/c, lighting,  keeping the restaurants open,  etc. are fixed costs. Higher occupancies help these as well. They burn if no one were in the hotel.


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## Westin5Star (Oct 19, 2009)

Fredm said:


> Because hotel rates are much more fluid.
> 
> I am a bit dated on the stats, but an example will suffice.
> 
> ...



Fred,

Awesome.  So you agree that if Starwood properly managed our TSs that our MFs should come out to less than $40 per night!  Hotel rooms get cleaned every night they are used.  Although TS units are generally larger, at Starwood cleaning is only included every 3.5 nights; the additional energy for the unit should be much less than cleaning less often (labor).  Therefore, by your example above, if TSs are being properly managed, the breakeven point should be less than $40 per night per unit.  Our MF are definitely higher than that!  This is further proof that Starwood is ripping off its TS owners by the huge increases in MF. 

($9000 for a paint job!)


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## LisaRex (Oct 20, 2009)

Westin5Star said:


> ($9000 for a paint job!)



I have misled you.  The $9000 was for "other continency." Who knows what that is? They charged owners a mere $4000 to paint the 1300 square feet. (I know, you're saying "What a bargain!")  See below for a breakdown of the costs, but you might want to take your blood pressure medicine first. 

They charged $8000 to demolish each villa. Outrageous, you say!  Now, now, they did have to tear out cabinets and rip up carpeting.  That took at least 3/4 of a day!  (Personally I'd have done it for $8M.  I could have made a tidy profit even after forking out transportation costs to Orlando, renting a dumpster, buying a crowbar and hammer, and staying in 5* accomodations. But I digress.)

What is the breakdown of the cost per villa?
The refurbishment cost for each villa will be approximately $67,170.

Kitchen $289*
Cabinets/countertops - $13,575 
Master bedroom/bathroom* – $8,004
Guest bedroom/bathroom* – $4,155 
Dining room – $4,134
Living room – $12,040 
Patio/balcony – $784
Tile flooring – $5,245
Paint – $4,018 
Demolition/renovation - $7,859
Stairwell improvements – $2,500 
Other/contingency – $9,023

* This estimate is for furniture, fixtures and equipment only. Reserves will be used to offset the refurbishment cost by $4,456 per villa.

Here's the scope of the work: 
KITCHEN
Granite countertops, cabinets, window treatments, garbage
disposal, sink and faucet and paint
DINING ROOM
Dining table and chairs, bar stools, chandelier, artwork, trim
and paint
LIVING ROOM
Media center with 42" LCD flatscreen TV and Bose®
entertainment system, queen sofa bed, lounge chair, carpet,
lamp, coffee and end tables, draperies, crown molding,
artwork and paint
MASTER BEDROOM AND BATHROOM
32" LCD flatscreen TV, mirror, lighting, king-size headboard,
duvet, nightstands, desk, lamp, dresser, lounge chair, carpet,
draperies, artwork, granite countertop, sink and fixtures, and
paint.
GUEST BEDROOM
32" LCD flatscreen TV, headboards, bed coverlets, nightstand,
lamp, dresser, artwork and paint
GUEST BATHROOM
Granite countertops, vanity, mirror, bath/shower tile,
lighting, fixtures and paint
PATIO/BALCONY Table and chairs


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## Fredm (Oct 20, 2009)

Westin5Star said:


> Fred,
> 
> Awesome.  So you agree that if Starwood properly managed our TSs that our MFs should come out to less than $40 per night!  Hotel rooms get cleaned every night they are used.  Although TS units are generally larger, at Starwood cleaning is only included every 3.5 nights; the additional energy for the unit should be much less than cleaning less often (labor).  Therefore, by your example above, if TSs are being properly managed, the breakeven point should be less than $40 per night per unit.  Our MF are definitely higher than that!  This is further proof that Starwood is ripping off its TS owners by the huge increases in MF.
> 
> ($9000 for a paint job!)



Westin5Star, you are pulling my leg, right?

$9000 for a paint job is indeed ridiculous. Then again, Lisa may be wrong about that.

Yes, Starwood is making about $500 per 2 bedroom unit/week in OM fees and up-charges. Or, about $1,200,000 per year at KOR and KOR-N. Of course, that will increase somewhat over time.  Since personnel and other costs are already charged to the resort, the amount is all profit. Not a bad business.


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## LisaRex (Oct 20, 2009)

Fredm said:


> $9000 for a paint job is indeed ridiculous. Then again, Lisa may be wrong about that.



I was.  I corrected myself earlier.  It was $4000 for the paint job.  The $9000, which represented 13% of the budget, was for "other contingency."  It also warned in the FAQs that actual costs could be more due to increased labor costs.  Guess they don't believe in, you know, signing contracts that set things like labor rates and material costs. 

And, no, the numbers were not made up by me.  They were quoted from nodge's link.  If you want to look at the granite that cost $13M per owner, the lovely brochure is linked here.  BTW, isn't it nice that the HOA took the time out to print a nice brochure like this?  Cause they're "Here for us!"

https://www.mystarcentral.com/CMS/en_US/svo_media/CMSMedia/PDF/misc/Springs_Makeover_Brochure.pdf

https://www.mystarcentral.com/CMS/en_US/svo_media/CMSMedia/PDF/misc/Springs_Makeover_FAQs.pdf

A quote from the FAQ section:

"Does the renovation increase the value of my villa?
It is difficult to put a value on your refurbished villa but, typically, market conditions or supply and demand dictate the monetary value of vacation ownership villas. As your villa is upgraded with modern and stylish interior designs and appliances, and as the resort becomes a more desirable vacation destination, it is likely that there will be greater demand among vacation Owners."

That's worked out well for Owners, hasn't it? Let's see, going rate for SVR:  $1.

It would be funny if people like the couple in their 70s who came her seeking advice, weren't being robbed.  Frankly, I don't consider the renovation, or the increasing MFs, to be funny.  And I think that Starwood is going to end up being very surprised at the Owner reaction as they get their letters.  They may want to staff up at MSC.


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## DanCali (Oct 20, 2009)

LisaRex said:


> I was.  I corrected myself earlier.  It was $4000 for the paint job.



As a point of reference, I paid $1800 (labor + material) to have my 1100 2BR condo in Chicago painted. I used the first contractor I contacted and didn't negotiate the price at all...


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## nodge (Oct 20, 2009)

spuppy said:


> [...]
> 
> * Houskeeping is $471.90



SVO really collects $471.90 from every owner for a full cleaning and a partial cleaning of their villa during the week!?!

I'm guessing that the cleaning crew members earn no more than $10/hour, which is still higher than minimum wage.  However, even at $10/hour, they would collectively have to spend 47 HOURS (nearly two solid days!) cleaning each villa each week to justify this $471.90 PER WEEK “housekeeping fee” charged to owners.

Unless lawyers from SVO's retained law firm are cleaning our units at their litigation hourly rates, armed with only this one data point, can anyone here still legitimately question the fact that SVO is deriving huge profits from our maintenance fees?  The only real questions are:  1) How huge is huge?; and, 2) What on earth is it doing with all of that money?

-nodge


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## WINSLOW (Oct 21, 2009)

nodge said:


> SVO really collects $471.90 from every owner for a full cleaning and a partial cleaning of their villa during the week!?!
> 
> I'm guessing that the cleaning crew members earn no more than $10/hour, which is still higher than minimum wage.  However, even at $10/hour, they would collectively have to spend 47 HOURS (nearly two solid days!) cleaning each villa each week to justify this $471.90 PER WEEK “housekeeping fee” charged to owners.
> 
> ...



Housekeeping must get paid a whole lot better there than in Florida at Vistana Fountains II where they budgeted $161.14 per unit for a 2 bedroom unit?


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## Fredm (Oct 21, 2009)

nodge said:


> SVO really collects $471.90 from every owner for a full cleaning and a partial cleaning of their villa during the week!?!
> 
> I'm guessing that the cleaning crew members earn no more than $10/hour, which is still higher than minimum wage.  However, even at $10/hour, they would collectively have to spend 47 HOURS (nearly two solid days!) cleaning each villa each week to justify this $471.90 PER WEEK “housekeeping fee” charged to owners.
> 
> ...



I don't know how costs are allocated to the "housekeeping" account.
But, I assume the following:
 - Labor - fully burdened - 21.00/hr. 
 - Cleaning supplies, paper products. 
 - Toiletries, pens, and other disposables.   
 - Central laundry allocation.
 - Pest control.
 - Supervisory staff allocation.
 - Equipment allocation. (motor carts, vacuum cleaners, etc.).
 - Linens and towel replacement.
 - Maintenance staff allocation and supplies - light bulbs, etc.

Again, I do not know how specific costs are allocated in the housekeeping account. 
Nonetheless, if one housekeeper spends 10 hours per 2 bedroom villa, per week, their cost would be $210 (using my burdened rate assumption).

No doubt, Starwood is making money beyond their OM fee from all the above. But, your characterization is dramatized.


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## DanCali (Oct 21, 2009)

Fredm said:


> I don't know how costs are allocated to the "housekeeping" account.
> But, I assume the following:
> - Labor - fully burdened - 21.00/hr.
> - Cleaning supplies, paper products.
> ...



The point is not whether lawyers are cleaning up... I think the bigger point is that the costs outlined by Fred should not vary much from state to state. Comparing across resorts - housekeeping labor is relatively low cost, supplies are Starwood's, laundry is laundry etc. Even if Starwood sends supplies UPS Ground to mainland locations and Fedex air to Hawaii that should not make a difference of $200 per unit per week in housekeeping costs (besides, these costs and their timing are so predictable in advance so they could send supplies weeks in advance by boat).

The second point is a comparison across time - did the cost of labor, cleaning supplies, and some electricity to run the dishwasher and laundry go up 100% over 5 years in these locations? Do these costs really need to go up every year? By 10%-15%?


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## DavidnRobin (Oct 21, 2009)

Fredm said:


> I don't know how costs are allocated to the "housekeeping" account.
> But, I assume the following:
> - Labor - fully burdened - 21.00/hr.
> - Cleaning supplies, paper products.
> ...



While it would not account for large cleaning charge - do not forget that it is not just the unit - it is also 1/52 for the housekeeping of the entire resort.


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## nodge (Oct 21, 2009)

DavidnRobin said:


> While it would not account for large cleaning charge - do not forget that it is not just the unit - it is also 1/52 for the housekeeping of the entire resort.



And don't forget the nightly renters that get daily cleaning.  I'm sure SVO tracks those "housekeeping" charges separately in accordance with well established accounting principles. No matter how easy it would be, I'm sure that SVO wouldn't even think of dumping those charges in with the owner housekeeping charges even if it could collect more renevue from those nightly rentals if it did.

-nodge
my website


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## Fredm (Oct 21, 2009)

DannyM said:


> The point is not whether lawyers are cleaning up... I think the bigger point is that the costs outlined by Fred should not vary much from state to state. Comparing across resorts - housekeeping labor is relatively low cost, supplies are Starwood's, laundry is laundry etc. Even if Starwood sends supplies UPS Ground to mainland locations and Fedex air to Hawaii that should not make a difference of $200 per unit per week in housekeeping costs (besides, these costs and their timing are so predictable in advance so they could send supplies weeks in advance by boat).
> 
> The second point is a comparison across time - did the cost of labor, cleaning supplies, and some electricity to run the dishwasher and laundry go up 100% over 5 years in these locations? Do these costs really need to go up every year? By 10%-15%?



I really don't know what to attribute specific increases to, resort by resort. 
My response was to the simplistic representation of housekeeping costs made by nodge. 

While I have offered my opinion about where the lions share is, I don't know the line item specifics. Neither do you.

I find myself repeating facts you want to ignore.

The cost of electricity affects the cost of everything (to manufacture, distribute, and store). And brief fluctuations cannot track to budgets, because its difficult if not impossible to budget correctly for it, without grossly over-budgeting.

The commercial price of a kw/h in California was 10.71 cents on January 1, 2005. On July 31, 2009 it was 16.38 cents. Rates were higher for most of 2008. I took the latest figures as they will fluctuate and be higher in the future.
Roughly a 60% increase in 4 1/2 years.

I am not saying that the increased cost of electricity, natural gas, water, fuels, etc  are  necessarily the entire reason for the budget increases. But, if you are looking for a broad factual answer, you have it.

Hawaii is another case altogether. The effects are magnified. A loaf of bread is $6. A gallon of milk is $8-9.  Anyway, you get the point.


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## DanCali (Oct 21, 2009)

Fredm said:


> The commercial price of a kw/h in California was 10.71 cents on January 1, 2005. On July 31, 2009 it was 16.38 cents. *Rates were higher for most of 2008...*
> 
> I am not saying that the increased cost of electricity, natural gas, water, fuels, etc  are  necessarily the entire reason for the budget increases. But, if you are looking for a broad factual answer, you have it.




Fred - I am not ignoring what you said... While I do agree that some of the cost increases over the past 5 can be attributed to electricity, I just don't see that as a broad factual answer. The electricity component is only some portion of the cost of running a resort yet MFs have risen as if electricity was 100% of the cost. The costs of labor, supplies etc just didn't have that kind of inflation.

Moreover, looking at a more recent period, we both agree electricity rates were higher in 2008 than in 2009. In fact, the cost of most things in the economy was flat or down. If so, why are MFs rising by 10%-15% across resorts again? If this is due to MF delinquencies by other owners then why aren't delinquencies a separate line item so we can track true MFs versus delinquencies from last year (I would think they would be happy if they could show flat "MFs" and an increase in payment in a separate line item only due to the recession)? Why doesn't the HOA get the rental revenue from the units of owners who didn't pay MFs? Do we even get any statistics on delinquencies?

The fact that there is little transparency and no accountability, and Starwood seems to care about its own pockets and not about owners' leads to my skepticism about their intentions and comments like "robbing Peter to pay Paul" from other tuggers.


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## Fredm (Oct 21, 2009)

DannyM said:


> Fred -.
> 
> 
> 
> ...


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## spuppy (Oct 22, 2009)

I've been to costco and walmart in hawaii.  The prices are not that expensive.


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## LisaRex (Oct 22, 2009)

Per the Owner's Agreement, all WKORV inventory not booked is turned over to SVO, who is free to rent it out for cash and/or StarPoints.  And they get to keep all the cash, aside from a modest housekeeping charge ONLY IF extra housekeepers are called in to deal with the renters.  We owners get nothing. Nada. Zilch. 

It really irritates me that SVO wrote such a one-side agreement.  We get all the downsides of owning (e.g. covering all the costs) and NONE of the upsides, such as rental income to offset our expenses. If FredM is correct, we're not only getting screwed by having to absorb the wear and tear of these renters, but we're also footing the bill for their energy usage -- their air conditioning bills, their hot water usage, etc. 

And, of course, as delinquencies go up, we're now expected to foot the bill for delinquent owners.  Which means MORE inventory for Starwood to rent out, more money in their pockets, and more OUT Of the owners.  It's a great system. For them!

The whole system is wrong. And we should pressure our HOA to do something about it. We simply cannot sustain a 10%+ increase every year.  

And if the HOA won't do anything about it, then surely there's an out-of-work attorney somewhere that could take up our cause to fight this usurious, one-side agreement.


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## DanCali (Oct 22, 2009)

LisaRex said:


> The whole system is wrong. And we should pressure our HOA to do something about it. We simply cannot sustain a 10%+ increase every year.
> 
> And if the HOA won't do anything about it, then surely there's an out-of-work attorney somewhere that could take up our cause to fight this usurious, one-side agreement.



The HOA hasn't been doing much until now so I doubt it will start now. 

You may not be able to find a law firm willing to take up some of these issues even as a class action - as one sided as these agreements are, we entered into them of your free will. We all had 7-10 days to read the fine print and change our minds, but we thought we got a "steal" on the resale price. 

What seems to grab attention from corporations in this day and age are these types of initiatives...


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## DanCali (Oct 22, 2009)

spuppy said:


> I've been to costco and walmart in hawaii.  The prices are not that expensive.



I didn't think Costco prices were that much different from the mainland either. 

I also didn't notice if the price of paper towels and toilet paper has doubled along with whatever other paper products were affected by energy prices... If you asked me, I'd say I was paying the same today as I was three years ago for paper, soap, and cleaning products. If these costs are truly double then I should start paying more attention to these things. 

Maybe I'll start being thankful that Starwood is raising MFs by only 15% and is using its negotiating power with suppliers in my and other owners' interests!


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## Fredm (Oct 22, 2009)

DannyM said:


> > What seems to grab attention from corporations in this day and age are these types of initiatives...
> 
> 
> 
> That will definitely do it! Talk about exposure. Over 5mm hits!


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## jerseygirl (Oct 22, 2009)

Danny M --

That's brilliant!  I saw that video when it first came out and was super impressed with the coverage it got (all the major news networks covered it).

Nodge ---

We need you.  I'll chip in $100 to pay some garage bad to record a song if you'll write it.  It needs to hit home ... 

I'll also "take one for the team" (weather getting chilly here!) and go to Vistana Resort for a week to video the $67K worth of renovations during a recession.


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## DavidnRobin (Oct 22, 2009)

LisaRex said:


> Per the Owner's Agreement, all WKORV inventory not booked is turned over to SVO, who is free to rent it out for cash and/or StarPoints.  And they get to keep all the cash, aside from a modest housekeeping charge ONLY IF extra housekeepers are called in to deal with the renters.  We owners get nothing. Nada. Zilch.
> 
> It really irritates me that SVO wrote such a one-side agreement.  We get all the downsides of owning (e.g. covering all the costs) and NONE of the upsides, such as rental income to offset our expenses. If FredM is correct, we're not only getting screwed by having to absorb the wear and tear of these renters, but we're also footing the bill for their energy usage -- their air conditioning bills, their hot water usage, etc.
> 
> ...



While unbooked WKORV intervals are turned over to SVO/SVN - what about this situation where Owners do not pay their MFs and they rolled over into the MFs owed?  What happens to their villas in the long run if they default?

Since this is a global issue for all SVO intervals it seems (WSJ base MFs are going up 25% in part because of deliquences) - pehaps it should be it's own thread - as to unify in order to start pressuring various HOAs for answers.


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## Fredm (Oct 22, 2009)

DannyM said:


> > didn't notice if the price of paper towels and toilet paper has doubled along with whatever other paper products were affected by energy prices... If you asked me, I'd say I was paying the same today as I was three years ago for paper, soap, and cleaning products. If these costs are truly double then I should start paying more attention to these things.
> 
> 
> 
> ...


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## jerseygirl (Oct 22, 2009)

I'm one of those people who doesn't trust my memory and uses the Bureau of Labor Stats to check prices!  

CONSUMER PRICE INDEX FOR THE HONOLULU AREA, FIRST HALF OF 2009


Consumer prices in the Honolulu metropolitan area increased by 0.3 percent from one year prior, but decreased by 1.0 percent in the first half of 2009 according to the Bureau of Labor Statistics of the U.S. Department of Labor. Regional Commissioner Richard J. Holden noted that an increase in the housing index contributed significantly to an overall increase in the annual all items index.

The transportation index fell by 11.0 percent for the year and 9.8 percent for the past six months. Over the year, gasoline prices were lower by 32.6 percent since the first half of 2008 and 30.6 percent since the second half of 2008.

The housing index made appreciable gains of 0.8 percent for the year. Annual prices for shelter also rose by 2.7 percent over the year and 2.3 percent for the past six months. The rent of primary residence index experienced increases of 3.2 percent and 2.5 percent for the year and for the past six months, respectively.

Prices paid for food and beverages rose 5.8 percent over the course of the year. During this period, both the food at home and food away from home indexes increased by 5.9 percent. An increase of 1.8 percent was recorded in the food and beverages index over the past six months. Food at home prices were up a modest 0.6 percent over the past six months and food away from home prices increased by 2.1 percent. The price of alcoholic beverages increased by 2.1 percent for the year and increased by 3.2 percent since the second half of 2008.

Medical care prices rose by 1.5 percent for the past twelve months and by 1.1 percent for the past six months.

Apparel prices exhibited large gains, with an 8.0 percent increase for the year and a 9.3 percent increase since the second half of 2008. Prices for recreation were unchanged since first half of 2008, but increased 0.6 percent from the latter half of 2008.

Education and communication prices advanced 5.0 percent during the past year and 1.5 percent over the past six months. Other goods and services rose by 7.5 percent on an annual basis and 5.1 percent on a semi-annual basis.

The Honolulu area’s Consumer Price Index for All Urban Consumers (CPI-U) advanced to 228.070 (1982-84=100) during the first half of 2009. Therefore, a market basket of goods and services that cost $100.00 in 1982-84 would have cost $228.07 in the first six months of 2009. Local area CPI data are not seasonally adjusted


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## Fredm (Oct 22, 2009)

I don't like relying on memory either.

The discussion was about the effect of electricity prices on HOA fees over time.

I used the seventh table down  to pin commercial rates, starting in 2001 through the present.


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## jerseygirl (Oct 22, 2009)

Fredm said:


> 08 was a killer. Not likely fully budgeted for. So, it had to be adjusted for in 09. Just a guess.



But I don't think it works this way, Fred.  For all of the resorts I own (too many), the financials clearly reflect when a deficit is carried over from one year to the next (it happens).  If WKORV owners did not see a deficit c/o in their 09 numbers, then there's no way they should be seeing increased utility (or other, for that matter) costs in 09.  Your own chart shows Hawaii commercial power rates decreasing from $31.94 to $20.74.

I haven't read this thread line-by-line ... am I missing something ... wouldn't be the first time.


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## Fredm (Oct 23, 2009)

jerseygirl said:


> But I don't think it works this way, Fred.  For all of the resorts I own (too many), the financials clearly reflect when a deficit is carried over from one year to the next (it happens).  If WKORV owners did not see a deficit c/o in their 09 numbers, then there's no way they should be seeing increased utility (or other, for that matter) costs in 09.  Your own chart shows Hawaii commercial power rates decreasing from $31.94 to $20.74.
> 
> I haven't read this thread line-by-line ... am I missing something ... wouldn't be the first time.



I don't know either. That's why I said it was just a guess.
Troopers reported that KOR was indeed showing a reduction in energy bills.

However, prices for goods and services affected by utility rates do not fall in tandem with these rates.  
My observation covers the almost 5 years from 1/1 2005. Not just the temporary drop for 6 months in 09, which are now going back up big time.
The rate drop not universal. California rates increased during the same 08-09 time period. 
Items specifically consumed by a Hawaii resort are not manufactured in Hawaii. Their cost basis is established elsewhere.

Nor do I hold that utility rates are the sole cause of increased fees.
But a substantial part across a five year period for all resorts.

I also have estimated Starwood up-charges about 10% for goods and services it provides, in addition to its management fee.  This becomes a larger take as actual costs increase.


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## krj9999 (Oct 23, 2009)

Your should probably not compare January from one year with July from another year.  Below are the year-to-date averages:

http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_b.html 



Fredm said:


> The commercial price of a kw/h in California was 10.71 cents on January 1, 2005. On July 31, 2009 it was 16.38 cents. Rates were higher for most of 2008. I took the latest figures as they will fluctuate and be higher in the future.


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## krj9999 (Oct 23, 2009)

It is really weird though - I am able to get Kona Brewing Co. beer cheaper in Maryland than I was able to find anywhere in Hawaii when I was vacationing there, even though it has to be shipped 5000 miles.  Go figure.



spuppy said:


> I've been to costco and walmart in hawaii.  The prices are not that expensive.


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## Fredm (Oct 23, 2009)

krj9999 said:


> It is really weird though - I am able to get Kona Brewing Co. beer cheaper in Maryland than I was able to find anywhere in Hawaii when I was vacationing there, even though it has to be shipped 5000 miles.  Go figure.



It is weird. The only thing I can think of is tax stamps. Hawaii has gone nuts with all kinds of taxes.


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## tomandrobin (Oct 23, 2009)

krj9999 said:


> It is really weird though - I am able to get Kona Brewing Co. beer cheaper in Maryland than I was able to find anywhere in Hawaii when I was vacationing there, even though it has to be shipped 5000 miles.  Go figure.



I may not be shipped to Maryland. It might be brewed on the east coast, under licensing agreement. 

When we went to St John this past summer, we drank the Virgin Pale Ale, brewed on St John. I like so much, I found a place in New Jersey that sold it and found someone to pick me up a few cases for home. Anyway the beer was not good, didn't taste anything like what we had in St John. Come to find out, it was brewed in Boston (or somewhere up north) under a licensing agreement with St John brewers.


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## tomandrobin (Oct 23, 2009)

Fredm said:


> It is weird. The only thing I can think of is tax stamps. Hawaii has gone nuts with all kinds of taxes.



Maryland is Crazy nuts with taxes too!


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## tomandrobin (Oct 23, 2009)

update....From Kona Brewing website

Kona Brewing Company runs its flagship brewhouse in Kailua-Kona on Hawaii's Big Island, which produced more than 10,000 barrels of beer in 2008.

Under strict guidance, Kona Brewing Company also produces its bottled beer and mainland draft beer in *Portland, Oregon, and Portsmouth, New Hampshire*, as part of its partnership with Craft Brewers Alliance Inc.


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## Fredm (Oct 23, 2009)

LisaRex said:


> Per the Owner's Agreement, all WKORV inventory not booked is turned over to SVO, who is free to rent it out for cash and/or StarPoints.  And they get to keep all the cash, aside from a modest housekeeping charge ONLY IF extra housekeepers are called in to deal with the renters.  We owners get nothing. Nada. Zilch.
> 
> It really irritates me that SVO wrote such a one-side agreement.  We get all the downsides of owning (e.g. covering all the costs) and NONE of the upsides, such as rental income to offset our expenses. If FredM is correct, we're not only getting screwed by having to absorb the wear and tear of these renters, but we're also footing the bill for their energy usage -- their air conditioning bills, their hot water usage, etc.
> 
> ...



Lisa, you have it right. The agreement is completely one sided. The owners get the bills and do not benefit from any of the fallout.

During a difficult economy like this one the burden is magnified. The increased cost of non-performing shares is spread among the performing owners, the use reverts to Starwood for their benefit, while owners pay for the maintenance cost of renters. And, Starwood up-charges the cost of goods and services.

Unfortunately, the agreement is legal (at least I think it is).

The real option open to owners is to replace the OM.

The very tough part is initially organizing 4-5% of the owners at the resort. If that can be done, it has a chance of succeeding.
So, for a 200 unit resort, the challenge is to recruit 500 owners who are mad as hell, and are willing to do something about it.
All each has to do is get 10 ambivalent owners to sign a petition.

It can be the most discouraging exercise imaginable, when one encounters those who talk it up, but once in the fight won't do their part. It is exactly what an OM counts on.


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## Loriannf (Oct 23, 2009)

*Nothing tastes as good as it does on St John*

Tom and Robin:

I agree with you about the Pale Ale, but come on, nothing tastes as good anywhere else as it does on St John.  How else can you explain the way T'ree Lizard (Cinnamon Bay campground restaurant) hamburgers taste ok when they're obviously not prime beef and are probably frozen somewhere along the way.   And don't get me started on Uncle Joe's B-B-Q.

Lori


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## DavidnRobin (Oct 23, 2009)

Re: Beer - Note: I am a beer snob, a certified beer judge, and homebrewing used to be my hobby (took 1st place in Pale Ale twice for the California State Homebrewing Competition - as well as a 1st in Stouts and 1st in Strong Ale - over a 4 year period)

The STJ Pale Ale is not brewed on island - I suggest that it just seemed to taste better on STJ (like Rum drinks do...) - personally I do not like fruit flavored beers.

Big Swell (very hoppy IPA) from the Maui Brewing Co (brewed in Lahaina) is one of the best IPAs on the market - it comes in a can - so make sure you pour it into a glass before drinking or it will seem extremely bitter (has to do with taste buds...).  Happy Hour (3:30 to 6PM) at the Maui Brewing Co in Kahana has beers at $4/pint and pizza slices at $1.50 - this is not posted.

We buy a case of Sierra Nevada at Costco when in HI - hard to go wrong with SN.

Friends don't let friends drink Corona... lol


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## tomandrobin (Oct 23, 2009)

Loriannf said:


> Tom and Robin:
> 
> I agree with you about the Pale Ale, but come on, nothing tastes as good anywhere else as it does on St John.  How else can you explain the way T'ree Lizard (Cinnamon Bay campground restaurant) hamburgers taste ok when they're obviously not prime beef and are probably frozen somewhere along the way.   And don't get me started on Uncle Joe's B-B-Q.
> 
> Lori



Everything is better in St John! 

_(Except the Maintenance fees)_


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## tomandrobin (Oct 23, 2009)

Just remember, its 5 o'clock somewhere....and right now its in Maryland!!! 

Cheers!


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## nodge (Oct 23, 2009)

jerseygirl said:


> Nodge ---
> 
> We need you.  I'll chip in $100 to pay some garage bad to record a song if you'll write it.  It needs to hit home ...



I'm on it.  

I'm toying with the idea of us SVO owners and SVO singing a duet like Elton John and KiKi Dee did in 1976.  This is what I have so far . . . .

Elton John/SVO Owners:  "Don't go breakin' my heart!"

KiKi Dee/SVO:   (insert sound of crickets chirping)

Elton John/SVO Owners:  "Oh Honey, if I get restless?"

KiKi Dee/SVO:  (insert sound of crickets chirping)

Well, you get the idea. . . .  The video could look something like this.

Who's in charge of getting the pig to play SVO's part?  Oh wait, SVO is already playing that part. 

-nodge


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## DeniseM (Oct 23, 2009)

tomandrobin said:


> update....From Kona Brewing website
> 
> Kona Brewing Company runs its flagship brewhouse in Kailua-Kona on Hawaii's Big Island, which produced more than 10,000 barrels of beer in 2008.
> 
> Under strict guidance, Kona Brewing Company also produces its bottled beer and mainland draft beer in *Portland, Oregon, and Portsmouth, New Hampshire*, as part of its partnership with Craft Brewers Alliance Inc.



May I just say that Kona Brewing Co. on the BI is a GREAT place to eat (and drink!) They have a lunch special which is a huge piece of pizza, a big salad, and a beer for a few bucks - great deal!


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## jerseygirl (Oct 23, 2009)

nodge said:


> I'm on it.
> 
> I'm toying with the idea of us SVO owners and SVO signing a duet like Elton John and KiKi Dee did in 1976.  This is what I have so far . . . .
> 
> ...




Nodge -- that video is perfect!!!  I wish we could just dub over it but we'd probably get in trouble with EJ and JH's estate.


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## jerseygirl (Oct 25, 2009)

Nodge -- I've got a potential.  See this youtube video:

http://www.youtube.com/watch?v=3086KqeP80o

You have to watch the whole thing.  Marlene is getting a little fiesty in her old age (is she alive?).

Here's my first stab at the lyrics:

Where have all the good weeks gone?
Long time passing
Where have all the good weeks gone?
Long time ago
Where have all the good weeks gone?
Starwood’s picked them every one
When will they ever learn?
When will they ever learn?

Where have all the owners gone?
Long time passing
Where have all the owners gone?
Long time ago
Where have all the owners gone?
Declared bankruptcy every one
When will they ever learn?
When will they ever learn?

Where have all the exchangers gone?
Long time passing
Where have all the exchangers gone?
Long time ago
Where have all the exchangers gone?
Gone for cruises every one
When will they ever learn?
When will they ever learn?

Where have all the employees gone?
Long time passing
Where have all the employees gone?
Long time ago
Where have all the employees gone?
Work at McDonalds every one
When will they ever learn?
When will they ever learn?

Where have all the SVN executives gone?
Long time passing
Where have all the SVN executives gone?
Long time ago
Where have all the SVN executives gone?
Hiding in Uruguay every one
When will we ever learn?
When will we ever learn?


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## DeniseM (Oct 25, 2009)

TOO FUNNY!  :hysterical:


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## jerseygirl (Oct 26, 2009)

This is  my favorite video of 2009 (note -- you must be 40+ too appreciate it).  This is what I have in mind for a spoof about Starwood:

http://www.youtube.com/watch?v=lj-x9ygQEGA&feature=player_embedded

They're getting away with dubbing over the original lyrics, so I think there's hope for us yet.


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## nodge (Oct 29, 2009)

jerseygirl said:


> This is  my favorite video of 2009 (note -- you must be 40+ too appreciate it).  This is what I have in mind for a spoof about Starwood:
> 
> http://www.youtube.com/watch?v=lj-x9ygQEGA&feature=player_embedded
> 
> They're getting away with dubbing over the original lyrics, so I think there's hope for us yet.



Hey Jerseygirl!

OK, I've finally stopped laughing enough to be able to respond. 

I agree that the "Bright Eyes" video should get top humor honors, but this one is definately a close second.   _"Jazz hands. Jazz hands. Jazz Hands. Jazz Hands." _

As for Marlene, she died on May 6, 1992, but, judging from the looks of it, I'm not sure if that was before or after they filmed her singing in that video.  Your proposed lyrics are outstanding!

Maybe we can dub over one of those inane videos in the "multimedia" section of MSC.   Too bad that they removed the one filmed with what appears to be extras from "the Sopranos" giving a tour of the Vistana Resort upgrades.  That one would have been easy, and we could have kept a lot of the original words in.  

I'll keep looking.

_“Bad Gold Tooth”_ nodge


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## jerseygirl (Oct 29, 2009)

Nodge -- Loved the battlefield!  Hadn't seen that one yet.

Thanks for the update on Marlene's passing.  I think they must have filmed that video on May 5, 1992!  

Keep thinking -- I know we can come up with something great !!!


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